The Golden Rule

The U.S. Department of State’s Directorate of Defense Trade Controls (DDTC), Office of Defense Trade Controls Compliance (DTCC) has announced that Keysight Technologies, Inc., of Santa Rosa, California (“Keysight”), has entered into a 3-year Consent Agreement to settle allegations that it violated the International Traffic in Arms Regulations (ITAR) in connection with unauthorized exports of technical data, to include software, to various countries, including a proscribed destination. According to the Proposed Charging Letter:

  • On November 9, 2017, the Office of Defense Trade Controls Policy (“DTCP”) raised concern over Keysight’s potential misclassification of its Signal Studio for Multi-Emitter Scenario Generation software (“MESG software”). It recommended Keysight submit a CJ to determine the jurisdiction of the software. The MESG software can be used with certain hardware equipment to model and simulate multi-emitter electronic warfare threat scenarios for testing radar equipment on fixed or mobile platforms.
  • Between December 5, 2015, and April 18, 2018, Keysight exported the MESG software as both trial and full versions of the software. Keysight exported full versions of the software installed on hardware or electronically. Further, Keysight exported trial versions of the software via downloads from their website.
  • In response to DTCP’s recommendation, Keysight submitted CJ-0005-18 on January 4, 2018. On April 27, 2018, DDTC provided Keysight with a determination that the MESG software was controlled under USML Category XI(d) based on the software’s direct relation to electronic warfare test sets described by USML Category XI(a)(11).
  • Between January 9, 2018, and April 18, 2018, while CJ-0005-18 was under review, Keysight exported without authorization the MESG software on eight separate occasions to the PRC, Russia, Japan, Israel, and Canada. Keysight claimed that these exports were based on good faith but misguided belief that the MESG software was not subject to ITAR controls, and once Keysight learned of DDTC’s formal CJ determination, it stopped any further unlicensed exports of MESG software and treated MESG software as ITAR controlled.
  • On May 21, 2018, Keysight submitted an initial disclosure assigned DTCC case number 18-0000493. Subsequently, on July 24, 2018, Keysight submitted its full disclosure in which it disclosed unauthorized exports to multiple countries of its MESG software, as described above. Keysight’s disclosure stated the exports of the MESG software were conducted pursuant to the Export Administration Regulations (EAR), under Export Control Classification Number (ECCN)EAR99.
  • Keysight believed the ITAR jurisdiction was in error, and on August 30, 2018, Keysight appealed CJ-0005-18 by submitting a reconsideration request in accordance with ITAR § 120.4(g), which was assigned CJ-0391-18. On February 13, 2019, DDTC provided Keysight with the determination of CJ-0391-18, reaffirming the determination of CJ-0005-18. DDTC maintained that the MESG software was controlled under USML Category XI(d) based on the software’s direct relation to electronic warfare test sets described by USML Category XI(a)(11).

In accordance with the Consent Agreement and Order issued in this matter, Keysight has agreed to the following enforcement measures:

  • A civil penalty of $6,600,000, with $1,100,000 payable within ten days of signing the Order and $1 million payable each year on the anniversary of the Order for the next three years, the remaining $2.5 million suspended on the condition that Keysight applies the amount to Consent Agreement-authorized remedial compliance costs.
  • Appointment of an outside Special Compliance Officer in consultation with the Director, DTCC to serve for a minimum of two years, and thereafter Keysight may request that DTCC allow it to substitute an Internal Special Compliance Officer.
  • Conduct a review within 90 days of the appointment of the Special Compliance Officer to ensure adequate/sufficient resources are dedicated to ITAR Compliance throughout Keysight’s ITAR regulated operating divisions, subsidiaries, and business units.
  • Strengthen compliance policies and procedures within 9 months of the implementation of the consent agreement, including  training for persons responsible for supervising Keysight employees and senior managers to ensure they are knowledgeable about the underlying principles of the AECA and ITAR.
  • Within 12 months, complete a classification review of all hardware and software pertaining to Keysight’s ITAR-regulated business activities and any technical data or defense services directly related to such hardware and/or software.
  • Complete at least one third-party audit conducted within 12 months of the Order. DTCC has the option of requesting additional audits.
  • Permit on-site reviews by DTCC during the 36 month period.

Heed the call and follow the GOLDEN RULE.

What is the GOLDEN RULE?

When filing a Commodity Jurisdiction (CJ) request for a product, software, or technology, treat the product, software, or technology as ITAR controlled until the CJ is adjudicated.

When the Office of Defense Trade Controls Policy (DTCP) came knocking raising concerns over the potential misclassification of the Keysight  MESG software and recommending the filing of a Commodity Jurisdiction to validate the export jurisdiction and classification of the MESG software, Keysight missed a clear compliance signal regarding how they were and should be treating the export jurisdiction of the MESG software.

