Levin and McCain Concerned by Pratt & Whitney Export Control Violations
Carl Levin (D-Mich.) and John McCain (R-Ariz.), chairman and ranking member of the Senate Armed Services Committee, respectively, asked the State Department and Defense Department to assess the national security impact of the recent Pratt & Whitney Canada export control violations, as well as explain how State and DoD will work more closely together to ensure compliance with export controls, in an Aug. 6 letter to the Secretaries of State and Defense. Levin and McCain also asked DoD to evaluate the case for the appropriateness of contract suspension or debarment.
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“We find the crime to which P&WC pleaded guilty enormously troubling,” said Levin and McCain. “According to the Justice Department, P&WC took what it described internally as a ‘calculated risk,’ because it wanted to become the exclusive supplier for a civil helicopter market in China with projected revenues of up to $2 billion.”
Levin and McCain expressed concern that the penalties on Pratt & Whitney Canada don’t go far enough. “While the Justice Department obtained a guilty plea from P&WC for illegally exporting software to China, no individual manager or employee has been held personally accountable for criminal misconduct,” they said. Levin and McCain also urged DoD to consider contract suspension or debarment for the company.
Worried about the longer-term implications of the case, Levin and McCain asked State and DoD to give the Armed Services Committee a “full assessment of the extent of the harm caused to national security by all of these violations.” Levin and McCain also said the case raises the possibility of systemic problems with export control oversight and enforcement, and asked DoD and State to report on how they can better cooperate to ensure export control compliance while furthering exports of U.S. equipment to allies.
(Pratt & Whitney Canada, a Canadian subsidiary of the Connecticut-based defense contractor United Technologies, pleaded guilty June 28 to violating the Arms Export Control Act and making false statements in connection with its illegal export to China of U.S.-origin military software used in the development of China's first modern military attack helicopter, the Z-10. United Technologies, its U.S.-based subsidiary Hamilton Sundstrand, and Pratt & Whitney Canada all agreed to pay more than $75 million as part of a global settlement with the Justice Department and State Department in connection with the violations and for making false and belated disclosures to the U.S. government about these illegal exports, of which up to $20 million can be suspended if applied by UTC to remedial compliance measures. See ITT’s Online Archives 12062907 for summary of Pratt & Whitney Canada’s guilty plea. See also ITT’s Online Archives 12070528 for summary of State’s debarment of Pratt & Whitney Canada, and 12070323 for summary of State’s guidance on handling exports in light of the debarment.)
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