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Welcome to the Quick 10 Podcast brought to you by Quick Track, focusing on all things

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FedCon and cyber defense from different perspectives and different personalities, all in 10 ish

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minutes.

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Here's your host, Derek White.

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All right.

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Thank you, Alex, for joining us today on episode two of the Quick 10 Podcast.

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How you doing?

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Good, great.

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Thanks for having me.

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Good, man.

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Good seeing you again.

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Hope all is well.

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As we kick this podcast series off, it's exactly what it is.

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It's 10 ish minutes talking about a specific topic that we dive right into.

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And today we're going to get into the world of ITAR and CMMC, which is what your specialty

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is.

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And we have today's Alex Trafton from Ankura.

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So one of the best, I believe, on the LinkedIn side of the world, if you're a LinkedIn user,

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first thing you need to do when you're done with this podcast is go follow Alex.

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Alex has great digestible content that he puts out on a regular basis.

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I highly recommend that people go do that.

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But from your experience, we're going to get right into it.

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And there's a large misconception that, quote, because we're compliant with A, we're therefore

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pretty good with B. I know you guys hear that a lot.

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We hear that a lot.

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Talk about ITAR regulations and the misconceptions that come with that when people also have

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requirements and regulations like CUI protection around the CMMC side, NIST 800 171.

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And where you see that from your guys' side.

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And share what people should know about that a little bit.

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Yeah.

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I mean, I do think that's a very common misconception.

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And I think it comes down to a conceptual issue in companies that they view ITAR as

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a regulatory issue.

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And so it sits with a legal function.

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And they view CMMC and CUI as a cybersecurity function, which typically sits in the technology

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focus, like with the IT or cybersecurity, and that they don't speak well to each other.

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But yeah, that's a common misconception.

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And for defense contractors, certainly if they have defense contracts, if they're producing

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manufacturing items that are controlled under the ITAR, and they're providing that to the

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US Department of Defense, that ITAR data will also be CUI.

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And so in that case, those are co-terminates.

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But companies can make products, and a lot of larger companies do this, where they have

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both commercial and defense businesses.

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And the technology can originate with or without defense funding, could be ITAR, and they could

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be selling it commercially.

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And then it could also be part of an acquisition contract for the DoD and the CUI.

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They could also have CUI that's controlled under the Commerce Department's Export Administration

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regulations, this dual use that the government might be acquiring, which is a separate regulatory

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regime.

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So those aren't necessarily the same thing, and they don't have all of the same requirements.

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And so I think that the ITAR data is definitely ITAR.

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It is something that is controlled under the ITAR by its very nature.

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The existence of that thing as that thing is making it ITAR.

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But a CUI is really driven by whether the Department of Defense has technical rights

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to the data that it paid for under an acquisition contract, which is the DFAR's language.

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And so that's really where you can start to kind of see those roads divide.

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If this is proprietary data we developed, then the DOD doesn't have rights to it.

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We could even be providing it to the government, but if it doesn't have rights to it, it's

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not CUI, but it could well be ITAR.

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And the requirements are very similar in some ways.

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They're both data protection requirements, but the ITAR is really focused on its origination

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was a nonproliferation regulation.

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And it's evolved and they update it.

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But for the most part, it's focused on sovereignty of data and making sure that foreign persons

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don't access data without a license so that the US government can control who has access

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to items which are covered under the US munitions list that they're in use military items.

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And that's a regulatory regime, where a CUI is contract-driven.

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So there's a diverse sense of requirements, right?

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And it relates to a number of factors.

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You can have CUI programs.

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There's no sovereignty requirement or no foreign person access restrictions on CUI.

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Now the Department of Defense can mark it as no foreign persons access, and they can

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mark it as what functionally makes it export control.

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But it's very nature is an export control, right?

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And there's many of the defense acquisition programs that have global supply chains where

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CUI data flows globally.

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It might be ITAR data, but those companies have to manage ITAR requirements, right?

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But the CUI doesn't make it so.

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And I think one of the big items where there's divergence and it's worth understanding is

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protection of the data with encryption, right?

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So if you look at CUI requirements in this 800.171, this is a requirement for any federal

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agency encryption standard, is that there's a requirement to use FIPS validated encryption,

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right?

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And the language in the ITAR is FIPS compliant encryption, right?

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And that's the difference between the CAVP, the cryptographic algorithm validation program,

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and the CMVP at NIST, which is the cryptographic module validation program, right?

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And I tend to think that there was a mistake when they wrote the ITAR regulation and they

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met validated, but they used compliant.

