Export Controls: Proposed Reforms Create Opportunities to Address Enforcement Challenges
Published: 2012-03-27T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: 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.
section_title: What GAO Found
paragraphs: 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 Delay s. 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.
section_title: What GAO Recommends
paragraphs: 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.

section_title: Letter
paragraphs: Each year, billions of dollars in defense and “dual-use” items—items that  have both commercial and military applications—are exported to U.S.  allies and strategic partners to further national security, foreign policy, and  economic interests. The U.S. government protects these items through  its export control system to ensure that they are transferred to foreign  parties in a manner consistent with U.S. interests. The current system is  governed by a complex set of laws, regulations, and processes and is  implemented by multiple agencies, some with overlapping jurisdiction.  Enforcement, a key function in the system, strives to prevent or deter the  illegal export of defense and dual-use items such as controlled  components that were shipped to countries like Iran, which were later  found in weapons and devices used against U.S. forces in Iraq. Export  control enforcement activities include inspecting items to be exported,  investigating potential export control violations, and pursuing and  imposing criminal and administrative penalties against violators. These  activities also seek to keep defense and dual-use items from being illicitly  transshipped through intermediary countries or locations, such as the  United Arab Emirates (UAE), Hong Kong, Singapore, and Malaysia,  where a high volume of trade provides potential opportunities for the illicit  transshipment of export-controlled items to an unauthorized final  destination, such as Iran.transshipment is the transfer of merchandise from its place of origin  through an intermediary country to an unauthorized destination. For  example, in September 2011, a Pakistani citizen pleaded guilty to  conspiring to commit export violations in connection with a scheme to  illegally export U.S. nuclear-related materials, by exporting these  materials from the United States through the UAE, to several restricted  entities in Pakistan. The Department of State and other federal agencies  have recognized illicit transshipment as a major weakness in trade and  national security.
For the purposes of this report, illicit  In 2006, we found that U.S. export control enforcement agencies faced  considerable challenges and made several recommendations to improve  interagency coordination, and we continue to include the U.S. export  control system as a key component of a GAO high risk area on protecting  technologies critical to U.S. national security interests. Noting challenges  in the entire U.S. export control system, in April 2010, the President  announced a reform strategy that included the creation of a single export  enforcement coordination agency as a primary forum where agencies can  coordinate and enhance export control enforcement efforts and resolve  conflicts. However, some members of Congress have raised questions  about existing export control activities including resources agencies are  devoting to these activities. Moreover, they have expressed concerns that  without addressing existing enforcement problems, reform of the export  control system could exacerbate current shortfalls in the system designed  to prevent countries and entities of concern from obtaining sensitive U.S.  defense and dual-use items. In response to your request, we identified (1)  how agencies allocate staff resources for export control enforcement  activities, and (2) challenges that agencies face in investigating illicit  transshipments and the potential impact of export control reform initiatives  on enforcement activities.
To conduct our work, we reviewed laws, regulations, and guidelines  relating to the enforcement of U.S. export controls on defense and dual- use items and interviewed officials from the Departments of Commerce,  Defense (DOD), Homeland Security (DHS), Justice, State, and the  Treasury as well as private industry and foreign government officials. We  also visited agency headquarters as well as three domestic and three  international locations to obtain and analyze information on resources,  knowledge of illicit transshipments, and challenges in investigating export  controls for criminal violations. We corroborated information on resources  with agency budget and other documents where possible. The domestic  locations, Baltimore, MD; Los Angeles, CA; and San Francisco, CA;  represent one or more of the following: a large percentage of the  investigative caseload, ports with a high volume of trade of U.S.  commodities, and a large presence of aerospace, electronics, and  software industries and geographic dispersion. The international  locations, Hong Kong, Singapore, and the UAE, represent three of the top  10 ports in the world for trade volume and have been identified by federal  agency officials as potential hubs for illicit transshipments of defense and  dual-use items. We also met with cognizant agency officials to discuss  progress, opportunities, and challenges of the President’s current export  control reform initiatives. (See appendix I for more details.)
