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ITAR Compliance Tips for Second- and Third-Tier Companies

Prime contractors for the U.S. defense industry bear the bulk of the burden for complying with the State Department’s International Traffic in Arms regulations. However, that burden gets pushed down the supply chain. If you’re a second- or third-tier supplier in this network, you undoubtedly will be mandated to comply with ITAR, as well. 

Here are tips on how small- to mid-sized businesses can best stay in compliance with ITAR: 

  • ITAR Registration – Many companies in the defense supply chain are required to register with the State Department under ITAR Part 122. Companies should assess if they are required to register and if so, do it ASAP.  
  • Develop your own ITAR Compliance Program – The State Department recommends that companies involved in ITAR-controlled activities adopt ITAR Compliance Programs – and if a company has an ITAR violation, the State Department frequently reduces penalties or assesses no penalties for companies that have compliance programs. Compliance programs demonstrate to prime contractors (and government agencies if there is an ITAR violation) that your company has a formal process for ITAR compliance. These programs project a sophisticated approach to managing ITAR-related issues.  
  • Conduct a risk assessment to determine unique requirements for your company – There may be ITAR requirements that are specific to your company based on your business activity, customer base and countries of operation. This risk assessment can help you identify the greatest legal risks/exposures for your company so you can focus on eliminating them.  

Some other ways you can stay in compliance with ITAR include conducting due diligence reviews of your own subcontractors and upstream suppliers to verify that they are taking appropriate steps to comply with ITAR. Also, when you receive documents from prime contractors like mechanical drawings or technical specs, see if they are marked as containing ITAR/EAR-controlled technical data so you can take steps to protect such material from improper transfer and disclosure.  

When you are sending ITAR/EAR-controlled and documents with this controlled technical data to other parties in the U.S., mark such items as subject to export controls to provide a warning to the recipients. Also, conduct ITAR compliance training for your company employees to assure that they understand the requirements under ITAR. 

Anyone conducting business that involves ITAR or other regulations should be prepared to comply sooner than later. That’s where 2W Tech steps in. We have a Cybersecurity Compliance Program that is designed to support our clients’ compliance obligations. Call us today to get started. 

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