investigate, and take punitive action against potential violators of U.S.  export control laws. 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. Agencies Use a Risk- Based Approach to Allocate Resources but Do Not Fully Track Those Used For Export Control Enforcement

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. 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. This task  force also includes participation by the military service intelligence units  and other law enforcement agencies. Reform Initiatives May Help Address Challenges In Investigating Illicit Transshipments But Detailed Plans Are Unknown

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. Investigators Face Several Challenges in Investigating Illicit Transshipments— Both Domestically and Overseas

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. 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. 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. Recommendations for Executive Action

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 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. 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. We interviewed  officials about their enforcement priorities at the headquarters of  Commerce, DHS, Justice, and State.
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 enforcementthe Departments of Commerce, Homeland Security (DHS), Justice, State and the Treasuryconduct inspections and investigations, and can levy punitive actions against violators. A challenging aspect of export control enforcement is the detection of illicit transshipmentsthe 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 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 Commerces 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 determinationswhich confirm whether an item is controlled and requires a license, and thereby help confirm whether an export control violation has occurredare 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 communityto seize shipments and take other actions against export control violatorsofficials 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.

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 GAOs recommendations.