	Background

Under the authority of the Arms Export Control Act, the State Department controls the export and temporary import of defense articles and services. Figure 1 shows the key phases of the license application review process. However, the State Department has not established formal guidelines for licensing officers to use to determine which agencies and State Department offices need to see certain license applications. As a result, the licensing office may be referring more applications than necessary. The State Department lacks procedures to control the flow of license applications through the review process, and as a result, in fiscal year 2000, hundreds of applications were lost and thousands more were delayed. State Department license reviewers told us that they frequently receive calls from applicants asking why their application is taking a long time. State Department Has Added Personnel and Plans to Automate the Process, but Needs to Focus on Correcting Process Weaknesses

The licensing office has taken steps to improve license processing time by hiring additional licensing officers and is planning to upgrade the office’s electronic business processing system. Recommendations for Executive Actions

To improve the efficiency and timeliness of the munitions licensing process, we recommend that the Secretary of State direct the Office of Defense Trade Controls in conjunction with reviewing agencies and offices to   develop criteria for determining which license applications to refer to other agencies and offices, and formal guidelines and training for organizations that receive referrals so that reviewers clearly understand their duties when reviewing license applications, and   establish timeliness goals for each phase of the licensing process. 2.
What GAO Found

The U.S. defense industry and some foreign government purchasers have expressed concern that the U.S. export control process is unnecessarily burdensome. Defense industry officials contend that extended reviews of export license applications by the State Department have resulted in lost sales and are harming the nation's defense industry. The State Department's Office of Defense Trade Controls is responsible for licensing the export and temporary import of defense articles and services. Many license applications take a long time to review because of their complexity and the need to consider different points of view. However, several conditions make the application review process less efficient and cause delays. The State Department has not established formal guidelines for determining the agencies and offices that need to review license applications. As a result, the licensing office refers more license applications to other agencies and offices than may be necessary. Furthermore, many license application reviewers in State Department reviewing offices consider license reviews a low priority. The State Department lacks procedures to monitor the flow of license applications through the review process. The State Department has hired new licensing officers which license office officials say has decreased processing time, and plans to upgrade the office's electronic business system. However, the planned upgrade needs to (1) ensure a controlled and timely flow of applications and (2) track the progress of applications.