Lockheed Martin Fined $3 Million Civil Penalty for Violations of Subsidiary Sippican
January 2007
Bottom Line:
A fairly large penalty for continuing to participate in a project when the TAA expired. This is a good tidbit for you to motivate your people to make sure they do not let agreements and licenses expire and to motivate them to do a good job on agreement and license administration. This is also useful for those people in your company who want to do something without a license/agreement just because somebody in the US Government tells them to do it.
According to the State Department, Lockheed Martin subsidiary, Sippican, violated the International Traffic in Arms Regulations (ITAR) and the Arms Export Control Act (AECA) when it went 4 months between expiration of an existing TAA and approval of a subsequent TAA and continued to provide regulated technical data and defense services to BAE Systems in Australia. The information disclosed was related to the electronic payload for the NULKA missile decoy which is being collaborated on by the US Navy and the Australian Government.
Officials from Sippican attempted to argue that the ITAR-regulated information that they were providing BAE was consistent with their contract with the US Navy. DDTC was quick to point out that contractual obligations, even with the US military, do not take precedent over the ITAR and the AECA. It seems that it is not that unusual for contractors to be put under pressure by the US military to proceed with providing services, goods or information without undergoing the necessary procedures (and subsequent waiting time) to obtain the proper licenses. Unfortunately for Sippican, if this is indeed what happened, they paid a high price of $3 million for bending to that pressure.
