Monday, February 21, 2011

Mind the export regulations and help LEOMA change them

It may be a flat economy, but export regulations still matter. Rocky Mountain Instrument and BAE Systems both found out the hard way last year. And meanwhile, the trade group LEOMA is pushing the U.S. government toward more relaxed regulations.

First, what happened to RMI--Rocky Mountain Instrument? In 2008 it had over $15 million in revenues and 150 employees (here's a photo for proof). But it was raided in 2007 for ITAR violations, filed for bankruptcy in 2009, and in June of last year, the Colorado-based company was slapped with a $1 million criminal fine. It pleaded guilty to selling ITAR-controlled prisms and data to such places as China, Russia, Turkey, and South Korea without a State Department license.

At the time of the raid, RMI waved off the accusations. Something about a disgruntled employee and that the investigation didn't involve RMI Lasers but rather a supplier. But RMI pleaded guilty in a plea deal in June. It's said that RMI cooperated throughout the investigation, and its web site is now very explicit about export regulations.

RMI certainly isn't alone. A recent violation by none other than BAE Systems led to a $400 million criminal fine. And in fact an article in Military and Aerospace Electronics points out some common mistakes that can get companies into some nasty trouble, such as:

* Misclassifying or changing classifications in the ITAR list
* Improper access to IT files for ITAR products
* Lack of licensing for non-citizens working on ITAR products
* Monitoring only hardware, while not complying on services as well

Entirely apart from this, the trade group LEOMA is working to steer the Commerce Department toward more reasonable restrictions. The administration wants to "build higher fences around fewer items" using a tiered system. The thing is, its proposed tiers include a lot of lasers that are already made and sold outside of the U.S. LEOMA wants to be sure that U.S. companies don't face unnecessary barriers to doing business for run-of-the-mill commercial applications.

It's tedious but important stuff. LEOMA is asking for support in its effort. Please contact Breck Hitz at to contribute.

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