[Senate Hearing 116-514]
[From the U.S. Government Publishing Office]
S. Hrg. 116-514
PART 1: PROTECTING THE RELIABILITY
OF THE U.S. MEDICAL SUPPLY CHAIN
DURING THE COVID 19 PANDEMIC
=======================================================================
HEARING
before the
COMMITTEE ON FINANCE
UNITED STATES SENATE
ONE HUNDRED SIXTEENTH CONGRESS
SECOND SESSION
__________
JULY 28, 2020
__________
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Printed for the use of the Committee on Finance
______
U.S. GOVERNMENT PUBLISHING OFFICE
46-295-PDF WASHINGTON : 2021
COMMITTEE ON FINANCE
CHUCK GRASSLEY, Iowa, Chairman
MIKE CRAPO, Idaho RON WYDEN, Oregon
PAT ROBERTS, Kansas DEBBIE STABENOW, Michigan
MICHAEL B. ENZI, Wyoming MARIA CANTWELL, Washington
JOHN CORNYN, Texas ROBERT MENENDEZ, New Jersey
JOHN THUNE, South Dakota THOMAS R. CARPER, Delaware
RICHARD BURR, North Carolina BENJAMIN L. CARDIN, Maryland
ROB PORTMAN, Ohio SHERROD BROWN, Ohio
PATRICK J. TOOMEY, Pennsylvania MICHAEL F. BENNET, Colorado
TIM SCOTT, South Carolina ROBERT P. CASEY, Jr., Pennsylvania
BILL CASSIDY, Louisiana MARK R. WARNER, Virginia
JAMES LANKFORD, Oklahoma SHELDON WHITEHOUSE, Rhode Island
STEVE DAINES, Montana MAGGIE HASSAN, New Hampshire
TODD YOUNG, Indiana CATHERINE CORTEZ MASTO, Nevada
BEN SASSE, Nebraska
Kolan Davis, Staff Director and Chief Counsel
Joshua Sheinkman, Democratic Staff Director
(ii)
C O N T E N T S
----------
OPENING STATEMENTS
Page
Grassley, Hon. Chuck, a U.S. Senator from Iowa, chairman,
Committee on Finance........................................... 1
Wyden, Hon. Ron, a U.S. Senator from Oregon...................... 4
ADMINISTRATION WITNESSES
Correa, Soraya, Chief Procurement Officer, Department of Homeland
Security, Washington, DC....................................... 7
Overacker, Thomas F., Executive Director, Cargo and Conveyance
Security, Customs and Border Protection, Department of Homeland
Security, Washington, DC....................................... 8
Francis, Steve, Assistant Director, Global Trade Investigations
Division; and Director, National Intellectual Property Rights
Coordination Center, Immigration and Customs Enforcement,
Department of Homeland Security, Washington, DC................ 10
ALPHABETICAL LISTING AND APPENDIX MATERIAL
Correa, Soraya:
Testimony.................................................... 7
Prepared statement with attachment........................... 45
Responses to questions from committee members................ 48
Francis, Steve:
Testimony.................................................... 10
Prepared statement........................................... 64
Responses to questions from committee members................ 68
Grassley, Hon. Chuck:
Opening statement............................................ 1
Prepared statement........................................... 72
Hassan, Hon. Maggie:
PowerPoint presentation...................................... 74
Overacker, Thomas F.:
Testimony.................................................... 8
Prepared statement........................................... 78
Responses to questions from committee members................ 83
Wyden, Hon. Ron:
Opening statement............................................ 4
Prepared statement........................................... 91
Communication
Center for Fiscal Equity......................................... 93
(iii)
PART 1: PROTECTING THE RELIABILITY
OF THE U.S. MEDICAL SUPPLY CHAIN
DURING THE COVID-19 PANDEMIC
----------
TUESDAY, JULY 28, 2020
U.S. Senate,
Committee on Finance,
Washington, DC.
The WebEx hearing was convened, pursuant to notice, at
10:17 a.m., in Room SD-215, Dirksen Senate Office Building,
Hon. Chuck Grassley (chairman of the committee) presiding.
Present: Senators Portman, Toomey, Cassidy, Lankford,
Daines, Wyden, Stabenow, Cantwell, Menendez, Carper, Cardin,
Brown, Bennet, Casey, Warner, Hassan, and Cortez Masto.
Also present: Republican staff: Daniel Boatwright,
Investigative Counsel; Caitlin Soto, Oversight Counsel; and
Jeffrey Wrase, Deputy Staff Director and Chief Economist.
Democratic staff: David Berick, Chief Investigator; Peter
Gartrell, Investigator; and Joshua Sheinkman, Staff Director.
OPENING STATEMENT OF HON. CHUCK GRASSLEY, A U.S. SENATOR FROM
IOWA, CHAIRMAN, COMMITTEE ON FINANCE
The Chairman. Good morning. I would like to welcome
everyone to the Finance Committee hearing. The title is very
appropriate at this time of the COVID-19 pandemic: the
reliability, and protecting it, of the U.S. medical supply
chain.
This is our very first hearing to discuss the integrity of
our Nation's medical supply chain. Today, we will hear from the
Department of Homeland Security, and in a few days we will hear
from private-sector stakeholders.
It is Congress's responsibility to ensure that DHS upholds
its responsibility to protect the public health by properly
ensuring that Americans on the front line get safe and
effective medical supplies.
I think we can all agree: the COVID-19 pandemic has exposed
several vulnerabilities of our medical supply chain. Some of
these vulnerabilities are new, while others have been around a
long time before the pandemic and have been further exacerbated
with this virus crisis.
Indeed, I have been asking questions long before the
pandemic brought these issues to the forefront. In November of
last year, I finalized my oversight activities on the
proliferation of counterfeit and other illicit goods sold on e-
commerce platforms.
The ranking member and I issued a report on our findings
and highlighted the threat counterfeits pose to our Nation's
economic security, and the health and safety of our populace.
We also highlighted that many counterfeits originate in China
and Hong Kong. At this point, I think it is fair to say that
China has serious
quality-control problems. It was evident then, and the pandemic
has proved it more so. Before the virus pandemic, hospitals and
health-care workers could avoid purchasing counterfeits by
tapping into their traditional supply chains.
However, as the demand for personal protective equipment
skyrocketed, some of these providers have had to go outside of
this normal supply chain to source supplies elsewhere, and in
some cases the supplies that have inadvertently been purchased
are fake, faulty, or even illicit medical supplies.
The problem of counterfeit and faulty products is something
that I have looked into for a very long time, dating back even
to my days as chairman of the Judiciary Committee. As the virus
began its foothold in the United States, I also sent a letter
to Vice President Mike Pence and several other agency heads to
express my concern that PPE shortages were allowing bad actors
to take advantage of hospitals and health-care workers
desperately seeking supplies.
I have talked to hospitals around the country, and
particularly in Iowa, and have heard stories of price gouging,
shady middlemen, and personal protective equipment that was
ordered and then never even arrived, or if it did, was
unusable. In my letter, I asked the administration to take this
issue seriously and to prosecute bad actors.
Today, we will hear from a representative of the U.S.
Immigration and Enforcement's Homeland Security Investigations
on their efforts to do just that.
Before we hear from today's witnesses, I would like to
discuss the substance of today's hearing. First, I want to go
back to the beginning and expose the root cause of why the
United States--and frankly, the world--is experiencing a
breakdown of their supply chains.
China is the largest manufacturer of personal protective
equipment in the world. More than 40 percent of these supplies
are manufactured there.
In the beginning of the pandemic, China did what was, we
would now consider unthinkable--I do not know what they thought
about it--they turned off the taps of PPE manufacturing and
heavily restricted their export. The Chinese Government also
directed its local and state governments to source more
supplies from the international market. As global demand soon
spiked and China restricted exports, distributors and suppliers
were unable to fulfill orders. As a result, some hospitals
report estimates of delays of 3 to 6 months for supplies.
Some pundits say China did what it did to address a
domestic health crisis. However, it is important to remember
that in the beginning China downplayed the seriousness of the
virus threat to the world while it redirected vast quantities
of PPE towards its domestic needs. In the United States,
China's decision to redirect medical supplies occurred when
States, territories, localities, and tribes began to
desperately need these critical supplies.
While China has since reversed course and allowed PPE to
leave the country, the United States has continued to struggle
to meet demands, with most of our supply chains heavily
dependent yet on China or Mexico.
We cannot allow our supply chains to be so heavily reliant
upon other countries. I look forward to working with my
colleagues, both Republican and Democrat, to discuss how we can
diversify our supply chains, and particularly do it by
increasing manufacturing in the United States.
Before the pandemic hit, hospitals and health-care
providers employed a ``just-in-time'' approach to sourcing
supplies from trusted distributors. However, as the virus
gained a foothold in our country, everyone rushed to compete
for supplies. That tremendously exacerbated the shortage.
As a result, some health-care providers resorted to
purchasing PPE from unverified suppliers, and some even turned
to the Internet to get supplies. By doing so, these providers
sometimes received fake, fraudulent, or even illicit goods not
safe for use in treating patients with the virus. In other
cases, providers faced price gouging or hoarding.
Fake N95 masks have become so prolific that 3M recently
filed suit against several purported PPE suppliers profiting
from COVID-19 at the expense of our vulnerable people.
Large health-care systems have told me that the supply
chain is doing better now, with more PPE coming in daily, which
gives them the ability to avoid unverified suppliers. However,
smaller providers continue to face shortages which may cause
them to continue to go to these unverified suppliers. Even more
concerning is that smaller providers, like safety-net clinics
and rural hospitals, tend to treat low-income families, a
majority of which are African Americans or Latinos. They have
been heavily hit by the pandemic.
This population has been hit the hardest, and is four or
five times more likely to be hospitalized. This is an issue
that cannot be sugarcoated or spun for some political purpose--
because it is just plain simply a fact. The black and brown
communities are suffering.
As members of the Congress and stewards of the public
trust, we must do everything in our power to protect this
vulnerable population. This committee is considering several
proposals along that line.
And one way that we can help this population is to do
everything in our power to shore up the integrity of the
Nation's supply chain and make sure that all hospitals and
health-care providers get the quality supplies that they need
to treat these patients.
With that said, I now turn to the Department of Homeland
Security's efforts to protect the integrity of our Nation's
supply chain. And our witnesses today will help us do that. DHS
and its components are engaged in an unprecedented whole-of-
government response to combat the virus pandemic.
Our Nation has not faced something like this in more than
100 years, even though the 1960s had quite a loss of life from
flu. Even so, we cannot deny that the Federal Government's
approach to emergency preparedness has always been fraught with
problems, going back to previous administrations. This is not
some partisan point. If I said, for instance, it was a problem
in the Obama administration, it is a fact. But it does not just
start there with Obama.
It also shows that, no matter which party is in the White
House, we can always do more to prepare.
Today, we will hear from witnesses who represent the Office
of Procurement, U.S. Customs and Border Protection, and ICE's
Homeland Security Investigations.
I thank you all for being present today. In closing, I just
want to say two things. First, I want to thank the officials
who work tirelessly in the Department to ensure the integrity
of our Nation's supply chains, and for their efforts to ensure
that those most in need get critical quality medical supplies.
Your job is incredibly important right now, but it has been a
very important job throughout a long period of time.
Second, we must come together to address vulnerabilities in
our Nation's supply chain. I hope today we can have a good-
faith discussion so that we can better understand what we as a
Congress need to do to protect America's front-line workers.
[The prepared statement of Chairman Grassley appears in the
appendix.]
The Chairman. Senator Wyden?
OPENING STATEMENT OF HON. RON WYDEN,
A U.S. SENATOR FROM OREGON
Senator Wyden. Thank you very much, Mr. Chairman.
Mr. Chairman and colleagues, the Finance Committee will
hold two hearings this week looking at why State governments
and health-care providers have struggled to get the PPE and the
gear they need to fight the scourge of the coronavirus.
Now, some members of this committee want this to be all
about counterfeits and China. In my view, that story is way off
the real mark. If you want to know what is doing the most to
contribute to the shortage of personal protective equipment,
you have to start with Donald Trump shirking his responsibility
to lead, forcing States and hospitals to compete against each
other for the supplies they need and exposing them to scammers
on the PPE gray market.
From the beginning to this day, the President is walking
away from his number one responsibility, which is to keep the
American people safe. The pandemic has claimed 150,000 American
lives and counting, but instead of focusing on that, the
President is launching paramilitary occupations in American
cities, including my hometown of Portland. It is all a big
campaign-season deflection from the enormous human and economic
toll that the pandemic is taking now.
My home State of Oregon is a perfect example of how the
Trump administration's priorities are so out of whack. Let me
explain why. Back in the spring, the President was in full-on
denial mode that he was responsible for helping our doctors and
nurses and caregivers and other front-line workers find the PPE
and other equipment that they so desperately had needed.
