Export Controls:

Reengineering Business Processes Can Improve Efficiency of State Department License Reviews

GAO-02-203: Published: Dec 31, 2001. Publicly Released: Jan 10, 2002.

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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.

Status Legend:

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  • Review Pending-GAO has not yet assessed implementation status.
  • Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.
  • Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.
  • Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.
    • Review Pending
    • Open
    • Closed - implemented
    • Closed - not implemented

    Recommendations for Executive Action

    Recommendation: To improve the efficiency and timeliness of the munitions licensing process, the Secretary of State should 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.

    Agency Affected: Department of State

    Status: Closed - Implemented

    Comments: Approximately 30 percent of State Department munitions license applications are referred to other State Department offices and U.S. government agencies. The State Department's "Licensing Officer Handbook and Process Guidelines" now provides detailed guidance to assist licensing officers in deciding if a license application should be referred to other offices and agencies. The guidelines were developed in consultation with State Department offices and other agencies. Specifically, the guidelines provide a chart which list referral criteria for each office and agency. Directorate of Defense Trade Controls officials met with officials from State Department referring offices to discuss the licensing process to determine the needs of each referral office. As a result of these discussion's, the Directorate has developed its referral guidelines and is putting country disposition guidelines on the desktops of all licensing officers. Directorate officials are also working with Defense Department officials and are developing a memorandum of understanding regarding the licensing process.

    Recommendation: To improve the efficiency and timeliness of the munitions licensing process, the Secretary of State should direct the Office of Defense Trade Controls in conjunction with reviewing agencies and offices to establish timeliness goals for each phase of the licensing process.

    Agency Affected: Department of State

    Status: Closed - Implemented

    Comments: As part of the Directorate of Defense Trade Controls' business process reengineering effort, the Directorate has established a system of highlighting licenses that may be stalled in the licensing process. First, the Defense Department will provide responses on license applications referred to them within 25 days. Second, the Directorate reserves the right to act on a license if no reply is received within 30 days unless the reviewing office requests further time--to include a reasonable deadline. Third, offices that have not responded to cases within 30 days will be contacted by the Directorate, with the aim of obtaining a recommendation. Fourth, if a license application review extends beyond 60 days, consideration may be given to establishing a committee to resolve the licensing issues. The Directorate's new D-Trade electronic licensing system now has reporting mechanisms to highlight license applications that exceed certain timeframes.

    Recommendation: Further, the Secretary of State should direct the Office of Defense Trade Controls to establish a mechanism to track license applications through each phase of the process to ensure timeliness goals are met and applications are not lost or delayed.

    Agency Affected: Department of State

    Status: Closed - Implemented

    Comments: The Directorate of Defense Trade Controls developed a new "D-Trade" database which receives electronically submitted license applications, provides license applications to referring organizations, and tracks license applications as they move through the licensing process. This database has a series of reports that track the progress of license applications. With this information, Directorate staff are responsible for ensuring licenses are moving through the process without unreasonable delay.

    Recommendation: To prevent imbedding an inefficient process into the State Department's planned electronic business processing system, the Secretary of State should ensure the steps outlined above are taken before proceeding with a new electronic processing system. The State Department should coordinate its efforts with the Defense Department because the Defense Department is also developing a new electronic system and receives the majority of license applications referrals.

    Agency Affected: Department of State

    Status: Closed - Implemented

    Comments: The State Department has worked with their offices and other agencies to develop guidelines for referring license application, establish referral procedures and timeliness goals for moving applications through the review process, and establish electronic tracking reports to ensure that timeliness goals are met. With these measures complete, the State Department is moving forward with their electronic licensing system. Furthermore, the State Department is nearing completion of a memorandum of understanding with the Defense Department on procedures associated with the licensing process with particular emphasis on the electronic referral of license applications.

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