Defense Manufacturer Fined $1 million for AECA, ITAR Violations
A U.S. manufacturer of defense technology products was fined $1 million by the Directorate of Defense Trade Controls and agreed to improve its compliance program after it violated the Arms Export Control Act and the International Traffic in Arms Regulations, DDTC said in a Nov. 20 enforcement order. The company, AeroVironment, illegally exported goods and technical data to Canada, Australia, France, Thailand and Britain, according to a charging letter. The company also violated terms and conditions of licenses and did not keep records of ITAR-controlled sales.
Sign up for a free preview to unlock the rest of this article
Export Compliance Daily combines U.S. export control news, foreign border import regulation and policy developments into a single daily information service that reliably informs its trade professional readers about important current issues affecting their operations.
The company made 14 voluntary disclosures that “acknowledged a portion of the charged conduct” and also began “a number of self-initiated compliance program improvements,” the DDTC said. That, combined with the fact that the violations did not harm U.S. national security, led to a lesser penalty, the agency said. If not for the mitigating factors, the “penalties imposed upon Respondent would likely be more significant,” DDTC said.
DDTC provided only a “summary” of the violations due to the “large number of violations over an extended period of time. Between 2014 and 2016, the company illegally exported unmanned aircraft systems to Canada “multiple” times, the agency said, and failed to obtain end-use certifications for the exports. At the time of the sales, AeroVironment “claimed use” of a Canadian license exception even though it “could not use the Canadian exemption to export certain defense articles and should have obtained export licenses for these exports,” the charging letter said.
In 2015, the company disclosed to DDTC illegal exports of technical data to Australia, France, Canada and Thailand involving shipments of operation manuals. The company violated “35 license provisos” by exporting the manuals when it used licenses that prohibited the export of information on “detailed performance” of unmanned aircraft systems. The company exported the manuals even though they contained information not authorized by the licenses, DDTC said.
In 2016, the company illegally exported to Britain four “M3/M4 Shrike” unmanned aircraft systems controlled under Category 4 of the U.S. Munitions List. The company exported the items even though DDTC did not approve the company’s export license until two weeks after the shipment. In a separate instance, AeroVironment violated the terms of a license authorizing the export of 14 “WASP AE DDL M2 Systems” to Australia when it used an “unauthorized consignee,” the DDTC. The company also failed to file the exports in the Automatic Export System.
On two instances in 2015, the company said it did not “systematically keep records” of exports of technical data related to its licenses, agreements or exemptions. And between May and July 2016, AeroVironment employees “hand carried Personal Protective Equipment” to Afghanistan without filing electronic export information in AES, DDTC said.
AeroVironment agreed to pay $500,000 of its $1 million settlement in increments over the next two years. The remaining $500,000 of the penalty must go toward improving the company’s compliance measures, DDTC said. If it does not, the company may be required to pay the remainder of the settlement to DDTC.
The company also agreed to several remedial compliance improvements to be in effect for two years, including notifying DDTC if any of its ”operating divisions” involved in AECA- and ITAR-related activities are acquired by another entity, according to the settlement agreement. The company also must ensure that “adequate resources” are devoted to its ITAR compliance programs and must conduct an internal review of its “compliance resources” alongside an official approved by the DDTC. That official may also conduct “oversight” and “monitoring” of the company’s compliance activities, the agency said, and AeroVironment will be required to “cooperate with all reasonable requests” of the official.
The agreement also requires AeroVironment to introduce a series of “strengthened corporate compliance measures” within one year of the enforcement order, including export control reviews of “all hardware.” The company must also conduct an audit performed by an outside consultant.
DDTC is not imposing a debarment against AeroVironment because the company has cooperated with the agency’s review, “expressed regret” and took steps to improve its compliance program. “The Department reserves all rights to impose additional sanctions, including debarment under the ITAR, against Respondent if it does not fulfill the provisions of the Consent Agreement,” DDTC said.