As a growing government or defense contractor, you may have found yourself in one of the situations that follow. If any of the foregoing sounds familiar, you might just be in export compliance land:
– You, a U.S. citizen, are a former member of the U.S. military, and a good buddy of yours (a member of a foreign military) approaches you with an opportunity to supply goods and services to a foreign company, foreign military, or other foreign organization;
– You work (or used to work) for a U.S. defense contractor, and you have been approached with an opportunity to supply goods and services to a foreign company, military, or other organization;
– You own or work for a U.S. company, and you want to sell goods and services overseas; or
– You own or work for a U.S. company, and you want to email the specs and drawings of a new piece of technology, software code, or encryption algorithm you received from your foreign buddy to your new impressive, hotshot engineer, who just happens to be from a foreign country.
Sound familiar? If it does, you almost certainly have an export compliance issue on your hands.
In other words, at this very instant you face significant risk of an export compliance violation! Remember, the penalties for an export compliance violation can be severe: up to 10 years in prison and up to $1 million in fines, 22 U.S.C. § 2778(c), be denied future exporting privileges, 22 C.F.R. § 127.1(c)(2), as well as debarment from contracting with the U.S. government. 22 C.F.R. § 127.7.
The solution, of course, it to make sure that no export compliance violation happens in the first place. And in this regard, the key to prevention involves putting in place a robust export compliance program that causes you and your organization to undertake the following analysis for each and every export to each and every person:
1. What product, information or service am I transferring, shipping, giving and/or selling?
3. Is it classified? If yes, this is now an ITAR issue; you will need a license from DDTC.
6. In which country or countries will my product, information or service be performed? Have I identified ALL countries, no matter how far fetched? Check OFAC Sanctions Programs site.
7. With whom will I be dealing along the way? Have I identified each and every person, government, company, partnership and/or other organization that I will be dealing with? Again, check OFAC SDN List and EAR Denied Persons List.
Please note, as far as export compliance is concerned, the foregoing are just the initial steps of ensuring your organization’s compliance with the export control laws and regulations of the United States. A comprehensive export compliance process involves additional components, including:
- Annual, comprehensive and mandatory employee training, especially for business development personnel (who happen to be a major source of export violations!);
- A comprehensive export compliance process and manual;
- Appointing a properly trained senior official to serve as your orgnization’s Empowered Official;
- Registration with the proper U.S. Government Agencies;
- Knowledge and understanding of the various laws and regulations that comprise the U.S. export compliance regime;
- Access to knowledgeable export compliance counsel; and
- Educating yourself, your peers and your employees on all aspects of export compliance.
Simon Courtman is a lawyer at Fluet Huber + Hoang, a full service law firm focused on the needs of growing government contractors. He previously served in the United States Air Force. You can reach him by email here.