ITAR for Metal Fabricators: The Basics
Article Revised August 16th, 2022
ITAR is a United States-specific set of regulations that control how military, defense, and space-related products are made, sold, and distributed. You can find all products and services that meet ITAR regulations on 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 “U.S. persons” can access the goods and services listed on the USML because many of the technologies included on the list would be considered sensitive items, given their military/defense purposes. Although well-intended, this restriction has caused an untold number of headaches for many companies and organizations because it sometimes blocks individuals who should be granted access by all reasonable measures.
Additionally, the definition of “U.S. persons” is not 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 U.S. persons as defined by The U.S. Department of State. As a result, foreign companies often 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 with large immigrant populations.
So while the concept of ITAR is relatively simple — a regulatory body limiting access to the USML to those purchasing data and technology and using it in the best interest of the United States — in reality, abiding by ITAR regulations can be challenging for manufacturers. This is why not every fabricator is ITAR-registered — the due diligence required to comply can be painstaking and cost-prohibitive.
ITAR Regulations in Practice
For an item to be listed on the USML, the metal fabrication company listing it must be ITAR registered as well as their entire supply chain. So while this may not be terribly complicated for a company that has fabricated and manufactured complete products 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 as well. This could result in 5 or 6 layers of verification and even more. If just a single company in that chain of what may end up being 50 or more suppliers were 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, and not staying compliant can result in some very high fines, as well as potential removal from the USML, so it’s in a company’s best interest to remain in compliance at all times, to the best of their abilities.
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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 go a long way toward excellent outcomes for both ITAR and ISO programs. That being said, there are nine areas that the Directorate of Defense Trade Controls’s Office of Defense Trade Controls Compliance recommends being 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
- Re-Exports/Retransfers
- Restricted/Prohibited Exports and Transfers
- Recordkeeping
- Internal Monitoring
- Training
- 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. This means anyone who touches the product in any way, even if it’s just sharing relevant data or technical information.
The reason for this is that not only does the metal fabricator supplying the finished product need to be ITAR registered and follow the related best practices, but so does every other company that had a hand in that item’s manufacture. So, 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 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 includes but is not limited to: Applications for permanent export, re-export, 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 easy to see why maintaining compliance with ITAR regulations can be complicated for metal fabricators, especially when multiple vendors become involved with the final 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 one International Traffic in Arms Regulations (ITAR)-registered metal fabrication and manufacturing facility: Pflugerville (Austin), Texas. The U.S. State Department’s Directorate requires ITAR registration of Defense Trade Controls (DDTC) for all of its contracted manufacturers, exporters, and brokers. As an ITAR-registered metal fabricator and manufacturer, EVS has been given federal clearance to submit bids and 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.