The product and software description, available on the Keysight website, describes a software used for signal generation for Electronic Warfare systems, which are sophisticated systems crucial to the U.S. natural security, with clear elaboration in the U.S.M.L. category XI(a)(4) and designated as Significant Military Equipment. Test sets for testing electronic warfare systems and radars are enumerated in USML XI(a)(11). The software which is treated as technical data under the ITAR is classified as USML XI(d).

When Keysight was instructed to file a Commodity Jurisdiction request to receive a formal USG ruling from the Department of State regarding the export jurisdiction and classification of the MESG software, Keysight acted promptly and filed the Commodity Jurisdiction request within 2 months of the DTCP request. But instead of following the GOLDEN RULE of compliance and treating the MESG software as ITAR until formally advised otherwise, they continued to make exports of the MESG software as EAR99.

In doing so, they made exports of an ITAR software to an ITAR 126.1 sanctioned country (China); exports to Russia, when Russia required export licenses and was deemed a very sensitive destination; and made exports to 3 other countries. The DTCC determined that the exports to China and Russia caused harm to the national security of the U.S.

In total, Keysight made unauthorized exports to 17 countries during the 2015 – 2018 period.

DTCC considered the exports as aggravating factors in weighing the 24 violations alleged in the proposed charging letter. Mitigating factors included Keysight’s cooperation with DTCC, filing the voluntary disclosure that acknowledged the conduct, implementation of remedial measures, and agreement to toll the statutory time limitations of the review period. Accordingly, DTCC determined it was not appropriate to debar Keysight in addition to the financial and compliance measures required by the consent agreement.

This case highlights the critical and fundamental first step for all exports. Conducting the export jurisdiction and classification analysis. Both at the time of design but on a continued basis, as the export regulations are evolving. While the ITAR and DTCP do not require filing Commodity Jurisdiction requests for each item to be exported, self-classification must follow the Order of Review set out in the ITAR and EAR. If conducted with export control and technical input, the export classification determination should clearly detail the analysis performed and stand the test of a government inquiry.

Keysight is a publicly traded company and a spin-off from Agilent Technologies, which has many ITAR regulated and EAR regulated products. Therefore, it is expected that Keysight had conducted its due diligence in classification and reached a very different conclusion for export control.

Here are the key takeaways:

1) DTCP regularly reviews exporters’ websites for products that might be ITAR regulated but not promoted by the exporter as such.

2) If contacted by DTCP and requested to file a CJ, immediately start treating the item as ITAR. Not all CJs result in an ITAR outcome. In fact, at least 60% provide an EAR determination. Voluntary Disclosures can be filed based on the outcome of the CJ if needed.

2) When performing self-classification, exporters should research the Department of State Commodity Jurisdiction (CJ) database (DDTC CJ database) to see if there have been any prior CJs for similar products that would give insight into how the government adjudicated a similar product.

3) When filing a CJ because you are unsure if your product is ITAR or EAR, ALWAYS treat the product as ITAR until the CJ is adjudicated.

4) Self Classification of company products should be periodically reevaluated by compliance personnel, as the ITAR USML and the EAR CCL have undergone an overhaul, thus changing export jurisdiction and export classification of many items.

5) Regular and periodic internal and external audits should review export jurisdiction and classification of products

6) Exporters should never presume that a product, software, or technology, if not ITAR controlled it is EAR99. If a product is truly not ITAR, there may be an applicable ECCN classification on the CCL before reaching EAR99 status.

The Proposed Charging Letter, Consent Agreement, and Order can be found here.

The Golden Rule

August 11, 2021

The U.S. Department of State’s Directorate of Defense Trade Controls (DDTC), Office of Defense Trade Controls Compliance (DTCC) has announced that Keysight Technologies, Inc., of Santa Rosa, California (“Keysight”), has entered into a 3-year Consent Agreement to settle allegations that it violated the International Traffic in Arms Regulations (ITAR) in connection with unauthorized exports of […]

Does Your Export Compliance Program Pass Muster?