In mid-March, during one of those inimitable coronavirus
press briefings, Donald Trump said the government is, and I
quote, ``not a shipping clerk'' and that when it comes to
acquiring PPE, quote, ``Governors are supposed to be doing
it,'' unquote.
His disinterest in leading any kind of coordinated effort
to acquire and distribute PPE forced our States to compete
against each other on the open market. That gave a lot of room
for sketchy suppliers and scam artists to rip off the taxpayers
and endanger front-line public health workers with unsafe and
substandard PPE.
My home State, Oregon, for example, purchased close to 1
million N95 masks from a supplier in China. After those masks
arrived, they were de-certified because they could not pass key
safety screenings. The U.S. agency that tests respirators,
NIOSH, now says that some of the Chinese respirators they
rejected could have been counterfeit, but nobody actually even
knows that for sure.
The fact that Oregon, like so many States and medical
providers, had to go out on its own and buy critical safety
equipment in the middle of a global pandemic is a disgrace. And
the pandemic continues to rage in the Pacific Northwest. But
Donald Trump is not trying to find new ways to help Oregon deal
with this pandemic.
One last point about priorities. I wish Donald Trump would
attack the coronavirus half as hard as he is attacking our
cities. Instead of his hands-off approach to fighting the
coronavirus, Donald Trump is hands-on terrorizing my friends
and neighbors at home in Portland with a secret police force of
hundreds of paramilitary units.
Night after night, they tear-gas a ``Wall of Moms.'' One of
my personal friends, Sharon Meieran, a county Commissioner and
an ER doc who was out protesting peacefully, was gassed without
provocation. Peaceful protesters have been shot with impact
munitions that are unquestionably capable of killing an
individual. People have been snatched off the streets into
unmarked cars, holding and interrogating them without
justification or charges. And now Donald Trump is saying he is
going to take this to other cities--take this violence
nationwide.
So what is happening in my State over the last few weeks is
just an example of how Donald Trump is neglecting his
responsibilities when it comes to fighting the pandemic--and
abusing the office for political gain. It is time to get down
to the single most important issue, and that is contributing to
the personal safety and well-being of the American people from
sea to shining sea. And one of the ways you do that is to
actually get personal protective equipment into the hands of
all the Americans who need it, and not deflecting attention
elsewhere.
Lots to talk about today. I look forward to the questions
and answers. Thank you, Mr. Chairman.
[The prepared statement of Senator Wyden appears in the
appendix.]
The Chairman. If we were having this in Des Moines, IA, at
the Federal building where my office has been located ever
since I have been in the U.S. Senate, and for my predecessor in
this position, the Des Moines police department would be
defending that building if the same violence occurred there.
The Des Moines police department would do that. But if they did
not, the people working in that building and the taxpayers who
paid for that building, would expect the Federal police force--
when I say ``police force,'' of different divisions within that
building--to protect their employees and to protect that
property.
And it happens that in at least five cities over the
weekend where there were some demonstrations, that the police
force, if they were needed, the local police force did it. The
only place where Federal law enforcement had to intervene was
in Portland. And if the Portland police were protecting the
Federal building, the people--the Federal employees there--
would not have to do it.
I am going to introduce Soraya Correa----
Senator Wyden. Mr. Chairman? Mr. Chairman----
The Chairman. I do not--I--you had your chance to speak
about the damage in Portland. I just wanted to say what the
situation was in Des Moines or other cities where they had the
same problem.
Senator Wyden. Mr. Chairman, could I respond for 1 minute?
The Chairman. Yes. Go ahead, please.
Senator Wyden. Thank you, Mr. Chairman.
And let us just be clear. What we are concerned about in
Portland, for example, is the attacks against our people even
away from Federal buildings, one.
Two, overwhelmingly Oregonians are peacefully protesting,
exercising their First Amendment rights. And I will just sum up
with something I think you would identify with, and the
Republicans would.
Tom Ridge, a Republican, the first Secretary of Homeland
Security, said point-blank, hell would freeze over before he
would have allowed something like this in his State.
Thank you for letting me make that clarification.
The Chairman. I will not comment on what you said, but I do
have a reaction to what I see on television in Portland. When
people set fire before the building, why isn't the fire
department out there putting the fire out?
I am going to introduce Soraya Correa. She is Chief
Procurement Officer for the Department. In her role, Ms. Correa
oversees the work of nine heads of contracting agencies and
their activities--well, I should not say nine agencies, but the
activity of nine heads--that provide operational procurement
services to the Department's Components, Directorates, and
offices. She has initiated and led several key efforts designed
to improve how the 1,400 members of the DHS Procurement
Workforce focus as a team on finding the right solutions to
enable and support DHS's mission.
This effort includes the Acquisition Innovations in Motion
framework; the Procurement Innovation Lab; and the Education,
Development, Growth, and Excellence mentoring program.
Thomas Overacker is the Chief Director of the Cargo and
Conveyance Systems Office of Field Operations for the U.S.
Customs and Border Protection. In this role, he provides
leadership for all aspects of CBP's cargo processing and trade
operations at ports of entry and Centers of Excellence and
Expertise.
He oversees non-intrusive inspection and radiation
detection technology for the agency, policies and procedures
for cargo verification and cargo control, and trade compliance.
He also directs the Customs-Trade Partnership Against Terrorism
and the Container Security Initiative.
Steve Francis is Assistant Director for Global Trade
Investigations at the U.S. Immigration and Customs Enforcement,
Homeland Security Investigations, and the Director of the
National Intellectual Property Rights Coordination Center. In
this dual role, Mr. Francis oversees HSI's national program
related to trade enforcement, intellectual property, and
counter-proliferation. He brings more than 2 decades of law
enforcement experience to that role. He served as special agent
in charge of HSI's operations in Michigan and Ohio.
We will start as I introduced you, so go ahead, Ms. Correa.
STATEMENT OF SORAYA CORREA, CHIEF PROCUREMENT OFFICER,
DEPARTMENT OF HOMELAND SECURITY, WASHINGTON, DC
Ms. Correa. Chairman Grassley, Ranking Member Wyden, and
distinguished members of the committee, thank you for the
opportunity to appear before you today to discuss how
procurement enables supply chain integrity in the U.S.
Department of Homeland Security.
I am Soraya Correa, the Department's Chief Procurement
Officer. I have been a career civil servant for more than 39
years and served at DHS since its inception. I oversee the work
of 10 contracting organizations that provide operational
procurement services to DHS Components, Directorates,
organizations, and offices across the country.
My office manages the Department's procurement policy and
processes and provides enterprise-level tools and contract
vehicles. At DHS, we are accustomed to providing emergency
contracting support while enabling the integrity of the supply
chain--oftentimes during concurrent disasters and emergencies.
We recognize the importance of ensuring contracts are awarded
only to those contractors who are deemed responsible in
accordance with the Federal Acquisition Regulations, regardless
of operational tempo.
Immediately after the President declared a national
emergency for COVID-19, my goals were to reduce any unnecessary
administrative burdens to enable quicker delivery of supplies
and services, to ensure employees and contractors had the
processes and tools in place to carry out their work virtually,
and to provide support to the DHS contracting activities in
their work to research and vet vendors. To achieve these goals,
I took several distinct actions early on.
First, I invoked the special emergency contracting
authorities under the Federal Acquisition Regulations. For
example, I increased the purchase card limit so that FEMA and
others could more easily procure larger volumes of emergency
supplies.
Second, I enhanced my communications framework with
industry, contracting staff, and other stakeholders to share
critical information on a regular basis. These forums focused
on key areas of our work to support the pandemic, such as the
CARES Act implementation, supply chain gaps, and how industry
could better support the DHS operational requirements.
And lastly, in response to an extraordinary surge in
inquiries from industry, I established two teams, a Supplier
Verification Team that focuses on vetting potential suppliers
for commercial items, and the Procurement and Acquisition
Innovation Response Team that focuses on innovative solutions.
These teams share the results of their work across DHS on a
regular basis. Furthermore, they give industry a centralized
approach to engage with DHS on COVID-19 and ensure that our
Components and contracting activities are not duplicating
efforts.
The activities I just outlined above, as well as others,
serve as an underpinning for the collaboration with other DHS
offices that is necessary to efficiently bring crucial
solutions to bear through our operational contracting work.
In addition, FEMA used an open solicitation covering a
broad array of items that immediately alerted industry to all
of the COVID-19, PPE, and other related emergency response
needs. The solicitation allowed FEMA to review responses and
award contracts in an expedited manner to responsible vendors
at fair and reasonable prices.
Finally, using the DHS Commercial Solutions Opening Pilot
Program Authority, we issued a solicitation that remains open
through August to obtain proposals for innovative commercial
products that may help meet our new and emerging mission needs
that have resulted from the COVID-19 pandemic.
In closing, I want to reaffirm my commitment to ensuring
the Department has the products and services needed to fulfill
its critical mission to safeguard the American people, our
homeland, and our values. I continue to look for every
opportunity to increase the efficiency and effectiveness of our
policies and processes which help to ensure the integrity of
the supply chain throughout the procurement process.
Thank you again for the opportunity to testify today, and I
look forward to your questions.
[The prepared statement of Ms. Correa appears in the
appendix.]
The Chairman. Thank you.
Mr. Overacker?
STATEMENT OF THOMAS F. OVERACKER, EXECUTIVE DIRECTOR, CARGO AND
CONVEYANCE SECURITY, CUSTOMS AND BORDER PROTECTION, DEPARTMENT
OF HOMELAND SECURITY, WASHINGTON, DC
Mr. Overacker. Chairman Grassley, Ranking Member Wyden,
members of the committee, I am Tom Overacker. It is my honor to
represent U.S. Customs and Border Protection and to discuss
what CBP is doing to ensure the integrity of the medical supply
chain during the COVID-19 pandemic.
CBP serves on the front lines supporting the U.S. response
to the pandemic, effectively managing trade and travel and
mitigating risk. We are working to expedite the import of
legitimate medical supplies and personal protective equipment,
PPE.
CBP's dedicated personnel are on the lookout for
counterfeit, substandard, or unapproved COVID-related products.
CBP has prioritized communication with parties involved in the
global medical supply chain. We work with the Food and Drug
Administration, the Federal Emergency Management Agency, the
trade community, and other stakeholders to ensure critical
supplies reach their intended destinations here in the United
States.
During fiscal year 2019, CBP processed 35.5 million entries
valued at over $2.7 trillion. Over the last 6 months, and as a
direct result of the global pandemic, we have seen a 12-percent
decline in the overall volume and a 13-percent decline in the
value of imports. These declines reached their peak in May when
the volume and value of imports were nearly 30 percent lower
than May of last year.
Despite declines in overall imports, imports of medical
supplies, especially PPE, have skyrocketed. In April alone,
import quantities of these commodities increased by 227
percent. The number of new actors in the supply chain has also
dramatically increased. The number of sellers of surgical and
medical gloves has increased by 128 percent. The number of
consignees acquiring protective masks has increased by 160
percent.
To segment risk and facilitate legitimate imports of
medical supplies, CBP's Pharmaceuticals, Health, and Chemicals
Center of Excellence and Expertise created the COVID-19 Cargo
Resolution Team, or CCRT. The CCRT created an online portal to
triage inquiries and provide up-to-date guidance from CBP and
links to guidance from FDA. To date, the portal has received
more than 21,000 views, and the CCRT has fielded approximately
2,500 inquiries, resolving cargo holds and expediting release
of critical imports.
The efforts of the CCRT have helped secure the importation
of approximately $1.2 billion in COVID-related supplies. In
addition, the CCRT worked closely with FEMA to support Project
Air Bridge and other FEMA procurements. CBP successfully
expedited clearance of over 400 flights at 17 different ports,
facilitating the importation of over 1.3 billion pieces of PPE.
The CCRT is also engaged with the Department of Health and
Human Services, supporting Operation Warp Speed to ensure that
imports of critical equipment and supplies are not delayed.
In addition to facilitating legitimate imports, CBP is
actively engaged in specific enforcement efforts. CBP
collaborates with FEMA to ensure that scarce and threatened PPE
remains in the United States for domestic use. CPB officers
identify and examine export shipments and provide relevant
information to FEMA for review and adjudication.
Together, FEMA and CBP have returned 3.6 million protective
masks and nearly 150,000 sets of gloves to the U.S. market.
Through CBP's National Targeting Center, we work with Homeland
Security Investigations, the United States Postal Inspection
Service, FDA, HHS, and numerous other domestic and
international partners to identify and disrupt illicit imports.
NTC targeting efforts have led to the interdiction of more
than 120,000 non-FDA-approved test kits, seizures of more than
10 million counterfeit masks, seizures of over 3,000 EPA-
prohibited anti-virus lanyards, and interception of more than
20,000 tablets of medicines that were not approved by FDA for
use in the United States.
The NTC directly supports Operation Stolen Promise, the HSI
initiative to disrupt criminal organizations, the malicious
cyber actors who prey on the public during the pandemic. The
NTC provides rapid, real-time targeting support for HSI
investigations.
