ITAR for Metal Fabricators: The Basics
ITAR is a United States-specific set of regulations that control the way military (defense) and space-related (NASA)-related products and services are made, sold and distributed. Products and services that meet ITAR regulations are added to the United States Munitions List (USML). These can range from actual defense-related goods such as missiles and aircraft, to specific “technical data” — documentation that can include design plans like blueprints and diagrams.
Who Can Access the USML?
A critical element of ITAR is that only “US persons” are able to access the goods and services listed on the USML. This makes sense as many of the technologies included on the list would be considered sensitive items, given that they are intended for military/defense purposes. However, this restriction has also caused an untold number of headaches for many companies and organizations, because, although well-intended, it sometimes blocks individuals who by all reasonable measures, should be able to be granted access. Additionally, the definition of “US persons” is not quite as straightforward as it might sound.
For instance, Dual and Third-Party Nationals are often restricted from USML access, because their status does not reflect the definition of US persons as defined by The US Department of State. This means that foreign companies are sometimes forced to discriminate against their employees who don’t meet the nationality criteria, which can violate anti-discrimination laws in some countries, such as Canada and Australia. It can also cause problems for countries such as these that have large immigrant populations.
So while the concept of ITAR is fairly simple — limiting access to those most likely to use the USML to purchase data and technology and use it in the best interest of the United States — it’s easy to see by this example why actually abiding by ITAR regulations can be challenging for manufacturers. This is why not every fabricator is ITAR-registered; the due diligence required can be painstaking and cost-prohibitive.
ITAR Regulations in Practice
If an item is to be listed on the USML, it means that not only is the metal fabrication company listing it ITAR registered, but their entire supply chain is as well. So while this may not be terribly complicated for a company that has fabricated and manufactured an entire product from start to finish, and has no suppliers of various parts to vet, most companies have to put a lot more work into verifying each piece that goes into their USML-listed products. For instance, if Boeing were to sell a fighter jet to the U.S. government, they would have to verify that every single part of that jet was manufactured by another ITAR-registered company, and all of those companies would need to vet their own suppliers, and so on. This can result in 5 or 6 layers of verification — sometimes more. And if just a single company in a chain of what may end up being 50 or more suppliers is found to have violated an ITAR regulation, then Boeing could be fined by the U.S. government.
ITAR Compliance in Metal Fabrication
Ensuring compliance with ITAR is ultimately up to each individual organization once they are registered. Not staying compliant can result in some very high fines, as well as potential removal from the United States Munitions List (USML). Either (or both) of these could be very high prices to pay, so it’s in companies’ best interest to be in compliance at all times, to the best of their abilities.
What Are Best Practices for ITAR Compliance for Metal Fabricators?
It is EVS’s belief that metal fabrication companies that certify under current ISO 9001 standards will likely have an easier time developing best practices for ITAR compliance, simply because there is so much crossover between the two. Truly understanding your business and ensuring many levels of transparency does a long way toward excellent outcomes for both ITAR and ISO programs. That being said, there are nine areas which the Directorate of Defense Trade Controls’s Office of Defense Trade Controls Compliance recommends be a part of an internal ITAR compliance control program. These are:
- Organization Structure
- Corporate Commitment & Policy
- Identification, Receipt and Tracking of ITAR Controlled Items/Technical Data
- Restricted/Prohibited Exports and Transfers
- Internal Monitoring
- Violations and Penalties
Failure to give attention to each of these areas increases the chances that companies may inadvertently end up in violation of ITAR regulations and be made to pay a penalty — as much as $1.5 million per violation (civil and criminal combined) — or even be removed from the USML entirely.
What constitutes an ITAR manufacturing violation?
Any person who is granted a license or other approval or acts pursuant to an exemption under this subchapter is responsible for the acts of employees, agents, brokers, and all authorized persons to whom possession of the defense article, which includes technical data, has been entrusted regarding the operation, use, possession, transportation, and handling of such defense article. [eCFR: Title 22 → Chapter I → Subchapter M → Part 127]
There are a number of ways in which a company can violate ITAR regulations, but what the above section of the Electronic Code of Federal Regulations (eCFR) boils down to is that those who wish to be listed on the United States Munitions List (USML) have to keep incredibly close track of their suppliers, and their suppliers’ suppliers, and so on and so forth. This means anyone who touches the product in any way — even if it’s just the sharing of relevant data or technical information.
The reason for this is because not only does the metal fabricator supplying the finished product need to be ITAR registered and follow the related best practices, so does every other company that had a hand in that item’s manufacture. For example, if EVS Metal ships a finished USML-listed product to a customer, if any of our partners had a hand in its creation — whether it was our steel supplier or a company that handled a specialized finishing process — each must be ITAR registered as well.
ITAR and Documentation
Another area in which ITAR regulations are very strictly enforced is the way in which import/export documentation is handled, and the list of documents that must be in compliance is long. The eCFR calls this a “willful misrepresentation and omission of facts” as it applies to documentation. The list of documents that fall under this category is rather long, and include, but are not limited to: Applications for permanent export, reexport, retransfer; electronic export information filings; invoices; declarations of destination; delivery verifications; applications for temporary export; applications for registration; purchase orders; foreign import certificates; and bills-of-lading.
Considering the size of this list (plus others not mentioned above), it becomes rather easy to see why maintaining compliance with ITAR regulations can be complicated for metal fabricators, especially when multiple vendors become involved with the final of a product. At EVS Metal, we work extensively with our partners to ensure the careful and detailed documentation of every USML-listed product we produce.
EVS Metal has two International Traffic in Arms Regulations (ITAR)-registered metal fabrication and manufacturing facilities: Pflugerville (Austin), Texas; and Keene, New Hampshire. ITAR registration is required by the U.S. State Department’s Directorate of Defense Trade Controls (DDTC) for all of its contracted manufacturers, exporters and brokers. As an ITAR-registered metal fabricator and manufacturer, this means that EVS has been given federal clearance to submit bids and subsequently supply finished defense articles for the United States Government and its authorized subcontractors.
About EVS Metal
EVS Metal is an American precision metal fabricator headquartered in Riverdale, NJ. Our machinists and operators utilize the latest technology to cut, bend and finish stand-alone items as well as parts for integration or assembly into more complex products. EVS Metal’s four ISO 9001:2015-certified locations comprise over 250,000 square feet of vertically-integrated manufacturing space and feature the most modern equipment available, from lasers and CNC machining centers to automated powder coating lines.
We serve a diverse customer base across North America, providing a range of services from ITAR-compliant, quick-turn prototypes to high-volume production runs. Request a personalized metal fabrication quote online or call (973) 839-4432 to speak with a specialist today.