ITAR Compliance for Job Shops and Manufacturers

Economic uncertainty plagues many people and industries. Manufacturers that rely on a few major customers to keep their doors open run significant risks. If that customer were to find a more efficient, less expensive solution, the entire operation could crumble. Economic uncertainty also impacts the demand for custom manufacturing services. This is where diversification comes in to save operations. Catering to stable marketplaces will help manufacturers maintain profitability while taking on some smaller, short-run jobs.

Government contracts can often provide the stability manufacturers are looking for. These jobs can span over multiple years and are a predictable source of income. Consistent profitability can help manufacturers with financial planning and investments in their operations. Additionally, success with government contracts can lead to long-term relationships with government agencies, resulting in repeat business and helping reduce the dependence on commercial or consumer markets.

Government contracts can involve large quantities and significant orders, which can help decrease the need for constant production adjustments and retooling necessary for smaller, diverse jobs. Especially when working in defense, technology, or healthcare, government contracts may fund research and development or offer accelerated payments that can help manufacturers gain traction. Manufacturers can get their foot into government contracts through ITAR certification.

The International Traffic in Arms Regulations (ITAR) is a set of United States government regulations that control the export and import of defense-related articles and services on the United States Munitions List (USML). They are designed to help ensure that defense-related technology does not fall into the hands of those who could harm national security.

ITAR compliance is mandatory for all manufacturers, exporters, and brokers of defense articles and services within the United States. This includes companies in the defense industry, contractors, and third-party suppliers. Additionally, non-U.S. persons and companies may be subject to ITAR if they manufacture or export defense articles or services in the United States.

To begin certification, companies should understand which products or services would fall under the USML and subject them to ITAR regulations. Once identified, it is best to appoint a “responsible officer” who will be the main point of contact for the Directorate of Defense Trade Controls (DDTC).

Before registration, companies should implement an internal ITAR compliance program, including training, procedural guidelines, record-keeping systems, and internal auditing procedures, to prevent unauthorized exports or disclosures. Note that the DDTC reserves the right to request access to records for five years after a transaction, so structuring documents now will only help streamline processes once certified.

Before proceeding with the export or import of defense articles or technical data, obtaining the proper exportation licenses from the DDTC is imperative. These licenses are issued for up to four years and require critical information concerning transfer specifics such as the identity and location of the recipient, the intended application and final user of the items, and the destination country. The company must also ensure that each supplier and vendor with whom they share customer data is ITAR-compliant.

Once these steps are completed, complete the required registration forms through the DDTC’s online system. This will include providing company details and a registration fee.

ITAR registration is not permanent; it must be renewed annually or as required by any ITAR regulations or company status changes. The renewal process involves confirming the accuracy of the current registration information and paying an annual registration fee.