CBP's officers, specialists, and agents remain committed to
carrying out their mission, despite the personal health risks
that they face in doing so. In these challenging times, CBP
continues to protect the American people, safeguard our
borders, and enhance the Nation's economic prosperity.
Thank you for the opportunity to testify. I look forward to
your questions.
[The prepared statement of Mr. Overacker appears in the
appendix.]
The Chairman. Thank you. Mr. Francis?
STATEMENT OF STEVE FRANCIS, ASSISTANT DIRECTOR, GLOBAL TRADE
INVESTIGATIONS DIVISION; AND DIRECTOR, NATIONAL INTELLECTUAL
PROPERTY RIGHTS COORDINATION CENTER, IMMIGRATION AND CUSTOMS
ENFORCEMENT, DEPARTMENT OF HOMELAND SECURITY, WASHINGTON, DC
Mr. Francis. Good morning, Chairman Grassley, Ranking
Member Wyden, and distinguished members of the committee. Thank
you for the opportunity to testify before the committee on U.S.
Immigration and Customs Enforcement Homeland Security
Investigations' response to those exploiting the COVID-19
pandemic.
Despite the widespread illness and death caused by COVID-
19, individuals and criminal organizations operating around the
globe are actively seeking to exploit the pandemic for illicit
financial gain. The illicit schemes these entities employ
compromise legitimate trade and financial systems, threaten the
integrity of the U.S. border, and endanger the safety and
security of the American public.
In my current capacity as the Director of the HSI-led
National Intellectual Property Rights Coordination Center, HSI
has been and continues to be well-positioned to leverage our
resources and trust that have been built over the past decade
among the private and public sectors to combat and investigate
the illegal importation of harmful and counterfeit goods
entering the U.S. supply chain.
When the pandemic struck, HSI saw the magnitude and
potential threat of the pandemic to the American public and
launched Operation Stolen Promise in April of 2020, a global
strategy that utilizes HSI's unique investigative border
authorities while leveraging our global trade and financial
crimes expertise, robust cyber capabilities, and international
global footprint to protect the homeland from the increasing
and evolving threat posed by the COVID-19-related fraud and
criminal activities.
Since the launch of this operation, HSI has opened over 570
criminal investigations worldwide, seized over $7 million in
elicit proceeds, made 53 arrests, executed 75 search warrants,
and analyzed over 50,000 COVID-19-related domain names. And,
while working alongside U.S. Customs and Border Protection, we
have seized over 900 shipments of mislabeled, fraudulent,
unauthorized, or prohibited COVID-19 test kits, treatment kits,
homeopathic remedies, purported anti-viral products, and
personal protective equipment.
Operation Stolen Promise was built around four central
pillars: partnerships, investigations, disruptions, and
education, each of which represents a core element to
addressing COVID-19-related crimes.
Since the operation's inception, HSI has implemented key
actions under each of these pillars to take a comprehensive,
multi-phased approach to combating COVID-19-related fraud
across multiple fronts. HSI works alongside CBP on a daily
basis to identify and investigate the illegal importation and
exportation of these prohibited pharmaceuticals and medical
supplies.
HSI's investigative efforts pursuant to Operation Stolen
Promise have revealed that the degree of fraud is
representative of the panic resultant from the pandemic. As
information on potential cures, tests, and PPE requirements
spreads through the public, the type of frauds quickly change
to meet the perceived new needs.
For example, when hydroxychloroquine was touted as a
potential cure, HSI saw a significant number of seizures
related to this drug. Consumers have no way to know if these
items are in fact legitimate, or if they will work if ordered
from third-party marketplaces or non-medical websites. Many of
the items obtained by CBP and HSI have not been approved by the
FDA or EPA. Based on the seizures made in conjunction with
HSI's partners and CBP, approximately 56 percent of our
seizures originate in China and Hong Kong.
However, the COVID-19-related seizures also include 39
other countries that have exported prohibited goods. The
largest percentage of seizures have been the COVID-19 test kits
at 45 percent, followed by pharmaceuticals at 27 percent, viral
lanyards at 16 percent, and PPE at 10 percent. While all the
products are not necessarily counterfeit, they do not meet the
U.S. regulatory standards and do not provide the medical
benefits they claim.
HSI financial crimes units are working very closely with
all our international, Federal, State, and local law
enforcement agencies to initiate and pursue and support HSI
investigations related to COVID-19 fraud. HSI has seen that the
scammers have attempted to profit from the pandemic through a
number of means, including bank, loan, and unemployment fraud;
hoarding and price gouging; various medical scams; and online
sales of counterfeit medicines, medical supplies, testing kits,
and PPE.
Additionally, HSI has directed agents to pursue criminals
who are engaged in crimes of victimization, with a particular
focus on those who exploit the vulnerable populations,
including the elderly.
HSI's work through Operation Stolen Promise has yielded
tremendous statistical results in just a matter of months.
These actions have kept prohibited pharmaceuticals, testing
kits, and medical supplies out of the hands of American
consumers; have prevented Americans from being victimized by
financial scams; and have helped secure the integrity of the
U.S. financial and trade systems.
Despite being faced with an unprecedented global health
crisis, the men and women of HSI remain dedicated to carrying
out this important mission.
I thank you for the opportunity to testify today and am
happy to answer any questions you may have. Thank you.
[The prepared statement of Mr. Francis appears in the
appendix.]
The Chairman. Thank you. And before I use my 5 minutes, I
am going to ask everybody to be really tight, because we have
almost everybody on the list who wants to ask questions, and we
do have two votes. And I am hoping for some cooperation from
Republicans who want to ask questions so I can go vote and keep
the meeting going while I go vote.
Ms. Correa, minority-owned small businesses have been
disproportionately impacted by the virus. You are Chief
Procurement Officer. You are in charge of vetting, reviewing,
and coordinating incoming inquiries from the business
community, and of course it is imperative that our government
come together to ensure that business survives in the current
circumstances.
Question one--and I only have two questions on this
subject--how is your office prioritizing small businesses,
including minority, women-owned, veteran-owned, that seek to
provide aid and support to the Federal Government in responding
to the COVID-19 pandemic?
Ms. Correa. Sir, thank you for your question.
First of all, we at the Department of Homeland Security
have a very robust small business program. We focus on small
businesses. We do focus on prioritizing them in accordance with
the Federal Acquisition Regulation.
When we think about small business, we think about first,
what are the small businesses that are out there that could
support us, and what categories are they in? And, how can we
enhance their ability to participate in our solicitations and
in our contracts?
In fact, the Department of Homeland Security has a very
strong record with the Small Business Administration. We have
scored a grade of ``A'' 10 years in a row because we meet or
exceed each of the goals for each of the socioeconomic
programs. So, we welcome small businesses. I personally meet
with them, and we have a very robust small business program
that reaches out to small businesses and helps them understand
how to work with the Department.
The Chairman. I, just as a follow-up--this is not really my
second question--but I asked about prioritization. Or are you
able to take care of everybody? So when I talk about minority,
or women-owned, or veteran-owned, they are taken care of? You
do not have to really prioritize? Is that right?
Ms. Correa. That is correct, sir.
The Chairman. Okay. Then the second question: how do we
obtain innovative solutions to quickly solve future disasters
or emergencies, from the procurement perspective? Is there
anything Congress can do to help with the procurement process
to ensure that we take advantage of innovative solutions?
Ms. Correa. Senator, thank you very much for that question.
First of all, how we obtain innovative solutions is, we
actually put out a solicitation using our Commercial Solutions
Opening Pilot Program to invite industry to identify solutions
that might be commercially available that we might be able to
use to address, whether it is alternative PPE or other supplies
or services that would help us in addressing COVID-19.
We vet those solutions through the appropriate program
officials, working with my colleagues here at the table as well
as others across the Department, to make sure that we are
getting good solutions.
The second thing, the second part of your question, is how
you might be able to help us. That CSOPP authority, Commercial
Solutions Opening Pilot Program, is a temporary authority that
is scheduled to expire in 2022. We would love to see that
become permanent, because we believe it helps us find new
solutions.
In addition to that, we have Other Transaction authority.
That Other Transaction authority is typically used when we are
doing research and development of new products. That authority
expires on 30 September of this year, 2020. We would like to
see that authority made permanent, as opposed to being renewed
each year, so that we can proceed with many of the programs
that we have to develop new solutions.
In addition to that, I mentioned the CARES Act, and it is
very important. Section 3610 of the CARES Act was to enable
businesses to maintain a ready workforce during this pandemic.
So, businesses that perhaps could not telework might have to
send their employees home. We want to make sure that we can
protect their ability to maintain that workforce.
Unfortunately, in section 3610, what happens is, for fee-
funded organizations, it is a little bit difficult to implement
that solution. So creating greater flexibility in section 3610
of the CARES Act would be extremely helpful, sir. Thank you.
The Chairman. Mr. Overacker, I have, previously in my
opening statement, talked about the study that we conducted. We
found, in the report we put out, that certain legal barriers
prevent your organization from sharing packing information. We
also learned that this information could help identify high-
volume sellers.
So earlier this year, CPB indicated its intent to create a
procedure for disclosure of information otherwise protected by
the Trade Secrets Act, which would address this very issue. Can
you tell us the status of rulemaking? And are you working with
stakeholders during this process? And I am going to have to
stop with that question. Go ahead and answer it, and then we
will go on to the next person.
Mr. Overacker. Yes, Senator, we are working on procedures
that would allow us to disclose seizure data in a larger
fashion, so that, whether it is the express carriers or any
actors in the supply chain, they have a better understanding of
who the violators are.
We are also working on something called ``suspension and
debarment,'' where we will actually suspend egregious violators
from doing business with Customs and Border Protection.
The Chairman. I will submit one more question for you to
answer in writing, and one question for Mr. Francis to answer
in writing, because we are not going to be able to have a
second round today. So if you would answer those, I would
appreciate it.
[The questions appear in the appendix.]
The Chairman. Now I go to Senator Wyden.
Senator Wyden. Thank you very much, Mr. Chairman. And, Ms.
Correa, I am trying to see if you are out there. Can you hear
me?
The Chairman. She is out there.
Senator Wyden. Very good. So you are the Chief Procurement
Officer for Homeland Security. And of course today we are
looking at the issue of defective and counterfeit COVID-19
medical supplies coming into the country. This is greatly
important to my State. We bought respirators for health-care
providers that could not be used because they did not meet
quality standards.
And a major reason why Oregon's and other States' medical
providers had to purchase these medical supplies in the first
place is because the Trump administration walked away from its
responsibility for organizing a national effort for procurement
and distribution. My view is, forcing Americans to fend for
themselves in a global market in the middle of a pandemic is
not a remedy, it is a prescription for a mess, for a real
health-care disaster.
Now, because you are the Chief Procurement Officer for
Homeland Security, one of the primary Federal agencies that has
responsibility to deal with these kinds of emergencies, I would
like to know if you believe forcing State health departments,
hospital systems, and doctors' offices to procure medical
supplies from any source they could get their hands on was a
sound national strategy?
Ms. Correa. Sir, it is difficult for me to comment on that
because I am not involved in that decision-making level. My
focus is, as soon as requirements are identified to our
Department to accomplish an acquisition, to make sure that we
go out, secure those sources from responsible vendors, and
ensure that we vet those vendors to make sure that we are
getting the right product delivered to the right place at the
right time.
Senator Wyden. Respectfully, ma'am, I am not asking you
about the politics. I am asking you about public health and
public health consequences. The President said, and he said it
point blank, acquiring PPE--he described it this way:
``Governors are supposed to be doing it.''
My view is, that exposed States to serious health-care
problems. It exposed the States to scammers on PPE. It forced
them to compete against each other, rather than having the
benefit--from a health standpoint--of a national plan.
So I would like you to tell me--set aside the politics--how
forcing all of these health officials at the local level to
compete to get scarce medical supplies in the absence of a
national plan is sound public health policy. This is about
public health, nothing else.
Ms. Correa. Sir, but I am not the appropriate person to
discuss public health policy. My responsibility is the
procurement function.
Senator Wyden. But from the standpoint of procurement, we
are talking today about the health consequences of buying
defective products. Let us talk about it just from a
procurement process--the procurement process alone.
How is it in the interest of the American people for the
States to compete against each other, to have all the scamming,
and to have the problems we have seen? How is that procurement
policy in the interests of the country?
Ms. Correa. Sir, again, I am dealing with the Federal
procurement process. We share information----
Senator Wyden. I understand about that, ma'am. I am asking
about a procurement process that is a prescription for a mess
because we are walking away from our Federal responsibilities.
And your title is Chief Procurement Officer. It is not Chief
Procurement Officer to try to figure out what to do if there is
a flawed policy; it is Chief Procurement Officer to make sure
that Americans in the time of a pandemic are going to be safe.