We conducted this performance audit from February 2011 through March  2012, in accordance with generally accepted government auditing  standards. Those standards require that we plan and perform the audit to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  that the evidence obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives.
subsections: section_title: Background
paragraphs: Actions can also include compliance and monitoring, such as reviewing disclosures by  exporters of possible export control violations, prelicense checks, and postshipment  verifications. See GAO, Export Controls: Post-Shipment Verification Provides Limited  Assurance That Dual-use Items Are Being Properly Used, GAO-04-357 (Washington,  D.C.: Jan. 12, 2004); and Defense Trade: Arms Export Control System in the Post 9/11  Environment, GAO-05-234 (Washington, D.C.: Feb. 16, 2005). investigate, and take punitive action against potential violators of U.S.  export control laws. These authorities provide the Federal Bureau of  Investigation (FBI) and Immigration and customs Enforcement (ICE) with  overlapping jurisdiction to investigate defense potential violations, and  FBI, ICE, and Commerce’s Office of Export Enforcement (OEE) with  overlapping jurisdiction to investigate dual-use potential violations.
Inspections of items scheduled for export are routinely conducted at U.S.  air, sea, and land ports, as part of the U.S. Customs and Border  Protection (CBP) officer’s responsibilities for enforcing U.S. import and  export control laws and regulations at our nation’s ports of entry. CBP’s  enforcement activities include inspection of outbound cargo through a  risk-based approach using CBP’s automated targeting systems to assess  the risk of each shipment, review and validation of documentation  presented for licensable items, detention of questionable shipments, and  seizure of shipments and issuance of monetary penalties for items that  are found to be in violation of U.S. export control laws. According to  CBP officials, almost 3 million shipments per month are exported from the  United States.
Investigations of potential violations of export control laws for dual-use  items are conducted by agents from OEE, ICE, and FBI. Investigations of  potential export control violations involving defense items are conducted  by ICE and FBI agents. OEE and ICE are authorized to investigate  potential violations of dual-use items. ICE is also authorized to investigate  potential violations of defense items. The FBI has authority to investigate  any criminal violation of law not exclusively assigned to another agency,  and is mandated to investigate and oversee export control violations with  a counterintelligence concern. The investigative agencies have various  tools for investigating potential violations (see table 2) and establishing  cases for potential criminal or administrative punitive actions.
Punitive actions, which are either criminal or administrative, are taken  against violators of export control laws and regulations, and may involve  U.S. or foreign individuals and companies. Criminal violations are those  cases where the evidence shows that the exporter willfully violated export  control laws. U.S. Attorneys’ Offices prosecute export control  enforcement criminal cases in consultation with Justice’s National  Security Division. These cases can result in imprisonment, fines,  forfeitures, and other penalties. Punitive actions for administrative  violations can include fines, suspension of an export license, or denial or  debarment from exporting, and are imposed primarily by State or  Commerce, depending on whether the violation involves the export of a  defense or a dual-use item. For example, Commerce can impose the  administrative sanction of placing parties acting contrary to the national  security or foreign policy interests of the United State on a list that  prevents their receipt of items subject to Commerce controls. The  Treasury’s Office of Foreign Assets Control (OFAC) administers and  enforces economic sanctions programs primarily against countries and  groups of individuals, such as terrorists and narcotics traffickers. The  sanctions can be either comprehensive or selective, using the blocking of  assets and trade restrictions to accomplish foreign policy and national  security goals. In some cases, both criminal and administrative penalties  can be levied against an export control violator. In fiscal year 2010,  Justice data showed that 56 individuals or companies were convicted of  criminal violations of export control laws.and Commerce reported more than $25.4 million in administrative fines  and penalties for fiscal year 2010. In 2011, over a third of the major U.S.  export control enforcement and embargo-related criminal prosecutions  involved the illegal transfer of U.S. military, nuclear, or technical data to  Iran and China.
