Imported Seafood Safety: Actions Needed to Improve FDA Oversight of Import Alert Removal Decisions

Imports account for over 90 percent of U.S. seafood consumption. FDA and the Department of Homeland Security (DHS) both play a role in overseeing imported seafood. FDA is responsible for ensuring the safety of most imported seafood. DHS provides FDA with import data on FDA-regulated products, including seafood. If FDA finds that imported seafood products appear to violate U.S. laws, FDA may place the products, firms, or countries on an import alert.

GAO was asked to review FDA's efforts to use import alerts to ensure the safety of imported seafood. This report, among other things, (1) describes FDA's import alert process for seafood products, (2) examines FDA oversight of key activities to support import alert removal decisions, and (3) examines the extent to which FDA has assessed the effectiveness of its seafood import alerts. GAO reviewed FDA procedures and data, including data on 274 removal decisions, for a non-generalizable sample of seven import alerts selected for a range of violations of federal law. GAO also interviewed FDA officials.

The Food and Drug Administration's (FDA) import alert process for seafood products includes three key components: (1) establishing new import alerts, which inform FDA field staff and the public that the agency has enough evidence that products appear to violate a federal food safety law to detain those products at U.S. ports of entry without physically examining them; (2) placing firms and products on existing import alerts; and (3) removing firms and products from those import alerts when violations are resolved. As of July 3, 2018—the most recent data at the time of GAO's analysis—FDA had 52 active import alerts affecting imported seafood that addressed a wide range of violations of federal law, including the presence of foodborne pathogens, such as Salmonella , or unapproved animal drug residues.

FDA has established audit goals, requirements, and expectations related to sampling and inspections—key activities to support import alert removal decisions—but does not monitor the extent to which it is meeting them. GAO's review of 274 removal decisions from October 1, 2011, through July 3, 2018, found that FDA had supported only a small percentage of its removal decisions by conducting sampling and inspections. For example, FDA has a goal to audit samples from at least one of the shipments used to support each removal decision to ensure the validity of the analysis that a private laboratory performed. However, GAO found that within a year prior to the 274 removal decisions, FDA did not conduct any audits for 260 (95 percent) of the 274 removal decisions. FDA officials said they conducted limited sampling because many import alert removal decisions can be supported by documentary evidence provided by firms. Additionally, for certain violations that indicate a firm failed to meet regulatory or administrative requirements and may pose a public health hazard, an FDA directive establishes a goal for FDA staff to conduct a follow-up inspection within 6 months. However, GAO's review of removal decisions found that for 31of the 32 firms that received such a finding, FDA did not conduct a follow-up inspection before removing them from an import alert. FDA officials said they did not know whether they were meeting their audit goals because the agency does not have a process to monitor the extent to which it is conducting its sampling and inspections. Establishing such a process would provide greater assurance that FDA is conducting its expected level of sampling and inspections to support its removal decisions and has confidence in continued compliance.

FDA has not established performance goals and measures for seafood import alerts—key elements for assessing the effectiveness of programs. Goals explain the outcomes a program seeks to achieve, and measures track progress towards those goals. In February 2019, FDA published a broad plan for the safety of imported food. The plan states that FDA intends to develop performance goals and measures related to imported food safety, but FDA has not established a time frame for doing so. By establishing a time frame and developing such goals and measures, FDA would be better positioned to assess how well its seafood import alert activities are supporting the agency in achieving its food safety mission.

GAO recommends that FDA (1) establish a process to monitor whether the agency is meeting its audit goals and expectations for sampling and inspections, (2) establish a time frame for developing goals and measures for its imported food safety program, and (3) develop goals and measures for seafood import alerts. FDA agreed with GAO's recommendations.

The United States is the world’s second largest importer of seafood,  importing from approximately 140 countries. More than 90 percent of  seafood products consumed in the United States are imported, according  to data from the National Oceanic and Atmospheric Administration  (NOAA). These data also indicate that U.S. seafood imports have risen in  recent years, from about 5.8 billion pounds of seafood in 2014 to about  6.3 billion pounds in 2017.

Under the Federal Food, Drug, and Cosmetic Act (FFDCA), the  Department of Health and Human Services’ (HHS) Food and Drug  Administration (FDA) is generally responsible for ensuring that the  nation’s food supply, including most imported seafood, is safe,  wholesome, sanitary, and properly labeled. To carry out its oversight  responsibilities for imported seafood, FDA requires processors and  importers to follow its Hazard Analysis and Critical Control Point (HACCP)  regulations to identify hazards and the critical control points in their  processing systems where one or more hazards are reasonably likely to  occur. Hazards can include drug residues such as antibiotics, pathogens  such as Salmonella, and insanitary conditions at the foreign processing  facility. FDA also relies on (1) inspections of importers’ facilities and of  processors’ foreign facilities each year to ensure HACCP compliance,  and (2) port-of-entry examinations and tests of imported seafood for  contaminants, including unsafe drug residues.

If FDA finds that imported seafood products from particular firms or  countries appear to violate FFDCA, FDA may place the products, firms,  or countries on an import alert. An import alert informs FDA field staff  and the public that the agency has enough evidence to detain products at  U.S. ports of entry without physically examining them (known as detention  without physical examination). For example, if routine FDA sampling at  ports of entry detects drug residues in an imported seafood product at  levels above acceptable limits, the agency can place the product and the  foreign firm that processed the product on an existing import alert  established for similar problems.

Products that are detained because of import alerts may ultimately be  refused entry into the United States, in which case they must be exported  to another country or destroyed. Alternatively, if the products are brought  into compliance, they will be allowed to enter U.S. commerce. FDA can  allow food products on import alerts to enter U.S. commerce if the  importer (1) proves that the individual shipment complies with FFDCA or  (2) “reconditions” the shipment—for example, by relabeling the product or  converting it into a type of product FDA does not regulate. To show that  the shipment complies with FFDCA, the importer must provide FDA with  evidence, such as private laboratory reports, to show that the importer’s  products do not violate federal laws and FDA regulations. Evidence of  multiple compliant shipments from an importer—based on sampling of  seafood products, inspections of foreign seafood processing facilities, or  documentation provided by facilities of corrective actions taken—may  lead FDA ultimately to decide to remove the firm and product from the  import alert. According to FDA officials, the effective use of import alerts  is key to FDA’s efforts to ensure that imported products under its  jurisdiction, including seafood, are safe and wholesome for U.S.  consumers.

The Department of Homeland Security’s (DHS) Customs and Border  Protection (CBP) also plays a role regarding imported food, including  seafood. CBP is responsible for collecting customs duties on imports,  including seafood, and seeks to prevent the evasion of customs duties.  In February 2009, we reported that CBP determined that Chinese shrimp  were being illegally transshipped through Malaysia to the United States.  Illegal transshipment is one scheme firms use to conceal the country of  origin and thereby evade applicable duties or import alerts. Because of  this illegal transshipment, importers of Chinese shrimp were not only able  to evade CBP’s duty requirements but also FDA’s 2007 import alert that  covered Chinese shrimp, among other seafood products, because of the  presence of unapproved drug residues.

You asked us to review FDA’s efforts to use import alerts to ensure the  safety of imported seafood. This report (1) describes FDA’s import alert  process for seafood products, (2) examines FDA’s oversight of key  activities to support its import alert removal decisions, (3) examines the  extent to which FDA coordinates with DHS to help ensure firms comply  with seafood import alerts, and (4) examines the extent to which FDA  assesses the effectiveness of its seafood import alerts in achieving the  agency’s food safety mission.

To describe FDA’s import alert process for seafood products, we  reviewed FDA documents, including procedures governing the use of  import alerts, which are documented in FDA’s Regulatory Procedures  Manual and its Office of Regulatory Affairs’ (ORA) ORA Laboratory  Manual. We also interviewed FDA officials to gain a further understanding  of this process. To identify the number of active seafood import alerts, as  of July 3, 2018, and the number of firms and countries affected by them,  we reviewed information that FDA posted on its website on seafood  import alerts and data that FDA maintained on these alerts from October  1, 2011, through July 3, 2018—the most recent available data at the time  of our analysis. FDA provided these data from its Compliance  Management System (CMS). To assess the reliability of FDA’s data, we  reviewed documentation for CMS, conducted electronic or manual  testing, and interviewed agency officials regarding controls, among other  things. We found these data to be sufficiently reliable for the purposes of  our reporting objectives.

To examine FDA’s oversight of key activities (i.e., sampling and  inspection activities) to support its import alert removal decisions, we  reviewed FDA procedures governing the use of import alerts; information  that FDA posted on its website on seafood import alerts; and data from  CMS that FDA maintained on these alerts, including removal data, from  October 1, 2011, through July 3, 2018. We also analyzed FDA sampling  data from the agency’s Field Accomplishment and Compliance Tracking  System (FACTS) and Operational and Administrative System for Import  Support (OASIS) from October 1, 2010, through August 10, 2018, and  FDA inspection data from FACTS from October 1, 2010, through June 22,  2018. To assess the reliability of FDA’s data, we reviewed  documentation for the systems that house these data, conducted  electronic or manual testing, and interviewed agency officials regarding  controls, among other things. We found these FDA data to be sufficiently  reliable for the purposes of our reporting objectives. We compared FDA’s  oversight of key activities to support removal decisions with standards for  internal control in the federal government, and we compared the import  alert, sampling, and inspections data with the audit goals, requirements,  or general guidelines related to such activities that are specified in FDA’s  procedures.

