ITAR Compliance Checklist

• Company

• Location
  Address

• Compliance Manager

• Conducted on

  Date

Jurisdiction and Classification

• Has the company properly determined if its products being exported are on the U.S. Munitions List (“USML”) and subject to ITAR?

  Yes

  No

  N/A

• Has the company determined the proper classification for the product under the Export Administration Regulations (“EAR”)?

  Yes

  No

  N/A

• This could be under the 600 Series on the Commerce Control List (“CCL”) under Export Control Reform, under another CCL category or EAR99. If the company is not certain of the jurisdiction of a particular product it can submit a commodity jurisdiction request to DDTC.

• Are any items listed as “Significant Military Equipment” and therefore subject to heightened ITAR requirements?

  Yes

  No

• Has the company checked to see if jurisdiction for the item has been transferred to the Bureau of Industry and Security (“BIS”) under Export Control Reform?

  Yes

  No

  N/A

• Has the company maintained adequate records of the basis of its classification for each of its products?

  Yes

  No

  N/A

• Has the company complied with the ITAR recordkeeping requirements as set forth at 22 CFR § 122.5?

  Yes

  No

  N/A

• Is an export license required for a transaction?

  Yes

  No

• If the shipment is to foreign subsidiaries or foreign offices of the company, an export license must still be obtained unless an exemption applies.

Export Licenses For Exports of Defense Articles

• If an export license is required for a transaction, has the company obtained the license (e.g. DSP-5, DSP-6, DSP- 73, DSP-74)?

  Yes

  No

  N/A

• Has the company complied with the terms, conditions, and provisos set forth in the license?

  Yes

  No

  N/A

ITAR–Controlled Technical Data and Software

• Has the company disclosed ITAR-controlled technical data to Foreign Persons in the U.S. (including to employees) with a license or applicable exemption?

  Yes

  No

  N/A

• Has the company transferred technical data regarding ITAR-controlled items with a license or applicable exemption to 1) Foreign sales agents or marketing intermediaries; 2) Foreign prospective customers as part of marketing proposals; 3) Prime or subcontractors, suppliers, program partners; and 4) Persons in trade shows, marketing presentations?

  Yes

  No

  N/A

• Has the company transferred ITAR-controlled technical data to company employees who are Foreign Persons specifically authorized in the company’s Technical Assistance Agreements or other DDTC authorizations? (This includes in both foreign offices and in U.S. offices.)

  Yes

  No

  N/A

• Have company employees taken ITAR-controlled technical data in overseas travel, including in documents, laptop computers, PDA’s, iPhones, iPads and similar devices with a license?

  Yes

  No

  N/A

• Employees should avoid taking defense articles and ITAR-controlled technical data and software in foreign travel on laptops, iPhones, iPads, other PDA’s, flash drives and other devices unless a license is obtained or an exemption is available.

• Has the company NOT posted ITAR-controlled technical data or software on websites, chat rooms or transferred such items to Foreign Persons through e-mails, text messages, e-mail attachments, faxes, videos, telephone calls or other electronic communications?

  Yes

  No

  N/A

Defense Services

• Has the company performed any services for Foreign Persons related to any items on the USML, or items within the definition of Defense Services, with a Technical Assistance Agreement (“TAA”) or other applicable agreement approved by DDTC? (This includes services performed in the U.S. and overseas.)

  Yes

  No

  N/A

• Were the services performed by the company within the terms, conditions, and provisos of such agreement?

  Yes

  No

  N/A

• Has the company performed services for a foreign military organization or foreign defense industry company in connection with an item regulated under the EAR?

  No

  Yes

  N/A

• Will the company be performing services for foreign military customers in connection with the sale of items subject to EAR?

  No

  Yes

  N/A

• Such transactions involve a heightened level of risk for possible ITAR violations due to possibility that the company could also be performing defense services regulated under ITAR and companies should use an extra level of caution in such transactions.

Imports of Defense Items

• Has the company imported any items on the USML in temporary import transactions or on the USML in permanent import transactions with a license?

  Yes

  No

  N/A

• Were all aspects of the import transaction within the terms, conditions, and provisos of such license?

  Yes

  No

  N/A

Registration

• Is the company registered with DDTC as a manufacturer and/or an exporter?

