Export Controls:

Proposed Reforms Create Opportunities to Address Enforcement Challenges

GAO-12-246: Published: Mar 27, 2012. Publicly Released: Mar 27, 2012.

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What GAO Found

Agencies use a risk-based approach, including workload and threat assessment data, to allocate resources, but most do not fully track those used for export control enforcement activities. As their missions are broader than export controls, agencies can use staff resources for other activities based on need, making tracking resources used solely for export control enforcement difficult. Only Commerce’s Office of Export Enforcement allocates its resources exclusively to export control enforcement as that is its primary mission. Other agencies, such as State and the Treasury, have relatively few export control enforcement staff to track. While several agencies acknowledge the need to better track export enforcement resources and have taken steps to do so, they do not know the full extent of their use of these resources and do not use this information in resource allocation decisions. In some cities, agencies are informally leveraging export enforcement resources through voluntarily created local task forces that bring together enforcement resources to work collectively on export control cases.

Enforcement agencies face several challenges in investigating illicit transshipments, both domestically and overseas, which potentially reduce the effectiveness of enforcement activities and limit the identification and investigation of illicit transshipments. These include:

  • License Determination Delays. License determinations—which confirm whether an item is controlled and requires a license, and thereby help confirm whether an export control violation has occurred—are often not timely, potentially hindering investigations and prosecutions.

  • Limited Secure Communications and Cleared Staff. Investigators have limited access to secure communications and staff with high-level security clearances in several domestic field offices, limiting investigators’ ability to share timely and important information.

  • Lack of Trend Data on Illicit Transshipments. While there is a good exchange of intelligence between enforcement agencies and the intelligence community—to seize shipments and take other actions against export control violators—officials noted that no formal process or means existed for these groups to collectively quantify and identify statistical trends and patterns relating to information on illicit transshipments.

  • Lack of Effectiveness Measures Unique to the Complexity of Export Controls. Investigative agencies lack measures of effectiveness that fully reflect the complexity and qualitative benefits of export control cases.

Some of these challenges may be addressed by ongoing export control reform initiatives, but reform presents both opportunities and challenges. Revising the control list could simplify the license determination process, but could also result in the need for increased enforcement activity overseas to validate the recipient of the items as fewer items may require U.S. government approval in advance of shipment. As most staff located overseas have other agency and mission-related priorities, their availability may be limited. The newly created national Export Enforcement Coordination Center is intended to help agencies coordinate their export control enforcement efforts as well as share intelligence and law enforcement information related to these efforts. However, it is unclear whether the center will address all of the challenges GAO found, as detailed plans for its operations are under development.

Why GAO Did This Study

The U.S. government controls the export of sensitive defense and dual-use items (having both military and commercial use). The five agencies primarily responsible for export control enforcement—the Departments of Commerce, Homeland Security (DHS), Justice, State and the Treasury—conduct inspections and investigations, and can levy punitive actions against violators. A challenging aspect of export control enforcement is the detection of illicit transshipments—the transfer of items from place of origin through an intermediary country to an unauthorized destination, such as Iran. In 2010, the President announced reforms to the U.S. export control system to address weaknesses found by GAO and others. GAO was asked to address how the export control enforcement agencies allocate resources, as well as the challenges they face and the potential impact of export control reform on enforcement activities. GAO reviewed documents and met with enforcement agency officials as well as with U.S. and foreign government and company officials in Hong Kong, Singapore, and the United Arab Emirates, which have a high volume of trade and have been identified as potential hubs for illicit transshipments.

What GAO Recommends

GAO recommends that Commerce, DHS, Justice, and State take steps individually and with other agencies through the national Export Enforcement Coordination Center to better manage export control enforcement resources and improve the license determination process. Agencies agreed with GAO’s recommendations.

For more information, contact Belva Martin at (202) 512-4841 or martinb@gao.gov.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: DHS/ICE Mission Action Plan to respond to GAO recommendations identified actions taken in 2012 to track resources expended on export control enforcement activities and use such data to make resource allocation decisions. Specifically, ICE now does this through its HSI (Homeland Security Investigations) TRAK(Transparency/Results/Accountability/Knowledge Sharing), its yearly operational Risk Assessment Process, and regular measurement of enforcement statistics and hours expended on export controls.

    Recommendation: To better inform management and resource allocation decisions, effectively manage limited export control enforcement resources, and improve the license determination process, the Secretary of Homeland Security and the Attorney General, as they implement efforts to track resources expended on export control enforcement activities, should use such data to make resource allocation decisions.

    Agency Affected: Department of Homeland Security

  2. Status: Open

    Comments: DOJ plans to make continual improvements to the investigative and prosecutorial data to allow better tracking and refined resource allocation decisions going forward.

    Recommendation: To better inform management and resource allocation decisions, effectively manage limited export control enforcement resources, and improve the license determination process, the Secretary of Homeland Security and the Attorney General, as they implement efforts to track resources expended on export control enforcement activities, should use such data to make resource allocation decisions.