We selected a nongeneralizeable sample of seven seafood import alerts  for more in-depth review. We selected these seven import alerts to (1)  illustrate a range of violations of FFDCA—such as the presence of drug  residues, pathogens, and insanitary conditions—that led FDA to place  products or firms on import alerts, (2) include import alerts that address  violations for which sampling or inspections were not specifically required  but would be reasonably expected prior to removal decisions, according  to FDA’s procedures (e.g., HAACP violations or drug residue violations),  and (3) include import alerts that specifically require sampling or  inspections prior to such removal. Using CMS data, we identified the firms  and products that FDA removed from any of the seven seafood import  alerts we selected. We then used sampling and inspection data from  FACTS and OASIS to identify any sampling FDA conducted within 1 year  before the removal decisions and any inspections within 6 months before  those decisions. In addition, we identified any sampling or inspections  FDA conducted within 1 year after the decisions. We also interviewed  FDA officials about how the agency ensures that it is conducting the  appropriate level of sampling and inspections to support its removal  decisions and have confidence that seafood firms removed from import  alerts continue to comply with FFDCA.

To examine the extent to which FDA coordinates with DHS to help ensure  compliance with seafood import alerts, we reviewed FDA’s efforts to  coordinate with DHS’s CBP to identify potential schemes to evade import  alerts, such as through illegal transshipment. Further, we reviewed a prior  GAO report related to FDA’s coordination with DHS on the issue of  evasion. In addition, we interviewed officials from both agencies about  their coordination efforts related to identifying potential seafood import  alert evasion.

To examine the extent to which FDA assesses the effectiveness of its  seafood import alerts in achieving FDA’s food safety mission, we  reviewed the FDA Strategy for the Safety of Imported Food and agency  documentation describing FDA’s Import Alert Effectiveness Program. We  compared FDA’s strategy and documentation with leading practices we  have identified in our past work for assessing the effectiveness of programs. For example, we have previously reported that requirements of  the Government Performance and Results Act of 1993 (GPRA), as  updated by the GPRA Modernization Act of 2010 (GPRAMA), such as  performance goals and performance measures, which apply at the  departmental or agency level, can serve as leading practices for planning  at lower levels, such as component agencies, offices, programs, and  projects, within federal agencies. We also interviewed FDA officials to  obtain their views on FDA’s efforts to assess the effectiveness of seafood  import alerts.

We conducted this performance audit from October 2017 to November  2019 in accordance with generally accepted government auditing  standards. Those standards require that we plan and perform the audit to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  that the evidence obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives.

According to FDA documents and officials, import alerts serve several  purposes, including the following:

Prevent products that appear to violate FFDCA from being distributed  in the United States.

Free up agency resources to examine other shipments by  automatically detaining shipments on import alerts on a case-by-case  basis without examining them.

Place the responsibility on the importer to ensure that the products  being imported into the United States comply with federal laws and  FDA regulations.

Import alerts may apply to (1) one or more products produced by all firms  in a specific geographic area, (2) one or more products produced or  shipped by a specific firm, or (3) a specific product because of concerns  about the product regardless of what firm produces it or where. Import  alerts covering a specific geographical area may apply to an area within a  country, to one or more entire countries, or worldwide. For example,  FDA established an import alert covering all firms processing shrimp in  India because of the presence of filth, decomposition, and Salmonella.

For import alerts that apply to geographical areas, all firms in the area  that produce the products specified in an import alert are initially placed  on that alert, and the specified products are subject to detention without  physical examination. If a firm presents evidence establishing that the  conditions that gave rise to the appearance of the violation associated  with the alert have been resolved and the agency has confidence that  future entries will comply with FFDCA, FDA indicates that the firm may be  removed from the alert by placing it on a “green list” that FDA creates for  the alert. For import alerts that apply to products that a specific firm  produces, FDA individually determines—for example, through testing or  examination—whether a firm and its products are potentially violative and  may be identified for potential detention without physical examination. If  so, FDA places them on a “red list” that it creates for the alert. Import  alerts that apply to a specific product of concern generally have neither a  red list nor a green list because such products cannot be removed from  the alerts. Products detained via import alerts may be (1) refused entry, in  which case they must be exported to another country or destroyed, or (2)  allowed to enter U.S. commerce if they can be shown to not violate  FFDCA or can be reconditioned to be brought into compliance with the  act.

Federal Agency Roles in Overseeing Seafood Imports

DHS, through CBP, is charged with facilitating international trade at the  ports-of-entry for seafood and other imports, while FDA examines or  inspects certain seafood imports.

CBP is responsible for, among other things, collecting the duties, taxes,  and fees assessed on products, including seafood, and managing the  import process. CBP collects import entry data through its Automated  Commercial Environment/International Trade Data System. These entry  data are submitted by a filer (typically, the product importer or a broker)  and include a description of the product, manufacturer information, and  the country of origin.

Generally, FDA electronically receives notification from CBP of all entries  of products under FDA jurisdiction at ports of entry through the CBP  system described above, which links to FDA’s OASIS. Once entry  information is received in OASIS, FDA uses its Predictive Risk-based  Evaluation for Dynamic Import Compliance Targeting (PREDICT)  screening tool to evaluate each entry line. PREDICT is a computerized  tool designed to estimate the risk of imports using information such as the  history of the importer or processing facility, inspection history, and  country of origin. FDA staff use these risk estimates to target for  examination shipments with high levels of risk. FDA cannot physically  examine every shipment of such products, owing in part to the volume of  imported products; we previously reported that the agency examines  about 1 percent of entry lines annually. FDA uses PREDICT to  electronically screen all imported food shipment information filed  electronically to determine which imports to physically examine at the  border. PREDICT uses a variety of data and analyzes data by applying  rules—conditional statements that tell PREDICT how to react when  encountering particular information—to generate risk scores for imported  food.

The electronic screening process consists of two phases:

Prior notice screening is intended to protect against potential  terrorist acts and other public health emergencies. Prior notice  screening requires that an importer, broker, or other entity submit  information to FDA on food being imported or offered for import into  the United States before that food arrives at the port of entry. FDA  targets, screens, and reviews the information to ensure that the  information meets the prior notice requirements and to determine  whether the food potentially poses a terrorism threat or other  significant health risk.

Admissibility screening is intended to ensure that the food is  admissible under FFDCA. As part of admissibility screening, FDA  electronically screens entry lines using PREDICT to determine,  among other things, whether the product on the entry line is on an  import alert. If the product on an entry line is on an import alert, then  the entry line may be detained without physical examination. If the  product is not on an import alert, then the entry line goes through the  typical admissibility screening process through which FDA uses  PREDICT to calculate a risk score and determine whether the entry  line is identified for potential examination or sampling.

Under Its Import Alert Process for Seafood Products, FDA Detains Affected Products and Removes Firms and Products from Alerts When Violations Are Resolved

Our review of FDA’s Regulatory Procedures Manual found that FDA’s  import alert process for seafood products includes three key components:  (1) establishing new import alerts to respond to human health risks, (2)  placing firms and products on new or existing import alerts (placement  decisions), and (3) removing firms and products from existing import  alerts when violations are resolved (removal decisions).

FDA Establishes New Seafood Import Alerts to Respond to Human Health Hazards

According to FDA’s Regulatory Procedures Manual, FDA establishes new  seafood import alerts to respond to human health hazards. FDA officials  may recommend new import alerts for a variety of reasons, including the  following:

FDA officials detain one or more products for a violation of FFDCA  that poses a significant health hazard (e.g., the presence of  Salmonella);

FDA officials notice a large number of violations affecting firms or  products from a specific country or area (e.g., the presence of filth in  canned crabmeat from Thailand);

FDA enforces regulatory requirements affecting importers that the  agency decides could be implemented, in part, through the use of an  import alert (e.g., HACCP requirements); or

FDA addresses concerns about the safety of specific products,  including puffer fish, which contain a deadly neurotoxin, or products  produced in geographic areas with known contamination, such as  those from areas surrounding Fukushima, Japan, which are at risk of  radionuclide contamination.

FDA officials in the field or at headquarters may recommend new import  alerts. FDA’s Division of Import Operations reviews the recommendations  and decides whether to approve them (called the clearance process).  After approval, according to FDA officials, FDA revises its screening  process at the ports of entry via PREDICT to screen for products, firms,  or countries on the new alert.

According to FDA’s import alert data, as of July 3, 2018, FDA had 52  active import alerts affecting imported seafood that addressed a wide  range of seafood products and violations of FFDCA. The range of  violations that these alerts address included  the presence of foodborne pathogens, such as Salmonella and E. coli;  the presence of unapproved animal drug residues, such as  chloramphenicol and nitrofurans;  the presence of pesticide chemical residues that are not allowed or do  not meet tolerance levels, such as diuron;  the presence of decomposition or insect, rodent, or other filth;  the presence of illegal or undeclared colors, undeclared food  additives, such as high fructose corn syrup, or undeclared food  allergens, such as milk;  the failure of the firm to meet HACCP requirements; and  the failure of the firm to operate in conformity with current good  manufacturing practices.

According to FDA’s import alert data, overall, from October 1, 2011,  through July 3, 2018, the 52 import alerts for imported seafood affected a  total of 3,765 unique firms in 111 countries. (See app. I for information  describing these 52 alerts.)

