Boeing has agreed to pay $51 million in a settlement with the U.S Department of State (DoS) to resolve around 200 violations of the Arms Control Act and the International Traffic in Arms Regulations (ITAR). The DoS and Boeing reached this settlement following an extensive compliance review by the Office of Defense Trade Controls Compliance in the Department’s Bureau of Political-Military Affairs.
The settlement between the Department and Boeing deals with Boeing’s unauthorized exports and retransfers of technical data to foreign employees and contractors; unauthorized exports of defense products, including unauthorized exports of technical data to China; and violations of license terms, and condition of Directorate of Defense Trade Controls authorizations.
“The U.S. government reviewed copies of the files referenced in this voluntary disclosure and determined that certain unauthorized exports to the [People’s Republic of China] caused harm to U.S. national security,” the State Department alleged. “The U.S. government also concluded that a certain unauthorized export to Russia created the potential for harm to U.S. national security.”
Boeing’s Violations in Detail
Specifically, the complaint alleged that multiple Boeing employees downloaded sensitive data in China that related to various defense products such as fighter jets, an airborne warning system and an attack helicopter. Additionally, Boeing revealed that there were at least 80 instances across 18 countries where its employees downloaded sensitive ITAR-controlled data.
All of the alleged violations were voluntarily disclosed by the aerospace giant, and a considerable majority come before 2020. Boeing cooperated with the Department’s review of its investigations and has implemented many improvements to its compliance program since the issues were discovered.
“We are committed to our trade controls obligations, and we look forward to working with the State Department under the agreement announced today,” Boeing said in a public statement. “We are committed to continuous improvement of that program, and the compliance undertakings reflected in this agreement will help us advance that objective.”
The Terms of the Settlement
Under the terms of the 36-month Consent Agreement, Boeing will pay a civil penalty of $51 million. The Department has agreed to suspend $24 million of this amount on the condition that the funds will be used to strengthen the company’s compliance program. In addition, for a period of at least 24 months, the DoS will provide an external compliance officer to oversee Boeing in order to ensure that the company is adhering to the consent. This will also require two external audits of its ITAR compliance program and implement additional compliance measures.
This settlement demonstrates the Department’s pivotal role in furthering the national security and foreign policy of the U.S. by controlling the export of defense articles. The settlement serves as a reminder that when exporting defense products, companies must do so with the explicit authorization from the DoS. 
Jacob Horowitz is a contributing editor at Compliance Chief 360°