ITAR's Impact on a Government Contractor/Supplier

May 25, 2011, 1:59 PM

If your company is supplying goods pursuant to a government contract, then the International Traffic in Arms Regulations ("ITAR") may apply to your product. The broadest category included in ITAR applies to any other product, service or technology with substantial military capability that was developed or modified for a military use. Developing products for a U.S. military customer can result in the product or service being subject to ITAR. The ITAR applies even if the companys only customer is the U.S. Government and even if the company does not ship any products out of the U.S.

Parties that produce items subject to the ITAR are required to register with DDTC (Directorate of Defense Trade Controls as a Munitions Manufacturer). Registration is primarily a means to provide the U.S. Government with necessary information on who is involved in certain manufacturing and exporting activities. Registration does not confer any export rights or privileges, but is a precondition for the issuance of any license or other approval for export. If the company is exporting products, performing services or disclosing technologies to DoD customers overseas or foreign nationals in the United States, the company may be required to obtain an export license. The registration fee is $2,250 per year for registrants for whom DDTC has not reviewed, adjudicated or issued a response to any applications during the twelve-month period ending 90 days prior to the expiration of their current registration. This fee includes those registering with the Department for the first time. Also, you must submit a registration packet to DDTC. You can find helpful hints on submitting a complete registration package at http://pmddtc.state.gov/registration/package.html. A complete package consists of a DS-2032 form, transmittal letter, legal documentation, the registration fee, and other attachments as needed.

Also, you should immediately separate this "military" product from its other similar commercial products (give it a different name/product code) or there is a risk that the similar commercial products could become subject to ITAR, forcing you to register and obtain licenses for these products. If you need further legal assistance with ITAR registration or any other topic discussed, please contact me at recoley@kaufcan.com. --R. Ellen Coley