All photos courtesy of Joshua Seybert, Air Force.

For aerospace and defense (A&D) manufacturers and contractors doing global business, international traffic in arms regulations (ITAR) have been a long-recognized cost of doing business. The latest rules from the U.S. Departments of State and Commerce require companies that manufacture, export, or re-export ITAR-controlled items to evaluate and amend their authorizations and restructure compliance. Compliance failures can be extremely costly – in January 2020, Airbus agreed to pay more than $3.9 billion to resolve an ITAR and bribery case.

Some organizations manage this complex regulatory landscape through manual internal processes or third-party compliance organizations. However, enterprise software for business operations can be embedded with ITAR principles to mitigate compliance concerns and make products, data, and services safely available to a global audience.

Complex state of affairs

Despite some recent streamlining, ITAR complexity facing A&D manufacturers is significant. Manufacturers must meet multiple regulatory documents, including the Commerce Control List (CCL) and the United States Munitions List (USML), which cover a variety of items.

To confuse matters more, different agencies are responsible for different application procedures – the Department of Commerce controls CCL items and the Department of State controls USML items. Each agency has different titles for the same items and different meanings for the same titles. Manufacturers need to keep abreast of multiple Denied Party Lists, or Specially Designated Nationals and Blocked Persons Lists, issued by various government departments, including the Department of the Treasury.

The ideal end goal would be a single point of control with a primary enforcement and coordination agency, a single information technology (IT) system, and a single licensing agency. But for now, A&D manufacturers must accept that many items are under ITAR control while others are covered by Export Administration Regulations (EAR), all while the Department of the Treasury keeps track of sanctions against foreign nations.

Staying compliant

One compliance option is to hire export control compliance officers that keep tabs on orders and deliveries to ensure forbidden materials are not shared with anyone on the control lists. This can be extremely time-consuming and costly. A second option is to employ a service agency to provide and consolidate analysis of the denied party listings into a database which can be accessed for a fee.

Regardless of compliance model, export control regulations will also have implications for underlying enterprise systems, including enterprise resource planning (ERP). Therefore, it’s important to ensure any ERP solution used for defense manufacturing has functionality for export control.

A business dealing in regulated materials must quickly and efficiently marshal this information within their ERP system and combine it with external regulatory data to ensure compliance as they process orders and transactions. They also must be able to share it with overseas partners in a frictionless environment.

Key ITAR compliance components

Without a fully integrated application suite allowing seamless data flow between different functions – such as supply chain management, manufacturing, engineering, customer relationship management (CRM) – it’s difficult to know which products, parts, or transactions may put an A&D manufacturer in jeopardy.

Rather than integrating complex third-party solutions between export control functions and ERP, a streamlined approach uses ERP enabled to do checks against third-party lists and manage orders, transactions, and other activities accordingly.

Factors to keep in mind when considering an ERP solution to aid ITAR compliance:

• Denied party checks – When committing to a sales order, ERP must ensure the order isn’t going to aa denied party by referencing a link to a database of denied parties compiled and updated regularly by an agency or third-party. You must have confidence that you checked the denied parties list before processing the order.
• Part-specific regulatory schema management – The parts catalog must hold information on items that might be export controlled, and ERP must indicate which regulation and regulatory body covers the item and the classification or rating within that schema which applies to it.
• Assembly-level management – If a manufacturer is handling an order for an assembly, ERP needs to record the parts within that assembly and the extent to which they are covered by different export regulations and commodity jurisdictions.
• License application, usage reporting – ERP users must identify, escalate, and resolve licensing issues; report on and monitor the consumption of licenses by orders; and manage license consumption.
• Secure document management – Some documents for control items have licenses that can only be viewed by certain authorized people. ERP with embedded, native document management will be best suited for export control. User permissions used in ERP to control access to sensitive data can be applied to the document management solution.
• Data, intangibles export control – ERP must offer some support in controlling processes such as shipment of a controlled product for display or exchange of data with overseas vendors.
• International requirements – Regardless of where they are based, exporters often have operations in other countries, each with its own set of export controls regulations.