section_title: Agencies Use a Risk- Based Approach to Allocate Resources but Do Not Fully Track Those Used For Export Control Enforcement
paragraphs: Agencies use some form of a risk-based approach when allocating  resources to export control enforcement as their missions are broader  than export controls. As agencies can use these resources for other  activities based on need, tracking resources used solely on export control  enforcement activities is difficult. Only OEE allocates all of its resources  exclusively to export control enforcement as that is its primary mission,  and State and the Treasury have relatively few export control  enforcement staff to track. Agencies’ risk-based resource allocation  approach incorporates a variety of information, including workload and  threat assessment data, but has not generally included data on resources  used for export control enforcement activities as agencies did not  implement systems to fully track this information until recently. Given the  overlapping jurisdiction of several enforcement agencies, in some cities  agencies have voluntarily created local task forces that bring together  enforcement resources to work collectively on cases—informally  leveraging resources.
subsections: section_title: Most Agencies—Whose Missions Are Broader Than Export Controls—Have Limited Data on Resources Used for Export Control Enforcement
paragraphs: Agencies determine their missions based on statutes, policy, and  directives, and articulate their fundamental mission in their strategic  plans.with senior agency officials, agencies with primary export control  enforcement responsibility have multiple missions that extend beyond  export controls as shown in table 3, except for OEE. As such, these  agencies are faced with balancing multiple priorities when allocating staff  resources.
Based on our review of these documents as well as discussions  enforcement, and as such, is the only agency that has been able to  fully track the resources used on these activities. To formulate its  budget and allocate its investigators, OEE conducts threat  assessments with a priority related to weapons of mass destruction,  terrorism, and unauthorized military use; and analyzes export control  enforcement case workload, including the prior year’s investigative  statistics of arrests, indictments, and convictions. OEE also recently  completed a field office expansion study to decide which cities would  be the best locations for additional OEE field offices. In this study,  OEE considered the volume of licensed and unlicensed exports and  the type of high-tech items exported from different areas of the United  States, and concluded that Atlanta, GA; Cincinnati, OH; Phoenix, AZ;  and Portland, OR, were optimal locations, but has not received budget  approval for expansion.
CBP reemphasized outbound operations in the creation of its  Outbound Enforcement Division in March 2009 to help prevent  terrorist groups, rogue nations, and other criminal organizations from  obtaining defense and dual-use commodities; enforce sanctions and  trade embargoes; and increase exporter compliance. CBP determines  the number of staff to allocate to outbound inspections through a risk- based approach based on prior workload and a quarterly threat  matrix—which includes the volume of outbound cargo and  passengers, port threat assessments, and the numbers and types of  seizures and arrests at the ports for items such as firearms and  currency. As of fiscal year 2010, CBP had allocated approximately  660 officers for outbound enforcement activities, but these officers can  be used for other than export control-related activities at any time,  when needed. For example, the Port of Baltimore has officers  assigned to perform outbound activities at both the airport and  seaport, some of which focus on the enforcement of controlled  shipments in the seaport environment. According to the Port Director,  any of these officers can be redirected at any time and often are  assigned to the airport during the busy airline arrival times, to perform  inbound inspection duties—based on priorities. Further, CBP does not  track the hours that its officers across the country spend on export  control enforcement activities, but is in the process of implementing a  system to do so. CBP officials stated that determining the right mix of  officers is complex and changes to its tracking system should allow for  better planning and accounting for resources used for outbound  activities in the future.  ICE’s Homeland Security Investigations, Counter-Proliferation  Investigations Unit focuses on preventing sensitive U.S. technologies  and weapons from reaching the hands of adversaries and conducts  export control investigations. To determine how many investigators it  should allocate to this unit, ICE uses information including operational  threat assessments and case data from the previous year, by field  office, on total numbers of arrests, indictments, convictions, seizures,  and investigative hours expended on export control investigations. For  example, it assigns a tier level for each of its 70 field offices, based on  threat assessments—ranging from 1 for the highest threat, resulting in  a larger number of agents assigned to these offices; to 5 for the  lowest threat, with a lower number of agents assigned. To further  prioritize resources, in 2010, ICE established Counter Proliferation  Investigations Centers in selected cities throughout the United States,  with staff focused solely on combating illegal exports and illicit  procurement networks seeking to acquire vital U.S. technology. ICE  concluded that it needed to form these centers to combat the  specialized nature of complex export control cases and determined  that its previous method of distributing resources needed refinement,  noting that some ICE field office managers had difficulty in balancing  numerous competing programmatic priorities and initiatives.  According to ICE officials, they plan to mitigate these concerns by  having staff and facilities focused solely on export control enforcement  cases, which will allow ICE to track and use this information to better  determine future resource needs.