And I will just ask one other question. And that is, you
heard me talk about the Department's focus on attacking my
hometown and other cities, rather than attacking the
coronavirus. How has the Department's effort with respect to
the pandemic benefited by leadership, attention, resources, and
efforts being focused on the streets of my hometown, the
constitutional rights of Americans? How do we benefit from the
standpoint of fighting the pandemic by deflecting Homeland
Security's efforts in the way I described?
Ms. Correa. Senator, I apologize, but I am not the right
person to answer that question. Those are not policy decisions
that I make. So, I apologize that I cannot give you an answer
to that question, but I certainly will take that back to the
Department so that it can be properly addressed.
Senator Wyden. My time has expired, but just, Mr. Chairman,
what this witness is doing is saying that procurement policy
really does not have anything to do with public health. I think
that is dead wrong, and that is the reason you are having the
hearing, to try to make the case that somehow Americans are
suffering primarily because of China from a public health
standpoint. The reason Americans are suffering is because
Donald Trump refuses to exercise national leadership with
respect to this pandemic.
Thank you.
The Chairman. Senator Portman?
Senator Portman. Mr. Chairman?
The Chairman. Yes. And before you go, Senator Portman,
would every staff member of Republican and Democrat, if your
member is not going to come to ask questions or do it
virtually, I would like to know it, because we have a long
list, and we have two votes, and I want to make sure we proceed
expeditiously.
Senator Portman?
Senator Portman. Mr. Chairman, the topic of this hearing is
protecting the reliability of the U.S. medical supply chains,
and I would like to focus on that issue. And it seems to me
that the most important thing we can do to improve the
reliability of our supply and deal with the fraud and
counterfeits that we talked about earlier today is to reshore
it, to have it here in America. And I think we have kind of
missed that point so far in the discussion, and I think that
should be our goal as Republicans and Democrats: to figure out
how to have a truly reliable source going forward.
I think, secondarily, we ought to try to bring it at least
to this hemisphere, because I know for some of the PPE,
including gowns and masks and gloves, there is a concern about
having adequate U.S. supply over the short term. But in
conjunction with Mexico in particular, and others in this
hemisphere, we have the ability to do that.
So my hope is that applying the very amendment which I
think all of us have voted on one way or the other, but is law
of the land, to say that we use domestic supplies and then,
when we cannot, to use our hemispheric partners as well, ought
to be our focus.
Since the start of the pandemic, I have been working with
domestic industry in Ohio, and actually around the country, to
figure out, how do you reshore this stuff? You know, how are we
going to get the PPE back here to this country, some of which
frankly was never made in large volumes here in this country.
And so we need to work particularly hard.
But the industry experts tell me every time that the best
way to accomplish that goal is to provide some certainty.
Provide some market signals, as they say, so they know if they
make a big investment--and many of these versions of these
factories and new factories are going to require big
investments--that they will have a market. And of course the
Federal Government is the buyer here.
And so I have been frustrated because we have not been able
to get our own government, the Joint Acquisition Task Force, as
well as now the DLA, Defense Logistics Agency, to send those
signals, because they are not using long-term contracts for
PPE. Instead, they are insisting on shorter-term contracts.
Right now, as an example for the PPE that we are talking
about, typically it is a 90-day contract. So I guess my
frustration is, if we really want to bring it back, there is a
pretty simple way to do it, which is to say, ``Look, here is a
long-term contract. This should be enough certainty to be able
to make the investment, and we can get moving on this.''
Again, this should not be a partisan issue.
Ms. Correa, you are an expert on procurement and I
appreciate that, and I know that is your role. Can you help us
understand why it is important for the government to send that
strong demand signal to industry, and how long-term contracts
send that demand signal and provide certainty for those seeking
to invest in U.S. production, who work to bring this production
back to our shores?
Ms. Correa. Yes, sir. Thank you, Senator, for the question.
Yes, the more information that we can give industry up front,
and the better projections that we can give them of what we
think we may need and when we think we may need it, and how
much we are going to be willing to invest in that, the better
they are equipped to respond to that.
Industries will turn. Companies will form. Large companies
will partner with smaller companies, and there are mentor
protege programs in many aspects that enable companies to get
into the business. But we have to do that with some level of
certainty, and that means that we have to know what we need,
when we think we are going to need it, and we are also going to
have to know if we are going to have funding for that.
So that is extremely important. That is what industry wants
to know and understand. I engage with industry quite a bit to
find out what their needs are, what kind of information they
are looking for, and that is the kind of information that they
seek. And they are going to be willing to invest as long as
they know that there is a long-term need.
Senator Portman. Well, I thank you for that answer, and I
think you are absolutely right. And part of it is back on us,
because you are saying that not only do we need to have a
requirement that there be long-term contracts--and by the way,
we have legislation we are about to introduce that would
require the Joint Acquisition Task Force, DLA, and others to
use these longer-term contracts. But secondly, you need to know
there is going to be a certainty of funding so that the
industries can make these substantial investments. And I look
forward to working with you and others on this. Again, we hope
to introduce this legislation shortly.
Let me talk about something else, which is the hospitals in
Ohio, and I know around the country, that back in March and
April were just desperate to find PPE. And frankly, they made a
lot of contracts with companies, some of which were not
traditional, but unconventional distributors that did not pan
out.
Sometimes what would happen, I am told by Ohio hospitals,
is one distributor would take orders from many hospitals and
then, once the material was on its way over here, they would
start the bidding process. And basically they would sell it to
the highest bidder.
That was not the idea. Others, as you know, had problems
with regard to counterfeits and outright fraud, in the sense
that they were not delivering what they said they would.
Mr. Francis, these bad actors in our supply chain are now
at the center of this investigation that you talked about. You
said you had--in your testimony, I heard you had seized 900
shipments or more, Operation Stolen Promise. And I am glad you
are doing that. I think it is important to investigate these,
and we need to be identifying these bad actors right away.
But we also need to figure out how to prevent these types
of situations from happening in the future. Because sadly, we
are not out of the woods yet in terms of the coronavirus
pandemic. And of course we want to be prepared for the next
possible pandemic.
So can you help us on this? Again, obviously the best thing
is to have a domestic supplier right here to avoid these kind
of bad actors. But apart from that, what can we do to assure
this does not happen into the future?
The Chairman. I hope you can give a short answer.
Mr. Francis. Sir, one of the important pillars within
Operation Stolen Promise is education. So we have a very robust
private/
public-sector partnership educating the consumers, educating
businesses. We are working closely. We have done several public
announcements, including the entire supply chain with Pfizer,
Merck, 3M, Alibaba, Amazon, and Citibank in educating the
American consumers about these fraudulent activities.
The Chairman. Senator Stabenow?
Senator Stabenow. Well, thank you very much, Mr. Chairman.
And I want to echo the frustration that my friend Senator
Portman just talked about in terms of not having the kinds of
equipment, PPE, the things that we need here to deal with the
medical pandemic in the United States.
I would say, though, it all comes down to not having a
national strategy. We do not have a national strategy. We
could. The Defense Production Act is something that has been
used in the past, and certainly Michigan, which was called the
arsenal of democracy in World War II, stepped up at the request
of the President of the United States on behalf of our country
during another kind of war.
So I think we are kind of skirting around the fact that we
do not have a national strategy that would bring these products
and the making of them to the United States, which is pretty
straightforward and actually can be done here in the United
States. And I certainly support doing that, instead of pitting
States and hospitals and everybody against each other. And
unfortunately in Michigan, I have had to step in and be deeply
involved in trying to figure out what has been incredible
chaos.
But I want to share--in addition to what we are talking
about overseas, an integrity in the system is really important.
I want to share a story about something that happened in
Michigan recently with a short-lived domestic company.
And, Ms. Correa, you have made it clear you are the Chief
Procurement Officer. You oversee the contracting done by the
Department of Homeland Security, including FEMA. And of course,
you know, we have been working with FEMA and working with HHS
to secure additional testing supplies for Michigan, as every
other State has been pitted against each other.
But in June, Michigan received more than 322,000 tubes of
COVID-testing transport mediums manufactured by a newly created
company called Fillakit. Fillakit was incorporated 1 week
before it was awarded the no-bid contract. It was headed by an
untrustworthy individual who had been fined in the past for
running telemarketing scams. And despite the concerns, FEMA
awarded Fillakit, a company with no demonstrated ability to
fulfill its terms, a no-bid contract for testing supplies. And
so we subsequently found out that they were in fact using
repurposed miniature plastic soda bottles. The reports were
that the packaging process was unmasked employees using, quote,
``snow shovels, dumping these things into plastic bins before
squirting saline onto them, all in the open air.'' They were
not the appropriate size for the laboratory equipment. They
were not manufactured in sterile conditions. And they would not
provide reliable test results. And after our State lab raised
deep concerns, FEMA and HHS told us not to use them.
So that is more than 300,000 tests we could not do, which
is a week's worth of tests in Michigan. So my question is--and
I already wrote this to FEMA Administrator Gaynor and HHS
Secretary Azar more than 4 weeks ago and have not gotten a
response, so I will ask you. First of all, what are the
criteria for giving no-bid contracts? And what steps were taken
by FEMA during the contracting process to verify the accuracy
of any representations or assurances made by Fillakit?
Ms. Correa. Senator, thank you for your question. I am
familiar with the Fillakit situation. I was made aware of it,
and we have obviously notified and discontinued use of the
Fillakit product. And we have referred the company for further
investigation to the office of the Inspector General. And of
course we are pursuing remedies under the contract.
To answer your question about what do we do, first of all,
what you are referring to as a no-bid contract, we refer to it
as a sole-source contract. That means we are entering into a
contract with a single company. Often in these emergency
situations, especially when we are buying commercial products,
we rely on certifications or other authorizations from known
bodies. In this case, Fillakit had an emergency use
authorization provided by the Food and Drug Administration. We
relied on that certification and entered into the contract and
acquired these products.
We subsequently found out that those products were
defective and, again, immediately notified the organizations
that received these products.
Senator Stabenow. If I might just interrupt a second, so
you are saying that FDA had approved this company that was put
in place within a week of getting the contract, with all of the
things that I described to you? They actually were certified by
FDA?
Ms. Correa. Yes. They had an emergency use authorization
provided by the Federal Food and Drug----
Senator Stabenow. That is very important for us to know to
follow up on. And I might say, in the interest of time, let me
just go on to ask what controls do FEMA and HHS have in place
to ensure that other entities that have been awarded contracts
to provide COVID-19 testing supplies are in fact providing
supplies fit for COVID-19 testing purposes? How do we know this
is not going to happen again?
The Chairman. Please give a short answer.
Ms. Correa. Yes. I cannot guarantee that it will not happen
again, but we certainly include inspection and acceptance
clauses in our contracts, and those clauses are based on the
particular product that we are buying and how we are going to
inspect and test the product.
The Chairman. Senator Menendez?
Senator Menendez. Thank you, Mr. Chairman. The United
States has passed 4 million COVID-19 cases recently. We know
the growing number of cases is in part due to the rush to
reopen in certain States without proper safeguards, and the
failure to ensure mask wearing and social distancing.
And it is hard to comprehend that months after the virus's
initial outbreak in the United States, we are seeing hot spots
all over the country. And we continue to have the same problems
procuring items like testing swabs and masks.
The reality is that we have had months to enhance our
stockpile. We would not even be here and having this hearing if
the administration had invoked the full power of the Defense
Production Act, Federal purchasing, and coordination to ensure
all of our communities had the basic materials to combat the
virus.
Now flu season is about 2 months away, and I have severe
doubts that we will be ready to deal with this ongoing pandemic
during the annual flu cycle if real leadership does not emerge
to coordinate our supply chain.
Now on July the 2nd, Rear Admiral John Polowczyk testified
to the House Select Committee on the Coronavirus Crisis about
the Federal Government's effort for procurement and
distribution of critical medical equipment and supplies. He
stated that the Supply Chain Stabilization Task Force is
working through over 350 leads to match American businesses who
have excess raw materials, workforce, or factory production
capacities combined with a drive to support the national
response effort. He also said Task Force members were working
to facilitate partnerships to pair companies that offered their
excess factory capacity, workforce, and access to their raw
material supply chain with manufacturers who produce PPE and
medical supply equipment.
So my question here, Ms. Correa, is would you agree that
having a nationwide system that supplied an accurate and real-
time capability and inventories could stop potential
disruptions in the domestic supply chain and help the Task
Force in their efforts?
Ms. Correa. Sir, I am sorry. Could you repeat the question,
because you kind of broke up a little bit? I apologize.
Senator Menendez. Would you agree that having a nationwide
system that could provide an accurate and real-time assessment
of U.S. manufacturers' capabilities and inventories could
minimize potential disruptions in the domestic supply chain and
help the Task Force in their efforts?
Ms. Correa. Sir, thank you for the question. Yes, in my
professional capacity, I would agree that any time we have a
system that enables us to more accurately vet and identify
supplies, it certainly will always help.
Senator Menendez. Thank you. And as the Chief Procurement
Officer, would having a national view of the supply chain help
us understand whether we need manufacturers to retool in key
areas to meet the need of American products such as PPE and the
medical supplies?