  Yes

  No

  N/A

• Has the company notified DDTC within 5 days of changes of the information set forth in its Registration Statement?

  Yes

  No

  N/A

• Does the company engage in brokering activities that require the company to register as a broker?

  No

  Yes

  N/A

Debarred Party List Review

• Has the company conducted reviews of all parties to its transactions involving ITAR-controlled items to verify that such parties are not listed on DDTC’s Debarred Parties List?

  Yes

  No

  N/A

Export Clearance Requirements

• Has the company complied with the export procedures for its exports of ITAR-controlled hardware?

  Yes

  No

  N/A

• Including:
  * Depositing license (DSP-5’s, etc.) and license documentation with Customs and Border Protection (“CBP”) at U.S. port of export
  * Decrementing licenses based upon the value of each export transaction
  * Electronic filing of export information under the Automated Export System (“AES”)
  * Applying destination control statement to documents under 22 CFR § 123.9(b)
  * Obtaining required documentation including End-Use Statements, DSP-83 Nontransfer and Use Statements (if required), etc.

• Has the company complied with the export procedures for exports of ITAR-controlled unclassified technical data?

  Yes

  No

  N/A

• Including:
  * Retaining export license document in company’s possession
  * Notifying DDTC of the export under 22 C.F.R. § 123.22(b)(3) (Form DS-4071)
  * Obtaining required export documentation (Form DSP-83, etc.)

• Has the company complied with the export procedures for the performance of Defense Services?

  Yes

  No

  N/A

• Including:
  * DDTC approves TAA or other agreement
  * Foreign recipient executes TAA
  * Fully executed TAA is submitted to DDTC within 30 days after it enters into force
  * If agreement not executed within one year of approval, notify DDTC in writing
  * Inform DDTC of initiation of export of technical data under 22 C.F.R. § 123.22(b)(3) (Form DS-4071)
  * Advise DDTC in writing if the agreement is not concluded
  * Advise DDTC of impending termination of TAA not less than 30 days prior to termination

Reexports and Retransfers

• If an ITAR-controlled item was properly exported (including ITAR-controlled technical data), was proper authorization obtained for reexports or retransfers of such items?

  Yes

  No

  N/A

License/Agreement Administration

• Has the company followed the requirements for the proper administration of licenses and agreements?

  Yes

  No

  N/A

• Examples of such requirements include:
  * Returning expended, expired or unused licenses to DDTC
  * Modifying TAA’s and other agreements in accordance with DDTC provisos
  * Executing TAA’s and providing copies to DDTC
  * Amending agreements as required due to changes such as scope, value, parties, etc. and submitting amended agreements to DDTC
  * Maintaining temporary export and import licenses and related shipment records
  * Filing annual reports under Manufacturing License Agreements and Distribution Agreements

See-Through Rule

• Has the company exported, reexported or retransferred an item that incorporates ITAR-controlled parts, components, attachments or accessories or is based upon ITAR-controlled technical data?

  Yes

  No

• If an item contains a part or component that is ITAR-controlled, under the DDTC “See-Through Rule” the entire end-item thereafter becomes subject to ITAR.

Reports For Sales Commissions, Fees and Political Contributions

• Has the company or its Vendors (as defined at 22 CFR § 130.8) paid or offered to pay sales fees or commissions in connection with the sale of ITAR-controlled items in excess of $100,000, or political contributions in excess of $5,000?

  Yes

  No

• Determine if the company is required to file the requisite reports with DDTC and comply with the other requirements
  under 22 CFR Part 130.

Receipt, Tracking, Marking and Security for ITAR-Controlled Items

• Does the company properly mark all ITAR-controlled products, technical data, and software within the company’s facilities to provide adequate notice that such items are ITAR-controlled?

  Yes

  No

  N/A

• Does the company provide adequate security within its facilities to prevent unauthorized access to ITAR-controlled items (including access by Foreign Persons)?

  Yes

  No

  N/A

• Does the company provide adequate notice to customers and other parties to which the company transfers ITAR-controlled items that such items are ITAR-controlled, through the use of destination control statements and other forms of notice such as under 22 CFR § 123.9(b)? (This includes transfers in the U.S. as well as transfers to overseas parties.)

