U.S. State Department Announces that “Gunsmithing” Requires ITAR Registration

On July 22, 2016, the U.S. Sate Deparmtnet, Directorate of Defense Trade Controls issued new “guidance,” seeking the registration of gunsmiths under the International Trade in Arms Regualtions (ITAR). The ITAR require manufacturers to register on a yearly basis; DDTC has taken the position that the acts performed by some gunsmiths rise to the level of manufacturing as defined by the ITAR. A full discussion and analysis of the issue is posed within this issue’s Legal Affairs column.

BIS and DDTC Issue Final Rules on Fundamental Definitions and Cloud Computing

The U.S. Department of Commerce’s Bureau of Industry and Security (BIS) and U.S. Department of State’s Directorate of Defense Trade Controls (DDTC) published final rules revising fundamental definitions in the Export Administration Regulations (EAR) and the International Traffic in Arms Regulations (ITAR), respectively. The revisions make substantive changes to remove controls on the export of certain encrypted transfers of software and technology. The revisions are part of the ongoing export control reform efforts of BIS and DDTC and are designed to enhance clarity and consistency between the two sets of regulations in both design and effect.

The final rule applies a four-part test in order to determine if the sending, taking, or storing technology or software will not be considered a controlled export transaction:

The technology or software must be unclassified;
“End-to-end encryption” must be used to secure the technology or software;
The encryption technology in use must meet or exceed Federal Information Processing Standards (FIPS) Publication 140-2 and be supplemented by security-related software meeting or exceeding current NIST guidance; and
The technology or software must not intentionally be stored in a country listed in Country Group D:5 or in Russia.

This final rule will allow U.S.-based companies to use cloud technology to transfer and store unclassified technology and software subject to the EAR without facing export control requirements, so long as they meet the encryption requirements specified in the rule. BIS has also clarified that the final rule allows for secure remote access to data on a U.S. server by a U.S. national while outside the United States without it being considered an export under the EAR.

A proposed rule by DDTC published in 2015 contained a similar provision allowing for the sending, taking, or storing of encrypted technology or software controlled by the ITAR. DDTC has not published a final rule on the issue, so this cloud computing authorization is not currently in effect under the ITAR.

Smith and Wesson to Acquire Crimson Trace

Smith and Wesson announced that it has signed a definitive agreement to acquire Crimson Trace, the industry leader in laser sighting systems and tactical lighting for firearms, for $95.0 million, subject to certain adjustments, utilizing cash on hand.

Crimson Trace has long been a key supplier of laser sighting systems for Smith & Wesson.  For more than two decades, Crimson Trace has provided consumers, military units, and law enforcement officers around the globe with the world’s largest selection of award-winning laser sight and tactical light products.  Based in Wilsonville, Oregon, Crimson Trace operates from a 50,000 square foot facility where it engineers and manufactures its products.

James Debney, Smith & Wesson President and Chief Executive Officer, said, “Crimson Trace provides us with an exceptional opportunity to acquire a thriving company that is completely aligned with our strategy to become a leader in the market for shooting, hunting, and rugged outdoor enthusiasts.  As the undisputed leader in the market for laser sighting products, Crimson Trace serves as an ideal platform for our new Electro-Optics Division. Firearms purchasers frequently buy electro-optic accessories to enhance the capabilities and performance of their firearms.  The growth that Crimson Trace has delivered is a testament to the high product quality and the robust product development capability that Lane Tobiassen, President and Chief Executive Officer of Crimson Trace, and his team have established.  That capability, combined with Crimson Trace’s leadership position in the market for laser sights, provides a solid framework for organic and inorganic growth.”

Lane Tobiassen, who joined Crimson Trace in 2005, will serve as President of the new Electro-Optics Division of Smith & Wesson, and will report directly to Debney.  The Crimson Trace management team and workforce, as well as its base of operations, will remain in Wilsonville, Oregon after the acquisition.

Barrett Firearms Receives ISO 9001:2015 Certification

Barrett Firearms Manufacturing, Inc. announced that it has received ISO 9001:2015 certification for the design and manufacture of firearms, ammunition, integrated ballistics computers and accessories. The ISO 9001:2015 Quality Management Standard is recognized by 95 countries for excellence in design, manufacture and delivery of quality products. It is the most widely used manufacturing standard in the world. Barrett is one of the first companies in the firearms industry to receive certification in the new 2015 standard.

“This achievement is the result of years of dedication to continuous improvement, perfecting of processes, and the ultimate goal of exceeding our customers’ expectations,” said Chris Barrett, president of Barrett Firearms. “Along the way we have exceeded our own expectations. This certification is not easily achieved. I am so proud of what our team has built here; we have set ourselves up for years of future success.”

Meprolight to Supply Thousands of Reflex Sights to the Israel Defense Forces (IDF)

Meprolight, a manufacturer of electro-optical systems, thermal and night vision equipment, and self-illuminated sights for military, law enforcement and civilian applications was selected to deliver the MEPRO MOR optic to the Israeli Defense Forces. This contract was signed as the company completes deliveries to the IDF of a previous order for thousands of MEPRO M5 Red Dot Sights (known in the U.S as MEPRO RDS PRO).

According to Benny Kokia, Vice President, Sales & Marketing at Meprolight, “We are proud of winning this tender. The sight was selected by the IDF in an open tender following in-depth testing and rigorous trials. According to the army’s demands, we were required to set up a rapid delivery schedule for the sights, and to quickly establish an effective and efficient maintenance system appropriate for the Israeli army – an active army – and sufficient to ensure the proper ongoing functioning of its systems.”

The MEPRO MOR is a compact, rugged, multi-purpose, multi-activated red dot reflex sight with integrated laser pointers. Designed for quick, instinctive, accurate shooting, it has a 30mm diameter lens, ensuring rapid target acquisition with either one or both eyes open, and quick transition between long-range and close-quarter encounters. MEPRO MOR’s large field of view enables effective operation in all weather, temperature, and light conditions. The passive self-illuminated system provides integrated day/night operation, LED for extra bright modes, two laser pointers – visible and IR, and multiple mounting options. The sight is suited for use with 5.56 mm caliber light weapons and 7.62 mm caliber light machine guns.