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But that's here and there.

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So that's a remarkably different standard, right?

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Whether or not you have to maintain validated, FIPS validated modules versus algorithms, right?

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Which is much lower standard, right?

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Because most strong algorithms are going to be approved for use in cryptographic module

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validation programs, right?

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And FIPS modules.

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So those are differing requirements.

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One is far more onerous, right?

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So the other thing is the degree to which encryption is a protection under the regulation

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or under the contract.

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I hear in the CMVP world a lot, people saying, well, if I just encrypt with FIPS validated

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modules, my data is fine.

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I can send it out.

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That's not true under the ITAR, right?

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So in the ITAR, there's a section of the 22 CFR, part 126.1, which is a restriction on

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export of even encrypted data to certain countries.

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And so those countries include Russia, they include North Korea, China, and a few others

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that exist on the sanctions list, right?

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That data, even if it's encrypted with FIPS validated or compliant encryption, data can't

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go there, right?

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So the notion that I think a lot of CMVP thought leaders have taken is that if I just use encryption

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to the standard FIPS validated, so I can just send ITAR where I want, sorry, I can send

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CUI where I want.

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Well, if that data is also CUI, you have to have some controls over where it goes with

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both.

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And that's a big one.

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And I think the other thing is, like most companies are struggling with cloud services

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and sovereign cloud services, right?

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Using GCC versus GCC-HI and Microsoft, you have to pay close attention to who's accessing

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that data under service contracts, right?

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So dumping your data into a federate authorized cloud environment, it's not necessarily sufficient,

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right?

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You have to follow the CUI rules, but you have to ensure that that company, if that

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data is also ITAR data, which a lot of defense data, especially in aerospace and defense

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manufacturing, right?

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Yeah.

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Typically, most of it's going to be ITAR.

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That the cloud service provider is ensuring not only that your federate authorized controls

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are implemented, but also that anyone who may access it, right?

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Or the sovereignty of that data itself resides within the US and is only accessed by US persons,

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right?

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So those are things that you want to consider, right?

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And again, companies tend to kind of view those things in silos.

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And I really encourage them to, if you have in-house counsel or an external counsel who

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specializes in international trade controls, that you engage with them when you're going

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through these CUI processes, right?

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Your self-assessments, DIPTAC assessments, CMC assessments, right?

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Policy design and how you scope your policies, right?

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Because a lot of companies will say, well, I'm going to apply your policies enterprise

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scale or I'm going to apply them at an enclave, a CUI enclave scale.

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Your policies need to account for all of your regulatory requirements.

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That could extend beyond ITAR as well.

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It could extend into privacy.

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You could have EAR data, dual-use commerce control data.

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And so those policies need to be appropriately scoped and include the appropriate requirements,

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right?

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And a lot of that's on how you screen individuals, right?

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How you screen your visitors.

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One issue we've run into is that companies will build their visitor management system

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around the ITAR requirements, which is like, hey, if they're a US person, I don't need

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to escort them.

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They can access the facility.

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But under CUI requirements, they need to be escorted at all times, right?

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So an ITAR program, typically companies will be, ITAR has been around since the 80s, right?

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And they'll have built an entire compliance program around the ITAR.

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So it's been there for a long time.

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And then when they get the CUI contract requirements, after all the DFAR saga was complete, then

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they're saying, well, we already have a visitor management program that addresses ITAR.

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So we're fine.

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Well, no, there are those nuanced differences between ITAR and CUI, which is really in the

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ITAR.

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Once you're a US person, they're like, State Department is kind of hands off about that,

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whereas the CUI requirements are not.

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So that's really some of the things to think about when you're dealing with data that's

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covered under both requirements, right?

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One, the beauty contract requirement, and the other is the ITAR regulation, right?

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And then establishing controls around end use.

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If you're an exporter of that technology, I think it's a little more nuanced than we'd

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want to discuss today.

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But those are some of the big ones that I see commonly with respect to test contractors.

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Yeah.

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And that's well said.

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And I think with that misconception side too, you nailed it.

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When you get into defense manufacturing, aerospace, the companies that have really put their emphasis

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either internally or with external resources on ITAR and export control data, they tend

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to do better for sure on when it comes to data protections and control information because

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they understand origin of data, where it's flowing, who's got access to it, who do I

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need to be authorizing and paying attention to, how we authorize, et cetera.

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So the unfortunate side, obviously for most of the defense industrial base when CUI and

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ITAR and different regulations are coming around is they do tend to have a lack of internal

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resources.

