ITAR Compliance: BAE Systems’ $36m Settlement Explained
BAE Systems Reaches $36 Million ITAR Settlement Over Arms Export Violations
The US Department of State has concluded a $36 million administrative settlement with BAE Systems, Inc. (BAE), the US arm of UK-headquartered BAE Systems plc, to resolve 104 violations of the Arms Export Control Act (AECA) and the International Traffic in Arms Regulations (ITAR). The settlement, concluded under ITAR section 128.11, follows an extensive compliance review by the Office of Defense Trade Controls Compliance within the Department’s Bureau of Political-Military Affairs.
The violations span multiple categories of ITAR breach. They include the unauthorised export of technical data to multiple countries, including, in one instance, to China; violations of the terms, conditions and provisos of several Directorate of Defense Trade Controls authorisations involving various countries; and the unauthorised export of defence articles, including technical data, designated as Significant Military Equipment.
BAE voluntarily disclosed all but one of the alleged violations, a substantial portion of which predate 2023, and cooperated fully with the Department’s review. The company has also implemented several improvements to its ITAR compliance programme since the conduct in question.
Under the terms of the 36-month consent agreement, BAE will pay a civil penalty of $36 million. The Department has agreed to suspend $18 million of this amount, on the condition that those funds are directed towards Department-approved remedial compliance actions. For an initial period of at least 24 months, BAE will also engage an external Special Compliance Officer to oversee the consent agreement, alongside at least one external audit of its ITAR compliance programme.
The case is a significant marker for defence exporters on both sides of the Atlantic.
Andrew Skinner, Principal at AM Skinner Solicitors, said:
“A settlement of this scale is a reminder that ITAR compliance is not a box-ticking exercise. Even the most sophisticated defence firms can accumulate violations when technical data moves over complex international supply chains, and the cost of getting it wrong now runs to tens of millions of dollars and years of external oversight. What stands out here is that BAE voluntarily disclosed all but one of the violations. Self-disclosure does not make a problem disappear, but it materially shapes the outcome.
Any UK or international business that handles US-origin defence articles or technical data should know, before a problem arises, how it would identify and disclose a breach.”
The firm has previously examined comparable US enforcement action in its analysis of the $36 million Bosch penalty.
The Consent Agreement and related documents will be available for public inspection in the Public Reading Room of the US Department of State and in the Penalties and Oversight Agreements section of the DDTC website.
About AM Skinner Solicitors
AM Skinner Solicitors is a specialist law firm advising businesses and organisations on international trade law, including export controls, sanctions and embargoes. The firm provides professional legal guidance to clients dealing with the complexities of ITAR, the AECA and broader export compliance systems across multiple jurisdictions. For more information, see our Export Controls and Sanctions and Embargoes services.
For a free initial 15-minute consultation to learn how Andrew can help, please call +44 (0) 1423 734019 or enquire.