Earlier this year, the Directorate of Defense Trade Controls (DDTC), the office within the Department of State responsible for administering the International Traffic in Arms Regulations (ITAR), disabled several of its electronic systems, including its D-TRADE system, the Electronic Filing System (EFS), the Electronic Licensing Entry System (ELLIE) and My Application Ready Yet (MARY) in order to convert to the single entry, portal-based Defense Export Control and Compliance System (DECCS). The new DECCS portal is the primary tool through which companies engaged in ITAR business communicate with DDTC on such matters as submitting, renewing and amending registrations, seeking licenses for exports of defense articles or defense services, and requesting advisory opinions and commodity jurisdiction determinations from DDTC. DDTC is planning to expand DECCS’s capacity to also accept and manage prior disclosures to DDTC and support other case management functionality.

The conversion from D-TRADE to DECCS is more than a technicality and brings with it some subtle, but substantive, additions and changes. One of the most material additions is a new required notification to DDTC as to whether the DS-2032 registrant maintains an ITAR compliance manual.

DS-2032 Registrations, Renewals and Required Notification of Changes now Contain a New Question Relating to Manuals: All initial DS-2032 registrations, annual renewals, as well as all required notifications of changes to DS-2032 registrations are now managed through DECCS.¹ The new version of the DS-2032 in the DECCS portal has introduced a new Question 10, which must be answered for initial registrations and annual renewals, but also for any required notification of a change to information contained in the registration (e.g., senior officers or members of the board, ultimate parent or subsidiaries and affiliates involved in ITAR-related activity, or registrant name and address). This new question requires the filer to advise whether the applicant has “written policies and procedures for compliance with the ITAR (including but not limited to 22 CFR 122.5)?” A “Yes” response to Question 10 means that the applicant certifies that the company’s written policies and procedures generally provide for compliance with the ITAR, and, in addition, specifically addresses the 5-year record-keeping requirement found in 22 CFR § 122.5, including the requirement that ITAR records are “legible” and “readable” and that changes to ITAR documents are recorded and traceable.

DDTC requires companies to conduct all ITAR business in compliance with all ITAR laws and regulations and has long taken the position that written policies and procedures (i.e., an ITAR compliance manual) are a necessary tool to achieve compliance. While the lack of a manual in itself is not a violation of the ITAR, the absence of a manual would likely constitute an aggravating circumstance (see 22 CFR § 127.12(3)(iv)) in the event of a violation. The addition of Question 10 does not change this background, but does create a record related to compliance approaches by ITAR registrants, and failure to maintain such a policy may itself trigger a compliance audit. To be effective and serve the intended purpose, the policies and procedures set forth in the manual must be followed routinely and reviewed and updated periodically. These written policies and procedures should take into account the particulars of the company’s ITAR business (e.g., domestic manufacturing only or international in scope) and that detail the requirements of 22 CFR § 122.5 and all other applicable laws and regulations.

Our team stands ready to assist ITAR companies with their evolving compliance issues. Please feel free to reach out to any member of our group, or your regular Dentons contact, for assistance with the development or review of written ITAR policies and procedures specific to your business, as well as for any other DDTC/ITAR, EAR/BIS, OFAC or CBP compliance issues.

1. Due to COVID-19, DS-2032 renewals due February through June 30, 2020, now enjoy a temporary suspension of the requirement (ITAR Parts 122 and 129) to renew the registration and pay a fee for a period of 2 months from the original date of expiration.