SMBs Subcontracted to DoD Primes Must be ITAR Compliant

International Traffic in Arms Regulations (ITAR) forces compliance from a large swath of businesses interested in contracting work with the U.S. Department of Defense. But if you were wondering if you needed to comply with ITAR as a subcontractor to one of these primes, the answer is a resounding, “Yes.”  SMBs subcontracted to DoD Primes must be ITAR compliant.

Many prime contractors are worried about whether their subcontractors are compliant with ITAR because the prime contractors can have liability, as well. As a result, primes are establishing requirements that their subcontractors become ITAR compliant. They are also asking their subcontractors to impose similar requirements on their suppliers and subcontractors. These prime contractors often will ask for documentation from the subcontractors that prove their compliance.   

Companies under ITAR are subject to several potential requirements, including obtaining export/import licenses and technical assistance agreements, which are restrictions on transfers of controlled technical data and software  to foreign nationals in the United States or overseas – including potentially employees of the company – restrictions on entering transactions with certain “proscribed countries,” engaging in “brokering” activities without authorization, registration, reporting and record-keeping requirements. 

Failure to be ITAR compliant can create significant problems for SMBs, including loss or termination of contracts, potential civil and criminal liability for ITAR violations, and reputational damage, especially in the eyes of prime contractors and other downstream customers. 

Penalties for ITAR violations include fines of up to $1 million per violation and up to 20 years imprisonment.   

What should SMBs do to meet ITAR compliance? To ensure you’re meeting the requirements, it is best to partner with a consultant like 2W Tech. We have a robust Cybersecurity Compliance Program that will ensure you are compliant with all your industry’s regulations. To learn more, contact 2W Tech today.   

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