FDA Places Certain Seafood Firms and Products on Existing Import Alerts and Detains Affected Products

According to FDA’s Regulatory Procedures Manual, after an import alert  has been established, FDA places certain seafood firms or products on  the alert and may detain affected products at the port of entry to prevent  them from entering U.S. commerce pending the importer of record’s  response. The manual specifies that FDA may place firms or products  on a new or existing import alert for the following violations of FFDCA: (1)  products are manufactured, processed, or packed under insanitary  conditions; (2) products are forbidden or restricted for sale in the country  in which they were produced or from which they were exported; or (3)  products appear to be adulterated or misbranded based on information  such as the product’s history of violations, among other things.  Examples of adulteration may include pathogens, such as Salmonella,  and residues of drugs or pesticides above accepted levels.

FDA’s Regulatory Procedures Manual also specifies the following types of  evidence that FDA generally may rely on to show that violative conditions  exist: one violative sample from FDA’s examination of the product, if the  product may have adverse health consequences;  information and historical data, such as a firm showing a pattern of  exporting violative products, if evidence indicates the product could  pose a health hazard; multiple violative samples, for violations (such as decomposition, filth,  or labeling) that do not pose a significant public health hazard; and  violations identified during inspections of importers or foreign  processing facilities.

According to FDA officials, about 90 percent of the recommendations to  place firms or products on an import alert result from FDA analysis of  imported seafood samples that identified product violations, such as drug  residues above acceptable levels. Officials stated that the remaining 10  percent of the recommendations arise from FDA inspections of importers  or processing facilities that identify firm violations, such as violations of  FFDCA related to HACCP requirements.

According to FDA’s Regulatory Procedures Manual, once a firm or  product has been placed on an import alert, future shipments may be  detained without physical examination, and the importer of record must  decide how to respond. The importer of record receives a notice stating  that the associated entry line is being detained and subject to refusal. The  importer of record may request that FDA immediately refuse entry of the  product, in which case the product must either be exported or destroyed.  Alternatively, the importer of record may (1) submit evidence showing that  the product does not appear to be violative or (2) request to  “recondition” the product—for example, relabel the product or convert the  product into a type of product FDA does not regulate.

According to FDA’s Regulatory Procedures Manual, FDA will hold a  hearing to determine whether the detained product should be released. If  FDA determines that the importer of record has provided sufficient  information to overcome the appearance of a violation, the importer of  record receives a notice stating that the product is released. If FDA  determines that the importer of record’s actions did not bring the product  into compliance, the product would be refused and must be exported  elsewhere or destroyed.

FDA May Remove Firms and Products from Existing Import Alerts When Violations Are Resolved

FDA may decide to remove a firm or product from an import alert if there  is evidence that the conditions that led to placement on the alert have  been resolved, according to FDA’s Regulatory Procedures Manual. Our  review of the manual and interviews with FDA officials indicate that FDA  sampling and inspections are key activities that support the agency’s  removal decisions. Generally, firms petition FDA to remove one or more  products or the firms themselves from seafood import alerts, and FDA’s  Division of Import Operations reviews the petitions. FDA’s procedures  specify the evidence that firms are to submit, which varies depending on  the nature of the import alert and the violation of FFDCA.

FDA may require one or a combination of the following: a minimum of five  consecutive nonviolative commercial shipments as determined by a  private laboratory hired by the firm, an on-site inspection of the importer  or foreign processing facility, or documentation showing that the cause  of the violation has been fully corrected. For example, according to FDA’s  procedures, firms or products placed on an import alert based on a  violative facility inspection may generally be removed from the alert  following a reinspection that shows that corrective actions to resolve the  violation have been taken. Private laboratories usually collect and analyze  the samples used as evidence to indicate that a commercial shipment  does not violate FFDCA and provide support for FDA’s decisions to  remove firms and products from import alerts. The procedures also call  for the agency to have confidence that future shipments will comply with  FFDCA, but they do not specify how FDA should ensure continued  compliance. According to FDA officials, when the agency relies on  documentation to support a removal decision, FDA generally relies on  subsequent inspections of the importers or foreign processing facilities  and sampling of their products to have confidence that the firms and their  products continue to comply.

FDA’s Regulatory Procedures Manual, as supplemented by the ORA  Laboratory Manual, specifies that the agency should conduct checks to  review whether the work performed by such laboratories can be used as  an appropriate basis for FDA’s removal decisions. These checks include  the following:

Audit samples. FDA’s manuals specify the following two audit goals  to ensure that the private laboratories’ analyses that FDA uses to  support its removal decisions are valid: (1) to audit samples from at  least one of the five nonviolative entries, as determined by a private  laboratory that the firm hired, to support a removal decision to ensure  the validity of the laboratory’s analysis and (2) to audit at least 10  percent of the work that a private laboratory performed to ensure that  the laboratory submits scientifically sound data. In the course of its  audits, FDA is to collect samples, called audit samples, to verify  analytical results from a private laboratory that demonstrates a  product complies with FFDCA. According to FDA, private laboratory  analyses are a critical element in public health protection because  they support FDA decisions to release detained goods. FDA’s  collection of audit samples is intended to provide confidence in the  laboratories’ analytical results.

On-site assessments. FDA’s ORA Laboratory Manual states that, at  times, FDA visits a private laboratory to ascertain that it has the  capability or capacity to perform analyses that FDA often relies on to  support removal decisions. The manual also states that on-site  assessments provide the opportunity to observe that equipment and  standards, among other things, needed to conduct the proposed  analyses are present and in good order; to review the adequacy of the  laboratory’s quality assurance and record-keeping programs; and to  observe the techniques and practices of the analysts. Furthermore,  the manual states that the on-site assessments are voluntary and that  a private laboratory may decline to participate.

FDA’s Oversight of Key Activities to Support Import Alert Removal Decisions Is Limited

FDA has established audit goals, requirements, and expectations related  to sampling and inspections—key activities to support import alert  removal decisions—but does not monitor the extent to which it is meeting  them.

In our review of FDA’s CMS data for 274 removal decisions from a  nongeneralizeable selection of seven import alerts from October 1, 2011,  through July 3, 2018, we found that FDA conducted audit sampling and  inspections to support removal decisions and subsequent sampling and  inspections to ensure continued compliance for a small percentage of the  decisions. Specifically:

Audit samples prior to removal decisions. For almost all of the 274  removal decisions we reviewed, FDA did not meet its first audit goal— to audit samples from at least one of the nonviolative shipments used  to support a removal decision to ensure the validity of the analysis of  the private laboratory hired by the firm. All seven of the import alerts  we reviewed were established for violations of FFDCA for which  FDA’s Regulatory Procedures Manual specifies that firms should  enter into U.S. commerce at least five consecutive nonviolative  commercial shipments, as determined by a private laboratory hired by  the firm, before FDA may consider a removal. Therefore, FDA should  have audited samples from at least one nonviolative shipment for all  274 removal decisions related to these seven import alerts. As  described earlier, FDA collects audit samples from shipments of  imported seafood to conduct such audits. However, we found that  FDA did not conduct any sampling, including audit sampling, within 1  year prior to removal for 260 (or 95 percent) of the 274 removal  decisions we reviewed. FDA officials told us that they do not monitor  the extent to which the agency is meeting its audit goal, such as  through analyzing CMS sampling data across all firms and products  affected by the alerts and therefore were not aware that the agency  had not met the audit goal.

Conversely, FDA officials told us that they were aware that the agency  historically had not met its second audit goal specified in its  procedures—to audit at least 10 percent of each private laboratory’s  work to support removal decisions to ensure that each laboratory  submits scientifically sound data. While FDA does not regularly  monitor whether it is meeting its 10 percent audit goal, in 2014, the  agency analyzed data on the audit samples it collected during its  audits of shipments covering fiscal years 2003 through 2013. FDA  conducted this analysis in response to concerns that district staff  raised about the quality of the analyses performed by private  laboratories for one of its districts. These concerns included the  following:

Failure to obtain representative samples from throughout a  shipment.

Failure to obtain samples randomly from throughout the shipment.

Failure to ensure an unbroken chain of custody from the site of  collection of a sample to the private laboratory as necessary to  ensure the integrity of the sample.

Use of untrained temporary employees to collect samples and  representing these individuals as employees of the private  laboratory.

FDA’s 2014 analysis showed that the agency did not achieve its 10  percent audit goal during the 11-year period. According to the  analysis, FDA audited about 1 to 2 percent of work performed by  private laboratories to support removal decisions.

In response to our request, FDA updated its analysis through fiscal  year 2018. The updated analysis shows that this percentage has  improved in recent years, with FDA auditing about 3 percent of the  work that private laboratories performed for fiscal year 2018.  However, this level of auditing remains far below the goal of at least  10 percent, as shown in figure 1. According to FDA officials, the  agency has not met this audit goal largely because it has limited  resources.