July 9, 2021

By: Jenny Hahn, President Small companies may suddenly find their export compliance programs aren’t up to the expectations of the Departments of State, Directorate of Defense Trade Controls (DDTC) or Commerce, Bureau of Industry and Security (BIS). This is particularly true when you consider the complexity of the Export Control Reform (ECR) initiative, and the […]

Honeywell International, Inc. Reaches 3 Year Consent Agreement With The Department Of State

May 4, 2021

By Jenny Hahn, President The U.S. Department of State’s Directorate of Defense Trade Controls (DDTC) has announced that Honeywell International, Inc. has entered into a 3 year Consent Agreement to resolve charges that it committed 34 violations of the Arms Export Control Act and the ITAR between July 2011 and July 2018 involving unauthorized exports […]

To Register Or Not, That Is The Question

March 27, 2021

Do I need to register or maintain registration with the Department of State (“DOS”)? Companies may find themselves asking this question, as a result of Export Control Reform. There are several factors to consider before deciding that your company should or should not register or maintain its registration with the Department of State. Are you […]

ITAR Certified, What Does It Mean?

March 26, 2021

Posted in 2016, very relevant today and worth a second read! Updated by Jenny Hahn, President Today many prime defense contractors and others involved in the manufacture and sale of defense articles regulated by the ITAR require evidence that companies in their supply chain are registered with the Department of State, Directorate of Defense Trade […]

Do You Know Where Your Export Controlled Technical Data Is?

March 25, 2021

By Jenny Hahn President FD Associates, Inc. In today’s global environment, the transfer of export controlled technical data, your company’s IP or customer technical data occurs in an instant. Export controlled technical data is regularly transferred electronically by email or other means to domestic and international customers, partners, vendors, legal counsel and consultants. To ensure […]

Due Diligence Considerations When Exporting To China

January 15, 2021

by Keil J. Ritterpusch Senior Compliance Associate and Jenny A. Hahn President The current climate between the U.S. Government and China related to export-controlled commodities is quite hostile and is not likely to change in the near term, even with a new U.S. President in place.  The U.S. Government, concerned with national security threats, human rights abuses, military modernization, theft […]

The President Signs Executive Order To Treat Hong Kong As China

November 13, 2020

By: Carlos Bentancor, Junior Associate & Jenny Hahn, President Hong Kong Now an Arms Embargoed Destination Announced 7.14.2020 and License Exceptions for EAR Items are Suspended The President signed an Executive Order (EO) on July 14, 2020, which requires the Special Administrative Region of Hong Kong (Hong Kong) to be treated as the People’s Republic of […]

US Department Of Commerce Publishes Rules That Greatly Expand The Requirement For Obtaining EAR Licenses

November 13, 2020

By:  Keil J. Ritterpusch, Senior Compliance Associate, and Jenny Hahn, President On April 28, 2020, the U.S. Department of Commerce’s Bureau of Industry & Security (“BIS”) published two new final rules and one proposed rule to the Export Administration Regulations (“EAR”) which substantially affect U.S. exporters of goods to China, Russia, and Venezuela.  In general, […]

DDTC Announces New Policies And Changes Affecting ITAR Registrations, Licensing, Part 130 Reporting, And DDTC Management

November 13, 2020

COVID 19 has impacted our daily lives. DDTC is no exception. Between the DECCS rollout and COVID 19 telework, DDTC is impacted and has responded with the following policies and changes intended to aid industry and ease the burden on exporters that may be hampered during this period to make filings in accordance with the […]

DECCS Is Here!

November 13, 2020

Don’t Panic, Just Enroll If you are registered as an exporter or manufacturer of defense articles with the Department of State, Directorate of Defense Trade Controls (“DDTC”), you have by now probably noted reference to “DECCS”, the Defense Export Control and Compliance System, either on the DDTC website or in correspondence from or with DDTC.  Do […]

Traveling With Electronic Devices – Are You Ready?

November 13, 2020

By Odyssey E. Gray, III, Associate, FD Associates, Inc. Today’s world is a “smart” world, a world of various electronic devices that provide ever expanding connectivity and access.  As a result of this age of “connectivity,” employers may require their employees to travel internationally, conducting business on their behalf while carrying electronic devices with them.  What […]

Export Compliance Red Flags

November 13, 2020

By John Herzo, Senior Associate Everyone involved in export compliance understands that the cornerstone of corporate compliance is a strong export compliance program. A sign that your export compliance program is functioning properly is the ability of your employees to identify and prevent potential export compliance violations before they occur. One essential tool for an […]

Violations Of The Foreign Trade Regulations, Easy To Do, Costly To Resolve

November 13, 2020

By Jenny Hahn, President Your company exports commodities to locations all over the world. Sometimes you file your own Automated Export System (AES) records and other times your company contracts with freight forwarders to do these filings on your behalf.  Recently your company received a demand letter from US Customs for $10,000 payment of a […]

Bureau Of Industry And Security, Department Of Commerce Final Rule Amendments To The Export Administration Regulations Affecting The Licensing Policy For Cuba

