GAO Reports on BIS's Dual-Use Export Control System

In light of the September 2001 terror attacks, GAO was asked by the Chairman of the House Committee on International Relations to examine the Department of Commerce Bureau of Industry and Security's (BIS's) dual-use export control system. In response, GAO (1) assessed whether BIS has evaluated and made changes to the system, (2) evaluated BIS's screening of export license applications against its watchlist, and (3) determined the extent to which BIS has taken corrective actions in response to weaknesses previously identified by GAO.

GAO Finds Lack of Systematic Evaluations

GAO states that although BIS made some regulatory and operational changes to the dual-use export control system, it has not systematically evaluated the system to determine whether it is meeting its stated goal of protecting U.S. national security and economic interests. GAO states that BIS relies on limited measures of efficiency that focus only on narrow aspects of the license application review process to assess the system's performance.

According to GAO, over the last 3 fiscal years, BIS has reported meeting its licensing-related time frames; however, BIS does not have efficiency-related measures for other steps in the license application review process, such as how quickly a license should be issued or denied once other agencies provide their input, or for the review process as a whole. GAO states that BIS also does not evaluate the efficiency of other aspects of the system, particularly whether it is meeting the regulatory time frame for the processing of commodity classification requests, of which there were 5,370 in fiscal year 2005 or about 24 percent of licensing officers' workload.

According to GAO, absent systematic evaluations, BIS conducted an ad hoc review of the system to determine if changes were needed after the events of September 2001. BIS officials determined that no fundamental changes were needed but opted to make some adjustments primarily related to controls on chemical and biological agents. GAO was unable to assess the sufficiency of the review and resulting changes because BIS officials did not document their review.

GAO Finds Omissions in BIS Watchlist

GAO states that it found omissions in the watchlist BIS uses to screen export license applications, which is intended to identify ineligible parties or parties warranting more scrutiny. GAO states that it identified 147 parties that had violated U.S. export control requirements, had been determined by BIS to be suspicious end users, or had been reported by the State Department as committing acts of terror, but these parties were not on the watchlist of approximately 50,000 names. GAO states that reasons for the omissions include a lack of specific criteria as to who should be on the watchlist and BIS's failure to regularly review the list. GAO also states that a technical limitation in BIS's computerized screening system results in some parties on license applications not being automatically screened against the watchlist.

GAO Finds Prior Recommendations Left Unaddressed

According to GAO, BIS has implemented several but not all of GAO's recommendations for ensuring that export controls on sensitive items protect U.S. interests. Among weaknesses identified in prior GAO reports is the lack of clarity on whether certain items are under BIS's control, which increases the risk of defense-related items being improperly exported. GAO states that BIS has yet to take corrective action on this matter.

GAO states that it also recommended that the Commerce Department, together with the Departments of State and Defense, develop agreed-upon criteria for determining which classification requests should be referred to the other departments, which would minimize the risk of improper determinations. According to GAO, BIS has not implemented this recommendation and continues to refer only a few commodity classifications to the two departments. GAO also reported in 2001 that export control jurisdiction between the two departments had not been clearly established for almost 25 percent of the items that U.S. government agreed to control as part of its commitments to the multilateral Missile Technology Control Regime, and GAO states that the two departments have yet to take action to clarify which department has jurisdiction over these sensitive missile technology items. GAO states that as a result, the U.S. government has left the determination of jurisdiction to the exporter.

GAO's Recommendations

The GAO recommends that the Secretary of Commerce systematically evaluate the dual-use export control system, correct omissions in BIS's watchlist and weaknesses in the screening process, and take action to address GAO's prior unimplemented recommendations.

GAO Report (GAO-06-638), dated June 2006) available at http://www.gao.gov/new.items/d06638.pdf