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18 The PCB Magazine • July 2017 Figure 1: Defense regulations affect all, from product owners to end customers. and imports. This irrespectively applies to all aspects of the trade, transaction and everybody is affected from the product owner, designer, sub-contractor by the compliance regulation of DoD as the end customer. The consequences can be severe; there are no excuses and one can- not simply claim that one did not know, as it is your responsibility to know. Compliance management in the defence in- dustry can be the defining factor between finan- cial success and costly mistakes. When procuring components, printed cir- cuits or materials to the defence industry, there is no such thing as assuming or relying on ques- tionable interpretations of rules and regula- tions. There is no option for shortcuts whether your supplier follows the regulations or not, and the costs of not properly examining what supply chain you are delivering to is far greater than the benefits of working faster. As computer systems, XML files and purchas- ing entities are becoming more experienced and implementing stricter surveillance and control. One must assume that the frequency of non- compliant cases will increase and based on pub- licly available information, this seems to be the case. DoD Export and Import Regulations If you are buying from the Unit- ed States, ITAR export licensing regulates the control of export from the United States of certain mili- tary products, parts, components, materials and technology. The United States is presently selling to more than half the countries in the world and this affects many sup- ply chains. There are also foreign companies who buy ITAR-regulated material for their own products and this will affect their domestic ex- port control. If you are selling to the United States, DFARS regulates all import to the United States of military goods and services. DFARS imposes requirements on U.S. government prime contractors and all lower tier subcontractors, regarding the import of goods and services, profit margins, application of certain accounting principles, reporting requirements, terms of payment and provision of various representations and war- ranties. Why is everybody talking about ITAR, when we should be talking about DFARS? DFARS Subpart 225.7 prohibits all procure- ment of PCBs from Mainland China. DFARS Subpart 225.10 and 225.003 states that foreign acquisition can only be conducted from NATO countries or allies of the United States. Any exemption from this regulation requires a de- viation approval according to DFARS Subpart 201.4. Why are we usually talking about ITAR when we should be talking more about DFARS? The first questions one should ask is, are you buying from or selling to the United States? In our experience, ITAR regulation is the most commonly known compliance regulation; however, a significant proportion of DoD for- eign defence acquisitions is governed by DFARS regulation. The question is then what strategy can one implement to ensure that one is compliant with STRATEGIES FOR COMPLIANCE WITH DOD REGULATIONS INCLUDING ITAR AND DFARS