The FBI, with both an investigative and intelligence mission, does not  allocate resources solely for export control enforcement and officials  told us they view these activities as a tool to gain intelligence that may  lead to more robust cases. Nevertheless, cases involving export  controls are primarily led by agents within the Counterintelligence  Division. To determine the number of agents to allocate to this  division, the FBI uses a risk management process and threat  assessments. Several years ago, the FBI established at least one  Counterintelligence squad in each of its 56 field offices. In July 2011,  the FBI established a Counterproliferation Center, merging its  Counterintelligence Division and its Weapons of Mass Destruction  Directorate to better focus their efforts and resources. The FBI is in  the process of implementing new codes within its resource tracking  system to obtain better information on agents’ distribution of work,  which will include time spent on investigations of defense and dual- use items.
U.S. Attorneys’ Offices have discretion to determine the resources  that they will allocate to export control enforcement cases, based on  national priorities and the individual priorities of the 94 districts. These  priorities include law enforcement concerns for their district and leads  from investigative agencies. In response to the risk associated with  national security, which includes export control enforcement cases,  staffing for national security activities has increased and several  districts have created national security sections within their office. In  2008, the Executive Office for U.S. Attorneys provided codes for  charging time and labeling cases to obtain better information on the  U.S. Attorneys’ Office distribution of work and those resources used  for export control enforcement. However, some Assistant U.S.  Attorneys told us that the time-keeping system is complicated as there  are multiple codes and sub-categories in the tracking system and  determining the correct codes is often subjective, making it difficult to  track time spent on export control enforcement cases. Senior agency  officials acknowledged this concern and are working with the U.S.  Attorneys’ Offices to provide better guidance to improve the accuracy  of attorney time charges.
Other offices, such as State’s Office of the Legal Adviser for Political- Military Affairs and Commerce’s Office of the Chief Counsel for the  Bureau of Industry and Security assist the enforcement agencies by  providing legal support. For example, Commerce’s Office of the Chief  Counsel pursues administrative enforcement actions against  individuals and entities, but also reviews and advises on OEE  recommendations for other administrative actions, such as temporary  denials of licenses. In addition, DDTC and OFAC pursue  administrative enforcement actions against violators. For example,  OFAC administers and enforces U.S. economic and trade sanctions  against designated foreign countries. While not all of staff in these  offices are allocated to export control enforcement, these offices have  relatively few staff to track.
In addition to a domestic presence, most export control enforcement  agencies also allocate resources overseas, but only Commerce allocates  resources exclusively to export control enforcement. For example,  Commerce maintains Export Control Officers in six locations abroad;  Beijing and Hong Kong, China; Abu Dhabi, UAE; New Delhi, India;  Moscow, Russia; and Singapore, to support its dual-use export control  enforcement activities. Given that these officers have regional  responsibilities, they cover additional locations. For example, the Export  Control Officer assigned to Singapore also covers Malaysia and  Indonesia. While other agencies have field locations in many overseas  locations, these resources are to support the agencies’ broader missions  and can be used for other duties based on the overseas mission  priorities. For example, ICE has 70 offices in 47 foreign countries with  more than 380 government and contract personnel which support all ICE  enforcement activities, including export control. They can also be called  upon to support various other DHS mission priorities. Specifically, the ICE  agents we met with at the U.S. Embassy in Abu Dhabi also conduct  activities in support of the full DHS mission and a great portion of their  time is spent on visa security and a lesser amount on export control  enforcement activities.
