BIS Suspends 3 Companies’ Export Privileges for Illegal Exports to China
The Bureau of Industry and Security June 8 issued a temporary denial order for three U.S. companies for their involvement in illegally exported technical drawings and blueprints to China. BIS said it suspended the export privileges for Quicksilver Manufacturing, Rapid Cut and U.S. Prototype for 180 days after they illegally exported materials used to 3D print satellite, rocket and defense-related prototypes, which are subject to strict export controls because of their “sensitivity and importance to U.S. national security,” BIS said.
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“Outsourcing 3-D printing of space and defense prototypes to China harms U.S. national security,” BIS Assistant Secretary for Export Enforcement Matthew Axelrod said. “By sending their customers’ technical drawings and blueprints to China, these companies may have saved a few bucks -- but they did so at the collective expense of protecting U.S. military technology.”
BIS said it was alerted to the violations in 2020 by a U.S. aerospace and global defense technology company. The agency found that all three companies used the same “rental mailbox” in North Carolina to receive export-controlled drawings from domestic customers to 3D-print certain “requested items,” BIS said. The companies then provided the drawings to manufacturers in China to 3D print the items “without their customers’ advance consent or knowledge” and without BIS licenses, the agency said. The three companies then imported the items into the U.S. for their customers.
The companies sent a range of “sensitive” drawings to the Chinese manufacturers, BIS said, including for “prototype space and defense technologies.” For one order in 2017, the agency said Quicksilver, a manufacturing services company, received about a dozen technical drawings for items subject to the Export Administration Regulations, which were intended to be used in a prototype space satellite. Quicksilver fulfilled the order and eventually received the finished items from China despite the technical drawings -- classified under Export Control Classification Number 9E515 -- being subject to a presumption of denial policy for China
In May 2021, a U.S. company hired Rapid Cut, which shares ownership with Quicksilver, to manufacture “specially designed parts intended for a rocket platform’s ground support and test equipment,” BIS said. Rapid Cut sent the technology -- which was classified under ECCN 9E604.a and also subject to a presumption of denial licensing policy for China -- to China May 7, 2021, without a license. Rapid Cut, like Quicksilver, exported the drawings despite being told by the customer that the drawings were subject to export controls and required a license.
The companies’ “clear disregard for export controls” also led to violations of the State Department’s International Traffic in Arms Regulations, BIS said. In April 2020, Quicksilver sent a U.S. customer an invoice for its 3D manufactured items, BIS said, and the invoice identified the shipper of the goods as Quicksilver MFG, located in Zhongshan, China. BIS said Quicksilver sent the customer’s technical drawings -- which were controlled under U.S. Munitions List Category XX -- to China despite Quicksilver signing a purchase order agreeing to comply with U.S. export regulations. The signed order said Quicksilver read the customer's terms and conditions, including the section on complying with “all applicable U.S. export control laws and regulations, specifically including but not limited to the Arms Export Control Act, ITAR, and the EAR.”
BIS said US Prototype’s president is a Quicksilver employee and listed as the designated representative for Rapid Cut’s corporate bank account. Prototype shared the North Carolina rental mailbox with Quicksilver and Rapid Cut.
The agency said it’s still investigating the illegal exports and encouraged customers of all three companies to “review their records to determine whether intellectual-property or export-controlled technology was provided and/or potentially compromised.” The denial order will remain in effect for 180 days from June 7 and may be renewed. The companies didn’t immediately respond to requests for comment.