Ms. Correa. Certainly, any time that we have insight into
the capacities and the capabilities of our industry, certainly
it will always make our purchasing processes much better and
much more accurate.
Senator Menendez. Well, I appreciate your response, because
that is exactly why I filed a national supply chain database
amendment to the National Defense Authorization Act and will be
introducing stand-alone legislation which establishes a
national chain database to the National Institute of Standards
and Technology's Manufacturing Extension Partnership, which
would give us that opportunity.
Let me ask Mr. Francis and Mr. Overacker. Even before the
pandemic, we all knew that government agencies and the private
sector needed to be doing more to stop the flow of counterfeit
goods into our country. The rise of e-commerce has brought with
it a flood of counterfeits and posed new challenges to our
traditional ways of tackling this problem.
Mr. Francis, since the pandemic started, has the IPR Center
worked with e-commerce platforms to encourage up-front
screening of vendors, identified verification, or ways to more
quickly remove counterfeit items from e-commerce sites?
Mr. Francis. Thank you, Senator. We have been working with
the e-commerce platforms since 2017 at least on some data-
sharing pilot initiatives. Since the pandemic, we know there
has been a significant increase in cooperation and
collaboration as it relates to the data sharing in the
marketplaces.
I am not certain about the pre-vetting. I know some
marketplaces do a better job than others. However, I am
optimistic. It is a voluntary-based data-sharing pilot program
with the marketplaces, but I do believe that the pre-vetting
with those marketplaces would definitely be beneficial in
stopping these bad actors and organizations from exploiting the
American public.
Senator Menendez. And finally, would appropriating
emergency funds to the IPR Center to tackle fake test kits,
medicine, and PPE, be useful at this stage?
Mr. Francis. Yes, sir, absolutely. Since the National IPR
Center has been codified, there have not been any appropriated
funds. Clearly it is a daunting task not only with the COVID-19
pandemic, but dealing with digital piracy, all these frauds and
counterfeit goods that are entering the marketplace on a daily
basis. Our priorities are national security, economic security,
and the health and safety of the American public, and we would
greatly appreciate appropriated funds. Thank you.
The Chairman. Senator Cassidy?
[No response.]
The Chairman. Okay; if Cassidy is not ready, then I go to
Carper. Senator Carper?
[No response.]
The Chairman. Okay, then I will go to Senator Lankford. I
am requesting that people who can ask questions let me know.
Senator Lankford?
Senator Lankford. Mr. Chairman, thank you very much.
Mr. Francis, let me ask you a little bit about the drug
products issue that we have and the challenge of trying to get
precursor chemicals in, and to be able to track how we handle
supply chains for those particular chemicals that are coming
in. What we need, where they are coming from, what we have--
because there is a lot of conversation about pharmaceutical
products and sales, but not the precursor chemicals before
that.
So I want to ask you specifically about just the challenge
of how to be able to determine what chemicals are needed, what
precursors are needed, the locations; those are a problem.
Obviously a lot of that is proprietary information as well. How
are we doing tracking that?
Mr. Francis. Sir, I am glad I have Mr. Overacker here next
to me, but definitely it is very challenging. At the National
IPR Center, we have a very robust initiative focused on the
illicit precursors and chemicals and other products that come
into the United States. We work very closely with the National
Targeting Center investigations, where we have embedded special
agents and analysts to really target those illicit goods from
entering.
It is my understanding--and I have not received a briefing
in a while--that many of these precursors were coming from
China, and now we are seeing the evolution of these precursors
going into Mexico and other countries and being smuggled across
the Southwest border into the United States.
Mr. Overacker. And if I might add, Senator, with respect to
legitimate importations of precursors by the domestic
pharmaceutical industry in order for them to do their
production, that is one of the reasons why, back in 2016 we
created our Centers of Excellence and Expertise. Our
Pharmaceuticals, Health, and Chemicals Center of Excellence and
Expertise works very closely with the domestic pharmaceutical
industry so that we have a keen understanding of what their
supply chain needs are, and so that we can work with them to
facilitate the legitimate importations of whatever precursor or
production equipment they need to do their jobs.
Senator Lankford. Well, let me push back at that a little
bit. Knowing where they are coming from is one thing. Actually
having other alternatives and having a wider supply chain than
having one or two countries that provide that, or pushing
towards domestic production----
Is there an ongoing conversation about what is needed,
where they are coming from, if we have an over-dependence on a
particular country, in this case China, that we have all seen
pretty clearly? The drugs may not come from China. The
precursor chemicals are coming from China. To be able to know
exactly how to be able to diversify that, what we are trying to
actually get diversified?
Mr. Overacker. So, Senator, I would say the diversification
of supply chain is critical to me, because we see right now the
demand for products and the supply limitations that there are.
We do not pick the winners and losers in the supply chain,
but we will work with the domestic pharmaceutical industry, the
health-care industry, and other health providers in the United
States to help ensure that we are not an impediment to the
imports that they need to do their production.
Senator Lankford. Well, we can talk further offline at some
point, because again I go back to--it is one thing to be able
to know that we have a dependency in other areas; it is another
thing to be able to know we have this dependency and we need to
be able to diversify this to other countries and other places.
Because having a supply chain map is good, it is a good start,
but having an opportunity to say to companies, you are
dependent on one place and that one place happens to be a
communist country that we have already seen cut off supplies
based on their needs rather than the needs of others--they will
not fulfill contracts on a whim; they will actually just shut
things off if they choose to, to be able to use economic
pressure even if it causes the loss of life. That is not
something that they care about in China.
So we have to be able to not only map where they are coming
from but then develop the relationships to be able to press on
those companies to say, ``You need a more diverse portfolio,
because you are putting American lives at risk by having a very
narrow funnel for your suppliers.''
Has that kind of conversation occurred?
Mr. Overacker. No, those are not the conversations we
directly have with the pharmaceutical industry at this time,
but I understand your point, Senator, and I take it to heart.
Senator Lankford. Thank you. And that is one we will
continue to have to be able to press back on some of those
issues as well. We have also found this in the PPE and some of
the products that are coming across.
There is some accusation that some of the PPE products that
are coming into the United States from China and other places,
that they are using forced labor for the production of those.
Have we been able to determine one way or the other if forced
labor is being used for production of some of the PPE coming
into the United States?
Mr. Overacker. Yes. We have recently issued a withhold
release order on nitrile gloves, which are medical standard
gloves, coming from Malaysia, for a particular manufacturer
there where we determined that forced labor was being used.
So we continue to monitor these situations, and we act upon
any leads or investigations that we encounter with respect to
forced labor. Currently at CBP, I believe we have 13 active
withhold release orders on products from a variety of
countries, not just the nitrile gloves from Malaysia, but we
continue to try to enforce our authorities with respect to
forced labor.
Senator Lankford. Thank you. Thanks for doing that. Thanks,
Mr. Chairman.
The Chairman. Senator Carper is next. I passed over Senator
Cassidy, so if you will let me know that you are available, I
will call on you after Senator Carper.
Senator Carper. Thanks very much, Mr. Chairman. To our
witnesses, welcome. There is a lot going on today, about six
hearings that I could go to. I am sorry I could not get here
sooner, but it is great to see all of you.
I have a couple of questions. I want to start off by
talking--actually have you talk about the need for a whole-of-
government PPE procurement strategy. And I would say this
question will be for you, Ms. Correa.
We talked about the need to protect Americans by ensuring
that PPE imported from other countries is legitimate. But
counterfeits are only a small fraction of the problem, as you
know.
Since March, I am told, there are hospitals, States, and
local governments that have reported dire shortages of PPE, and
I hear a rising again of those concerns. These shortages have
become more acute in recent weeks as cases have shot up, likely
contributing to the cycle of even greater demand.
As the Chief Procurement Officer at DHS, I assume it would
be helpful to you to have a whole-of-government strategy
designed to ensure availability of sufficient PPE, including
from domestic sources. It seems the President could provide
such a strategy in part by issuing orders to domestic
manufacturers to produce PPE under the Defense Production Act.
Do you agree that such a coordinated Federal strategy would
help you to keep--and us, help us to keep costs down, and to
ensure quality?
And the second half of that question would be, has DHS
conveyed the need for such a strategy to the White House? And
what has been the response? If you could handle those, I would
appreciate it. Thank you. Again, welcome.
Ms. Correa. Thank you, sir. Thank you for your question.
Certainly, a coordinated procurement strategy is always
going to benefit. Any time that we can bring our sources, our
resources together, identify the supplies that are needed, and
engage our manufacturing entities out there to support that
need, it is going to be beneficial to the government, to the
State, local, and tribal organizations, and all the
institutions that serve the public.
With respect to a communication of any such strategy or
request for such a strategy, I do not have that information. I
can certainly check with our officials at DHS who normally
communicate with the White House.
Senator Carper. All right; thank you.
My second question would be for you as well. It deals with
sharing COVID-19 test results in public health IT. The
pandemic, this pandemic, has exposed the cracks in our public
health system, and in particular our antiquated public health
IT infrastructure. In too many parts of our country, public
health departments are relying on pen and paper. Their fax
machines are old. Old software is used to collect and share
COVID-19 test results. What are DHS and FEMA doing to help
update and integrate public health data such as test results
and demographic information in major transit points such as
airports, train stations, and ports? What rules govern
acquisition of innovative technologies? And how can we ensure
that FEMA and DHS procurement officials have the necessary
resources that they need to identify legitimate operators who
can help bring our systems into the 21st century?
Ms. Correa. Sir, I can only answer the question from the
perspective of procurement. And as I mentioned earlier, we have
several authorities that we want to use, and to continue using,
to invite commercial innovative solutions that we can apply
throughout our infrastructure--be it for supplies, services, or
products.
I believe the appropriate officials probably to discuss the
IT infrastructure with are really our Cybersecurity and
Infrastructure Security Agency, as well as probably Health and
Human Services. But I would certainly take that question back
and get you additional information.
Senator Carper. I will welcome that. A follow-up question
to that one, if I can. One of the strengths of Taiwan's public
health systems has, for example, been the country's ability to
integrate demographic data from travelers with their public
health system.
What is DHS doing with HHS and the CDC to ensure that
domestic and international travelers' COVID-19 test results, or
symptomatic information such as temperature checks, are quickly
and accurately collected and shared?
Ms. Correa. I am not the appropriate individual, because I
do not work on the immigration data. I do not know if my
colleagues----
Senator Carper. Does anybody else want to try that?
Mr. Overacker. Senator, that is not my area of
responsibility within CBP, but we are working with CDC and
other agencies as we work on the plan of how we will monitor
travelers that we process once we begin to receive more
international travelers.
Right now, we are about at 5 percent of where we were last
year at this time in terms of international travel. But I will
take that question back and make sure that we get you the right
answer on what CBP is doing with respect to monitoring travel.
Senator Carper. Thanks so much.
Mr. Chairman, there is a company, actually a Delaware
company that grew out of DuPont, that has been around for about
30 years, and they operate in I think about 90 countries around
the world and a bunch of health-related companies in the U.S.
Their name is LabWare--LabWare. And what they do--imagine, if
you will, a small suitcase that has in it a tablet. That tablet
would be used instead of pen and paper to take down the
information from people who are about to be tested.
And they use their driver's license that actually has a bar
code on the back of the driver's license, to bring down and to
unite with the information from the tablet, who this is, what
their background is, where they live, and everything. And they
marry with that the test result. It could be a swab, it could
be blood, or whatever, test results that go up on the cloud and
are brought down and put in public health agencies across the
country. It is really great stuff, and it helps make for more
accurate information more quickly, and it is actually very
helpful, I think, in terms of tracing and that sort of thing.
So I just raise that as American technology--LabWare.
The Chairman. Thank you, Senator Carper.
Now we go back to Senator Cassidy, and if Senator Cardin
gets ready, he will be after Cassidy.
Senator Cassidy. Thank you all.
First, I just want to put a plug in. We understand that
online activity with counterfeit goods has been a major issue
here. And so I have introduced two bills, one the SANTA Act
regarding children's toys, and secondly the INFORM Consumers
Act, which would ask online platforms to list, if it is a
third-party seller, who is that seller, so that you can see
their address. If they are selling a product, a 3M product, but
it is not 3M, you would know that if that was the case.
So anyway, just to put a plug in, and of course we would
love if folks support it as we go forward either from the
committee or from outside of government. So let me ask--and I
will let somebody decide who should answer this, but I gather
that Chinese companies, or those from Hong Kong, are often
involved with the online sales of counterfeit goods.
And so if--and I think that this COVID crisis has
demonstrated the vulnerability of our country to having so many
supply chains going through China. Could we potentially
decrease the number of counterfeit goods flowing into our
country if we were to move supply chains out of China into
Mexico or Central America or someplace else? Or would the
counterfeiters just move their operations?
Any thoughts on that?