Inspections prior to removal decisions. For the 274 removal  decisions we reviewed, FDA conducted inspections of importers or  foreign processing facilities for 28 (about 10 percent) of the removal  decisions in the 6 months prior. According to FDA’s procedures,  firms or products placed on an import alert based on a violative facility  inspection may generally be removed from the alert following a  reinspection of the importer or foreign processing facility. In some  instances, a firm may present information or documentation sufficient  to demonstrate that appropriate corrections are in place to overcome  the appearance of a violation and, with appropriate concurrence, may  be removed from the import alert. FDA officials added that, regardless  of the basis for placement on an import alert, FDA could require an  on-site inspection prior to removal, depending on the hazard the  violation posed. For example, certain violations may result in a finding  of “official action indicated” (OAI), which indicates that an  establishment failed to meet regulatory or administrative requirements  and may pose a hazard to public health. FDA’s Field Management  Directive 86 establishes a goal for FDA staff to conduct a follow-up  inspection within 6 months after an OAI finding to verify that the facility  has corrected violations. In our review of the 274 removal decisions,  we found that for 32 firms that received an OAI inspection finding after  FDA issued the directive in December 2011, FDA did not conduct a  follow-up inspection for 31 of these firms before removing them from  an import alert. According to FDA officials, the agency did not monitor  whether its staff decided that inspections would be expected for the  274 removal decisions or whether the facilities that received an OAI  inspection finding were reinspected. FDA officials told us that the  agency relied on reviewing data on removal decisions individually to  ensure that expected inspections had been conducted. Consequently,  FDA was not aware of the extent to which the facilities associated with  the removal decisions were actually inspected.

Sampling or inspections following removal decisions. As shown  in figure 2, for the 274 removal decisions we reviewed, FDA  subsequently conducted sampling for 6 percent of the products at  ports of entry and inspections for 13 percent of the importers or  foreign processing facilities within 1 year after removal. FDA does  not have a goal for the amount of sampling or inspections that should  be conducted following removal decisions; however, as described  above, FDA’s procedures call for the agency to base removal  decisions on evidence establishing that the conditions that gave rise  to the appearance of a violation have been resolved and that the  agency has confidence that future shipments will comply with FFDCA.

FDA officials said that when the agency does not inspect a facility and  relies on documentation describing the actions the firm has taken to  address the appearance of a violation to support a removal decision,  the agency relies on subsequent sampling and inspections to have  confidence in continued compliance. According to FDA, the past  violative history of a firm is reflected in the PREDICT screening rules  for the examination of future shipments and in the process of  prioritizing inspections of foreign facilities. It was unclear from the  CMS data that FDA provided the extent to which the agency relied on  documentation to support the remainder of its removal decisions.  However, based on FDA officials’ statements about subsequent  sampling or inspections, we would expect to see a larger percentage  of products sampled and firms inspected after their removal from  import alerts for FDA to have confidence in continued compliance  given the low percentage of inspections we found before removal  decisions. FDA officials said they were not monitoring whether staff  decided that subsequent sampling and inspections would be expected  for these removals, and staff do not continuously monitor post- removal activities. Consequently, FDA officials were not aware of the  extent to which the products and foreign processing facilities  associated with removal decisions were subsequently sampled and  inspected.

FDA officials told us that they were generally aware that FDA had  conducted limited sampling and inspections to support removal decisions  and have confidence in continued compliance. They attributed this limited  sampling and inspections to their belief that many import alert removal  decisions can be supported by reviewing documentary evidence that FDA  requested and the firms provided that describes the actions the firms  have taken to address the appearance of a violation. According to FDA  officials, such reliance on firm-provided documentation to support removal  decisions is, in part, how FDA prioritizes its use of limited laboratory and  inspection resources.

FDA officials stated that the agency can check the basis of its removal  decisions by looking up individual import alert cases in CMS and the  agency’s sampling and inspection data in FACTS and OASIS to  determine whether the agency would conclude that sampling and  inspections to support these decisions would be appropriate, and if so,  whether they were done. These officials said that they believed that  checking the data on the basis of removal decisions individually and when  questions arise from sources internal or external to FDA, instead of  regularly analyzing sampling and inspections data, was sufficient to  ensure the appropriate level of oversight. However, as discussed above,  this approach has not informed them of the extent to which the agency is  meeting its audit goals and expectations.

Standards for internal control in the federal government state that  management should design control activities to achieve objectives and  respond to risks. An example of such control activities includes  management comparing actual performance with planned or expected  results. Such a comparison could include FDA comparing audits  conducted with its audit goal (e.g., auditing at least 10 percent of a private  laboratory’s work) to ensure that its goal was met. Monitoring the extent  to which the agency is meeting its audit goals and expectations for  conducting sampling and inspections to support its import alert decisions  would enhance its oversight of these activities to better protect U.S.  consumers from imported seafood that is not safe and wholesome.

FDA Generally Has Not Coordinated with DHS to Help Ensure Firms Comply with Seafood Import Alerts

FDA and DHS have established a mechanism for coordinating the use of  certain resources, but they generally have not coordinated to help ensure  that firms comply with seafood import alerts by identifying potential  instances of evasion of alerts, according to agency officials. FDA  officials stated that the agency can coordinate with CBP in situations that  could involve evasion of import alerts, but the agency does not have a  formal mechanism for regularly and proactively coordinating to identify  evasion. FDA officials said that such coordination could include CBP  sharing information that could help FDA identify instances of evasion.

As previously noted, CBP is responsible for collecting customs duties on  imports, including seafood, and seeks to prevent the evasion of customs  duties. As we reported in 2012, CBP personnel are to analyze trends in  import data, among other things, to look for anomalies that may indicate  evasion and also follow up on allegations from external sources. Once  CBP identifies a potential instance of evasion, it can use a variety of  techniques at different points in the import process to determine whether  evasion is actually occurring. These techniques include collecting  samples from shipments of products at U.S. ports of entry and conducting  laboratory analyses of these samples to identify their true country of  origin. Through its efforts, CBP has identified illegal transshipments—a  scheme to conceal the country of origin and thereby evade applicable  duties or FDA’s import alerts. For example, CBP reported that in 2016,  customs officers seized about 42 tons of Chinese honey that had been  transshipped through Taiwan to evade U.S. duties applicable to Chinese  honey. According to FDA documents, at the same time, FDA had an  import alert for honey because of unsafe drug residues. This alert  included Chinese firms, but did not include any firms from Taiwan.

In February 2009, we reported on CBP’s expertise in detecting illegal  transshipment that could enhance FDA’s ability to detect import alert  evasion. We stated that FDA and CBP could work together to help ensure  that importers were not attempting to evade duties or import alerts.

However, we found that the agencies had not identified ways to maximize  and leverage their resources or established processes and policies for  working together systematically across agency lines. We recommended,  among other things, that FDA and CBP develop mechanisms to share  information related to the evasion of import alerts. FDA and CBP agreed  with our recommendation, but as of July 2019, the agencies had not fully  implemented it.

Specifically, FDA and CBP signed a memorandum of understanding  (MOU), effective May 2013, to set forth terms for CBP to coordinate with  FDA on staffing, space, and equipment requirements for the National  Targeting Center. However, the MOU does not address CBP sharing  information on potential evasion of import alerts with FDA regularly or the  agencies working proactively to identify such evasion. According to CBP  officials, FDA and CBP do not coordinate specifically on targeting to  detect evasion, but CBP would be willing to coordinate with FDA and  provide any applicable expertise in this area.

While a collaborative mechanism such as an MOU is not needed to share  information, we continue to believe that FDA and CBP should develop a  mechanism to help the agencies formally coordinate to identify potential  evasion of seafood import alerts. Until these agencies develop such a  mechanism, they may be missing opportunities to share information  regularly that could benefit each agency’s efforts to detect illegal  transshipment and help FDA proactively identify and prevent evasion of  seafood import alerts.

FDA Has Not Assessed the Effectiveness of Its Seafood Import Alerts in Achieving Its Food Safety Mission

FDA has not assessed the effectiveness of its seafood import alerts in  helping to achieve its food safety mission. Specifically, FDA has not  established performance goals and measures for seafood import alerts— key elements of assessing the effectiveness of programs. Performance  goals explain the purpose of agency programs and the results—including  outcomes—that they intend to achieve. Performance measures provide  organizations with the ability to track the progress they are making toward  their mission and goals and provide managers with information on which  to base their organizational and management decisions. Under GPRAMA,  agencies are required to develop long-term strategic plans and establish  results-oriented goals in alignment with their missions and identify  objectives and strategies needed to achieve those goals. GPRAMA also  requires agencies to use performance information to assess their  progress toward achieving their goals.

According to FDA officials, the agency is implementing a program, which  it refers to as an import alert effectiveness program, to review its import  alerts. FDA documents note that the focus of this program includes (1)  determining if FDA identified the firms on import alerts during its  admissibility screening and took the appropriate action, (2) ensuring the  accuracy of data FDA maintains in CMS on firms on import alerts, and (3)  determining whether the reasons for the alerts are still relevant, and  ensuring that the import alerts are accurately posted for clear  communication to industry and FDA field staff. We commend FDA for  these efforts. However, according to our review of FDA documents  describing the activities planned for this program, the program does not  include performance goals and measures for import alerts. FDA officials  stated that this is because the program is new.

Additionally, in February 2019, FDA published a broad plan for the safety  of imported food that includes a goal, objective, and strategy related to  import alerts. Under its goal to detect and refuse entry of unsafe foods  at the border, FDA has an objective to strategically use import alerts and  import certifications by using data and information from oversight  activities, regulatory cooperation, and other reliable sources to enhance  the effectiveness and efficiency of import alerts. However, FDA’s strategy  for achieving this objective does not include performance goals or  measures that would allow the agency to assess the effectiveness of its  seafood import alerts in helping to achieve FDA’s food safety mission. In  its 2019 plan for the safety of imported food, FDA states that it intends to  develop performance goals and measures for imported food safety.

However, FDA has not established a time frame for doing so. Once FDA  has developed goals and measures for imported food safety, FDA would  be able to establish corresponding performance goals and measures  specific to seafood import alerts. By developing such goals and  measures, FDA would be better positioned to assess how well its seafood  import alert activities are supporting the agency in achieving its food  safety mission.

