International Traffic in Arms Regulations

1. - 1 -  International Traffic in Arms Regulations/Export Administration RegulationsNadcapExport Control Trainingfor Auditors

2. - 2 - Required Training for All Nadcap Auditors The following presentation is required reading for all Nadcap Auditors. This information is provided here to keep you abreast of Federal regulations that may impact your audits. It is essential that you be aware of this law to assure compliance. Please review the following information, print out the training affirmation page of the presentation and sign and return to PRI. Following review of this information, should you have additional questions, contact Ericha McLaughlin - ericham@sae.org

3. - 3 - What is ITAR & EAR? International Traffic in Arms Regulations Code of Federal Regulations Parts 120 – 130 EAR Export Administration Regulations Full text of the Federal Law available at (http://pmdtc.org/reference.htm)

4. - 4 - “I am an Auditor -- Not an Arms Trafficker!” How Does this Impact Me? We have two classifications of personnel (auditors & PRI Staff) in the system: Unrestricted and Restricted. Unrestricted people are U.S. citizens or green card holders (permanent resident aliens). Restricted persons are those who are not US citizens or green card holders. This designation applies to all PRI Staff, auditors & consultants. All personnel directly employed or associated with PRI must know their status in the system. All auditors shall follow the requirements in NIP 7-07 and all issued auditor advisories.

5. - 5 - Nadcap Internal Procedure 7-07 NIP 7-07 has been issued to address Nadcap requirements with regard to ITAR and EAR. Nadcap subscribers have the responsibility to clearly identify to their suppliers any material or information which is Export Controlled. Suppliers are responsible for properly identifying and controlling any material, hardware, technical data, and/or documentation subject to the applicable Export Control regulations and laws. PRI Staff is responsible for ensuring that proper auditor resources are scheduled in accordance with identified Export Control regulations and laws. Prior to, and at the beginning of the audit, suppliers shall identify “ auditable material” which are restricted under ITAR / EAR

6. - 6 - Nadcap Internal Procedure 7-07 PRI staff is responsible for notifying supplier re : auditors restricted / unrestricted status. Supplier shall be aware of auditor / PRI staff status and restrict access of these individuals as per the appropriate Export Control regulations and laws which apply to their auditable material. Suppliers are responsible for safeguarding all Export Controlled auditable material. No Export Controlled material should be posted in eAuditnet Auditable material, identified as Export Controlled, shall not be copied, memorized, or utilized in any manner which could result in the unauthorized use of the information. If an Export Control issue arises before or during an audit, PRI staff person will provide instruction to auditor and supplier concerning the continuation of the audit.

7. - 7 - What is the Impact to Me? The technical data of many Nadcap participating prime contractors, is maintained by suppliers under these laws and regulations. As you audit their parts, you must be aware of the requirements of this law should you encounter any ITAR/EAR hardware. The law provides for penalties including fines, jail, and civil penalties under U.S. criminal statutes for those violating the regulations.

8. Penalties 1. Administrative (vs. Criminal) 2. Fines 3. Debarment from exporting activities 4. Imprisonment Penalties can be applied to both companies and individuals Maximum Penalties EAR Civil penalties may be the greater of $250,000 or twice the value of the transactions. Criminal violations may be up to $1,000,000 and/or 20 years imprisonment. ITAR Civil penalties up to $500,000 per violation Criminal fines up to $1,000,000 per violation and/or 10 years imprisonment - 8 -

9. - 9 - Technical Data is an Exportable Commodity Technical data is included as an export under the ITAR regulations (http://pmdtc.org/reference.htm) Information required for the design, development, production, manufacture, assembly, operation, repair, testing, maintenance or modification of defense articles. This includes information in the form of blueprints, drawings, process specifications, photographs, plans, instructions, and documentation.

