DDTC Issues New Guidance, FAQs Related to Debarments, ITAR Disclosures
The State Department’s Directorate of Defense Trade Controls this week updated and issued a host of new guidance to address industry questions related to debarments, disclosures and export controls violations. The 17 new FAQs, published about three weeks after the agency said it was preparing new guidance at the request of the Defense Trade Advisory Group, address a range of compliance issues, among them what should be included in voluntary disclosures, how the agency treats those disclosures, how they affect licensing, and differences between a debarment rescission and reinstatement of export privileges.
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One FAQ details what DDTC requires for submissions of voluntary disclosures -- including “proof of corrective actions” and the “relevant compliance procedures in effect at the time the violation occurred” -- while another specifies that companies should submit those disclosures “immediately after a violation is discovered.” After submitting an initial notification, DDTC said a company has 60 days to “conduct a thorough review of all defense trade-related activities to submit a full disclosure.” Companies can submit an extension request, which must include why the information couldn’t be “immediately provided” and a new date “on which you expect to be able to provide the information.”
The agency also said the company doesn’t need to wait until a voluntary disclosure case is closed before applying for a DDTC license “related to the matters disclosed.” But the license application “must reference the related DTCC case number in the appropriate block of the license application,” DDTC said, adding that companies shouldn’t include a “placeholder or fictitious number on the license application” if they don’t know their case number. Omission could lead to another violation of the International Traffic in Arms Regulations, DDTC said. Companies should email DTCC-CaseStatus@state.gov if they don’t have their case number.
In another FAQ, DDTC said companies are sometimes required to disclose an ITAR violation, including if the violation involves certain countries or “unreturned temporary exports of personal protective gear.” The agency “strongly encourages” disclosures for all other types of violations and said it will consider voluntary disclosures a mitigating factor when calculating a penalty. “DDTC views voluntary disclosures as a positive step toward improving ITAR compliance,” the agency said.
The agency also listed a set of circumstances in which it is “appropriate” to submit a voluntary disclosure. They should be submitted if a company is “uncertain whether the events that occurred constitute a violation, as well as situations in which you are uncertain whether events that would constitute a violation have actually taken place.” If after a “thorough review” a company can’t determine whether it violated the ITAR, DDTC said the company should submit a disclosure and describe its investigation and “an explanation as to your inability to confirm the violation.”
DDTC also issued new and updated guidance related to debarments, rescissions and reinstatements. The agency again stressed that recessions of statutory debarments don’t necessarily reinstate a company’s export privileges, a 2019 policy change meant to reward past violators who aren't yet ready for complete reinstatement (see 1903120050). “This policy change recognizes that the circumstances warranting rescission of statutory debarment may be different than those warranting the reinstatement of export privileges,” DDTC said.
The agency said it will reinstate export privileges “only” if the person or entity has taken “appropriate steps to mitigate any law enforcement and other legitimate concerns and to deal with the causes that resulted in the conviction or ineligibility.” The person or entity must also explain in a letter reasons for being reinstated.
In another FAQ, DDTC said companies that can’t determine if a customer or supplier is debarred may need to “consult court or other records for confirmation.” Sometimes the State Department provides identifying information about the debarred person, including a birthdate, but companies can also reach out to DDTC directly with questions, the agency said.
Although a debarred person is generally prohibited from participating directly or indirectly in ITAR-controlled activities, including exporting technical data, defense items and providing defense services that require a license, other activities are allowed, the agency said. Debarred persons aren’t blocked from obtaining banking services, conducting real estate transactions, buying automobiles or participating in “any other activity not controlled under the ITAR.”
DDTC also said recipients of grants issued under the Deferred Action for Childhood Arrivals policy don’t fall within the ITAR definition of a “U.S. person.” The agency said the “issuance of an employment authorization document by U.S. Citizenship and Immigration Services to such recipients does not mean that an individual is a lawful permanent resident or a protected individual.”