Import alerts play an important role in keeping the U.S. food supply—as  well as other FDA-regulated products—safe, and FDA has numerous  active import alerts affecting imported seafood that address a wide range  of seafood products and violations of FFDCA. However, FDA does not  have a process to monitor the extent to which it is conducting key  activities to support its removal decisions—sampling and inspections.  Establishing such a process would provide greater assurance that FDA is  conducting its expected level of sampling and inspections to support its  removal decisions and have confidence in continued compliance.

Additionally, FDA and CBP have yet to develop mechanisms to share  information regularly and proactively that can help detect noncompliance  with import alerts through evasion. We continue to believe that doing so,  as we previously recommended, would enhance the agencies’ efforts to  identify potential evasion of seafood import alerts.

Further, by establishing a time frame for developing goals and measures  for assessing the effectiveness of its imported food safety efforts and also  developing such goals and measures specific to seafood import alerts,  FDA would be better positioned to assess how well its import alert  activities are supporting the agency in achieving its food safety mission.

We are making the following three recommendations to FDA:

The Commissioner of FDA should establish a process to monitor  whether the agency is meeting its audit goals and expectations for  sampling and inspections to support its removal decisions for seafood  import alerts. This could be done through regularly analyzing data that  FDA collects, such as those in CMS, FACTS, and OASIS.  (Recommendation 1)

The Commissioner of FDA should establish a time frame for  developing performance goals and measures for its imported food  safety program. (Recommendation 2)

The Commissioner of FDA should, as the agency develops goals and  measures for its imported food safety program, develop performance  goals and corresponding performance measures specific to seafood  import alerts. (Recommendation 3)

We provided a draft of this report to HHS and DHS for comment. In its  comments, reproduced in appendix II, HHS’s FDA agreed with all three of  our recommendations. FDA also provided technical comments, which we  incorporated as appropriate. DHS provided technical comments, which  we incorporated as appropriate.

More specifically, FDA agreed with our recommendation that it establish a  process to monitor whether the agency is meeting its audit goals and  expectations for sampling and inspections to support its removal  decisions for seafood import alerts. FDA stated that it agrees that  developing metrics and monitoring the import alert removal process is  necessary and that these efforts should be guided by the analysis of  available data. FDA also stated that it plans to develop goals for its  auditing process to ensure audit sampling targets products of higher  public health concern and provides the agency support to guide decisions  to release individual shipments that have been detained as a result of an  import alert. FDA further stated that it intends to enhance its case  management system to include checklists for FDA reviewers who process  petitions for removal from import alerts to better document that all  necessary information is present and has been evaluated to support the  removal decision.

FDA agreed with our recommendation that it should establish a time  frame for developing performance goals and measures for its imported  food safety program. FDA stated that the agency is developing  performance measures and outcome indicators for imported food safety  to help support the agency’s overall goal of reducing the incidence of  illness and death attributable to preventable contamination of FDA- regulated foods.

Finally, FDA agreed with our recommendation that it should, as it  develops goals and measures for its imported food safety program,  develop performance goals and corresponding performance measures  specific to seafood import alerts. FDA stated that the agency will use the  results of its import alert effectiveness program to develop metrics to  demonstrate the effectiveness of the program and its use of import alerts.  The extent to which FDA’s planned actions will satisfy our  recommendations will depend on how FDA implements those actions.

As agreed with your offices, unless you publicly announce the contents  earlier, we plan no further distribution of this report until 30 days from the  report date. At that time, we will send copies to the appropriate  congressional committees, the Secretary of Health and Human Services,  the Secretary of Homeland Security, and other interested parties. In  addition, the report will be available at no charge on the GAO website at  http://www.gao.gov.

If you or your staff members have any questions regarding this report,  please contact me at (202) 512-3841 or morriss@gao.gov. Contact points  for our Offices of Congressional Relations and Public Affairs may be  found on the last page of this report. GAO staff who made key  contributions to this report are listed in appendix III.

Appendix I: Food and Drug Administration Import Alerts Affecting Seafood Products

Table 1 includes information posted on the Food and Drug  Administration’s website describing the 52 import alerts affecting seafood  that were active as of July 3, 2018.

Appendix II: Comments from the Department of Health and Human Services

In addition to the contact named above, Anne K. Johnson (Assistant  Director), David Moreno (Analyst in Charge), Kevin Bray, Steven  Campbell, Stephen Cleary, Michele Fejfar, Ellen Fried, Juan Garay,  Caitlyn Leiter-Mason, Ying Long, Cynthia Norris, Dan Royer, and Kiki  Theodoropoulos made key contributions to this report.

Food Safety and Nutrition: FDA Can Build on Existing Efforts to Measure  Progress and Implement Key Activities. GAO-18-174. Washington, D.C.:  January 31, 2018.

Imported Seafood Safety: FDA and USDA Could Strengthen Efforts to  Prevent Unsafe Drug Residues. GAO-17-443. Washington, D.C.:  September 15, 2017.

Seafood Safety: Status of Issues Related to Catfish Inspection. GAO-17- 289T. Washington, D.C.: December 7, 2016.

Imported Food Safety: FDA’s Targeting Tool Has Enhanced Screening,  but Further Improvements Are Possible. GAO-16-399. Washington, D.C.:  May 26, 2016.  2015 Annual Report: Additional Opportunities to Reduce Fragmentation,  Overlap, and Duplication and Achieve Other Financial Benefits. GAO-15- 404SP. Washington, D.C.: April 14, 2015.

Food Safety: FDA Can Better Oversee Food Imports by Assessing and  Leveraging Other Countries’ Oversight Resources. GAO-12-933.  Washington, D.C.: September 28, 2012.

Managing for Results: Key Considerations for Implementing Interagency  Collaborative Mechanisms. GAO-12-1022. Washington, D.C.: September  27, 2012.

Seafood Safety: Responsibility for Inspecting Catfish Should Not Be  Assigned to USDA. GAO-12-411. Washington, D.C.: May 10, 2012.

Seafood Safety: FDA Needs to Improve Oversight of Imported Seafood  and Better Leverage Limited Resources. GAO-11-286. Washington, D.C.:  April 14, 2011.

Seafood Fraud: FDA Program Changes and Better Collaboration among  Key Federal Agencies Could Improve Detection and Prevention. GAO-09- 258. Washington, D.C.: February 19, 2009.

Results-Oriented Government: Practices That Can Help Enhance and  Sustain Collaboration among Federal Agencies. GAO-06-15. Washington,  D.C.: October 21, 2005.

FDA ensures that imported seafood is safe to eat. If it suspects that products may violate U.S. laws, FDA can detain them at ports until the violation has been resolved—a process called an import alert.

FDA’s goal is to sample at least one shipment of each product before removing it from alert status. We found that for 274 seafood products that FDA removed from import alerts between 2011 and 2018, FDA did not sample shipments for 95% of these products, and does not have a process to ensure it actually conducts such sampling.

We recommended that FDA establish such a process.


Defense Acquisitions: DOD Needs to Improve How It Communicates the Status of Regulation Changes

Congress has pursued acquisition reforms to make DOD's acquisition process more efficient and timely. Some statutes have directed DOD to revise or consider revising its acquisition regulations.

The House Armed Services Committee's report accompanying the NDAA for Fiscal Year 2019 included a provision for GAO to review DOD's regulatory implementation of acquisition-related provisions in the NDAAs from fiscal years 2010 through 2018. This report (1) determines how DOD implements acquisition-related NDAA provisions in the DFARS and communicates with stakeholders throughout that process, and (2) identifies the status of implementation of provisions enacted in the specified NDAAs.

To conduct this work, GAO reviewed DOD documents and interviewed DOD officials regarding the process for implementing acquisition-related NDAA provisions. GAO also analyzed DOD's data and reports on the implementation status of provisions enacted in NDAAs for fiscal years 2010 through 2018. GAO selected 12 of these provisions as case studies based on factors such as year enacted and time taken for implementation to obtain a mix of older and newer provisions, and shorter and longer implementation timeframes.

The staff of the Defense Acquisition Regulations System are responsible for making changes in the Defense Federal Acquisition Regulation Supplement (DFARS)—the Department of Defense's (DOD) regulation augmenting the Federal Acquisition Regulation, which guides government purchases of products and services. They begin their process by first tracking legislation that may affect acquisition regulations before Congress enacts the National Defense Authorization Act (NDAA). After enactment, they identify which provisions to implement through regulatory changes and which to implement through other means. In certain circumstances, rather than change the DFARS, DOD can issue a class deviation, which allows its buying organizations to temporarily diverge from the acquisition regulations. The figure below shows the primary means DOD uses to implement NDAA provisions, and the mechanisms DOD uses to make information on the status of any changes available to the public and others.

Department of Defense's (DOD) Methods to Implement and Report on Actions Taken on National Defense Authorization Act (NDAA) Provisions

DOD does not have a mechanism to clearly communicate to Congress, industry, and other interested parties the status of regulatory or other changes based on NDAA provisions. Using only publicly-available reports and information, it is difficult for an interested party to find the implementation status of any given acquisition-related NDAA provision. This is because no single DOD source communicates the status of regulatory or other changes in a manner that links the changes to specific NDAA provisions. As a result, interested parties are not always aware of what provisions have been implemented and when. This information is important for congressional oversight and to industry for planning and compliance purposes. Federal internal control standards state that management should address the communication expectations of external users.