Mr. Francis. Senator, thank you for the question. You know,
over the last 5 years, on average about 85 percent of our
seizures related to counterfeit goods have come from China and
Hong Kong. And that has been an issue to protecting the health
and safety of the American public.
I think that with IP and counterfeits, or prohibited goods,
that China and Hong Kong have been the places of origin for the
goods that are coming in that are harming the American public,
and also harming the U.S. economy.
So, yes, to answer your question, I believe that that could
be a potential solution to reduce the number of counterfeits
coming from those countries.
Senator Cassidy. And you may have answered this earlier--I
apologize if I missed it--but to what degree are those
governments collaborating and cooperating with us? If we
identify somebody as a counterfeit producer and/or shipper, are
they in turn cracking down? Because certainly mainland China,
and now Hong Kong, has a high level of government oversight.
So are they collaborating with us as we attempt to stop
this 85 percent of the counterfeit goods coming from there?
Mr. Francis. Sir, thank you. Homeland Security
Investigations has an office in Beijing and also in Hong Kong,
and we do receive tremendous support on our criminal
investigative efforts. The Hong Kong and Chinese officials both
support our investigative efforts, especially if it relates to
health and safety products.
Senator Cassidy. I am a little bit, though, confused.
Because in a country in which there is such facial recognition,
so if I walked into that country and flew around, there would
be a camera taking pictures of my face wherever I went. So how
much of this is a pro forma collaboration and how much of it is
actually effective? Let me ask that first.
Mr. Francis. Sir, it is difficult for me to answer that
today. When we submit requests to our offices in Beijing and
Hong Kong, working through our special agents there, we are
receiving support and collaboration. I know that there is
continuing, ongoing support from both areas.
I am not really sure if I can answer that question
specifically.
Senator Cassidy. Got it. Let me ask you this: what is the
connection between counterfeiting and human and drug
traffickers, or other illicit activities? I get a sense that we
have a threat network, and that they are just on the one hand
doing counterfeiting, and on the other hand they are doing
illicit financing. And it seems like it is a whole web, if you
will, of criminal activity. Is that a fair statement?
Mr. Francis. It is, Senator, yes. It is intertwined. There
is international money laundering. There are these
transnational criminal organizations that are involved not only
in trafficking of drugs, but human trafficking as well as IP
crimes. As you can imagine, intellectual property theft is very
profitable with minimal prosecutorial risks. So the
profitability is what these organizations and bad actors are
pursuing.
Senator Cassidy. And so it has been my premise that we need
an interagency task force that would work on this, because it
is not just Customs but it is also illicit financing, and it is
also--you know, name all the things--so we should have an
interagency task force.
I cannot see the clock. I am assuming I am almost out of
time, so if you could comment on that, Mr. Francis, and I will
let that be my last question.
Mr. Francis. Thank you, Senator. That is exactly why we
launched Operation Stolen Promise in an effort to bring
together our cyber capabilities, financial capabilities,
intellectual property, our international operations. I really
think the COVID-19 pandemic and the response that HSI has had
with Stolen Promise will change the way we look at intellectual
property theft, as well as the prohibited goods entering the
United States.
The Chairman. Senator Cardin? And will Senator Brown be
ready after Senator Cardin?
Senator Cardin. Mr. Chairman, thank you very much. I
appreciate all our witnesses and their testimony.
Maryland has had problems that we have seen in all States.
We have had challenges on the supplies that we received,
including the supplies that we have received from the Federal
Government, from FEMA. We have had real shortages in providing
PPE to our health-care providers and to our nursing homes, and
the list goes on and on and on.
Our Governor, Governor Hogan, has been pretty aggressive in
trying to protect the supplies for the people of the State of
Maryland, but it has been clear, as he has pointed out on
numerous occasions, that the inconsistencies coming out of this
administration on how the supply chain was being protected
caused confusion among States, caused conflict among States,
some misinformation. And today, we still have the challenges of
an inadequate supply chain.
So I appreciate all the comments that have been made. We
have received fraudulent goods also, and that is an area of
major issue.
I want to ask my question though, if I might, in regard to
the issues of hoarding and gouging, as to what effectively we
are doing in order to prevent the hoarding and to take action
against those who are doing price gouging to try to take
advantage of this emergency situation.
Our States have acted with the State laws that deal with
price gouging, and there is inconsistency between the approach
taken by the Federal Government and our States.
Could you share with me--and I think this should probably
go to Ms. Correa, or perhaps Mr. Overacker--who is the point
person at the national level to try to coordinate the efforts
of our States, and with those that have the claims against
those companies that have been taking advantage of this public
emergency?
Mr. Overacker. Thank you for the question, Senator. With
respect to hoarding and gouging under the Defense Production
Act, there are actors within the Federal Government, whether it
is HHS, or FEMA, or the Department of Justice, who are
currently pursuing investigations into the hoarding and
gouging.
CBP's role primarily is to act upon appropriate allocation
orders that we may receive, but also to work with those
partners to identify imports that may or may not fall into that
category. And we support investigations in that light.
With respect to who is the ultimate authority within the
Federal Government on investigations for hoarding and gouging,
you know, it is not CBP. We are not investigators. But I do
know that the Department of Justice is heavily involved in
these cases.
Senator Cardin. Ms. Correa, would you like to add to that?
Ms. Correa. Yes, I was just going to add that, yes, the
Department of Justice would be the primary agency that acts on
prosecuting these organizations. If we are aware of any
information, or we obtain any information on any elements of
price gouging or hoarding, we refer the matter to the Inspector
General who does an investigation, and then the matter gets
further referred to the Department of Justice.
Senator Cardin. Could you just share with me how you are
working with State law enforcement so that we have a united
effort to deal with hoarding and gouging?
Mr. Francis. So, Senator--this is Steve Francis--I would
like to respond to that. As it relates to hoarding and price
gouging, the U.S. Attorney's Office out of New Jersey is
leading the Task Force effort there. We do have significant
HSI-led investigations on hoarding and price gouging, and we
are working very closely with State and local officials.
So specifically with the investigation out of New York
City, this was an individual who was hoarding and gouging PPE--
face masks. We seized over 1.7 million, working alongside NYPD,
CBP, as well as the Postal Inspection Service and the DEA.
There are a lot of efforts among the Department of Justice,
not only with the Consumer Fraud Protection Branch, Hoarding
and Price Gouging Task Force, but we work closely with the
Computer Crime and Intellectual Property Section with DOJ.
So it is a tremendous whole-of-government effort relating
to that, and we are working very, very closely with our State
Attorney Generals' offices.
Senator Cardin. Thank you, Mr. Chairman.
The Chairman. Okay. After Senator Brown gets done, for the
benefit of our witnesses, I am going to have to, not adjourn
but to recess this hearing, because I cannot get a single one
of the Republicans to come over and chair while I am voting.
And so you will just have to do whatever you do when we are in
recess.
But be ready to come back quickly, because I will vote on
the last vote--or I will be voting on the first vote last, and
then I will be the first one to vote on the second vote, and
then I will not be bothered anymore.
Senator Bennet, you will be up right after Senator Brown.
Yes, yes. Bennet is right after Brown.
Senator Brown, take your 5 minutes.
[Pause.]
The Chairman. Senator Brown? If Senator Brown does not show
up, you could--go ahead, Senator Bennet.
Senator Bennet. Thank you, Mr. Chairman, and I would be
happy to----
The Chairman. Go ahead.
Senator Bennet. I would be happy to chair the hearing for
you, if you would like.
The Chairman. I would--tell you what: you use your 5
minutes, and then recess it. And I will leave now----
Senator Brown. Mr. Chairman, Senator Brown just got back.
Could I go after Senator Bennet?
The Chairman. Yes, you can go after Senator Bennet, but it
will be after our recess.
Senator Bennet. Why don't I yield to Senator Brown, and
then----
Senator Brown. No, no, I do not want to do that. Go ahead,
Michael.
The Chairman. Go ahead.
Senator Bennet. Okay. Thank you to the witnesses for being
here.
Ms. Correa, I wanted to reflect a little bit about what we
have heard today from my colleagues, Republicans and Democrats,
on what is going on in my State of Colorado, which is that we
confronted massive shortages of PPE early on in this pandemic.
We are confronting massive shortages of testing equipment.
The administration seems to believe that we have an issue with
respect to testing sites. That is not the issue. The issue is
that our hospitals do not have access to the supplies they need
to be able to test our citizens--by the way, unlike any other
country. You know, many other countries in the world have
access to testing supplies, and have access to testing that
allows people to get a response in a day or less than a day.
In my State, it has now gone back to 7 days, 11 days. If
you are living in a rural area, 12 or 13 days. And now that we
are 5 or 6 months into this pandemic, what we have seen is,
every single hospital in my state--and I would say in the
United States of America--is in competition with one another
for exactly the same supplies. The veterans hospital, the VA
hospital in Denver, has no national plan that they are a part
of. They are competing with every other hospital in America to
get PPE for the people who work at the VA, to get testing
supplies for the people whom they need to test.
And not surprisingly, what has happened is, we have seen
the kind of nefarious behavior work its way into our supply
chain which the other witnesses have testified to. That is a
serious problem, and I am glad they are here to testify. But an
equally serious problem, I would argue--and maybe an even more
serious problem--is that we have massive shortages across the
country. And the prices of things like masks and gowns and the
booties that people have to wear, have all gone through the
roof.
In Colorado, I think the estimate at Denver Health--you
know, filled with people on the front line supporting one of
our most important public hospitals--the price of masks has
gone up 41 percent. Earlier on in the year it was up 100
percent.
So--and by the way, we are also competing with FEMA from
time to time, because FEMA has come in occasionally and said,
nope, we are going to take all the ventilators, or, nope, we
are going to take all the masks. And I do not know where they
are going, if they are going to Arizona, or Texas, or whatever.
So we have a completely broken system out there. And what I
would ask you is this, Ms. Correa, and I ask you this in the
spirit of somebody who respects the fact that you have worked
in the Federal Government for, as you said, I think 39 years.
If this committee came to you, or the administration came to
you and described the situation that we are confronting--I
think we can stipulate that what I am saying is accurate; it is
consistent with what everybody here has said. If we came to
your team and said, ``Help us solve this problem of scarcity,
of not sufficient testing, of prices that are going through the
roof because of no coordination,'' what would you tell us you
could do if you had the authority to do it, either
administratively or legislatively? What could your team of
people, committed public servants, do to help America begin to
act like we are a first-world country facing this pandemic?
Ms. Correa. So, from a procurement perspective, from where
I sit and the role that I play, yes, if somebody could identify
for us what the need is, what the requirement is, where the
fund sources, all those things are, then we could coordinate
amongst our procurement organizations, whether it is the Joint
Acquisition Task Force at the Department of Defense, Health and
Human Services, Department of Homeland Security, VA, and other
agencies, we could coordinate so that we could identify what
the sources of supply are, provided that those sources are out
there, and how we might best fulfill that need.
So, yes, we could coordinate amongst the procurement
organizations, but we would need to understand what the
requirement is, what those sources----
Senator Bennet. And when you say you need to understand
what the requirements are, do you think you have a--I mean, do
you understand the requirements in the hospitals in Colorado?
Do you understand the requirements of the----
Ms. Correa. So, we do not get that data, personally. It
comes through, in some cases, the folks who are coordinating
with them, such as when FEMA was running the National Response
and Recovery effort, they were coordinating and getting
information in, and that is how we were----
Senator Bennet. Who is giving you that information now?
Ms. Correa. Typically, it comes from States--well, I cannot
answer that question right now, because right now the Joint
Acquisition Task Force has taken over the purchase of PPE and
non-PPE supplies on behalf of HHS because FEMA got freed up to
support disasters and national emergencies that are coming up.
Senator Bennet. What disasters and national emergencies
that are coming up?
Ms. Correa. Like hurricanes----
Senator Bennet. So you have been taken off of COVID, then?
Ms. Correa. FEMA is not leading that effort anymore, not
the purchasing part. FEMA's National Response----
Senator Bennet. So here is what I would say, and I am going
to adjourn for the chairman. You know, the President said, ``I
am not a shipping clerk.'' That is a point of view, I suppose.
It is not a point of view that most Presidents would have had
when faced with a global pandemic. I mean, a global pandemic, I
would think, would be a moment where, at least for one moment,
we are one Nation under God trying to solve the problems that
we are confronting.
And not only did he say he is not a shipping clerk, he
said, ``I'm glad they're having this competition because it
will create price discovery and the lowest prices will be
available to people and hospitals across the country.''
And as you know, Ms. Correa, the reverse is absolutely
true. Which is that, when you have the kind of scarcity we are
confronting, when you cannot predict whether the COVID virus is
going to be in Arizona next week, or Texas the week after that,
or Colorado the week after that, what we have seen is not price
transparency but the kind of gouging, the kind of misbehavior,
the kind of increases in prices that have made it even more
difficult for us.