  Yes

  No

  N/A

Processing, Handling or Forwarding of ITAR-Controlled Items

• Does the company track ITAR-controlled items if it receives them within its facilities?

  Yes

  No

  N/A

• Even if a company merely receives, processes, stores, or otherwise handles USML items without providing any other value-added functions, ITAR requirements will arise. Companies should review their supply chain operations and inventory to determine if ITAR-controlled items are received, stored or otherwise handled by the company in its operations and take protective measures including marking, securing and controlling such items.
  

Controls In Company IT System

• Does the company maintain adequate controls in its information technology system to protect against unauthorized access, disclosure and transfer of ITAR-controlled technical data and software?

  Yes

  No

  N/A

• Including:
  * Adequate security processes to limit access by Foreign Persons to ITAR-controlled technical data and software
  * Procedures for prominently marking ITAR-controlled technical data and software such as in e-mails, attachments, Word documents, PowerPoint slides, spreadsheets, electronic drawings
  * Limitations on the transfer and copying of ITAR-controlled technical data and software stored in the company’s IT system

Manufacturing License Agreements and Distribution Agreements

• Is the company licensing ITAR-controlled technical data to permit the manufacture overseas of an item on the USML?

  Yes

  No

  N/A

• The company will most likely be required to enter into a Manufacturing License Agreement (“MLA”) approved by DDTC unless an exemption applies. See 22 CFR Part 124.

• Has the company operated within the terms and conditions set forth in such agreements?

  Yes

  No

  N/A

• Has the company filed its annual reports with DDTC related to operations under the MLA?

  Yes

  No

  N/A

• Has the company maintained records related to its manufacturing of ITAR-controlled products as required under the MLAs?

  Yes

  No

  N/A

• Is the Company establishing a warehouse or distribution point abroad for defense articles exported from the U.S. for subsequent distribution to entities in a sales territory approved by DDTC?

  Yes

  No

  N/A

• The Company will most likely be required to enter into a Distribution Agreement (“DA”) approved by DDTC unless an exemption applies. See 22 CFR Part 124.

• Has the company operated within the terms and conditions set forth in such agreements?

  Yes

  No

  N/A

• Has the company filed its annual reports with DDTC related to operations under the DA?

  Yes

  No

  N/A

• Has the company maintained records related to its manufacturing of ITAR-controlled products as required under the DAs?

  Yes

  No

  N/A

Brokering

• Has the company engaged in “brokering” activity as defined at 22 C.F.R. Part 129?

  Yes

  No

• Has it registered as a broker with DDTC?

  Yes

  No

  N/A

• has it obtained the requisite licenses, filed its annual reports, and complied with the other requirements under 22 CFR Part 129?

  Yes

  No

  N/A

• If the company retains third parties to engage in “brokering activity” on behalf of the company as defined in § 129.2(a) and (b), have such third parties registered with DDTC under 22 CFR Part 129?

  Yes

  No

  N/A

Use of ITAR Exemptions

• Has the company relied on exemptions from requirements under ITAR?

  Yes

  No

• Has the company complied with all of the applicable conditions for use of such ITAR exemptions?

  Yes

  No

  N/A

• For example, in many instances use of exemptions under ITAR is not permitted in transactions:
  (i) involving “proscribed destinations” set forth at 22 CFR § 126.1; (ii) for which
  Congressional notification is required pursuant to 22 CFR §123.15; (iii) involving items
  designated as Significant Military Equipment (See 22 CFR §120.7); (iv) involving persons
  who are ineligible under 22 CFR § 120.1(c); (v) involving the establishment of offshore
  procurement arrangements or producing defense articles offshore; and (vi) by parties that are
  not registered with DDTC under 22 CFR Part 122. See 22 CFR §§123.16, 125.4, 125.6 and
  124.3.

• Has the company maintained adequate records of its reliance on the exemptions in specific transactions as required under ITAR?

  Yes

  No

  N/A

Proscribed Countries, Significant Military Equipment and Major Defense Equipment

• Has the company engaged in any unauthorized transactions involving ITAR-controlled items with any of the “§ 126.1 Proscribed Countries”?

  No

  Yes

  N/A

• The company is required to report such transactions to DDTC.