GAO found that DOD has taken action to address 180 acquisition-related provisions since 2010. On average, implementation was completed within 1 year from enactment. Some complicated provisions took more than 2 years to implement. For example, a fiscal year 2016 NDAA provision, directing a regulatory change for commercial item procurements, took more than 2 years to implement because DOD was reconciling a prior year's related but different NDAA commercial item provision into one DFARS change.

DOD should develop a mechanism to better communicate the implementation status of acquisition-related NDAA provisions, particularly those that direct a change or consideration of a change to the DFARS. DOD concurred with the recommendation.

Due to changes in national security priorities and the industrial base  landscape, the Department of Defense (DOD) must have the ability to  acquire and field the products and services needed in the most cost- efficient and timely manner possible. Congress has pursued acquisition  reforms to help DOD achieve this objective through annual National  Defense Authorization Acts (NDAA) and other statutes. In addition, some  provisions in the NDAAs specifically direct DOD to revise or consider  revising the Defense Federal Acquisition Regulation Supplement  (DFARS).

In a report related to the NDAA for Fiscal Year 2019, the House  Committee on Armed Services raised questions about perceived delays  between enactment of statutes and issuance of regulations in the  DFARS. The committee’s report contains a provision for us to review  DOD’s process for revising the DFARS. This report (1) determines how  DOD implements acquisition-related NDAA provisions and communicates  implementation status, and (2) identifies the status of DOD’s efforts to  implement acquisition-related NDAA provisions from fiscal years 2010- 2018.

To determine how DOD implements acquisition-related NDAA provisions,  we reviewed the DFARS Operating Guide, DFARS open and closed  cases reports, and decision matrices from the Defense Acquisition  Regulations System (DARS), which document decisions on implementing  NDAA provisions, from fiscal years 2010-2018. We also reviewed NDAAs  from fiscal years 2010-2018 to identify provisions that directed DOD to  make or consider regulation changes. We focused on Title VIII of the  NDAAs, which contains acquisition-related provisions. We also  interviewed DARS staff, Defense Acquisition Regulations Council  members, and officials from the DOD components—Air Force, Army,  Navy, Defense Contract Management Agency, and Defense Logistics  Agency. We compared the DARS rulemaking process with the Standards  for Internal Control in the Federal Government.

To identify the implementation status of acquisition-related NDAA  provisions from fiscal years 2010-2018, we analyzed DARS reports that  include information on the case files associated with the NDAA Title VIII  provisions from fiscal years 2010-2018. We also analyzed data from the  Defense Acquisition Regulations Management Information System as of  October 31, 2018, to determine the number and types of cases by year,  duration of cases, and relevant NDAA provisions. We asked DARS  officials to verify the cases we identified. To better understand the  Defense Acquisition Regulations Council’s recommendations and the  DARS implementation process, we selected as case studies 12 NDAA  provisions that directed DOD to make or consider making regulation  changes. The case study selection criteria included the year the provision  originated in a NDAA (which allowed us to analyze a mix of older and  newer provisions) and how long it took provisions to be implemented  (which allowed us to analyze a mix of shorter and longer cases). For the  12 selected provisions, we reviewed the associated case files. We found  the Defense Acquisition Regulations Management Information System  data to be sufficiently reliable for purposes of reporting on how the DARS  implemented NDAA provisions concerning acquisition issues. Additional  details on our scope and methodology are provided in appendix I.

We conducted this performance audit from August 2018 to July 2019 in  accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.

The Defense Acquisition Regulations Council is responsible for  developing fully coordinated recommendations for revisions to the  DFARS, which supplements the Federal Acquisition Regulation. The  Federal Acquisition Regulation provides executive agencies with uniform  acquisition policies and procedures for acquiring products and services,  and is prepared and issued through the coordination of the Defense  Acquisition Regulations Council and Civilian Agency Acquisition Council.  The DFARS contains additional requirements of law, DOD-wide policies,  delegations of Federal Acquisition Regulation authorities, deviations from  Federal Acquisition Regulation requirements, and policies or procedures  that have a significant effect beyond the internal operating procedures of  DOD, or a significant cost or administrative impact on contractors or  offerors. The DFARS is designed to be read in conjunction with the  primary set of rules in the Federal Acquisition Regulation. Stakeholders in  the acquisition process include executive agencies’ program and  contracting officials, members of Congress and congressional staff,  industry and contractors, and members of the public.

Specifically, the Defense Acquisition Regulations Council generally  makes implementation recommendations to DOD, such as when  publication of rules to amend the DFARS is appropriate. DARS staff then  implements the Council’s recommendations. The Defense Acquisition  Regulations Council is composed of the Chair who is also the DARS  Director, Deputy Chair who is also the DARS Deputy Director, and one  policy and one legal representative from each of the following DOD  components:

DFARS changes can originate from different sources, including  legislation, recommendations from DOD’s Office of the Inspector General,  our recommendations, court decisions, executive orders, or policy  changes within DOD. DFARS changes that originate from legislation,  including NDAAs, are given the highest priority, according to DARS  officials.

DARS staff has other related responsibilities, including working with  civilian agencies in activities connected with promulgating the Federal  Acquisition Regulation.

DOD Has a Process for Implementing Acquisition-Related NDAA Provisions, but Does Not Clearly Communicate Implementation Status to Stakeholders

DOD has a rulemaking process to change the DFARS that includes  implementing acquisition-related NDAA provisions through regulatory  changes or other methods. The DARS staff is responsible for facilitating  the process of making these changes in the DFARS. The staff first  reviews draft legislation that may affect acquisition regulations before  Congress enacts the NDAA. After the NDAA is enacted, DARS staff then  identifies which provisions require action. The DARS staff coordinates  across the department and provides for public notice of implementation  actions when required. However, there is no publicly-available summary  reporting of the status of the regulatory changes or other implementation  methods linked to specific NDAA provisions. Congress and industry  representatives therefore cannot clearly see the status of pending  regulatory changes pertaining to acquisition issues addressed in the  NDAA.

DOD Implements Acquisition-Related NDAA Provisions in DFARS and by Other Methods

DOD’s acquisition rulemaking procedures are governed by statute, which  generally requires agencies to issue a proposed rule for each rulemaking  and provide not less than a 30-day public comment period following  publication of the proposed rule in the Federal Register. These  requirements only apply to those DFARS rules that are related to the  expenditure of appropriated funds and have either a significant effect  beyond the agency’s internal operating procedures or a significant cost or  administrative impact on contractors or offerors. However, the  requirements may be waived if “urgent and compelling” circumstances  make compliance with the requirements impracticable. In those instances,  DOD issues an interim rule rather than a proposed rule. The interim rule  is effective on a temporary basis if DOD provides at least a 30-day public  comment period after publishing the interim rule in the Federal Register.  DOD then may issue a final rule after considering any comments  received. As a part of the rulemaking process, the Office of Information  and Regulatory Affairs reviews proposed and final regulations. The time  period for its review is generally limited to 90 days. See figure 1 for an  overview of the DARS’s process to change DFARS rules.

DARS staff can implement the provisions by one or more methods,  including the rulemaking process described above and other actions,  such as:  issuing DFARS class deviations, and  changing DFARS Procedures, Guidance, and Information (PGI), a  non-regulatory document that supplements the DFARS.

DOD Reviews NDAAs to Identify Provisions That Might Require DFARS Revisions or Other Actions

Before annual NDAAs are enacted, DARS staff told us that they review  proposed legislation and committee report language to stay abreast of  provisions they may have to implement after NDAAs are enacted. DARS  staff solicits input on which provisions may require implementation from  DOD components and offices, such as the Defense Contract  Management Agency, that have a stakeholder interest in many  acquisition-related provisions.

DARS staff tracks each of these potential changes in case files, which are  referred to in this report as cases. DARS staff also can work with other  federal agency offices to implement an acquisition-related NDAA  provision through a Federal Acquisition Regulation rule change, interim  rule change, or class deviation. In some instances, a provision may  specify that DOD take other actions, such as holding a public meeting to  obtain interested parties’ opinions on an acquisition topic.

Upon review of the enacted NDAA, the Defense Acquisition Regulations  Council or DARS staff sometimes decides that a provision should be  implemented by another DOD office or in other defense acquisition  guidance. For example, the DARS staff could determine that a provision  only applies to one DOD component and does not require a DFARS  change. In another example, DARS staff could determine that the initially  identified provision should be implemented in acquisition guidance, such  as DOD Instruction 5000.02. Further, sometimes DARS staff will change  implementation methods after having selected one. For example, DARS  staff may initially decide to implement a provision with a DFARS change,  but upon conducting research to draft the rule change, it may find that the  provision would be better implemented with a Federal Acquisition  Regulation change.

Based on our review of NDAAs from fiscal years 2010-2018, we identified  37 explicitly directive provisions—36 that directed DOD to either make or  consider making an acquisition-related regulatory change, and one that  directed DOD to issue acquisition-related guidance. DARS officials told  us that when a provision directs a change or consideration of an  acquisition-related regulatory change, the Defense Acquisition  Regulations Council and DARS staff give it the highest priority. We  confirmed that, in the Defense Acquisition Regulations Management  Information System, this priority is reflected by identifying the NDAA as  the source of the change in the synopsis field. We confirmed that the 36  provisions we identified had NDAA as the source of the change.