November 13, 2020

By Odyssey E. Gray, III The Department of Commerce, Bureau of Industry and Security issued a final rule, published in the Federal Register, effective November 9, 2017, which enumerated amendments to the Export Administration Regulations (“EAR”) in connection with implementation of U.S. policy in accordance with the National Security Presidential Memorandum on Strengthening the Policy […]

Faulty Processes Can Be Expensive And Put Your Ability To Export At Risk

November 13, 2020

By Odyssey E. Gray, III, Associate, FD Associates, Inc. A successful and lawful export should be the product of a series of internal processes conducted by persons responsible for trade compliance that help determine/answer pertinent and relevant questions concerning the export.  Exporters should be sure to continually review and evaluate internal processes for compliance to the […]

Does Your IT Infrastructure Comply With The Current DOD Rules For Cybersecurity Protections?

November 13, 2020

The DoD Rules for Protecting Data Generated or Received as Part of Your DoD Contract or Subcontract Goes Into Effect in Four Short Months By:   Keil J. Ritterpusch, Esq. – Senior Compliance Associate, FD Associates, Inc. Over the past few years the U.S. Federal Government has been working to establish a regulatory system to […]

Updated Version – Presentation Of DSP-61 And DSP-73 Licenses For CBP Decrementation No Longer Required

November 13, 2020

By Odyssey E. Gray, III, Associate, FD Associates, Inc. Pursuant to a Final Rule issued in the Federal Register (Public Notice 9811, 82 FR 15 January 3 2017), with an effective date of December 31, 2016, exporters are no longer required to present their DSP-61 Temporary Import and DSP-73 Temporary Export licenses with Customs and […]

Final Round Of Export Control Reform Revisions Related To Spacecraft

November 13, 2020

By Paul Croarkin, Senior Associate Keil Ritterpusch, Senior Compliance Associate On January 10, 2017, the Department of State and the Department of Commerce published final rules to further refine the control of spacecraft and related items controlled for export by the International Traffic in Arms Regulations (“ITAR”) and the Export Administration Regulations (“EAR”).  The final […]

Changes To USML Categories VIII And XIX And Their Bookend ECCNS 9A610 And 9A619

November 13, 2020

By John Herzo, Senior Associate Odyssey Gray, Associate Jenny Hahn, Partner As part of the continuing review of the U.S. Munitions List (“USML”) and the Commerce Control List (“CCL”) 600 / 500 Series Export Control Classification Numbers (“ECCN”) as part of Export Control Reform, on November 21, 2016 the Department of State, Directorate of Defense […]

DDTC IT Modernization – “Are You Ready?”

November 13, 2020

By Odyssey E. Gray, III, Associate, FD Associates, Inc. Change.  It’s the universal constant.  In all matter of things, change is ongoing, necessary and undeniable.  In the world of IT, it is a hallmark of the industry.  Technology changes occur daily as individuals, businesses, corporations and Governments seek more efficient and productive ways to do […]

Updates To The Department Of State’s Agreement Guidelines

November 13, 2020

By John Herzo, Senior Associate On August 11, 2016, the Department of State, Directorate of Defense Trade Controls (DDTC) published its latest iteration of the Guidelines For Preparing Agreements (guidelines). DDTC updated the guidelines based on the changes to certain definitions and other sections of the ITAR that were published in the Federal Register on […]

DDTC Rescinds Notice From May 6, 2016 Regarding The Use Of The Current Version Of The DSP-83

November 13, 2020

By John Herzo, Senior Associate June 8, 2016 –  Effective IMMEDIATELY any expired DSP-83 forms the Department of State receives with export license applications will be processed. In addition, any client who received a proviso directing the upload of a new DSP-83 form as part of the condition to make exports is advised by the department of State […]

DOJ Issues Guidance On Pursuing Individual Accountability For Corporate Wrongdoing

November 13, 2020

By Keil J. Ritterpusch, Esq., Senior Associate In a memorandum and accompanying speech in September 2015, U.S. Deputy Attorney General Sally Quillian Yates, the Department of Justice (“DOJ”) announced a major new initiative designed to target and pursue “accountability from the individuals” who “perpetrate corporate wrongdoing.”   The memorandum is published at This DOJ memorandum provides […]

Client Notice: DDTC Waives Requirement For Exporters To Lodge DSP-5 Permanent Export Licenses With CBP, Effective Immediately

November 13, 2020

DDTC announced on 12/21/2015 that it has waived the requirement for the industry to lodge DSP-5 permanent export licenses for hardware with CPB. This decision was made in anticipation of the implementation of the U.S. Customs and Border Patrol (CBP) Automated Commercial Environment (ACE) and because DDTC has been electronically sending CBP registration and licensing […]