DDTC Sees Jump in Blue Lantern Checks

The State Department’s Directorate of Defense Trade Controls significantly increased its end-user checks from 2019 to 2020, partially because the agency was able to dedicate more resources to its Blue Lantern program after it transferred certain gun export controls to the Commerce Department last year. In its annual Blue Lantern report released July 6 -- which details the agency’s end-use monitoring efforts on controlled defense articles and services -- DDTC said it initiated checks on 272 export licenses or applications during the 2020 fiscal year, an increase of more than 45% from 2019.

DDTC was able to initiate only about 150 Blue Lantern inquiries in 2019, partly due to the 35-day lapse in government funding in December 2018 and January 2019 (see 2006160040). Although the agency substantially increased its checks last year, it fell short of its 2018 number of 466 checks.

The agency also closed 180 Blue Lantern cases in 2020, with about 74% reporting “favorable” results, meaning DDTC was able to verify that authorized end-users received and secured the defense articles. About 24% of the cases were deemed unfavorable, which DDTC said was lower than the 31% “average rate of unfavorable outcomes” for the past five fiscal years.

The most common cause of an unfavorable finding in 2020 was “derogatory information,” DDTC said, or finding that the foreign party was an “unreliable recipient” of a U.S. Munitions List item. The second-most common cause was an unlicensed party, followed by “inability to confirm order or receipt of goods.” DDTC didn't find any cases of potential or actual diversion but documented two cases of unauthorized reexports or retransfers.

The agency updated about 1,100 entries and added nearly 2,000 new entries to its Watch List, an internal DDTC screening tool that includes more than 227,000 entities that receive “extra scrutiny” when they appear on a license application. DDTC continued an initiative begun last year to “systematically” share its Watch List with the Commerce Department’s Bureau of Industry and Security. “This sharing improves Commerce’s ability to regulate items it controls,” the report said, “especially those items formerly controlled on the USML.”

The State Department also released a Defense Department end-use monitoring report on articles and services transferred through the Foreign Military Sales program. The Defense Department's Golden Sentry program reviewed more than 545 letters of offer and acceptance and other transfer agreements in 2020. Agency officials also conducted more than 2,000 “physical security checks” of storage facilities and carried out “accountability inventories” of more than 217,000 defense items.