section_title: Agencies Informally Leverage Enforcement Resources through Local Task Forces
paragraphs: The export control enforcement investigative agencies often have offices  located in the same cities or geographic areas. In many of these cities,  agencies’ officials said that they informally leverage each others’ tools,  authorities, and resources to coordinate investigations and share  intelligence through local task forces allowing them to use resources  more efficiently and avoid duplicating efforts or interfering with each  other’s cases. In 2007, Justice’s National Export Enforcement Initiative  encouraged local field offices with a significant export control threat to  create task forces or other alternatives to coordinate enforcement efforts  in their area. Since then, almost 20 U.S. Attorneys’ Offices have created  task forces of their own initiative or in conjunction with another  enforcement agency, primarily in cities where these agencies are co- located to facilitate the investigation and prosecution of export control  cases. Figure 1 shows the location of investigative agencies’ major field  offices, as well as the location of export control enforcement task forces.
Most of the task force members we met with in Baltimore, Los Angeles,  and San Francisco stated that they see benefits beyond the coordination  of cases, including investigating cases together and sharing resources.
Baltimore’s Counterproliferation Task Force: ICE and the U.S. Attorneys’  Office created this Task Force in 2010 and it has representatives from  each of the enforcement agencies located in the area, as well as the  defense and intelligence communities. Task force officials stated that they  develop and investigate export control cases together and, to enhance  interagency collaboration, ICE has supplied work space, allowing agents  from other agencies to work side-by-side to pursue leads and conduct  investigations. Officials emphasized that the task force enables smaller  agencies with fewer resources to leverage the work and expertise of the  others to further their investigations and seek prosecutions. Sometimes  the task force structures reap benefits that individual agencies cannot  reach on their own, as exemplified by the Baltimore Counterproliferation  Task Force. Among successes was a Maryland man sentenced to 8  months in prison followed by 3 years of supervised release for illegally  exporting export-controlled night vision equipment.
Los Angeles’ Export and Anti-proliferation Global Law Enforcement  (EAGLE) Task Force: The U.S. Attorney established this Task Force in  2008 as a result of Justice’s counter-proliferation initiatives. Its purpose is  to coordinate and develop expertise in export control investigations.  Currently, there are over 80 members from 17 Los Angeles-based federal  agencies. According to a task force official, the EAGLE task force has  resulted in increased priority on export control investigations and  improved interagency cooperation since it was established. For instance,  the enforcement agencies are now more effectively sharing information in  their respective databases. A task force official noted that enhanced  access to these databases allows agencies to reduce duplication of  license determination requests and to easily retrieve information on a  particular person or commodity’s history using the search options.  Additionally, through the task force structure, ICE and OEE agents have  worked together to conduct additional outreach to industry affiliates.
San Francisco’s Strategic Technology Task Force: According to officials,  this task force was formed by FBI in 2004, with a primary focus on  conducting joint export control outreach activities to academia and  industry with the other investigative agencies (ICE and OEE). This task  force also includes participation by the military service intelligence units  and other law enforcement agencies. FBI task force leaders stated that  this task force has helped to coordinate outreach activities as well as to  generate investigative leads. According to an agent from the FBI’s San  Jose field office, that office has a performance goal to conduct 90 percent  of their export control-related investigations jointly with investigative  agencies at ICE and Commerce.
