What is ITAR?
EXECUTIVE BRIEF
The International Traffic in Arms Regulations (ITAR) plays a critical role in regulating the export and import of defense-related materials, ensuring that U.S. defense capabilities remain secure and in trusted hands. Here is what defense contractors need to know:
- Defense contractors must strictly comply with ITAR regulations to avoid civil and criminal penalties, including fines and the loss of contracts
- Regular employee training is critical for identifying and preventing costly and reputation-damaging data breaches
- Implementing strong cybersecurity measures and utilizing ITAR-approved cloud services are necessary for ensuring compliance
Dig deeper and continue learning below!
The International Traffic in Arms Regulations (ITAR) is a set of rules overseen by the U.S. Department of State under the Arms Export Control Act (AECA). ITAR controls the export and import of defense articles, related technical data, and defense services to safeguard U.S. national security and foreign policy interests. The goal is to keep sensitive military technologies out of the wrong hands.
For contractors working within the U.S. Department of Defense (DoD) ecosystem, understanding ITAR is essential for protecting classified work, avoiding fines, and maintaining your eligibility for government contracts.
Navigating the complex requirements of ITAR can be challenging, particularly for small and medium-sized businesses. This guide will explain ITAR in simple terms, its importance for defense contractors, and how your organization can achieve compliance to avoid severe penalties and maximize your opportunities in the defense industry.
Understanding ITAR
ITAR plays a significant role in protecting U.S. national security. From fiscal years 2013 through 2021, the U.S. Department of State received 8,547 voluntary disclosures of potential ITAR violations from exporters. Any one of those leaks could jeopardize U.S. defense operations and personnel; allow adversaries to replicate, counter, or exploit U.S. capabilities; or simply undermine U.S. credibility and partnerships with allies who rely on tight security controls.
There are 11 parts for ITAR, including:
Why Does ITAR Matter?
ITAR matters because:
- It prevents unauthorized access to weapons, defense tech, and military know-how
- It keeps adversaries from exploiting our capabilities
- It maintains the U.S.’s technological edge in global defense markets
ITAR plays a vital part in protecting sensitive information, including technical blueprints, classified electronics, weapons systems, and military training equipment. Defense contractors, manufacturers, and exporters working with ITAR-controlled items must strictly comply with ITAR regulations to mitigate risks and maintain DoD contracts.
Non-compliance with ITAR can lead to severe civil penalties, loss of contracts, and, in cases of willful violations, even criminal prosecution.
What Is Controlled Technical Data?
ITAR technical data refers to information necessary for the design, development, production, manufacture, or maintenance of defense articles. Examples include:
- Engineering designs and blueprints
- User manuals for defense equipment
- Research studies related to military applications
The unauthorized export of ITAR data, whether through email, cloud storage, or file sharing, is a violation. That’s why it’s critical to implement secure access controls and safeguard sensitive information if you’re handling ITAR data.
What Is the USML?
If ITAR is the rulebook for handling various defense-related items and services, the United States Munitions List (USML) is the list of classified inventory ITAR applies to. If something is on the USML, it’s automatically subject to ITAR control. That means:
- You can’t export it without a license
- You can’t share it with foreign nationals, even inside the U.S.
- You must register with the State Department (DDTC) if you make or deal with it
The USML consists of 21 categories of defense articles, including but not limited to:
- Firearms and Related Articles (Category I)
- Guns and Armament (Category II)
- Ammunition and Ordnance (Category III)
- Launch Vehicles, Guided Missiles, Ballistic Missiles, Rockets, Torpedoes, Bombs, and Mines (Category IV)
- Explosives and Energetic Materials, Propellants, Incendiary Agents, and Their Constituents (Category V)
- Surface Vessels of War and Submersible Vessels (Category VI)
- Ground Vehicles (Category VII)
- Aircraft and Related Articles (Category VIII)
- Military Training Equipment and Training (Category IX)
- Personal Protective Equipment (Category X)
- Military Electronics and Associated Equipment (Category XI)
- Fire Control, Laser, Imaging, and Guidance Equipment (Category XII)
- Materials and Miscellaneous Articles (Category XIII)
- Toxicological Agents, Including Chemical Agents, Biological Agents, and Associated Equipment (Category XIV)
- Spacecraft and Related Articles (Category XV)
- Nuclear Weapons, Incendiary Agents, and Toxicological Agents (Category XVI)
- Classified Articles, Technical Data, and Defense Services Not Otherwise Enumerated (Category XVII)
- Directed Energy Weapons (Category XVIII)
- Gas Turbine Engines and Associated Equipment (Category XIX)
- Submersible Vessels and Related Articles (Categories XX)
- Articles, Technical Data, and Defense Services Not Otherwise Enumerated (Category XXI)
Who Needs To Be ITAR-Compliant?
The following businesses and entities must ensure ITAR compliance:
- Defense contractors working within the DoD supply chain, including hardware, software, and logistics
- Manufacturers of defense articles, ranging from firearms to advanced aerospace systems
- Companies handling related technical data and performing defense services for ITAR-regulated items
ITAR restricts access to controlled data to U.S. persons (citizens and lawful permanent residents) unless an export license is obtained for foreign persons, including certain dual citizens, even if they’re employees or contractors.
ISI INSIGHT: Only U.S. citizens and permanent residents are generally permitted to access or manage ITAR-controlled items unless an appropriate license or exemption has been issued for non-U.S. persons.
How Contractors Can Achieve ITAR Compliance
Implementing an effective ITAR compliance program is essential. Here are the steps your organization can take to become ITAR-compliant.