The Way the DARS Publicly Communicates Actions Makes It Difficult to Link to NDAA Provisions

DARS staff has different ways of communicating changes to the  regulations and other implementation methods to the public.  “Significant revisions” to the DFARS must be published in the Federal  Register. DARS staff also publishes the progress of DFARS  changes in case reports that are available on its website. Case  reports provide a synopsis of each case, which can include the NDAA  provision or other source of the case; describe cases combined to  address more than one provision; or show multiple cases for a single  provision.

DARS staff also posts notices of DFARS class deviations and  revisions to DFARS PGI on its website.

DARS staff provides input for regulatory priorities through DOD’s  publicly-available Unified Agenda. This includes all expected rule  changes DOD-wide and a Regulatory Plan that identifies the most  significant regulatory actions DOD expects to issue within the next 12  months.

It is difficult, however, for interested parties, such as Congress and  industry groups, to determine if a provision has been implemented using  only this publicly-available information. This is due, in part, to the fact that  provisions can be implemented through one or multiple methods, and  DARS actions can be reflected in more than one case. For example, if an  interested party, such as a federal contractor, expects to see a change to  the DFARS based on how an NDAA provision is worded, but the DARS  staff implements the provision with a class deviation, the interested party  may not realize that the provision has been implemented by another  method. In addition, DARS staff may consider a provision as implemented  with an action such as a class deviation even if a subsequent case to  change the DFARS is opened later.

We, too, found it difficult to determine the implementation status of  acquisition-related NDAA provisions using only publicly-available reports  and information. DARS staff was able to create a report for us that  showed implementation status by provision. But we were able to  determine and verify the implementation status of these provisions only  after using a combination of the DARS internal reports, publicly-available  reports and information, and data we had requested from the Defense  Acquisition Regulations Management Information System database.

DFARS and Federal Acquisition Regulation open and closed case reports  provide general information on a case, such as the topic and case  number. The reports also provide the status of the case. For example, a  report may say: “Defense Acquisition Regulations Council director tasked  team to draft proposed DFARS rule.” However, the case reports do not  provide information on when a regulatory change may be expected. This  information can help companies plan for future business opportunities  and devise the means to ensure compliance with regulations. See figure  2 for an overview of NDAA provision implementation methods and the  mechanisms DOD uses to report status information.

Standards for Internal Control in the Federal Government states that  management should externally communicate quality information to  achieve the entity’s objectives. Specifically, available information should  address the expectations of both internal and external users. DARS  staff regularly publishes public status updates on cases, rule changes,  and PGI changes. However, there is no readily available mechanism for  external stakeholders, such as Congress and industry representatives, to  determine the implementation status of any particular legislative  provision. This is because the status updates published by the DARS  staff do not provide the complete implementation status listed by specific  legislative provisions. Without communicating the implementation status  of legislative provisions, Congress lacks information for oversight of  acquisition reforms, and federal contractors lack visibility into how and  when changes will occur. For example, the House Armed Services  Committee expressed its oversight interest in a provision passed in 2013  that was not implemented in the DFARS until 2018. Additional  information on the status of the DFARS change may have been helpful to  the committee’s oversight activities. In another example, industry  expressed concern about the status of a regulation implementing a fiscal  year 2017 NDAA provision related to the lowest price technically  acceptable (LPTA) source selection process in order to plan for  responding to solicitations following implementation of the rule.

DOD Has Taken Action to Address Acquisition-Related Provisions in NDAAs from Fiscal Years 2010-2018, and Time Taken to Implement Averaged Less Than 1 Year

DARS staff identified 180 NDAA provisions from fiscal years 2010-2018  that potentially required an acquisition-related regulatory change or  another action. DARS staff and other DOD entities have taken some type  of action to address all these provisions. Our analysis showed that 112 of  the provisions had been implemented. The timeframe for implementation  was, on average, just under 1 year. Some implementation efforts took  longer than a year for a variety of reasons, such as reconciling multiple  years of NDAA requirements or dealing with highly complex topics. The  remaining legislative provisions are either in the process of being  implemented or DARS staff determined that a regulatory change was not  needed. DARS staff prioritized those provisions that expressly directed  DOD to change or consider an acquisition-related regulatory change.  DARS documentation showed that some of the implementation deadlines  in statute were shorter than the time periods that DARS generally allows  for the rulemaking process, including public comment and outside agency  review.

DARS Staff Identified and Addressed 180 Acquisition-Related NDAA Provisions

Following its process, DARS staff identified 180 NDAA provisions from  fiscal years 2010-2018 that potentially required an acquisition-related  regulatory change or another implementation action. We found that  DARS staff and, in a few instances, other DOD entities have taken action  to address all of those provisions. See figure 3 for the implementation  status of all 180 provisions distributed by NDAA fiscal year.

DARS Staff Implemented 112 Provisions within 1 Year of NDAA Enactment, on Average

We found that DARS officials opened cases within 30 days of NDAA  enactment, on average, for the acquisition-related NDAA provisions from  fiscal years 2010-2018. For the 112 of 180 provisions that have been  implemented, DOD completed the first implementation actions on  average within 1 year. DARS staff frequently used a combination of  methods to implement provisions, such as using an interim DFARS rule  followed by a final rule. When two or more implementation actions are  taken, DARS officials generally consider the first action as the action that  implements the provision. If a class deviation, interim DFARS rule, or PGI  is issued to address an NDAA provision, the DARS staff considers it  implemented even if additional actions—such as issuing a final DFARS  rule—are still being pursued. We used the same approach for our  analyses for determining the implementation status of provisions and time  taken to complete implementation. See table 1 below for the average time  to complete the first action to implement the 112 NDAA provisions.

Figure 4 shows the distribution of time taken to implement all 112 NDAA  provisions.

Some implementation efforts took longer than a year for a variety of  reasons. Publishing an interim DFARS rule generally took less than a  year, while publishing a final DFARS rule change took closer to 2 years  on average. In the selected DFARS cases studied, we found examples  where DOD had to reconcile multiple years of NDAA requirements or  manage complex topics, which we have similarly reported on as reasons  that influence the time needed to issue regulations in past work.

Reconciling Multiple Years of NDAA Requirements:   Congress directed DOD to revise the DFARS to reflect updated  requirements related to procuring commercial items in section 851 of  the fiscal year 2016 NDAA. Congress included a deadline of 180 days  from the NDAA enactment, but the DFARS update was not completed  until nearly 800 days after enactment. Our review of DARS case files  showed that the DARS staff prioritized implementing the provision, but  decided to address a related NDAA provision from 2013 through a  single DFARS rule change. In this instance, multiple NDAAs included  provisions the DARS staff viewed as closely related. As a result,  developing language that reconciled the requirements for all of these  provisions took additional time and effort. DARS officials told us that  they came close to publishing a commercial items rule earlier, but  started over because subsequent NDAA provisions included  requirements related to commercial items.

Managing Complex Topics:   Congress directed DOD to revise the DFARS regarding the use of the  LPTA source selection process in section 813 of the NDAA for fiscal  year 2017. Congress included a deadline of 120 days from enactment  in the provision, which DARS staff was unable to meet due to the  complexity of the issue and additional requirements added by a  subsequent NDAA. Following enactment of the 2017 NDAA, DARS  staff developed a proposed rule that would have implemented  relevant NDAA sections in under a year. However, prior to publishing  that rule, the NDAA for fiscal year 2018 was enacted and contained  added LPTA requirements. After the 2018 NDAA was enacted, DARS  staff combined all of its related LPTA cases into a new DFARS case  and made adjustments to the proposed rule it had been developing.  The DARS staff responsible for updating the previous proposed rule  requested five extensions from DARS leadership between January  and March 2018 to update documentation to address the fiscal year  2018 provisions and prepare additional analyses. After months of  coordination and reviews, DARS staff published a proposed rule in  December 2018 with a 60-day comment period. Sixteen formal  submissions were received by the February 2019 deadline. The  DARS staff is currently reviewing those comments and drafting a final  rule, which must still go through multiple reviews before it can be  published in the Federal Register.

Congress directed DOD to consider revising the DFARS regarding an  extension of contractor conflict of interest limitations in section 829 of  the NDAA for fiscal year 2013. This provision has been in the process  of implementation due to a determination that this rule should be  informed by a pending Federal Acquisition Regulation change. In this  instance, Federal Acquisition Regulation principals opened a case to  implement the provision in the Federal Acquisition Regulation 7  months after NDAA enactment, and DARS officials agreed to draft the  rule change that would implement the provision. DARS staff published  a proposed rule in the Federal Register for public comment  approximately 8 months later. However, DARS staff informed us that  a few weeks after the public comment period, Federal Acquisition  Regulation officials directed them to suspend its activities until a  separate, related Federal Acquisition Regulation rule on “closely  associated with inherently governmental functions” was finalized.  However in August of 2018, section 829 of the NDAA for fiscal year  2013 was repealed by section 812(b)(4) of the NDAA for fiscal year  2019.

We identified 36 provisions, a subset of the 180, that expressly directed  DOD to make or consider making an acquisition-related regulatory  change, as well as one provision that directed DOD to issue guidance.  DARS staff implemented 22 of the 37 provisions in about 13 months on  average. Of the 37 provisions, 32 had statutory deadlines, ranging from  30 to 365 days after enactment. The DARS documentation showed that  the DARS staff prioritized these NDAA provisions by noting the deadlines,  but generally did not implement them by the deadline. We found that:

DARS staff met the deadlines in eight of 32 instances. In those eight  instances, the actions completed were relatively simple, and DARS  staff determined that a public comment period was not required. For  example, DARS staff changed the DFARS to implement section 801  of the fiscal year 2018 NDAA—which required DOD to revise the  DFARS to include three specific statements about DOD acquisitions— in 143 days, ahead of Congress’s 180-day deadline.