Although successful cases of joint collaboration among agencies can  yield positive enforcement outcomes, as reported by the offices in the  three cities we visited, the extent to which these alliances are effective is  primarily dependent on personal dynamics of a given region, agency, and  law enforcement culture. In addition, these local agency task forces for  export control enforcement vary in structure, are voluntary, and do not  exist nationwide. For example, while multiple investigative agencies have  local offices in Chicago and Dallas with export control enforcement  agents, agencies do not have a local task force in these cities to regularly  coordinate on export control cases. While agency officials shared  examples of agencies informally leveraging each other’s resources,  officials told us that they do not factor in such resources when planning  their own agency allocations for a variety of reasons, including each  agency’s separate budgets and missions, which do not generally consider  those of other agencies.
section_title: Reform Initiatives May Help Address Challenges In Investigating Illicit Transshipments But Detailed Plans Are Unknown
paragraphs: Enforcement agencies face several challenges in investigating illicit  transshipments, both domestically and overseas—including license  determination delays; limited access in some overseas locations; and a  lack of effectiveness measures that reflect the complexity and qualitative  benefits of export control cases. Recognizing broader challenges in  export control enforcement, the President announced the creation of a  national export enforcement coordination center, which may help  agencies address some of the challenges described below, but detailed  plans to do so have yet to be developed.
subsections: section_title: Investigators Face Several Challenges in Investigating Illicit Transshipments— Both Domestically and Overseas
paragraphs: The current export control enforcement system poses several challenges  that potentially reduce the effectiveness of activities and limit the  identification and investigation of illicit transshipments. Export control  enforcement agencies seek to keep defense and dual-use items from  being illegally exported through intermediary countries or locations to an  unauthorized final destination, such as Iran, but agencies face challenges  that can impact their ability to investigate export control violations, both  domestically and overseas. First, license determinations—which confirm  whether an item is controlled and requires a license, and thereby help  confirm whether an export control violation has occurred—can sometimes  be delayed, potentially hindering investigations and prosecutions.  Second, investigators have limited access to secure communications and  cleared staff in several domestic field offices, which can limit their ability  to share timely and important information. Third, agencies have limited  access to ports and facilities overseas. Fourth, agencies lack consistent  data to quantify and identify trends and patterns in illicit transshipments of  U.S. export-controlled items. Lastly, investigative agencies lack measures  of effectiveness that fully reflect the complexity and qualitative benefits of  export control cases.
License Determination Delays. To confirm whether a defense or dual-use  item is controlled and requires a license, inspectors, investigators, and  prosecutors request license determinations from the licensing agencies of  State and Commerce. These license determinations are integral to  enforcement agencies’ ability to seize items, pursue investigations, or  seek prosecutions. DHS’s Exodus Command Center operates the Exodus  Accountability Referral System—an ICE database that initiates, tracks,  and manages enforcement agency requests for license determinations  from the licensing agencies.identifies three different levels of license determinations: initial (to seize  an item or begin an investigation), pre-trial (to obtain a search warrant,  among other things), and trial (to be used during trial proceedings). The  Exodus Command Center has established internal timeliness goals for  receiving responses to requests for initial determinations within 3 days;  pre-trial certifications within 45 days; and trial certifications within 30 days.  However, as shown in table 5, these goals are often not met, which can  create barriers for enforcement agencies in seizing shipments before they  depart the United States; obtaining search warrants; and making timely  arrests.
section_title: Conclusions
paragraphs: Given the wide-ranging mission of most of the agencies involved in export  control enforcement, it is essential that agencies track resources  expended on export control inspections, investigations, and prosecutions  to assess how these resources are contributing to fulfilling their missions  and are focused on the highest priorities in export control enforcement.  While agencies, such as DHS and Justice, have recognized the need to  better track their resources, a more comprehensive approach, including  enhanced measures of effectiveness, could help these and other  enforcement agencies assess workload and efficiency in making resource  allocations and in determining whether changes are warranted. The  creation of the Export Enforcement Coordination Center presents such an  opportunity for the entire export control enforcement community. The  center has the potential to become more than a co-location of  enforcement agencies, but can be a conduit to more effectively manage  export control resources. As the center’s operation progresses, it has the  opportunity to address ongoing challenges in export control enforcement,  including reducing potential overlap in investigations, and help agencies  to work as efficiently as possible, maximize available intelligence and  agency investigative data, and measure the effectiveness of U.S. export  control enforcement activities. Challenges presented by delays in license  determinations can affect the inspection, investigation, and prosecution of  export control cases but may be outside of the mission of the center since  they primarily involve the licensing agencies. Having goals for processing  license determinations can help establish transparency and accountability  in the process. Given that the licensing agencies and the Exodus  Command Center have not agreed to timeliness goals for responding to  such requests, these agencies may benefit from collaborating to help  improve the effectiveness of the process.
