GAO Highlights Issues Plaguing Firearms Export Licensing Reviews, End-Use Checks

The 87-page GAO report, released last week, highlights issues that are hampering U.S. licensing efforts since the State Department transferred oversight over most non-automatic and semiautomatic firearms to the Commerce Department in 2020 (see 2001170030). GAO said the State Department, which gives its input on those licensing decisions, lacks “agency-wide guidance” for how its individual bureaus review applications. It also said BIS staffing shortages mean the agency often relies on International Trade Administration officials to carry out end-use checks for those exports, which conflict with ITA’s duties to promote U.S. exports, not restrict them.

The report was published after BIS put in place a hold on new license applications submitted this month, which some lawyers said could exacerbate delays caused by the agency’s staffing shortages 2502130068).

GAO specifically called the State Department’s license review process “fragmented,” “inconsistent” and “duplicative.” The agency’s Bureau of International Security and Nonproliferation (ISN) and Bureau of Economic and Business Affairs (EB) mostly handle those reviews, although EB officials told GAO that they felt their role was “duplicative” because ISN was already reviewing most of the applications routed to them. EB officials also said they don’t have the “same expertise” as ISN employees and don’t have access to information that ISN employees use to screen end-users against a firearms distributors database, view their application history or identify trends.

As a result, EB officials mostly defer to ISN on licensing reviews, GAO said, but they still have to process the applications, which takes time. ISN officials told GAO that this “duplicative review process predated their tenure at the agency” and they were unable to “explain the rationale for the review process.”

“Without a consolidated coordination of State’s position, State creates a fragmented review process, which makes it difficult to ensure that all export license applications for Commerce-controlled firearms receive the same level of review,” GAO said. It added that some of the State Department’s reviews “might not be considering all the relevant information or consulting the appropriate expertise, which could increase the risk of firearms being exported to unauthorized end users.”

GAO also said the State Department lacks guidance to help its bureaus carry out those reviews. Without written guidance, some bureau officials told GAO “they were not always clear on how the review process worked,” including whether licenses needed to be reviewed within a certain time frame. In multiple cases, an official told GAO that they would have recommended the U.S. deny the licensing applications, but the person didn’t know about Commerce’s deadlines and didn’t “respond in time to those review requests.” Commerce ultimately approved those applications, the report said.

GAO also noted that ISN, the State Department agency that reviews most of these license applications, doesn’t have access to an internal watch list of potentially questionable end-users that the Directorate of Defense Trade Controls uses when screening transactions. “Without access to DDTC’s internal watch list, ISN may lack critical information needed to effectively screen license applicants for firearms exports and target possible cases for end-use monitoring to ensure that these exports are used as intended and by legitimate end users,” GAO said.

The report also touches on BIS, which it said is “hampered by staffing gaps” and often relies on officials in other Commerce bureaus to carry out firearms end-use checks, including officials who may not be as familiar with export control laws. Although BIS officials told GAO in 2018 that they were expecting a “higher workload” as a result of the looming 2020 transfer of firearms oversight to the State Department, they noted that Commerce didn’t request more funding to help its overseas export control officers until its FY 2025 budget request.

The report notes that the value of U.S. commercial exports of non-automatic and semiautomatic firearms rose by 7% in the three fiscal years after the 2020 transfer, compared with the three years before the transfer. That uptick was driven by “substantial increases” in the value of exports to resellers in “countries at high risk for firearms diversion or misuse.”

Because BIS doesn’t have enough export control officers to carry out its end-use checks, it sometimes relies on “diplomatic personnel,” such as a Foreign Commercial Service officer from ITA. These officials typically don’t have the same “skills and experience” as BIS export control officers -- including the same knowledge of the Export Administration Regulations or experience as a criminal investigator -- even though they tend to be called upon to carry out high-risk end-use checks, GAO said.

It also said end-use checks may conflict with ITA’s main duties of promoting commercial U.S. exports. An ITA official may, for example, connect an American business to an overseas firearms distributor and later be asked to carry out an end-use check on that distributor that could restrict those same exports. “Yet, BIS and ITA do not have guidance on how to segregate potentially conflicting duties,” GAO said.

BIS also doesn’t give its export control officers (ECOs) “formal training specific to their role before they start on the job,” GAO said. BIS told GAO that they generally hire these officers from a pool of internal applications with law enforcement experience, such as BIS special agents, and usually are already familiar with the agency and the EAR. But other times BIS hires officers from outside the agency who may not have export control experience, and they may sometimes learn from “on-the-job training” or “job aides” that help them carry out their duties.

“However, we found that some ECOs did not receive on-the-job training as described and were either unaware of the job aides or did not find them useful,” GAO said. “Additionally, BIS officials told us the job aides were out-of-date.”

The GAO report offers a range of recommendations for both the State and Commerce departments, including:

• the State Department should assess its process for reviewing license applications for Commerce-controlled firearms and determine whether it should consolidate that process into one bureau
• the State Department should develop agency-wide guidance for reviewing export license applications for Commerce-controlled firearms to “ensure consistent reviews across reviewing bureaus”
• the State Department should develop a process to share information from DDTC’s internal watch list with ISN to improve oversight over firearm exports
• Commerce should determine whether it needs more export control officers or “reallocate” existing officers “or other resources to provide for appropriate global coverage
• Commerce should develop and put in place new-hire training for export control officers
• Commerce should develop a “formal intra-agency process” for BIS to request assistance in conducting end-use checks from ITA and other bureaus and develop “controls to address conflicting duties that may exist between BIS and ITA.”

Both the State and Commerce departments told GAO they would work to address the recommendations.