Three US companies were sanctioned for sending defense blueprints to China. They are accused of transferring files of technical drawings and blueprints used to 3D print satellites, rocket technology, and other defense-related prototypes just so they could save on costs. These unauthorized exports resulted in a penalty known as a temporary denial order (TDO), which is described as one of the most severe civil penalties applicable.
On June 7, 2022, the US Commerce Department’s Bureau of Industry and Security (BIS) announced the enforcement charges against the US-based companies, Quicksilver Manufacturing, Rapid Cut, and U.S. Prototype, to suspend all export privileges for 180 days, which can be renewed.
The decision comes after the US identified that all three companies were collectively using the same rental mailbox in Wilmington, North Carolina, to receive export-controlled drawings from their domestic customers to 3D print aerospace and space parts. However, without their customers’ consent or knowledge, these drawings were sent to manufacturers in China to 3D print the items without the required US government authorization. Once the components had been printed, they were shipped back to the US and the ordering customers.
According to BIS’ 11-page TDO document, an investigation by the Commerce Department’s Office of Export Enforcement (OEE), revealed that the first alerts of suspicious activity were informed back in February 2020, when an unnamed US aerospace and global defense technology company alerted of an export-control violation committed by a third-party supplier involving the unauthorized export of controlled satellite technology to China.
OEE revealed that around July 2017, satellite parts were ordered from Quicksilver in Wilmington. As part of the transaction, Quicksilver received roughly a dozen technical drawings and 3D CAD files to manufacture the specified components, which the customer would then use in a prototype satellite.
Even though Quicksilver advertises its 3D printing services on its website, the company ordered the parts from a Chinese firm. Both the shipping label and the pro forma invoice provided within the parts shipment identified Quicksilver as having an address in China and indicated that the products had been shipped from that country, even though no export license had been sought or obtained for the transaction.
A similar violation was discovered in 2021 at Rapid Cut – which is related to Quicksilver by location, ownership, and operating personnel – also involving controlled technology exported to China without the required BIS export license. Except for this time, it was specially designed parts intended for a rocket platform’s ground support and test equipment. The OEE’s inspection into the dubious behavior of the three companies produced evidence that there was a “clear disregard for export controls” that extended beyond just items subject to the Export Administration Regulations (EAR) but also encompasses the unlicensed export of defense articles to China, designated in the International Traffic in Arms Regulations (ITAR) and listed on the US Munitions List, to China.
Commerce Secretary Gina Raimondo said in a recent statement that the new TDOs are the “first enforcement actions taken by the Commerce Department’s Bureau of Industry and Security under the stringent export controls imposed by the US.”
Commenting in this particular case, US Assistant Secretary of Commerce for Export Enforcement, Matthew S. Axelrod added that “outsourcing 3D printing of space and defense prototypes to China harms U.S. national security. 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 U.S. military technology.”
Due to its sensitivity and importance to US national security, the information shared by the three companies is subject to strict export controls. That is why the TDO signed by Axelrod denies Quicksilver, Rapid Cut, and U.S. Prototype export privileges to prevent any imminent violations of the EAR and also encourages former customers of the three 3D printing service bureaus to review their records to determine whether intellectual property or export-controlled technology was provided or potentially compromised.
One of the most striking discoveries is that all three companies are highly interconnected. Not only do they use the same mailbox address, but US Prototype’s president has been a senior process specialist at Rapid Cut since 2010, while his wife is also listed as US Prototype’s vice president. Additionally, both Quicksilver and Rapid Cut have duplicate websites; the only difference between them is the name on the top of the site (see comparison below). Considering the irregularities in the businesses and the TDO issued for the illegal export of technology to China, we will be following up on any upcoming BIS decisions about the companies.
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