Four provisions had deadlines for implementation of 60 days or less.

For example, sections 841 and 842 in the fiscal year 2012 NDAA  called for changes to be made to the DFARS within 30 days. The  short deadlines allowed for fewer days than DARS staff allocate for  public comment (minimum of 30 days, by law) and outside agency  review (no more than 90 days, by executive order). Deadlines that did  not allow for these activities as well as time to draft language were  typically not met.

DARS is responsible for developing and maintaining DOD acquisition  regulations, which may include implementing acquisition-related NDAA  provisions. The DARS staff has internal tools to track, manage, and  communicate the status of DFARS changes, including implementation of  NDAA provisions. However, DOD’s DFARS change process does not  have a reporting mechanism to clearly communicate to Congress,  industry, and other interested parties the status of regulatory or other  changes linked to specific NDAA provisions. Without a mechanism to  better communicate DOD’s actions to implement NDAA provisions,  stakeholders potentially affected by reforms may be unaware of what and  when changes may be implemented. Given the actions and length of time  that it may take to implement provisions and see a change reflected in the  DFARS or elsewhere, stakeholders would benefit from knowing the status  of DOD’s actions before implementation has been completed in order to,  for example, prepare for compliance.

We are making the following recommendation to the Secretary of  Defense to ensure that the Director of the Defense Acquisition  Regulations System:  Develop a mechanism to better communicate to all stakeholders the  implementation status of acquisition-related NDAA provisions, particularly  those provisions that direct a change or consideration of a change to the  DFARS. (Recommendation 1)

We provided a draft of this report to DOD for comment. DOD concurred  with our recommendation to develop a mechanism to better communicate  to all stakeholders the implementation status of acquisition-related NDAA  provisions. The department said it will develop a matrix reflecting the  implementation status of acquisition-related NDAA provisions and post  the matrix on the Defense Pricing and Contracting public website. DOD’s  written comments on the report are reprinted in appendix II. DOD also  provided technical comments, which we incorporated as appropriate.

We are sending copies of this report to the Acting Secretary of Defense;  the Under Secretary of Defense for Acquisition and Sustainment; the  Secretaries of the Air Force, Army, and Navy; the Director, Defense  Acquisition Regulations System; appropriate congressional committees;  and other interested parties. This report will also be available at no  charge on the GAO website at http://www.gao.gov.

If you or your staff have any questions concerning this report, please  contact me at (202) 512-4841 or by e-mail at woodsw@gao.gov. Contact  points for our Offices of Congressional Relations and Public Affairs may  be found on the last page of this report. GAO staff that made key  contributions to this report are listed in appendix III.

Appendix I: Objectives, Scope, and Methodology

A House Armed Services Committee report related to the National  Defense Authorization Act (NDAA) for Fiscal Year 2019 included a  provision for us to review the Department of Defense’s (DOD) process for  revising the Defense Federal Acquisition Regulation Supplement  (DFARS), among other things. This report (1) determines how DOD  implements acquisition-related NDAA provisions and communicates  implementation status, and (2) identifies the status of DOD’s efforts to  implement acquisition-related NDAA provisions from fiscal years 2010- 2018.

To determine how DOD implements acquisition-related NDAA provisions,  we reviewed DOD documents and supplemented our work with interviews  with relevant DOD officials. Specifically, we reviewed the DFARS  Operating Guide, January 2015; presentation on the Defense Acquisition  Regulations System Rulemaking Process, DFARS open and closed  cases reports, Federal Acquisition Regulation open and closed cases  reports; decision matrices from the Defense Acquisition Regulations  System (DARS), which document decisions on implementing NDAA  provisions from fiscal years 2010-2018; and other applicable reports and  information on provisions and cases from the DARS staff and the  Defense Acquisition Regulations Council. We also referenced our past  reports on DFARS rulemaking; U.S. Code on Publication of proposed  regulations; the Federal Acquisition Regulation Operating Guide, July  2015; Federal Register notices related to DOD rulemaking; and the news  listing on the DARS website. We adopted the DARS use of the term  “implementation,” which includes both regulatory action as well as other  actions, such as public meetings or a report.

We interviewed DOD officials that are involved in the DFARS rulemaking  process. Specifically, we interviewed members of the Defense Acquisition  Regulations Council and DARS staff, including the Chair and Deputy  Chair, the Regulatory Control Officer that prepares rules for submission to  the Office of Information and Regulatory Affairs within the Office of  Management and Budget, and DFARS case managers. We also  interviewed officials from the DOD components—Air Force, Army, Navy,  Defense Contract Management Agency, and Defense Logistics Agency.

We interviewed industry representatives from the Aerospace Industries  Association, National Defense Industrial Association, and the  Professional Services Council.

We compared the DARS process with the Standards for Internal Control  in the Federal Government. Specifically, we reviewed DOD’s public  reports of its implementation actions with internal control principle 15:  “management should externally communicate the necessary quality  information to achieve the entity’s objectives.” Stakeholders in the  acquisition process include executive agencies’ program and contracting  officials, members of Congress, congressional staff, industry, contractors,  and members of the public.

The DARS staff provided a complete data extract of Defense Acquisition  Regulations Management Information System as of October 31, 2018, to  document the acquisition-related NDAA provisions that DARS staff  identified as potentially requiring implementation. The Defense  Acquisition Regulations Management Information System is the DARS  database to track the status of individual cases that are associated with  DARS rulemaking actions. We analyzed the data extract to identify which  Title VIII provisions that the DARS identified for implementation from  NDAAs from fiscal years 2010-2018, and to identify the cases related to  those provisions. We focused on Title VIII—Acquisition Policy, Acquisition  Management, and Related Matters—of the NDAAs, which contain  acquisition-related provisions. We queried the data extract to identify  cases with notes indicating NDAA provisions from fiscal years 2010-2018  as the source of change in the database synopsis field. We found 180  acquisition-related provisions from Title VIII of the NDAAs from fiscal  years 2010-2018 that the DARS staff had identified for implementation.  For these 180 provisions, we determined the number and types of cases  by year, duration of cases, and duration of select steps for cases. We  verified the validity of provisions and cases that were not in both the  DARS reports that DARS staff manually produced and the Defense  Acquisition Regulations Management Information System data with  DARS officials as of April 19, 2019.

To identify the implementation status of acquisition-related NDAA  provisions from fiscal years 2010-2018, we further analyzed data from the  Defense Acquisition Regulations Management Information System and  DARS reports. For the actions associated with the 180 provisions, we  analyzed the status history of each case, associated status dates for  cases, and closed status indicators. We also reviewed DARS reports,  such as the internal stats charts with case duration and closure metrics  that DARS officials told us they manually verify. We reviewed a report that  the DARS staff manually produced for us that showed actions and cases  by provision for the NDAAs from fiscal years 2010-2018.

We independently analyzed the NDAAs from fiscal years 2010-2018 and  determined 36 provisions in Title VIII that expressly directed DOD to  make or consider making an acquisition-related regulatory change, as  well as one provision that directed DOD to issue guidance. We identified  these provisions using a keyword search of individual and combined  terms and criteria, such as “regulation, defense, and acquisition  regulation.” To better understand the Defense Acquisition Regulations  Council’s recommendations and DARS implementation process, we  selected 12 provisions that directed DOD to make or consider an  acquisition-related regulatory change for case studies. The case study  selection criteria included the year of the NDAA from which the provision  originated for a mix of older and newer provisions and time duration for a  mix of shorter and longer cases related to implement the provisions.

We used DARS reports and our analysis of the Defense Acquisition  Regulations Management Information System data to determine the year  and time duration. Since the DFARS Case Standard Timeline is 52  weeks, we selected provisions with cases that were both more and less  than 52 weeks. We also selected provisions with cases that were open  and closed. We created a data collection instrument for the case studies  that captured information, such as which provisions were associated with  the case, to standardize our data collection process. For the 12  provisions, we reviewed the associated case files that are generally a  record of the implementation process and the Defense Acquisition  Regulations Council’s recommendations, and the decisions made by the  DARS staff. We also reviewed available publication folders associated  with the cases that generally document input and decisions from other  agencies, such as the Office of Management Budget’s Office of  Information and Regulatory Affairs. Finally, we used the information in the  files to verify the information in Defense Acquisition Regulations  Management Information System for those specific cases.

We found the Defense Acquisition Regulations Management Information  System data and information in the files that we reviewed to be  sufficiently reliable for purposes of reporting on how the DARS staff  implemented NDAA provisions and the time duration to do so.

Appendix II: Comments from the Department of Defense

Appendix III: GAO Contacts and Staff Acknowledgments

In addition to the contact named above, Penny Berrier, Assistant Director;  James Kim; Holly Williams; Beth Reed Fritts; Gail-Lynn Michel; Emily  Bond; Lori Fields; Matthew T. Crosby; Lorraine Ettaro; and Tim Bober  made key contributions to this report.

For years, Congress has been trying to improve how DOD buys products and services by enacting annual acquisition reform legislation. DOD implements these reforms through regulations.

We found that DOD has taken actions to address 180 acquisition reforms since 2010. On average, implementation was completed within a year of the legislation being enacted, but some provisions took over 2 years to implement.

However, the status of implementing regulations is not always easy to track. We recommended that DOD better communicate the status of these regulatory changes to Congress and other interested parties.