Three companies issued temporary denial order for outsourcing sensitive AM orders to China

June 10, 2022

Quicksilver Manufacturing Inc, Rapid Cut LLC and US Prototype Inc, all based in Wilmington, North Carolina, USA, have been issued a Temporary Denial Order (TDO) from the US Commerce Department’s Bureau of Industry and Security (BIS). The order suspends export privileges for 180 days and relates to the unauthorised export to China of technical drawings and blueprints for the Additive Manufacturing of satellite, rocket and defence prototype components. This type of information is subject to tight export controls due to its sensitivity and importance to US National Security.

“Outsourcing 3D printing of space and defence prototypes to China harms US national security,” stated Matthew S Axelrod, Assistant Secretary of Commerce for Export Enforcement at the US Commerce Department’s Bureau of Industry and Security (BIS). “By sending their customers’ technical drawings and blueprints to China, these companies may have saved a few bucks—but they did so at the collective expense of protecting US military technology.”

As described in the TDO, Quicksilver, Rapid Cut, and US Prototype – collectively utilising the same rental mailbox – received export-controlled drawings from their domestic customers to additively manufacture requested items. Without their customers’ advance consent or knowledge, these drawings were provided to manufacturers in China to additively manufacture the items without the required US Government authorisations. The items were then imported into the United States to be provided to the ordering customers.

TDOs are some of the most significant civil sanctions that BIS can issue. The Assistant Secretary’s order denies the companies all of the export privileges described in part 764 of the Export Administration Regulations, which include (but are not limited to) applying for, obtaining, or using any license, license exception, or export control document, or engaging in or benefitting from such transactions, in order to prevent imminent violations of the EAR. The order was issued for a renewable 180-day period and cuts the companies’ ability to export from the United States, as well as their ability to receive or participate in exports from the United States.

This matter remains under investigation and customers of Quicksilver Manufacturing, Rapid Cut, and US Prototype are encouraged by BIS to review their records to determine whether intellectual property or export-controlled technology was provided and/or potentially compromised. As set forth in the TDO, US customers are also advised that they are prohibited from taking any action that facilitates any of the companies taking possession or control of items subject to the EAR that are intended for export.

The TDO is available to read here.

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