10. EC-LR/Restricted The term used by PRI when dealing with Export Control is EC-LR/Restricted. The definition for this term is: All Defense Articles and Technical Data controlled by the ITAR; any dual-use or civil items or Technology controlled by the EAR under any ECCN except EAR99. EC-LR/Restricted “Item”: a term which includes parts, materials, software, other technical information or technology which requires licenses or has any other restriction by the laws and regulations (ITAR/EAR). - 10 -

11. - 11 - Export The definition of Export includes Sending restricted product to non US source Disclosing (including oral or visual disclosure) or transferring technical data to a foreign person whether in the U.S. or abroad or Performing a defense service on behalf of, or for the benefit of, a foreign person, whether in the U.S., or abroad

12. - 12 - Nadcap Auditor Responsibilities Nadcap Auditors shall be thoroughly familiar with the requirements of NIP 7-07. Nadcap Auditors shall comply with the requirements NIP 7-07. Nadcap Auditors shall be aware of the ITAR/EAR regulations and understand the impact of these regulations. Nadcap Auditors shall know their status as restricted or unrestricted and the roles and responsibilities of that status.

13. - 13 - Nadcap Auditor Responsibilities (Continued) Auditable material restricted by ITAR/EAR shall not be posted on eAuditNet or removed from the supplier facility by the Auditor. Contact the Staff Engineer for direction if objective evidence is necessary to support audit.

14. - 14 - Recognizing ITAR/EAR Material May be identified as ITAR/EAR Control Export Control Identification may be on: Face of drawing First sheet of specification or embedded in text Purchase Order May not be identified as such, but is on the covered Munitions List NOTE: Nadcap auditors are not to scan data presented to you for audit for these designations - knowing the EC status is the responsibility of the supplier.

15. - 15 - Applicable at Non-U.S. Suppliers Suppliers located outside of the U.S. may be licensed under this legislation and may be processing ITAR/EAR material. NOTE: there currently are NO licenses available which authorize Nadcap auditors to audit EC-LR/Restricted items (if a license is required). As Auditors for PRI and Nadcap, Restricted Auditors must be especially vigilant to comply with this U.S. law and avoid review of any ITAR/EAR material.

16. - 16 - Overview of ITAR/EAR An overview of the ITAR/EAR Law follows. http://www.pmddtc.state.gov/regulations_laws/itar_official.html / The US State Department website includes overviews of all definitions as well as information on the US Munitions List. Following review of this information and NIP 7-07 at the end of this presentation please print out the following page, sign and return via fax to the Auditor Staffing & Training Dept., +1 614-635-2836.

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18. - 18 - Affirmation of ITAR/EAR Training Name:___________________________ I have read the ITAR/EAR Overview and NIP 7-07 and I understand my role and responsibilities under this law. I understand that I am considered a Restricted or Unrestricted Auditor Circle the Appropriate and will act in accordance with the requirements. I understand that penalties for violation include fines, jail, civil penalties under U.S. criminal statutes. If, during the course of a Nadcap Audit, I should knowingly come into contact with ITAR/EAR material, I shall act in accordance with NIP 7-07. Signature______________________________________________ Date:_________________________________________________ Please fax to +1 724-635-2836 – Auditor Staffing & Training Dept.

19. - 19 - U.S. EXPORT CONTROL LAWS AND REGULATIONS This material is intended only as an overview tool and does not provide all substantive information needed to make a responsible export decision. Please contact your Center Export Administrator or Counsel for assistance in interpreting and applying U.S. export control laws and regulations to your specific export or import requirement.  Bob Tucker Director, Assessments and Technology Division, Office of External Relations and NASA Export Administrator

20. - 20 - INTRODUCTION Just What Is An Export Anyway? A Simplified Definition The transfer of anything to a “FOREIGN PERSON” by any means, anywhere, anytime, or the knowledge that what you are transferring to a “U.S. PERSON”, will be further transferred to a “FOREIGN PERSON”.

21. - 21 - U.S. Export Laws and Regulations ITAR stands for International Traffic in Arms Regulations. These are regulations administered by the US State Department and focus on defense articles hardware, information and systems with military uses. EAR stands for Export Administration Regulations. These regulations are administered by the US Commerce Department and focus on commercial and “dual use” (both military and commercial) products, information, technology, and equipment.