section_title: Recommendations for Executive Action
paragraphs: To better inform management and resource allocation decisions,  effectively manage limited export control enforcement resources, and  improve the license determination process, we are making the following  four recommendations:  We recommend that the Secretary of Homeland Security and the Attorney  General, as they implement efforts to track resources expended on export  control enforcement activities, use such data to make resource allocation  decisions.
We recommend that the Secretaries of Commerce and Homeland  Security as they develop and implement qualitative measures of  effectiveness, ensure that these assess progress towards their overall  goal of preventing or deterring illegal exports.
We recommend that the Secretary of Homeland Security, in consultation  with the departmental representatives of the Export Enforcement  Coordination Center, including Commerce, Justice, State, and the  Treasury  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; establish procedures to facilitate data sharing between the  enforcement agencies and intelligence community to measure illicit  transshipment activity; and develop qualitative and quantitative measures of effectiveness for the  entire enforcement community to baseline and trend this data.
We recommend that the Secretaries of Commerce and State, in  consultation with the Secretary of Homeland Security, the Attorney  General, and other agencies as appropriate, 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.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided a draft copy of this report to Commerce, DHS, DOD, Justice,  State, and Treasury for their review and comment. Commerce, DHS,  Justice, and State concurred with the report’s recommendations and,  along with DOD, provided technical comments which we incorporated as  appropriate. Treasury did not provide any comments on the report.
As multiple agencies have responsibilities for export control enforcement,  several of our recommendations call for these agencies to work together  to effectively manage limited export control enforcement resources and to  improve the license determination process. In their comments, Commerce  and State agreed to work in consultation with DHS and Justice to  establish timeliness goals for license determinations. In its comments,  DHS stated its intent to work with the other agencies to improve the  license determination process as well as take steps to deploy its  resources in the most effective and efficient manner and provided target  dates for completing these actions. In particular, DHS noted that ongoing  tracking efforts by CBP and ICE will be used to improve their knowledge  of resources expended on export control enforcement activities and that  they will periodically review this information to determine the overall  direction of the export control program. Additionally, DHS stated its intent  to establish a working group with other agencies to develop performance  measures related to export control enforcement to help estimate the  effectiveness of all associated law enforcement activity. Written  comments from Commerce, DHS, and State are reprinted in appendixes  II, III, and IV, respectively.
We are sending copies of this report to interested congressional  committees, as well as the Secretaries of Commerce, Defense,  Homeland Security, State, and Treasury as well as the Attorney General.  We will also make copies available to others upon request. In addition,  the report will be available at no charge on GAO’s Web site at  http://www.gao.gov.
If you or your staff have any questions on matters discussed in this report,  please contact me at (202) 512-4841 or martinb@gao.gov. Contact points  for our Offices of Congressional Relations and Public Affairs may be  found on the last page of this report. GAO staff that made key  contributions to this report is listed in appendix V.
