Nothing in common

The departments of Defense and State are each building electronic systems designed to streamline the cumbersome U.S. export review process, but critics worry that industry's burden will be made heavier because the two systems may not be compatible."Industry doesn't want to have to gear up for two different systems with two different protocols," said Joel Johnson, vice president of international affairs for the Aerospace Industries Association, a Washington trade organization representing companies such as Lockheed Martin Corp., the Boeing Co. and TRW Inc.SRA International Inc., Fairfax, Va., won a $22.5 million contract Jan. 14 to automate the U.S. export license application process from the U.S. Export Systems Automation Initiative. Known as USXPORTS, the interagency office was opened in January 2001 by the Defense Department to establish a secure electronic license review interface among its offices, industry and other agencies. However, the State Department announced Jan. 2 that it was beta-testing an electronic, Web-based license application system it is developing in-house. State intends to unveil the new system during the first quarter of 2002. The new system will allow applications to be submitted over the Internet using encryption and digital authentication tools, according to a statement from Lincoln Bloomfield, assistant secretary for political and military affairs. He estimated the system could cut the processing time 25 percent to 50 percent.Of particular concern to the AIA, Johnson said, is that the State Department appears unwilling to acknowledge the work being done by the USXPORTS office. As a result, its e-review system may not work with the one contracted by USXPORTS."The Department of Defense [asked] State to help, and the State basically said, 'Pound sand,' " Johnson said. Bloomfield, however, has said the two systems, although not identical, will be compatible. In a defense industry forum in December, he said the State Department's system will do everything the Pentagon system would do, and probably more.SRA would not comment on the controversy, but Anthony Valletta, vice president and director of the company's command, control, communications and intelligence systems unit, said maintaining interoperability with present and future systems is a "paramount concern" for SRA and the USXPORTS office, and that State Department personnel had participated in the development process. SRA's system, scheduled for a 2003 or 2004 implementation, will eliminate submissions of paper-based supporting documents, Valletta said. Companies will be able to keep tabs on the status of their applications, and the average review time should be shortened as work-flow inefficiencies are smoothed over.Both systems answer industry criticism that the State Department's process for granting licenses is too slow.All companies that manufacture or export defense products or provide defense services are required to register with the State Department's Office of Defense Trade Controls to obtain a license. But while the U.S. export review process is controlled by the State Department, under the authority of the Arms Export Control Act, the office refers many applications to the Defense Department, Commerce Department and other agencies to evaluate their effects on national security and trade. When the State Department reviews export applications in-house, the average processing time is about 23 days, according to the General Accounting Office. But when other agencies must review applications, the processing time is 91 days. "Part of the problem is that it sometimes takes five or 10 days from when an application arrives [at an agency] until it is looked at by the first human being," Johnson said. "Sometimes the application sits on the desk for a few weeks while that particular officer is on vacation."A GAO report delivered to the Senate Armed Services subcommittee on readiness and management support last December found numerous inefficiencies in the review system. Review times were extended unnecessarily, departments had no set instructions on how to monitor the flow of applications, nor had they guidelines on how long reviews should take. In many cases, applications are lost or delayed.The State Department has argued that export licensing reviews can be lengthy because of the intensive process of evaluating what impact commercial offerings will have on foreign policy and national security. Johnson said the industry understands that long reviews may be necessary, but questioned their necessity in many cases. "We know that an aircraft with a missile launcher will take more than 30 days to review," Johnson said. "But why does it take two months to license 35 flares to the Italian Coast Guard?" Trade organizations such as the AIA claim the cumbersome process results in lost sales for U.S. business. According to AIA, when reviews for the commercial satellite sales shifted to the State Department from the Commerce Department in 1998, the industry suffered a 40 percent decline in market share the following year. According to an earlier GAO report, the State Department completed more than 46,000 license application reviews in fiscal 2000. The department authorizes more than $20 billion in commercial defense trade each year, according to the State Department Web site."An integrated system should help with licensing applications, statistics, compliance and final analysis of what we're doing in this country," Johnson said.