22. - 22 - U.S. GOVERNMENT PLAYERS STATE COMMERCE Bureau of Export Affairs DEFENSE Defense Threat Reduction Joint Chiefs of Staff (JCS) Others Arms Control & Disarmament Agency TREASURY Customs Office of Foreign Assets Control WHITE HOUSE Office of Science & Technology Policy National Security Council U.S. Trade Representative IC TRANSPORTATION Federal Aviation Administration JUSTICE Federal Bureau of Investigation ENERGY

23. - 23 - U.S. Export Laws and Regulations Examples of Other U.S. Government Players, Laws & Regulations Drug Enforcement Administration (21 CFR 1311) Food and Drug Administration (21 USC 301) Department of Interior (50 CFR 17.21,22,31,32) Department of Treasury (31 CFR 500) Department of Energy (10 CFR 205.300, 10 CFR 110 & 810) Others

24. - 24 - Reasons Certain Exports are Controlled National Security (NS) Foreign Policy (FP) Proliferation (MT, NP, CB) Short Supply (SS) Anti-Terrorism (AT) Crime Control (CC) High Performance Computer (XP) Regional Stability (RS) UN Sanctions (UN)

25. - 25 - The United States Munitions List (USML) I - Firearms II - Artillery Projectors III - Ammunition *IV - Launch Vehicles, etc. *V - Explosives, Propellants, Incendiary Agents and Their Constituents VI - Vessels of War and Special Naval Equipment VII - Tanks and Military Vehicles VIII - Aircraft and Associated Equipment IX - Military Training Equipment X - Protective Personnel Equipment XI - Military Electronics *XII - Fire Control, Range Finder, Optical and Guidance and Control Equipment *XIII - Auxilary Military Equipment XIV - Toxicological Agents and Equipment and Radiological Equipment *XV - Spacecraft Systems and Associated Equipment XVI - Nuclear Weapons Design and Related Equipment XVII - Classified Articles, Technical Data and Defense Services Not Otherwise Enumerated XVIII - Reserved XIX - Reserved XX - Submersible Vessels, Oceanographic and Associated Equipment XXI - Miscellaneous Articles

26. - 26 - ITAR DEFINITIONS- Defense Article Important ITAR Definitions “Defense Article” - any item on the USML, including “technical data”. EC-LR/Restricted “Item”: a term which includes parts, materials, software, other technical information or technology which requires licenses or has any other restriction by the laws and regulations (ITAR/EAR). Denied Parties/Watch List: A list of countries and programs that have been denied any export privileges. PRI is to have no involvement with any country or program on the lists under any circumstance.

27. - 27 - ITAR DEFINITIONS - Technical Data Important ITAR Definitions Technical Data - information which is required for the design, development, production, manufacture, assembly, operation, repair, testing, maintenance, or modification of “defense articles”; classified information related to “defense articles”; information covered by an invention secrecy order; software directly related to “defense articles”.

28. - 28 - ITAR DEFINITIONS - Technical Data Important ITAR Definitions Technical Data (cont’d) - does not include information concerning general scientific, mathematical or engineering principles commonly taught in schools, colleges and universities or information in the “public domain”. It also does not include basic marketing information on function or purpose or general system descriptions of “defense articles”.

29. - 29 - ITAR DEFINITIONS - U.S. Person Important ITAR Definitions U.S. Person - a natural person who is a lawful permanent resident as defined in 8 U.S.C. 1101(a)(20) or who is a protected individual as defined by 8 U.S.C. 1324b(a)(3). It also means any corporation, business association, partnership, society, trust, or any other entity, organization or group that is incorporated to do business in the U.S. It also includes any governmental (federal, state or local), entity.