section_title: Appendix I: Scope and Methodology
paragraphs: To determine how agencies allocate staff resources for export control  enforcement activities, we interviewed cognizant officials and examined  relevant documents such as agencies’ budgets, strategic plans,  memorandum, and other documentation on resources. We interviewed  officials about their resources at the headquarters of Commerce, DHS,  Justice, State, and the Treasury. We also discussed with DOD officials  their role in providing investigative support to agencies responsible for  export control enforcement. We developed and used a set of structured  questions to interview each agency’s resource planners to determine how  they allocate resources, what information and factors they consider in  resource allocation decisions, what their enforcement priorities are,  whether they track resources expended on enforcement, if they had  conducted an analysis of their resource need, and if they consider or  leverage other agencies’ resources. We obtained applicable criteria  including the Office of Management and Budget  Circular A-11 and  departmental guidance on resource allocation and tracking. We also  reviewed previous GAO and inspector general reports regarding the  Government Performance and Results Act (GPRA), as amended, and  resource management for enforcement programs. To determine current  resource levels, we obtained geographic locations of all domestic staff  conducting export control enforcement, actual expenditures on export  control enforcement activities, and information on staffing levels from  each agency for fiscal years 2006 through 2010. We did not  independently verify the accuracy of agency information on expenditures  and staffing levels obtained, but we corroborated this information with  cognizant agency officials. We considered agencies’ overall resources for  the broad enforcement authorities and the resources allocated to export  control enforcement specifically. Finally, we analyzed agencies’ budget  requests, expenditures, and staff hours to determine agencies current  resource commitment and how agencies have allocated resources to  export control enforcement activities.
To determine challenges that agencies face in investigating illicit  transshipments and the potential impact of export control reform initiatives  on enforcement activities, we interviewed cognizant officials, examined  and analyzed relevant export control documents and statutes, and  conducted sites visits both domestically and overseas. We interviewed  officials about their enforcement priorities at the headquarters of  Commerce, DHS, Justice, and State. We also discussed with DOD  officials their role in providing license determination support to agencies  responsible for export control enforcement. We developed and used a set  of structured questions to interview enforcement agency officials in  selected domestic and overseas locations and observed export  enforcement operations at those locations that had air, land, and  seaports. We selected sites to visit based on various factors, including  geographical areas where all enforcement agencies were represented  with a large percentage of investigative caseload; areas with a mix of  defense and high-tech companies represented; ports with a high volume  of trade of U.S. commodities; a large presence of aerospace, electronics,  and software industries, and based on headquarters officials’  recommendations on key areas of export control enforcement activities  both domestically and abroad. On the basis of these factors, we visited  Irvine, Long Beach, Los Angeles, Oakland, San Francisco, and San Jose,  CA; Washington, D.C.; and Baltimore, MD domestically. Internationally,  we interviewed United States Embassy and Consulate officials and host  government authorities in Hong Kong, Singapore, and in Abu Dhabi and  Dubai in the United Arab Emirates (UAE). We received briefings on the  export control systems from the Hong Kong Government’s Trade and  Industry Department, Customs and Excise Tax Department, from  Singapore’s Ministry of Foreign Affairs, Singapore’s Immigration and  Customs Authority; as well as toured ports at these locations. We also  received a briefing from the Hong Kong Customs Airport Command on air  cargo and air-to-air transshipment of strategic commodities and visited  the DHL Hub at the Hong Kong International Airport. In the UAE, we  visited the Government of Sharjah, Department of Seaports & Customs,  Hamriyah Free Zone Authority and met with the Director and Security and  Safety Manager to discuss the Hamriyah Free Zone. We reviewed the  findings and recommendations of past GAO reports, documentation from  enforcement agencies, and interviewed U.S. government officials from  these agencies as well as their field offices. We also met with several  agency representatives of the Export Control Reform Task Force and  reviewed recent White House press releases on the export reform  initiatives. Further, we examined Federal Register notices on changing  regulations related to the export control reform initiative.
We conducted this performance audit from February 2011 through March  2012, in accordance with generally accepted government auditing  standards. Those standards require that we plan and perform the audit to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  that the evidence obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives.
section_title: Appendix II: Comments from the Department of Commerce
section_title: Appendix III: Comments from the Department of Homeland Security
section_title: Appendix IV: Comments from the Department of State
section_title: Appendix V: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
paragraphs: Belva Martin, (202) 512-4841 or martinb@gao.gov.
section_title: Staff Acknowledgments
paragraphs: In addition to the contact names above, John Neumann, Assistant  Director; Lisa Gardner; Desiree Cunningham; Jungjin Park; Marie Ahearn;  Roxanna Sun; Robert Swierczek; and Hai Tran made key contributions to  this report.