ITAR Freight Forwarder Update: Schenker AG and BAX Global Removed from EPLS

As a follow-up to our February 26, 2012 post regarding the mandatory and proposed debarment of a number of freight forwarders and the resulting impact on ITAR-related transactions, today Schenker AG and BAX Global Inc. were removed from the Excluded Party List System (EPLS).

The removal from the EPLS took place after the the companies presented to the Department of the Air Force information to demonstrate the companies' present responsibility to conduct business as a federal contractor. After consideration of that information the Air Force today determined that suspension or debarment of the companies was no longer necessary.  As a result, the proposed and mandatory debarments have been terminated and both entities have been removed from the EPLS. As we previously noted, Schenker Inc. was never included on the EPLS and DDTC had continued to issue licenses including that entity. 

Because the Schenker AG entities are no longer considered to be "ineligible" parties under section 120.1(c) of the ITAR, there should be no further need for exporters to submit a "transaction exception" request to DDTC for pending or future ITAR authorizations involving any of the freight forwarders that were added to the EPLS on February 16, 2012:

• CEVA Logistics LLC (removed from EPLS on February 24, 2012)
• EGL Inc. (now owned by CEVA Logistics) (removed from EPLS on February 24, 2012)
• Kuehne and Nagel International AG (removed from EPLS in March 2012)
  
• Panalpina Welttransport (Holding) AG (removed from EPLS on March 16, 2012)
• Panalpina Inc. (removed from EPLS on March 16, 2012)
• Schenker AG (removed from EPLS on April 11, 2012)
• BAX Global Inc. (now part of DB Schenker) (removed from EPLS on April 11, 2012)

Since none of these freight forwarders are "ineligible" to participate in ITAR transactions, we urge DDTC to remove or update its February 27, 2012 Web Notice to reflect this new information.

The significant interest in this issue has heightened the awareness of the role that the EPLS and serves as an important reminder that exporters and other parties involved in ITAR-related transactions should screen all the parties involved in ITAR licenses and other authorizations, including freight forwarders, against the EPLS. 

This action taken by the Air Force against these freight forwarders also highlights the impact of the debarment provisions contained in the Consolidated Appropriations Act of 2012 (Pub. L. 112-74). Those little-noticed provisions require the debarment of companies receiving federal funds, including from the Department of Defense, that have been "convicted of a felony criminal violation under any Federal law within the preceding 24 months." (See Division A, Section 8125 for the Department of Defense language.)