Lest anyone think that the DDTC is backing off from strongly enforcing the ITAR’s restrictions, $13 million in civil penalties was placed on Honeywell this past week, serving as a stark reminder to the exporting industry.
The case involved alleged transfers of 71 ITAR-controlled technical drawings related to various weapons systems to multiple countries and then, two years following a voluntary disclosure of this first set of unauthorized disclosures, additional violations involving 27 unauthorized exports of technical drawings. The documents were disclosed through DEXcenter and Daptiv, sharing and collaboration platforms used by Honeywell employees.
In addition to the civil penalty and three years of compliance reporting to the DDTC, Honeywell has agreed to hire a Special Compliance Officer (SCO) to be selected by the DDTC from candidates proposed by Honeywell and this SCO will be in place for a minimum of 18 months. The SCO shall have duties approved by the DDTC for overseeing Honeywell’s ITAR compliance and may hire, at Honeywell’s expense, the staff the SCO needs.
This DDTC action against Honeywell follows on the heels of the DDTC’s consent decree with Airbus last year, involving a number of alleged Airbus violations including failure to maintain records of ITAR-controlled transactions and unauthorized exports. Airbus agreed to pay $10 million in fines in its agreement.
In a similar fashion near the end of 2019, two companies paid substantial fines for ITAR violations. The California-based company AeroVironment, Inc. agreed to pay $1 million in penalties for its alleged violation of the ITAR involving technical data and record-keeping. A month before that, Florida company L3Harris Technologies, Inc. agreed to pay $13 million for its alleged ITAR violations.
While each of Honeywell, Airbus, AeroVironment, and L3 Harris Technologies are no doubt smarting from the millions of dollars in penalties they must pay, their cases stand as unambiguous lessons to all exporting and defense industrial based (DIB) companies. Either invest upfront in compliance technology, compliant processes, and training to avoid violations or invest later following fines being paid and having the DDTC oversee your exporting. And that is if your organization avoids criminal penalties and debarment