The subcontractor should have registered with the DoS, Office of Defense Trade Controls (ODTC), obtained export approvals, and complied with all other requirements of the DoS’s International Traffic in Arms Regulations (ITAR).  Because the subcontractor failed to take the above actions, it is now confronted with the following difficulties:

• Time and energy expended to collect related export documents (if any)

• Expensive legal bills and a seemingly endless investigation

• Adverse publicity

• Possible shipment delays and possible seizures and forfeitures

• Possible fines levied against the company and individual(s)

• Possible imprisonment of  company personnel (executives and others)

• Prohibition from accepting Department of Defense contracts

• Debarment of the company and individual from exporting

• Debarment of the subcontractor could harm business arrangements (current and projected with the major defense contractors

• Additional administrative actions taken by the DoS or the Department of Commerce (DoC) 

• Possible loss of job

Actual Recent Violation:  A U.S. company was denied export privileges in 1995for illegally exporting zirconium and making false declarations on DoC license applications and shipping documents, which involved the reexport of zirconium to third country destinations. Zirconium is used to make cluster bombs.  The parent company paid $9.4 million in criminal fines and an additional $1.5 million in civil fines.  Its subsidiary company, which made the exports, was fined $2 million and debarred for 3 months with probation for the balance of the 3 year denial period.  This export violation adversely affected the ability of other U.S. and foreign companies to effectively conduct their international programs.  Guilty criminal verdicts were issued against at least one U.S. person.  In addition, a Chilean arms manufacturer paid $8.6 million in civil penalty fines before fleeing to avoid imprisonment.