    Agency Affected: Department of Justice

  3. Status: Open

    Comments: During fiscal year 2013, Office of Export Enforcement (OEE) will work with partner law enforcement agencies, including through the Export Enforcement Coordination Center, to examine its best practices for measuring effectiveness in export enforcement. As of Sept. 2014, Commerce efforts ongoing, but not completed.

    Recommendation: To better inform management and resource allocation decisions, effectively manage limited export control enforcement resources, and improve the license determination process, the Secretaries of Commerce and Homeland Security as they develop and implement qualitative measures of effectiveness, should ensure that these assess progress towards their overall goal of preventing or deterring illegal exports.

    Agency Affected: Department of Commerce

  4. Status: Open

    Comments: DHS/ICE has moved to a performance measurement system that will track systemic vulnerabilities, both nationally and within its respective field offices, to prioritize efforts. ICE will use the same system to examine the impact effectiveness and outcomes of counter-proliferation investigations. In March 2014, CBP implemented the reengineered Automated Export System (rAES), allowing for more detailed descriptions of export activities into a database to inform trend analysis and subsequent export enforcement efforts. DHS E2C2 leadership and CBP explained in Sept. 2014, that while CBP is using rAES for tracking, ICE is using the Border Enforcement Enhanced Program (BEEP) to track investigations. It is in the pilot phase within ICE/HSI and officials hope to bring it on board for all of E2C2 partners in the future. ICE tracks metrics and resources through investigative case hours.

    Recommendation: To better inform management and resource allocation decisions, effectively manage limited export control enforcement resources, and improve the license determination process, the Secretaries of Commerce and Homeland Security as they develop and implement qualitative measures of effectiveness, should ensure that these assess progress towards their overall goal of preventing or deterring illegal exports.

    Agency Affected: Department of Homeland Security

  5. Status: Open

    Comments: To help track resources expended and coordination of enforcement resources, the E2C2 has ratified and implemented the investigative deconfliction protocol. The E2C2 has also ratified and implemented the dispute resolution protocol and it is being used by all E2C2 partners. These are two of seven standard operating procedures planned to be in use by the E2C2. The Intelligence Community engagement/information protocols are being addressed through the E2C2 Export Enforcement Intelligence Working Group to help facilitate data sharing, and ICE, through the E2C2, is still in the process of establishing interagency agreement on procedures to facilitate data sharing between the enforcement agencies and intelligence community to assist in measuring illicit transshipment activity. The E2C2 Intel Cell White Paper is complete. The E2C2 Intel Cell is to serve as the primary interagency conduit for defining, establishing, and implementing protocols and facilitating information sharing between the IC and export enforcement community. The white paper outlines the E2C2 Intel Cell's mission, general roles and functions, recommended tasks and structure to facilitate enhanced coordination and intelligence sharing. The E2C2 Intel Cell, when established, will develop standard operating procedures and determine implementation of these procedures for facilitating information sharing at E2C2. The standard operating procedure for the E2C2 Intel Cell has not been signed.

    Recommendation: To better inform management and resource allocation decisions, effectively manage limited export control enforcement resources, and improve the license determination process, the Secretary of Homeland Security, in consultation with the departmental representatives of the Export Enforcement Coordination Center, including Commerce, Justice, State, and the Treasury should (1) leverage export control enforcement resources across agencies by building on existing agency efforts to track resources expended, as well as existing agency coordination at the local level; (2) establish procedures to facilitate data sharing between the enforcement agencies and intelligence community to measure illicit transshipment activity; and (3) develop qualitative and quantitative measures of effectiveness for the entire enforcement community to baseline and trend this data.

    Agency Affected: Department of Homeland Security

  6. Status: Open

    Comments: BIS will consult with DHS and FBI to review existing timeframes for responding to license determination requests and revise those timeframes as appropriate. BIS will also review its process, including timelines, for responding to license determination requests initiated by BIS enforcement agents. As of Sept. 2014, Commerce efforts ongoing, but not completed.

    Recommendation: To better inform management and resource allocation decisions, effectively manage limited export control enforcement resources, and improve the license determination process, the Secretaries of Commerce and State, in consultation with the Secretary of Homeland Security, the Attorney General, and other agencies as appropriate, should establish agreed upon timeliness goals for responding to license determination requests considering agency resources, the level of determination, the complexity of the request, and other associated factors.

    Agency Affected: Department of Commerce

  7. Status: Open

    Comments: State drafted a Memorandum of Understanding (MOU) to establish the formal process for the federal law enforcement community to request and receive certain documents or products (i.e., first level determinations, pre-trial and trial certifications, records checks) that the Department of State's Directorate of Defense Trade Controls provides to federal law enforcement. The Departments of State, Justice and Homeland Security have been discussing and revising the draft MOU and its underlying process for more than a year, to ensure reflection of the changing realities and requirements associated with the ongoing Export Control Reform.

    Recommendation: To better inform management and resource allocation decisions, effectively manage limited export control enforcement resources, and improve the license determination process, the Secretaries of Commerce and State, in consultation with the Secretary of Homeland Security, the Attorney General, and other agencies as appropriate, should establish agreed upon timeliness goals for responding to license determination requests considering agency resources, the level of determination, the complexity of the request, and other associated factors.

    Agency Affected: Department of State

 

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