So I would say this has been a catastrophic failure on the
part of President Trump. And I feel bad about it, in part
because I know the quality of the people who work for you, and
I know what they could do if they were given the opportunity to
actually do what we need them to do. And I hope they will get
that chance.
I will, in regard to what the Senator from Iowa said, now
adjourn the hearing until he returns and calls on Senator
Brown. Thank you. The meeting is adjourned.
[Whereupon, at 11:59 a.m., the committee recessed,
reconvening at 12:28 p.m.]
The Chairman. I am told that Senator Casey is ready.
Senator Casey? If Senator Casey isn't ready----
Senator Casey. Yes, I am ready.
The Chairman. Oh; go ahead, Senator Casey.
Senator Casey. Mr. Chairman, thank you very much. I had
trouble with my microphone there.
Thank you very much. And I want to start with Ms. Correa
regarding domestic production chains. But I wanted to say,
first, that I realize that there are times when it is very
important for us to hold accountable public officials, either
appointed or elected. But sometimes you have to start with the
elected official.
And when it comes to what I believe is a colossal failure
on personal protective equipment, PPE, I think the failure
started with the elected President and has gone down from
there. And so a lot of my frustration that I have, and a lot of
Americans have, is directed at the President's failure to take
the virus seriously, to have an action plan, and to put himself
and put the Nation on a war footing.
If you are a commander-in-chief and you've got a war
against a virus, you have to act like it every day. And there
should have been an all-out effort, call it what you will,
Marshall Plan or something on that order on personal protective
gear, and it never happened. It just never happened.
In The New York Times this weekend there was a major story
headlined ``FEMA Sends Faulty Protective Gear to Nursing Homes
Battling Virus.'' Nursing homes? We are now very close to the
60,000 mark--60,000 dead in nursing homes. That means residents
as well as workers in those nursing homes, and no strategy to
get that number down. And a component part of the strategy is
PPE, we know that.
You have to ask yourself, is this the United States of
America? We cannot make enough masks and gloves and gowns? And
I am not saying it is all the failure of one administration,
but the recent failures, there is no question where the failure
emanates.
Let me start with some testimony from last week. House Ways
and Means Committee, Kim Glas, president and CEO, National
Council of Textile Organizations--that's the Association of
Domestic Textile and PPE producers--said, ``The U.S. textile
industry is only running at 10 to 30 percent, and many mills
are idle.''
Ms. Correa, I wanted to ask you, can you explain the PPE
shortages? And why have we not maximized domestic--domestic--
production?
Ms. Correa. Sir, I probably should clarify my role as the
DHS Chief Procurement Officer. I am part of the supply chain,
and I am part of what helps create integrity in the supply
chain, but I do not direct the manufacture of equipment. I
identify requirements when they are known to us, get them out
to industry, and hopefully get proposals back, or information
back that we can use to award contracts.
So, it is hard for me to answer that question, because I am
not the appropriate person to answer that question.
Senator Casey. Well, it is a question that I think the
administration should answer, even if--and I know you have been
engaged in public service a long time for the Federal
Government--but we need to get an answer to that kind of a
question.
Can you answer this question about purchases that you have
directed on behalf of the government? How much domestic PPE
have you purchased versus foreign-manufactured PPE?
Ms. Correa. So, I do not have the exact figures on that.
Our first priority is to buy domestic product, in accordance
with the Buy American Act, and when such product is not
available, if U.S.-based companies do not have product, then we
investigate to see what other product they have and where that
product comes from.
Companies do have to disclose if they are providing a
foreign product in response to a Federal Government
solicitation. But I can get you the exact figures. I just do
not have those with me right now.
Senator Casey. Well, that would be very helpful, I think,
for the committee to have a quantification of that number.
And finally, I wanted to ask you about the process by which
you quantify the demand for the purchase of PPE. Tell us about
that. Tell us what you can about that, what the demand is and
how you proceed with that.
Ms. Correa. Sure. Through our logistics coordinators, our
program officials identify what the requirement is. What are
the needs, where the products are needed. They bring that into
the procurement organization, and then we accomplish the buy.
So, for example at FEMA, through the National Response
Coordination Center, they work with State and local officials
to identify the requirements, the type of equipment that they
need, and then the purchasing organization does the buy.
And then typically, the shipments are made to a
distribution center or location, and then they further
distribute the equipment out to the appropriate organizations.
Senator Casey. Okay. Well, in the final seconds I have, one
of the real indictments in this article I mentioned was from a
University of Chicago health economist who said, quote, ``The
Federal response to protecting one of the most vulnerable
populations in this country [meaning nursing homes] has been a
dismal failure,'' unquote.
And that starts with the President. And beyond this
pandemic, we need a whole new industrial policy in this country
to produce enough PPE. The same country that put a man on the
moon more than 50 years ago ought to be able to produce enough
gowns and masks and other protective equipment. There is no way
we should settle for this, especially in the context of nursing
homes.
Thank you, Mr. Chairman.
The Chairman. Senator Hassan, if you are available.
Senator Hassan. I am available, Mr. Chairman. Can you hear
me?
The Chairman. Yes, I can hear you.
Senator Hassan. Okay, great. Well, thank you, Chairman
Grassley and Ranking Member Wyden, for holding this hearing,
and to our witnesses for participating today.
The COVID-19 pandemic is increasing demand for medication,
supplies, and personal protective equipment. And the medical
supply chain is not keeping pace. And it is going to be
exacerbated if we do in fact start to physically reopen schools
moving forward. I was just on the phone yesterday with a number
of my school districts in New Hampshire, and they are
scrambling to find PPE.
In addition to being responsible for shoring up
manufacturing and distribution capacity for things like masks
and gowns, the Federal Government is responsible for ensuring
that products in the medical supply chain are safe. This
includes ensuring that counterfeit medical products do not
enter our country's supply chain.
Last week, Senator Enzi and I introduced the Safeguarding
of Therapeutics Act, which is bipartisan legislation that would
give FDA authority to seize counterfeit medical products so
they cannot reach patients and front-line health-care workers.
I hope my colleagues will join Senator Enzi and me in
calling for this bill to be included in the next COVID-19
relief package.
I have a few questions, but before I ask those, Ms. Correa,
I wanted to follow up on something you said in a couple of your
answers so far, where you have indicated how important it is to
you to have an understanding of what the demand or need for a
particular product is. And I have not been able to tell from
your testimony whether you in fact believe your office has the
information about what the projected need for personal
protective equipment is.
About a month ago in a hearing before the Homeland Security
and Governmental Oversight Committee that I sit on, Director
Gaynor from FEMA produced to the committee a chart of the need
for various personal protective equipment month by month, and
where we were in terms of supplying that need either
domestically or from overseas.
And I just wonder if you have seen it? It is labeled
``White House COVID-19 Supply Chain Task Force,'' and if you
have not seen it, we are happy to get it to you. But I just
wanted to understand whether there has been communication about
that?
Ms. Correa. There is communication about that. And perhaps
I should clarify. It is not that we do not know the projected
need. In the Procurement Office, what we do is actually
accomplish the buy.
First of all, DHS right now, through FEMA, was supporting
the COVID-19 response. The transition of the procurement
function has now happened, and DLA is supporting the
overarching buys, if you will, to support the pandemic
response. FEMA is now focused more on the disasters from a
procurement standpoint.
In the Procurement Organization, we take those projections.
We will share them with industry. But for us to accomplish the
buy, we not only have to have the projection but where we are
going to ship these supplies, or who we are going to send them
to, and the funding to accomplish the procurement so that we
can award the contract.
Senator Hassan. So what information--are you lacking
information now about where you need to send them and what
sectors have the greatest demand?
Ms. Correa. As I indicated, the DLA is actually who is
buying for the government-wide buy in response to the COVID-19
response now. But to answer your question, right now, no, I do
not have any requirements in front of me to buy, or funding to
make the procurement happen.
DLA, like I said before--and the Joint Acquisition Task
Force--is now taking over the procurement from a national
response.
Senator Hassan. Okay, I understand that. So I will ask, Mr.
Chairman, without objection, for the slides that were produced
last month to the HSGOC Committee, to be entered into the
record.
The Chairman. Without objection, so ordered.
[The slides appear in the appendix beginning on p. 74.]
Senator Hassan. Thank you. I do have another question for
Mr. Overacker and Ms. Correa.
Since the onset of COVID-19, States and health-care
facilities have been scrambling, and often competing in
expensive bidding wars with each other, to get enough medical
supplies to meet the needs of health-care workers, patients,
and businesses.
At the same time, there are reports of an increase in the
production and trafficking of counterfeit products. What
specific medical products and supplies do you believe have been
the focus of counterfeiters since the start of the pandemic?
How is that impacting the safety of patients and health-care
workers?
Mr. Overacker. So, with respect to how we deal with just
the rapid increase in the number of people who are trying to
obtain PPE supplies and facilitate legitimate imports, that is
one of the primary reasons why we created our COVID-19 Cargo
Resolution Team. They stand at the ready to assist new actors
in the supply chain so they understand the importing
requirements and what needs to take place in order for us to
rapidly facilitate the legitimate imports.
With respect to illicit imports or counterfeits, from the
very beginning of this crisis I think some of the first things
we saw were counterfeit masks. And by counterfeit masks, I mean
masks that would have a trademark on them for an actual known
provider. But also, in addition to counterfeit masks, we are
just seeing other illicit products such as--we mentioned this
before--these what they call ``shut-out lanyards,'' which are
basically a sham product that tells people if they wear this
around their neck, it will protect them from COVID.
So these are the types of things that we have seen. How we
try to combat this is, whenever we encounter these at our ports
of entry, that is information, a data point, that we use to
share with HSI so that we can begin investigations into the
people who are trafficking. And then we use our targeting
capabilities to support HSI's investigation.
The Chairman. Before I call Senator Brown, I would like to
know if four Senators--well, Senator Cantwell is here, so
virtually, are Cortez Masto, Daines, and Whitehouse going to
participate? Just let my staff know.
I go to Senator Brown now.
[Pause.]
The Chairman. Senator Brown?
Senator Brown. Thank you, Mr. Chairman. I really appreciate
it.
Before I begin my questions, I want to take a moment to
express my outrage at the action of the Department of Homeland
Security in cities across America. I echo the words of Senator
Wyden, our ranking member. It is unconscionable that in this
country--in this country, in America in 2020--our President is
treating our own cities like war zones, sending unidentified
Federal forces, talking about ``deployments,'' as if Oregon,
Illinois, and New Mexico are foreign battle fields.
These agents arrest our own citizens who are exercising
First Amendment rights. They are standing against police
brutality. They are standing in support of Black Lives Matter.
The President has no problem trampling on the constitutional
rights of Americans. None. We should be outraged by that.
So, Mr. Chairman, I would start with Ms. Correa. My first
question is for you. I have been in touch with a number of Ohio
and American manufacturers around the country who describe
procurement processes--they call them ``completely chaotic.''
They get bounced around from official to official with no idea
who is actually in charge. In fact, it is clear no one is in
charge.
The procurement terms change repeatedly with no
explanation. One urgent gown solicitation was canceled at the
last minute because the government decided it needed a
different type of hospital gown.
Do you think this lack of coordination has contributed to
PPE shortages and delays, Ms. Correa?
Ms. Correa. Sir, that is a difficult question for me to
answer. Certainly, it could contribute to that, but I am not
aware of those concerns with respect to DHS. We established the
process for industry to be able to communicate with us. We
centralized communications through an industry liaison mailbox.
And then we had teams of people who were vetting any requests
for information, whether the request was about an existing
solicitation or about future work, or even how to do business
with the Department.
Senator Brown. Well, Ms. Correa, if I could, these
requests--in some cases these requests were directly to the
White House, directly to Mr. Navarro, whom the President
designated to do this, and the chaos just continued.
All of this has unnecessarily exposed front-line workers to
COVID-19. It has prevented them from producing the amount of
tests we need to get kids back to school, to get workers back
safely, kids back safely to school, workers back safely on the
job. It seems clear to me that increasing domestic production
of PPE would make us better-equipped to respond to future
public health emergencies but almost completely resolve
concerns of counterfeit face masks and other equipment.
Do you agree with that, yes or no?
Ms. Correa. I believe that if we can increase production in
the United States, certainly that would help our supply chain.
Senator Brown. Thank you.
Mr. Overacker, my next question is for you. In 2016, the
ranking member, Senator Wyden, and I closed a longstanding
loophole that previously allowed certain imports made with
forced labor to enter our country. Because of our amendment,
U.S. law prohibits any products from entering our country made
with forced labor.
I have read news reports about imported face masks made in
China by Uyghurs, whom we know are subject to forced labor
conditions by the Chinese Government.
Can you tell this committee with certainty that no PPE
supplies that have been made with Uyghur forced labor are
entering the U.S.?
Mr. Overacker. So, Senator, with respect to forced labor,
that is one of the things we are looking at in that region of
China where Uyghurs are, what products that are coming out of
there. We do have active investigations underway.
