DSP-5 Scenario based on real events
Your company has been working for months, maybe even years to cultivate a contract to manufacture your company’s first satellite for a Singapore Cellular Provider. It’s a $10,000,000 contract and your manufacturing team has just completed the final product. Months ago, you were given a forecast of when the product would be available to export, you then were given the responsibility to file the DSP-5 with the Directorate of Defense Trade Controls (DDTC), and you’ve done a spectacular job getting that prepared and ready.
This is your first DSP-5 but you’ve had many experiences with DSP-73s, all went off without a hitch, and this will be no different, right?
You covered all your bases, you’ve got the hard copy ready to lodge/decrement, and you can do so at any port. The most exciting part is your company trusts you completely to get the job done, and you know you can.
You contact the Forwarder and arrange the export, enter the info in your Global Trade Management system, and transmit the shipment info via AES. You then prepare the packet and send over to Customs via your broker as you’ve done a thousand times before. Now it’s just sit back and wait for that receipt to come back with your green light to ship. Seamless, simple.
You now notice it’s been a few days and it doesn’t normally take this long; customs must be backlogged, you think. You wait another day. Your broker contacts you in the late afternoon, asking “Where is the freight located?”… Wait, why are they asking this? Their reply, “Customs called, they would like to know the location of your shipment.” You provide the information, after all you know this is typical in the realm of Customs Compliance, they want to see how beautiful our $10M Satellite is; you then provide the location to your broker, who then provides it to the Officer at CBP who was requesting the information.
A few more days go by and the phone rings, it’s Officer what’s his name from Customs, obviously calling to compliment you on a job well done. The Officer identifies himself, he then begins to take a tone of authority “Sir, I am calling to notify you that you are in Violation of Ch. 22 part 123 of the ITAR regulations § 123.22 (a) (1), you have filed your AES prior to lodging your license and we will be seizing your shipment; we’ll contact you with a formal notification soon.”
Dumbfounded, you then respond, “Thank you” and disconnect the call. Your heart sinks, an overwhelming sense of doom comes over you and you wonder where you went wrong. It has to be a mistake right?
AES Filing Requirements – It’s in the details
You quickly grab the regulations and it is right there, clear as day…
§ 123.22 Filing, retention, and return of export licenses and filing of export information.
(a) (1) Filing of licenses and documentation for the permanent export of hardware. For any permanent export of hardware using a license (e.g., DSP-5, DSP-94) or an exemption in this subchapter, the exporter must, prior
to an AES filing, deposit the license and provide any required documentation for the license or the exemption with the U.S. Customs and Border Protection.
The CBP Officer was right… and you just got your company’s most profound accomplishment in decades seized by Customs because you pressed that AES button to transmit. You then have to notify your company of the oversight, and hope for the best.
This is based on actual events, names, articles and scenarios were changed to protect their privacy.
SAP Global Trade Services (GTS) out of the box license determination strategy is not initially setup to prevent blunders with the handling of certain license aspects your team may or may not know about. SAP GTS is however, certainly capable of being modified to take this and many other scenarios into consideration when processing a license. Hard blocks can be configured to prevent this exact situation.
It is always encouraged to ensure you have all your bases covered, before initiating the AES Filing, especially in situations where a high profile article is concerned.