SCRM Threat Assessment

‍BITE is a tool suite that assists companies in multiple domains to reduce risk in their supply chain. Our AI technology assists companies to remain on the right side of compliance through cost-effective, easy-to-use tools.

This document covers information and processes to assist companies with threat assessment for supply chain risk management and the maintenance of facility clearances for defense sector companies.

What is Supply Chain Risk Management: The defense and national security industry includes companies that ship sensitive technologies, handle classified information and support key national security infrastructure. All these companies are required to routinely check their supply chain for bad actors and/or ensure they are appropriately tracking the end use of sensitive technology and information.

Governments enforce strict laws and regulations relating to the export of controlled goods, technologies and services for strategic trade. This enforcement regime is often referred to as strategic trade controls (STC).

Additionally, the U.S. aggressively protects classified information associated with controlled goods and technologies through the Defense Counterintelligence and Security Agency (DCSA) and its National Industrial Security Program (NISP). Contractors who carry facility clearance levels (FCL) for access to classified information have greater obligations for reporting suspicious inquiries or contacts to DCSA. Companies with both FCLs and engage in exporting controlled goods and technologies have perhaps the highest national security compliance requirements.

Many defense contractors with FCLs are unwitting targets of foreign malign state actors such as China, Russia, North Korea and Iran which aggressively seek controlled commodities and/or classified technologies. The suspicious inquiries come in the form of emails, RFQs, bid proposals, pricing requests and other seemingly routine business inquiries. The procurement networks working for malign state actors operate businesses across the globe and are adept at disguising the actual end use and end user for the controlled commodity/technology.

Additionally, cleared contractors need to be aware of the Deemed Export concept, that includes the release of technology subject to export restrictions to a foreign national regardless of where the transfer takes place. This can include transfer of sensitive technology designs, blueprints, specifications a well as verbal descriptions of the sensitive technology.

Why is SCRM important for DCSA-cleared contractors: The cleared industry and their trade partners - subcontractors, manufacturers, shippers, consignees or other entities involved in the supply chain - should employ the highest level of due diligence in reviewing their transactions to avoid compliance problems for controlled goods and possible risk to their Facility Clearance (FCL). “The technology and information resident in U.S. cleared industry is under constant and pervasive threat from foreign intelligence entities seeking to gain the technological edge.” Some of the primary reasons for effective risk management practices are summarized below:

1. National Security: Preventing transactions with denied parties or watch listed entities that pose a threat to national and global security. Export enforcement programs prevent the proliferation of weapons of mass destruction and destabilizing accumulation of conventional weapons and related material. NISPOM helps protect the “crown jewels” of the U.S. defense sector and prevent grave damage to our national security.
2. Economic Security: Protecting national trade competitiveness and supporting foreign policy objectives while maintaining innovation in strategic trade for advanced technologies.
3. Global Security: Implementing effective export controls and due diligence best practices supports national contributions to global security – a safe international supply chain is only as effective as its weakest link and malign actors exploit those weak leaks.
4. Preventing the introduction of sub-standard or counterfeit components into the U.S. defense industry supply chain.

What are the rules you need to adhere to: There are several compliance control rules and regulations specific to this including but not limited to Export Control Reform Act 2018 - 50 USC 4801-4852, Arms Export Control Act - 22 USC 2778 / International Traffic in Arms Regulations (ITAR) - 22 CFR 120-130, Sanctions Statutes , 32 CFR Part 117, Espionage Act, and more.

For a full list of regulations and statutes relevant to SCRM and Cleared contractors/companies, please log into our app to get access to the full Playbook.

How does BITE Help:

The BITE Playbook, available in the BITE app, helps you navigate these regulatory requirements and quickly understand which agencies enforce what regulations associated with your specific transaction,  as well as a mapping for how each BITE module helps you remain compliant with specific regulations.

BITE Data: our BITE Playbook maps directly to watchlists, Harmonized Schedule codes and commodity screening lists, allowing you to quickly check a commodity or person against the extensive filters in our platform and thereby adhere to specific regulations.

BITE includes extensive, in-depth training modules to help users get set up for success and walk you through how to stay on the right side of compliance.

Sign up for the app here: https://app.bitedata.io/ or send us an email to set up a demo: bite@nuborders.com