My suppliers aren’t registered! Now what?

We get a lot of questions from clients about what to do if they use suppliers who are not registered with DDTC to perform ITAR-related work.

This presents an interesting dilemma. Although it’s clear that the supplier is violating Section 122.1 of the ITAR, is the company who sends that supplier ITAR-controlled work also violating the regulations? Further complicating this situation is the fact that many companies maintain ITAR compliance manuals which require them to send compliance questionnaires to, or obtain other written certification from, their suppliers and vendors when it comes to ITAR/EAR compliance.

Export Solutions has always advocated a conservative approach when there’s a potential to expose our clients to any impropriety in dealing with the regulations. We recommend that our clients not send ITAR-controlled items (either products or data) to their suppliers when they know the supplier is not registered with DDTC. This situation seems to go beyond the normal “red flag” (suspecting something is wrong), because you actually know something is wrong.

We also recommend that clients develop an effective ITAR compliance manual which describe the due diligence they will follow when it comes to utilizing sub-tier suppliers for ITAR/EAR work.

What does the government say about all of this? DDTC stops short of suggesting that the company sending the ITAR-controlled item is in violation of the regulations. However, DDTC does stress – and we continually reinforce this with clients – that all companies clearly identify the export control status of any item which leaves their facility. With such clear communication, there’s no excuse for any supplier receiving those items to not properly handle the goods or information in compliance with U.S. law.

What if your suppliers complain? (And trust me, they will complain.) Point them to the applicable section of the regulations … or blame it on your own compliance procedures … or simply blame your pesky export consultant, who keeps advising you to follow both the spirit and the letter of the law.