Export Control and Nadcap Audits

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Export Control and Nadcap Audits

26 February 2015

In May 2014, PRI instituted a new pricing structure for Nadcap and NUCAP audits. This meant that, from December 1, 2014, additional fees were assigned where appropriate to cover the higher travel costs associated with audits of facilities processing Export Control work. The Export Control fee has been implemented because audits with ITAR/EAR restrictions taking place outside the USA incur higher costs due to the requirement for a US citizen / green card holder to travel from the USA to conduct the audit. Prior to December 1, 2014, the additional cost had been shared among all audits; the Export Control fee covers this additional cost so that it is paid by the audit requiring the additional effort, rather than being spread equally among all audits.

When audits are scheduled, a representative from the company being audited is required to indicate whether the company processes any ITAR/EAR restricted work, so that the appropriate auditor can be sent to conduct the audit. Occasionally, however, auditors arrive on site to conduct the Nadcap audit and find that there is ITAR/EAR restricted work, even though the company representative had indicated that there wouldn’t be any.

This is problematic for two reasons: first, because it means that the auditor may not be able to conduct the audit, if he is not authorized to view ITAR/EAR restricted work. In that case, the audit will be stopped and rescheduled to take place at a later date with an auditor who is authorized to conduct the audit. This is disruptive and inconvenient for all involved and means that the company has to pay for two audits; second, if the auditor is authorized to view ITAR/EAR restricted work, he may continue with the audit but the invoice will be amended to include the Export Control fee. The audit will be failed or certification withdrawn if the Export Control fee is not paid within ninety days. This is also an inconvenience for all parties.

It is important that the Export Control question is correctly answered when scheduling the audit. If there is any uncertainty, suppliers are strongly recommended to contact their customer for clarification.