• Special heightened restrictions exist under ITAR for transactions involving: (i) the “proscribed countries” set forth at 22 CFR 126.1, including China (and will be subject to a policy of denial for license applications); (ii) items that are designated on the U.S. Munitions List as “Significant Military Equipment” (See 22 CFR 120.7); (iii) Major Defense Equipment (See 22 CFR § 120.8); and (iv) classified technical data and services (See USML Category XVII – Note for classified technical data the company will be subject to requirements under ITAR as well as under NISPOM).

Foreign Military Sales

• Is the company relying on the exemption for Foreign Military Sales transactions set forth at 22 CFR § 126.6 (c)?

  Yes

  No

• Has the company complied with all of the conditions applicable to the use of such exemption?

  Yes

  No

  N/A

• The company will be required to obtain a license or other authorization from DDTC unless another exemption applies.

Classified Defense Articles and Technical Data

• Have the company’s exports of classified defense articles and technical data complied with the provisions of 22 CFR § 125.3 and 125.9, including use of DSP-85, as well as the NISPOM?

  Yes

  No

  N/A

• Classified articles, technical data and defense services not otherwise enumerated are listed on the USML under Category XVII

Obligations In Working With Subcontractors and other Program Partners

• Will the Company be working with subcontractors, teaming partners or other independent parties in the transaction?

  Yes

  No

• The company should coordinate with such parties regarding ITAR compliance in performing the transaction. Prime contractors are advised to verify that subcontractors are conducting their operations involving the transaction in compliance with ITAR requirements, including complying with registration requirements, obtaining licenses and TAA’s, reporting and recordkeeping requirements.

Congressional Notification For Defense Articles and Agreements

• Has Congressional Notification been provided in connection with exports of defense articles that exceed the threshold amounts set forth at 22 CFR § 123.15, or major defense equipment as defined at 22 CFR § 120.8?

  Yes

  No

  N/A

• Has Congressional Notification been provided for TAA’s and MLA’s for manufacturing abroad defense items classified as Significant Military Equipment as set forth in 22 CFR § 124.11?

  Yes

  No

  N/A

Parts and Components – Definition of “Specially Designed”

• For parts, components, attachments, and accessories that are still covered under USML “catch-all” provisions following Export Control Reform, do such items fall within the definition of “Specially Designed” as set forth at 22 CFR § 120.41?

  No

  Yes

  N/A

ITAR Items Acquired In Mergers and Acquisitions

• Is the company undertaking acquisition transactions?

  Yes

  No

• A common entry point for ITAR-controlled items into a company is through mergers and acquisitions. If a company acquires another company and the target company has items in its possession that are on the USML (including in the form of finished products, parts and components, research and development, inventory, or other items elsewhere in its supply chain), upon consummation of the acquisition the acquiring company will own the USML items and be subject to ITAR controls. This can occur regardless of whether the acquisition is structured as the purchase of stock, purchase of assets or merger. (In addition, if the target company has committed ITAR violations prior to the acquisition, the acquiring company could step into the target company’s shoes and become liable for such violations if proper precautions are not taken.)

• Yes

  No

  N/A

• Conduct detailed ITAR due diligence review of the target company prior to the acquisition to ascertain if there will be any impact on the acquirer related to ITAR following the completion of the acquisition transaction.

Procedure To Limit Illegal Diversion, Transshipment and Reexports

• Does the company face the risk of illegal diversion, transshipment, reexport or retransfer in its transactions?

  No

  Yes

  N/A

• A U.S. exporter should lawfully export an item to a foreign party, and the foreign party without the knowledge of the U.S. exporter will then transfer the item to a prohibited country, prohibited party or use it for a prohibited or unauthorized end-use. (In certain instances, U.S. exporters can have liability in such transactions for violations under U.S. export control laws.) The company should consider adopting a compliance procedure to reduce the risk of illegal diversion, transshipment, reexport or retransfer.

Voluntary Disclosures

• If a violation or possible violation has occurred, has the company considered submitting a voluntary disclosure to DDTC to reduce or mitigate potential penalties and eliminate past compliance risks?

  Yes

  No

  N/A

• Penalties for ITAR violations include up to 20 years imprisonment and financial fines of up to $1,000,000 per violation for criminal violations, and lesser amounts for civil violations.

Sign Off

• Additional Observations

• Compliance Manager Name & Signature

  Sign
Department Representative

• Department

• Name & Signature

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