The Meggitt-USA, Inc. Settlement - Outsourcing Pitfalls and Due Diligence

Here are some of the important and notable quotes from the August 23, 2013, settlement between Meggitt-USA-Inc. and the US Department of State (DOS). 

 

“Respondent’s subsidiary, Endevco, disclosed that due to inadequate or incorrect guidance from an advisor, the company erred in its jurisdictional determination for some of its products.  As a result, Endevco, failed to obtain a license or other authorization for over one thousand shipments of various accelerometers.”  [Proposed Charging Letter (PCL), page 5, 2nd paragraph (para), first two sentences].

 

“In addition and as a result of a similar misjudgment by one of Endevco’s export consultants regarding jurisdiction, Meggitt Sensors & Controls Company Ltd., located in the People’s Republic of China, also received from Endevco several such ITAR-controlled manufacturing calibration systems… without authorization.”  [PCL, page 6, 2nd para, 1st sentence]

 

This is not the first case where State has noted bad guidance from an external source (i.e. an advisor, consultant or lawyer).  In this one they did not name names.  Perhaps they should have for our collective self-protection.

 

The lesson learned (again) is, whenever you outsource anything, due diligence is critically important! 

 

More than one vendor in the trade compliance/export control community (even some who claim they are experts) is willing to mislead, make false and unsubstantiated claims, misrepresent what they offer, say anything, do anything and provide you a faulty product or service with a smile on their face.  They are happy to take your money (the more the better for them), but doesn’t the ball end-up in your organization’s and your court when it comes to following bad advice or using the faulty product or service?

 

Don’t buy the hype!   Do your homework and make sure you are getting exactly what you want and what you paid for from a credible/reliable source that actually knows the regulations and knows what they are doing. Using your network of honest, proven and trusted professionals to sanity check things will also pay big dividends. 

 

The bottom line is you do not have to follow bad advice.  Likewise, you can reject or not use a faulty product or service.  Isn’t accepting a wrong course of action from a provider who leads you down the primrose path just as much your fault as theirs?

 

For all the Meggitt-USA, Inc.-US Department of State settlement documents, go to http://www.pmddtc.state.gov/compliance/consent_agreements/meggitt.html.