Have you closed the book on your New Year’s resolutions? Is it too late to add one more? If not, here’s one to consider if you are a senior manager of a company that exports ITAR-controlled defense articles: Resolve to empower your Empowered Officials in 2015.

DDTC-registered businesses that file for export licenses are required to designate one or more “Empowered Officials” to “sign” license applications and, when requests for DDTC authority are filed, to certify to certain matters set out in ITAR § 126.13. DDTC relies on the Empowered Official signing the application to ensure that the certifications are true, that the license application or other request for authority contains accurate, truthful and complete information and that the company is otherwise complying with the ITAR in connection with the transaction.

Start the new year by considering the authority an Empowered Official must have according to the ITAR. Ask yourself whether your company’s Empowered Officials truly possess all the requisite authority. If the answer is “no” or “I don’t know, maybe not,” then the most important link in your company’s ITAR compliance framework may broken and you should make fixing it a priority. Begin the new year by resolving to empower your Empowered Officials in 2015. This sensible compliance measure costs nothing. For mid-size companies, fully empowering their Empowered Officials may be the most important ITAR-compliance measure they can implement.

So, what is an Empowered Official and what powers is he/she required to have? “Empowered Official” is defined in ITAR § 120.25. Paraphrasing the regulation, an Empowered Official is an individual who meets the following criteria:

• A direct employee of the company
• In a position “having authority for policy or management” in the company;
• Who has been designated an Empowered Official in writing;
• Who is trained in the “provisions and requirements” of the ITAR; and
• Who has “independent authority” to:
  • Inquire into any aspect of a proposed export, temporary import, or brokering activity by the company;
  • Verify the legality of the transaction and the accuracy of the information to be submitted to DDTC; and
  • Refuse to sign any license application or other request for approval without prejudice or other adverse recourse.

In short, when the ITAR talks about an “Empowered Official” they’re talking about an employee with real muscle. Do the Empowered Officials in your company fit that description? Do they possess the necessary clout? Here are some questions to ask yourself:

• Does each Empowered Official know and believe he/she has real authority to inquire into any aspect of any export transaction? If the Empowered Official is a manager or director, can he or she ask a VP or Sr. V.P. the following questions and insist on good answers: Do we know this customer well enough to accept the representations they are making to us on sensitive matters? Have we adequately addressed red flags suggesting that they may re-export our product? Have we taken adequate steps to ensure that they will use technical data, defense articles and defense services only as permitted? The list of legitimate questions that can arise goes on and on. Do your Empowered Officials know that it is okay to push others, even higher ups; that it is in fact their job to be pushy?
• Does the management, administrative and factory staff know that when an Empowered Official makes a reasonable ITAR-based request for information or documentation to support a license application, the request needs to be made a priority and treated as a serious matter?
• Do all the people to whom the Empowered Officials report, directly and indirectly, understand that, as a result of the reporting chain, they too own responsibility for fulfillment of the Empowered Officials’ responsibilities?
• If your Empowered Official sits within the sales or manufacturing function and reports directly or indirectly to the V.P. of Sales or Manufacturing, does the Empowered Official truly have the ability– free from fear of punishment–to hold up a transaction higher-ups are eager to consummate if something isn’t right from an ITAR perspective,? Is that true wherever the Empowered Officials sit in your organization?
• Does the Empowered Official sit in an operating unit but report to someone in corporate headquarters far away? Or perhaps the Empowered Official reports to non-U.S. citizens at a foreign corporate parent? In these situations, do the people up the management chain have sufficient ITAR training, familiarity with facts on the ground and appreciation of their roles to support the Empowered Officials properly?
• Do your Empowered Officials receive the continuing education and training they need in order to do their jobs? Do you send them to the NSSF Import-Export Conference, SIA programs or industry-sponsored programs, such as the Firearms Industry Compliance Conference, so they can stay up to date? This is more important today than ever before as Export Control Reform has changed many of the old rules.
• If you are a CEO or sit on the board of a company in the industry, do you understand that impasses can occur as a result of Empowered Officials doing their jobs and that the CEO may need to break them in ways that send the right messages to employees and reinforce the correct tone at the top of the organization? Do you understand that, ultimately, it is up to the CEO and board to foster an environment that allows Empowered Officials to do their jobs? In this respect, are you doing everything you should be doing?

If you squirmed a little (or more than a little) as you read the questions above, then make room for one more New Year’s resolution: Resolve to empower your Empowered Officials in 2015.

Sometimes, knowing what the goal is doesn’t mean the path is clear. If you need help figuring out the right solution for your business, give us a call.