1. Develop an ITAR Compliance Plan
Begin by documenting your compliance program, including detailed policies and procedures for managing controlled data. This plan should include measures to restrict foreign persons’ access to ITAR-controlled data, on-site or remotely, and designate compliance responsibilities within your organization.
2. Conduct Regular Audits
Periodically review and audit your workflows and systems to identify potential ITAR compliance gaps. These audits should focus on verifying adherence to your documented policies, assessing the security of your data management practices, and rectifying any vulnerabilities.
3. Leverage Technology for Data Security
Utilize advanced technology solutions to manage and safeguard ITAR-controlled data. Employ data encryption, secure file storage systems, and other tools that align with high cybersecurity standards, such as NIST 800-53.
4. Train Employees
Comprehensive employee training is a critical component of ITAR compliance. Ensure all ITAR-related personnel are well-versed in ITAR regulations, proper data management protocols, and incident reporting procedures.
5. Work with Compliance Experts
Working with security and compliance professionals, such as ISI, can provide your organization with tailored guidance and support. Experts can conduct risk assessments, design compliance frameworks, and offer insights into regulatory updates, ensuring your program remains robust and aligned with current and future standards.
Integrate ITAR and CMMC Compliance
Contractors can effectively address overlapping requirements by aligning ITAR compliance with related frameworks like CMMC. Integrating ITAR and CMMC processes allows your organization to meet regulatory and cybersecurity standards, providing stronger protection for sensitive data.
The Cost of ITAR Compliance
Achieving ITAR compliance can be an investment, particularly for small and mid-sized businesses. ITAR compliance costs vary significantly depending on company size, export activities, and security infrastructure. Expenses may include registration fees, legal counsel, secure IT systems, and compliance audits.
What Are the Most Common ITAR Violations?
Examples of common ITAR violations include the following:
Failure to Register with the DDTC (Directorate of Defense Trade Controls)
Companies manufacturing, exporting, or brokering defense-related products or services must register with the DDTC. For instance, imagine a small aerospace supplier that begins selling components used in military applications but neglects to register, assuming their contributions are insignificant. This oversight could result in significant penalties and loss of business opportunities.
Improper Handling of ITAR-controlled Items in Cloud Storage or Through Unsecure Email
A common compliance issue is sharing technical data using unsecured email or unauthorized cloud storage. For example, consider an engineer working remotely who uploads ITAR-controlled blueprints to a personal cloud drive for convenience. If this drive lacks sufficient encryption or proper access controls, it could expose sensitive data to unauthorized individuals, including foreign entities.
Untrained Employees Inadvertently Granting Access to Sensitive ITAR Data
Employees lacking sufficient ITAR training may inadvertently grant access to restricted data. For example, an untrained staff member might forward a presentation containing ITAR-controlled technical details to a foreign client without realizing the potential violation. This is why comprehensive compliance training is necessary for all employees handling sensitive information.
Exporting Defense Articles to Foreign Persons Without Proper Licenses or Permissions
Defense articles, whether physical hardware or technical details, require proper licensing before being shared with any foreign individuals or entities. Imagine a scenario in which a defense contractor ships an ITAR-controlled navigation system prototype internationally for a demonstration but fails to obtain the required export license. This breach could result in financial penalties and reputational damage.
What Are the Penalties for ITAR Violations?
Penalties for ITAR violations can be severe. They include:
- Civil fines of up to $500,000 per violation
- Criminal fines of up to $1 million or 10 years imprisonment for willful violations
- Loss of contracts significantly damaging your company’s reputation and profits
How to Secure Your ITAR Data
Adopting strong data security practices is critical to safeguarding ITAR-controlled materials and meeting compliance requirements. A foundational element of ITAR data security lies in adherence to NIST 800-53, which establishes a comprehensive baseline of security standards and guidelines. This framework provides a structured approach to identifying, implementing, and assessing security controls critical for protecting sensitive information.
By integrating NIST 800-53, organizations ensure that their security measures address risk management, access control, incident response, and system monitoring—core aspects necessary for ITAR compliance.
Key measures include:
- Ensuring compliance with NIST 800-53 standards to implement and validate robust security controls aligned with federal requirements
- Encrypting all communications that involve sensitive ITAR data to prevent unauthorized access or interception
- Restricting access to authorized U.S. persons only to adhere to ITAR regulations on personnel access
- Regularly updating and patching systems to mitigate vulnerabilities and reduce potential risks
- Use ITAR-compliant cloud solutions, such as Microsoft GCC High
By establishing a strong security posture rooted in NIST 800-53, organizations can confidently address ITAR requirements while minimizing operational risks and regulatory exposure.
How ISI Can Help You Achieve ITAR Compliance
Navigating ITAR requires expertise. At ISI, we bring over a decade of experience working with DoD contractors to simplify compliance challenges. From implementing secure IT infrastructure to developing bespoke compliance programs, we’ll protect your organization.
Stay ahead of the curve—partner with ISI today to safeguard your business against penalties and position yourself for success.
FAQs About ITAR
What Is the Difference Between ITAR and EAR (Export Administration Regulations)?
The Department of State oversees ITAR, which exclusively regulates defense-related articles and technologies. At the same time, the U.S. Government Department of Commerce administers EAR, which governs the export of dual-use items with commercial and military applications.
How Do You Get an ITAR License?
Submit a registration application to the DDTC. Once registered, you can apply for specific export licenses based on your scope of work.
Who Enforces ITAR?
The DDTC administers ITAR regulations, while enforcement actions may involve agencies such as the Department of Justice and Homeland Security Investigations.