30. - 30 - ITAR DEFINITIONS - Foreign Person, Export Important ITAR Definitions Foreign Person - opposite of U.S. Person. Export - sending or taking a “defense article” out of the U.S. in any manner, except by mere travel outside of the U.S. by a person whose personal knowledge includes “technical data”; or transferring registration, control, or ownership to a “foreign person” of any aircraft, vessel, or satellite covered by the USML, whether in the U.S. or abroad; or

31. - 31 - ITAR DENIED Parties/RESTRICTED Countries There are numerous denied parties/watch lists that are maintained by Department of State and Department of Commerce, OFAC, etc. OFAC- Office of Foreign Assets Controls: U.S. Department of Treasury agency which administers sanctions against targeted foreign governments, individuals, entities and practices. U.S. economic force used to enact foreign policy goals. Includes blocked assets, trade restrictions and financial transactions. Jurisdiction applies to all U.S. persons and citizens. Sanction lists are designed to keep you away from these countries, companies, individuals and/or practices. PRI Staff should refrain from dealing with individuals from any of the countries listed below or any of the practices. If approached by any individuals or entities on this list, the staff member should report it to management immediately.

32. - 32 - ITAR – Denied Parties/Restricted Countries LIST Balkans Belarus Burma Coite d’Ivorie Cuba** Diamond Trading Iran** Iraq Liberia Narcotics Trafficking Non Proliferation North Korea Sudan Syria Terrorism Iran** Zimbabwe

33. Anti Boycott Regulations If individuals or companies make any mention in relationship to refusing to do business with part of the EAR that does not allow US persons/companies to go along with any boycotts with Israel. This could take the form of questions about PRI Personnel working on the audit (Auditor/Staff Engineers). If you have any conversations with any companies regarding this issue, you must report it to your supervisor immediately. - 33 -

34. - 34 - The Export Administration Regulations (EAR) Administered by the Department of Commerce (Bureau of Export Administration) The Commerce Control List (CCL) Divided into ten (10) categories (0 to 9) Complete listing of items controlled by the EAR Example: Category 9- Propulsion Systems, Space Vehicles and Related Equipment

35. - 35 - The (New) Export Administration Regulations (EAR) 15 CFR 730-774 Category 0 - Nuclear Materials, Facilities and Equipment and Misc. Category 1 - Materials, Chemicals, Microorganisms and Toxins Category 2 - Materials Processing Category 3 - Electronics Category 4 - Computers Category 5 (Part 1) – Telecommunications Category 5 (Part 2)- Information Security Category 6 - Sensors and Lasers Category 7 – Navigation and Avionics Category 8 - Marine Category 9 - Propulsion Systems, Space Vehicles and Related Equipment

36. - 36 - EAR DEFINITIONS Important EAR Definitions Export- Any item sent from the United States to a foreign destination (company or person) is an export. All items and articles leaving the United States are exports and, therefore, are subject to controls and restrictions. Items include hardware (parts, materials, sub assemblies), information (drawings, specifications, test data, calculations) and technologies (e.g.. Composites) Exports can be … physical (sending a part to a foreign country or person) aural or verbal (telling someone information about a controlled part) visual (a foreign person sees controlled information – even if they see it on your laptop in a public place)

37. EAR Definitions Cont’d. Items Subject to the EAR - items listed on the Commerce Control List (CCL) and those items designated as EAR 99 Controlled Technology - specific information required for the “development”, “production”, or “use” of a product which is itself “controlled”. The information takes the form of “technical data” or “technical assistance”. Technical Data - May take forms such as blueprints, plans, diagrams, models, formulae, tables, engineering designs and specifications, manuals and instructions written or recorded on other media or devices such as disk, tape, or read-only memories. Technical Assistance - may involve transfer of “technical data” - 37 -

38. - 38 - EAR DEFINITIONS Cont’d. Important EAR Definitions Reexport - shipment from one foreign country to another foreign country Publicly Available Information - information that is generally accessible to the interested public in any form and, therefore, not subject to the EAR Publicly Available Technology and Software - that technology and software that are already published or will be published; arise during, or result from fundamental research; are educational; or are included in certain patent applications (see 15 CFR 734)

39. - 39 - Nadcap Procedure NIP 7-07 All auditors must review the NIP 7 – 07 posted in eAuditNet under User Documents.