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And if they do have it, it's a smaller team.

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So obviously highly recommended that external resources like yourself that are experts and

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stuff is to engage with that.

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And that kind of rolls into kind of my other question I wanted to ask you is we can kind

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of wrap up with this is if someone wanted to learn one thing from you like today, like

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short term, maybe it's been off the radar, maybe it's been something that just hasn't

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been because of lack of resources, something that they've been able to grasp.

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If they hear one thing from you today on what they can do right now in the short term to

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help them get down a path where this is going to end well for them, what would that be from

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Alex's standpoint?

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Yeah, I think know where your data is.

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That sounds always cliche.

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And you can leverage these programs to work together to do that.

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So if you look at the guidance from the DOD, that's the 5230-24, which is the distribution

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statement markings, that's a document that's been revised year in, year out since ITAR

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and DOD contracts were around.

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And so if you go back to the first document from 1984, if you look at the first type of

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sensitive data that the DOD is talking about, it is really they're talking about export

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control data.

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Like they're saying we're really worried about ITAR data.

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And so a lot of that data is going to be similar.

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It's going to be technical documents.

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So understanding that, what they mean, if you look at control technical information,

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that type of CUI that constitutes covered defense information in DFAR 712, that's application

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and military and space technology.

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That's the ITAR definition.

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So what I would say is one way to kind of to not have this be a problematic issue is

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you can start to look at it.

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You have like a robust ITAR program and typically people have one because they've been doing

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it for a long time.

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You have a training program and you have an identification and marking program.

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If you can start using that and associating those, like if you have ITAR category 11,

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you're a satellite, just like that.

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And you know that you have space contracts with Space Force DOD, right, identifying your

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ITAR and then finding out which programs are associated with it.

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Right.

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So is that a government defense program?

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You can start to leverage your ITAR program, which a lot of companies have to your point

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in better form than they do their CUI programs.

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And so they can start to use that to help identify where their CUI is.

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Right.

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And getting it marked and controlled and then looking at those policies and saying, okay,

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well, do we have enough governance in place to kind of effectively control this data to

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both standards?

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And typically you're going to end up taking the higher watermark standard, right, which

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is validated encryption, your CUI standards.

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But never neglecting some of those nuanced ITAR requirements.

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So I would encourage trade controls, international trade controls experts to get in and read

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DFAR 7012, to get in and read the special publication 8171.

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And I would equally encourage cybersecurity experts who are focused on CUI and CMMC to

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go and read the ITAR and watch the webinars and read some articles on that and really

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start to understand how you can be a resource to your broader governance of enterprise data

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and find ways to commonly solve these problems.

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Because while they're different, they're the same in a lot of ways, which is really that

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control of technical data.

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Yeah.

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That's great.

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Obviously, we could sit here and talk about this for a week if we wanted to.

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And hopefully people would listen.

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You're again, you're a great resource for this topic.

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This is not one of those topics you want to be wrong on.

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You can put a lot of focus on half of the conversation today on, let's say, CUI, CMMC,

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and the 171 and in with on the ITAR stuff down the road without even realizing it.

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So very, very important topic.

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Thank you, Alex, who is the senior managing director at Incura.

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I didn't even mention that at the beginning.

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So thanks for joining.

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Where can people find more information from you if they want to reach out and look at

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using you as a reference here?

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Yeah.

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I think you said already my LinkedIn is probably the place where that gets consolidated from

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all the different avenues.

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I'll publish our practice thought leadership there.

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I post there frequently on matters of national security, specifically ITAR to CUI, and also

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artificial intelligence and trade controls.

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So if those areas are interesting to your listeners, I think coming to my LinkedIn,

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you can always message me there.

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I respond quickly.

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So I think that's probably the best place to find me.

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Perfect.

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Well, perfect.

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Well, thank you, sir.

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I'm looking forward to next time we have you on because we'll probably want to tackle some

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of the stuff you just said in a little bit more detail.

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And thank you so much.

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And if anybody has any other questions or topics you want to submit, please subscribe

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to the podcast.

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Check out quicktrack.com for any information from the QuickTrack side and happy to connect

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you to whatever resources we can.

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But again, thank you, Alex, and we'll talk to you next time.

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Thank you.

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Thank you for listening to this episode and make sure to subscribe to the Quick 10 podcast

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wherever you get your podcasts and check us out on YouTube as well.

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For more information about QuickTrack, visit our website at www.quicktrack.com.

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It's C-U-I-C-K-T-R-A-C dot com.