No second chances

Manufacturers and contractors in the A&D sector can ill afford expensive and jeopardizing litigation due to poor materials and equipment export control. Rather than opening room for human error or paying for a third-party agency, ERP helps A&D manufacturers prepare for, and meet, the legal requirements of ITAR.

IFS

About the author: Kevin Deal is the vice president of IFS, Aerospace and Defense, North America. He can be reached at kevin.deal@ifsworld.com.

After decades of continued growth supplying ultra-precision aerospace components, C&S Machine Products Inc. recently consolidated three disparate operations into a new, state-of-the-art 122,000ft² facility in Niles, Michigan, about 90 miles east of Chicago.

About 100 employees use more than 100 advanced machines to perform CNC turning, 5-axis milling, grinding, electrical discharge machining (EDM), and Swiss multi-axis turning to machine small, difficult, ultra-precision parts. The shop holds grinding tolerances within 0.00005", and such tight tolerance parts have become the shop’s niche and competitive advantage. Associated operations include honing, lapping, additive manufacturing (AM), laser marking, assembly, testing, and cleaning.

Serving aerospace manufacturers since the 1980s, C&S supplies critical aerospace assemblies including hydraulic spool and sleeve valves, and the shop’s components are on nearly every military and commercial airplane platform active today. Typical workpiece materials are hardened 440C and 52100 aerospace steels and nitriding steels, in addition to nickel-base alloys and titanium commonly used in aerospace.

“The parts generally are small enough to be held in one hand,” says C&S President Dominick Saratore. “And we can often ship 20 to 40 pieces in one small box. We’ll make any part for any customer that needs our kind of tight tolerance capabilities, but aerospace is our bread and butter.”

Precision grinding

Within C&S’s lean manufacturing part processes, high-precision Studer CNC grinders from United Grinding expedite production and reinforce quality.

“United Grinding is our go-to grinding machine tool source that offers real depth in capabilities,” Saratore says. “There are a lot of grinding machines out there that just don’t have the same consistent quality, service, parts, or training. We use our Studers for cylindrical grinding. But we are also looking at other projects in the future, using different capabilities.”

The shop installed a Studer favorit machine a year ago, another a few months ago, and has a third on order.

“We are always setting up and changing over to run part families,” Saratore says. “We get the luxury of running the same jobs over and over, but we don’t do it in large volumes and don’t get to set up and run something for a month. Typically we will set up a job and run it for the day, and the next day we are running something else.”

Some of the company’s customers specify part dimensions as well as grinding processes to avoid putting stress on a part that could later crack.

“Our customers are very specific in what they want,” Saratore says. “Not only do we have to produce to the print, we also have to meet their processing requirements.”

The shop has a catalog of about 500 high-accuracy part numbers. “To be able to do that day in and day out for 500 part numbers, you have to have a complete depth in your system and people, and your organization has to be robust,” Saratore says.

Saratore credits the company’s investment in technology, facilities, equipment, and people for its continued growth and success. “Many shops don’t put all of those pieces together, but we do. We produce precision products and have systems in place to control the processes.”

At C&S, putting all the pieces together starts with the facility and equipment.

“Our facility is temperature, humidity, and air quality controlled. Every machine tool that we buy is best in class, and we don’t cut corners on equipment, tooling, fixturing, workholding, business processes and systems, employee training, and so on,” Saratore says.

C&S and United Grinding are similar in that they both provide all the pieces necessary for success.

“There’s not a missing piece. If there are 20 things required to be great, United Grinding and C&S have all 20,” Saratore notes.

C&S Machine plans to keep growing in the sectors it serves. Part of the plan is the recent creation of an advanced manufacturing research and development (R&D) group consisting of a director of advanced manufacturing R&D, an applications engineer, an automation engineer, and a program manager. C&S is currently on pace to add one advanced manufacturing cell per year, but as the shop grows and evolves, the plan is to bring on two to four cells annually. Grinding technology from United Grinding will likely figure into these plans.

C&S Machine Products

United Grinding North America

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