We have already initiated at least one withhold release
order, not pertaining to the masks but to other products from
that region of China. And we continue to investigate that. We
have also recently issued a withhold release order on nitrile
gloves from Malaysia. But, Senator, we will go back, and I will
make certain we get all of the information we have on what we
are doing currently with respect to the region of China where
the Uyghurs are located.
Senator Brown. Thanks, Mr. Overacker. I appreciate your
candor. The administration's answer to that question would be,
``Yes, we are certain we are not importing Uyghur products.'' I
mean, I know the President's uneasy relationship with the
Uyghurs, that he does not generally stand with human rights
groups and oppressed minorities in countries; he stands with
the dictators at the top, whether it is President Xi, or the
President of North Korea, or Turkey, or name the country.
But the law is the law. And I am hopeful, when I send a
follow-up letter to you, that you can not just tell us the
specific actions, but address how effective those specific
actions are. Because it is the law.
Mr. Chairman, this pandemic has been the great revealer in
so many ways in our country. It has revealed the racial
disparities that are rampant in our health-care system and our
economy. It revealed the President's lack of economic
leadership. Supply chains are critical in a crisis like this
one. We have all had individual cases in our States where we
tried to get companies that could step up and produce PPE, and
those companies say they have run into chaos or indifference at
the White House.
So I am introducing, because of all this, because we must
make domestic production a Federal priority, I am introducing
the Protecting American Heroes Act tomorrow. My bill will
increase U.S. production of PPE and other critical items in the
Strategic National Stockpile and make sure we are better-
prepared for a pandemic.
It will mean we will be better able to quickly increase
production of the supplies we need in an emergency, made by
Americans. I look forward to working with my colleagues on this
committee to get it signed into law.
Thank you, Mr. Chairman.
The Chairman. Senator Cortez Masto, if you are available.
Senator Cortez Masto. I am. Mr. Chairman, thank you so much
for this hearing, and to the panelists, thank you for appearing
today.
Let me start with Mr. Overacker. I am from Nevada. I have
been working closely with my Governor's office, and I have
learned from them that the CBP processing time has slowed the
arrival of PPE in Nevada, so much so that they are also seeking
to attain the guidance directly from China because the State's
demand has surpassed the Strategic National Stockpile
allocation.
But here is my concern. I am being told that once these
shipments do arrive, they sit with CBP. The Governor's office
and the FEMA regional administrator have been great to work
with the State of Nevada in helping us shake loose those
orders.
Mr. Overacker, you described the COVID-19 Cargo Resolution
Team, whose work included coordinating with government agencies
to ensure that legitimate shipments are not unnecessarily
delayed. Does that include working with the State and local
governments as well?
Mr. Overacker. Yes, Senator. And with respect to cargo
release times and processing times, one thing I want to
emphasize is that our ports of entry are open. Our CBP officers
are clearing cargo. And so COVID has not impacted our cargo
release process.
What we have experienced over time though--we see where
there are instances where products may be regulated by FDA, and
FDA would need to review them before they can be released by
CBP. But if there are any delays, I am not aware of them right
now. And part of the job of our CCRT is to resolve any
potential holds that may exist so we can expedite that cargo.
And, Senator, I will be more than happy to take a closer
look at what is going on in Nevada. But I assure you, our ports
of entry are open and we are processing cargo.
Senator Cortez Masto. And so, for instance, if a State
Governor or a local government has issues, is there a direct
contact that they could reach out to directly to get answers
immediately?
Mr. Overacker. So the CCRT information portal, they have a
web portal that is on CBP.gov where they take in inquiries.
They triage those inquiries. They assign them to the
appropriate port for resolution. And I myself even field
inquiries directly. But I assure you, we will do everything we
can to resolve whatever issue they may be experiencing under
that.
Senator Cortez Masto. I appreciate that. Thank you very
much.
Let me talk a little bit--this has been discussed as well
during this hearing, and I have heard this in my State as well
through this pandemic. We have heard a lot about the gray
market, which is a segment of the medical supply marketplace
outside of the large manufacturers and distributors like
McKesson or Cardinal that we can think of.
And The Wall Street Journal has also written about--how it
describes it is as ``an anarchic marketplace filled with
legitimate vendors and traders, fly-by-night brokers, and
opportunists who look to make a fast buck while operating in an
arena with little transparency and fast-changing rules.''
Let me open this up to the panel, but let me start, Mr.
Overacker, with you as well. Can you speak to the notion of
this gray market PPE and what are the implications, and what
are we doing to try to address it? I will tell you, my concern
right now is that my government, the State of Nevada, and local
governments are all competing with one another to get this PPE.
In fact, the concern I have is what I heard from local
government, that typically they purchase masks. Once this
pandemic hit, the mask price went up 66 percent. And not only
were they not able to buy what they needed, they had to buy
hundreds more masks than what they actually needed.
So what are we doing at the Federal level to address this
gray market?
Mr. Overacker. So any time you introduce new actors in the
supply chain, that exposes potential risks. So, from the CBP
perspective, what we do for the facilitation piece is try to
expedite the release of cargo from legitimate suppliers that we
know; in other words, the entities that we have been dealing
with over time and that we have a track record with.
As far as the gray market goods go, I mean the State and
local governments are not just competing against themselves;
they are competing globally, because this is a global pandemic
and the supply around the globe is really under stress.
So what we try to do from a CBP perspective is, one,
segment the risk so that we can expedite the legitimate
shipments that we know. Focus in on those actors that are
unknown to us. And with respect to gray market goods, when we
think about ``gray market,'' we also have to recognize that in
this pandemic not only do hospitals and schools and front-line
operators need to have PPE, everybody needs PPE too.
So gray market goods are not always necessarily
substandard, but they could be an alternative good for other
actors who are not front-line responders.
Senator Cortez Masto. Thank you to the panel. I appreciate
it.
The Chairman. Senator Daines?
Senator Daines. Thank you, Mr. Chairman.
It is long overdue that we end our reliance on foreign
countries like China to produce medical equipment, supplies,
and lifesaving drugs. That is why I have taken swift action to
put America first in leading the efforts in Congress to support
made in America manufacturing, as well as jobs.
I was able to secure $10 billion in the CARES Act to
accelerate the development and manufacturing of drugs and
vaccines in the United States to treat and prevent the
coronavirus. I also helped introduce legislation to end our
reliance upon China for drugs and medical manufacturing and
bring those jobs back to the U.S.
Being dependent on China is a threat to our national
health. It is also a national security threat. America will be
safer and it will be stronger when we bring our pharmaceutical
and medical manufacturing supply chains and those jobs back to
the United States.
Mr. Overacker, you mentioned in your testimony that China
remains the largest source country for masks, which means they
have significant control over these important supplies, putting
America's front-line workers at risk in the event of a public
health crisis like we have seen.
I was pleased to see that there are provisions in the HEALS
Act, the newly released COVID-19 relief bill, to encourage
domestic manufacturing of personal protective equipment to the
Strategic National Stockpile. This is critically important if
we want to end our reliance on China for PPE and bring those
jobs back to the United States.
My question is this: since the beginning of the pandemic,
can you speak to the trends on imports of PPE and medical
supplies from China and the work that DHS has been doing to
combat counterfeit, substandard, and unapproved products like
PPE?
Mr. Overacker. Thank you, Senator. Yes, currently, based on
the data we see, China remains the largest supplier of masks to
the United States by a wide margin over other countries such as
Mexico, Canada, India, and Vietnam.
With respect to domestic production, there are domestic
producers of N95 masks in particular. And any shift of
production to the United States that would occur, we would also
have to look at the secondary and tertiary supply chains that
would be required to ensure that we have the materials to do
so.
What CBP is currently doing with respect to imports from
China is what we do on a daily basis. We scrutinize those
imports by unknown or new actors just to try to see if these
products are safe.
We work with FDA to determine whether or not these goods
are regulated by FDA or not. And we even turn products over to
the FDA for their review and to determine whether or not these
are safe, or if they are FDA-approved products.
And in addition to that, we work closely with HSI. Any time
we do have a counterfeit or a suspect product, we turn that
information over to our partners with HSI so that we can work
collaboratively on investigations.
Senator Daines. Ms. Correa, in Montana and across the
Nation we are seeing an uptick of coronavirus cases. While we
are making significant progress on securing a COVID-19 vaccine
for the American people as soon as perhaps October or November,
it is critical that the United States is equipped with the PPE
and the medical supplies necessary to combat this pandemic,
especially with the upcoming flu season.
Ms. Correa, with regard to procurement, to what extent was
DHS prepared to meet the COVID-19 crisis? Would you describe
what gaps were found and lessons learned?
Ms. Correa. Sir, thank you for your question.
This pandemic is of monumental proportions, of course, and
it affected the entire country. So certainly, we had to adapt
quickly to answering the call.
But typically, we have contracts. We use government-wide
contracts. We have prepositioned contracts to respond to these
types of things. Unfortunately, those contracts were not
sufficient.
So what we have done is, we continue to vet vendors. In
fact, as vendors come in and inquire or offer to sell anything,
we have supplier verification teams that vet those vendors to
ensure that they are proper sources of supply, that they
actually have legitimate product that they can sell, and when
that product would become available.
For any vendors who do not give us good information, or are
not answering the questions, or appear suspect, we immediately
refer them to the Inspector General for investigation.
Senator Daines. That makes me--I have one last question for
Mr. Overacker before I wrap up, but thanks for that update.
As I mentioned earlier, I helped secure $10 billion in the
CARES Act to accelerate the development and the manufacturing
of COVID-19 vaccines and therapeutics. This funding was
critical to the creation of Operation Warp Speed, which aims to
deliver 300 million doses of a safe, effective vaccine for
COVID-19 by January of 2021.
Mr. Overacker, in your testimony you mentioned that CBP's
COVID-19 Cargo Resolution Team works at HHS to facilitate
importation of equipment and materials in support of Operation
Warp Speed.
Could you give me an update on these efforts to date? I am
running out of time, so please make it brief.
Mr. Overacker. Senator, we have had several meetings with
HHS and Moderna. We have a meeting scheduled with them on
Thursday. Our intention is to identify what they need to have
imported, whether it is production equipment, and then make
certain that we expedite that.
We anticipate that they will begin importations in August.
But in addition to the production equipment, all of the other
materials that will be needed to deliver 300 million doses of
vaccine--such as 300 million syringes and 300 million glass
vials, 300 million cotton swabs, whatever it is--we are going
to work with them to identify what they need, and we will
expedite getting that into the country for them.
The Chairman. Senator Whitehouse?
Senator Whitehouse. Thank you, Mr. Chairman, and thank you
all for a long morning. I appreciate your service.
Ms. Correa, when you are doing your purchasing, whom are
you buying for?
Ms. Correa. Generally, we are buying for the Department of
Homeland Security.
Senator Whitehouse. For FEMA?
Ms. Correa. For all of DHS.
Senator Whitehouse. But in this case, primarily----
Ms. Correa. In this case, FEMA was buying on behalf, or for
HHS in support of Federal, State, and local----
Senator Whitehouse. And the Strategic National Reserve?
Ms. Correa. Yes.
Senator Whitehouse. Okay. So if I were--say the State of
Rhode Island and I came to you, you are not there to help me?
You are there to help the Federal agencies, FEMA, HHS, and so
forth?
Ms. Correa. Exactly. Yes, sir.
Senator Whitehouse. So that is what your testimony is----
Ms. Correa. That is correct. I oversee the processes.
Senator Whitehouse. And the fact that a State is thrown
into this melee of competition is something that you are not in
a position to remedy, because you do not work for the State.
Ms. Correa. That is correct.
Senator Whitehouse. Mr. Francis and Mr. Overacker, you have
both given powerful testimony about the extent of the fraud in
this marketplace. Indeed, you have said consumers have no way
to know if these PPE items are in fact legitimate, or if they
will work, if ordered from third-party marketplaces or non-
medical websites.
Would you characterize the current market out there as
toxic to some degree in terms of the amount of fraud and
mislabeling and defective products that are being sold in it?
Mr. Francis. Thank you, Senator.
Senator Whitehouse. Toxic, dangerous, use your word. I am
not trying to put a word in your mouth, I am just trying to get
a simple description of how dangerous you think this
marketplace is for the buyer.
Mr. Francis. I think dealing with this pandemic and the
global anxious audience--you know, there is a high demand of
equipment and PPE, and it is very vulnerable. And so we are
seeing this very challenging environment with marketplaces,
social media platforms, the sales of these goods. It is really
disheartening.
Senator Whitehouse. So, very vulnerable? Very challenging?
Rife with fraud? All fair descriptions?
Mr. Francis. Yes, sir.
Senator Whitehouse. Do you agree, Mr. Overacker?
Mr. Overacker. Yes. And I would say that any time you are
dealing with e-commerce, when you are dealing with unvalidated
or unknown entities that are selling products online, there is
an inherent risk. And that is one of the reasons why at CBP we
have launched what we call a section 321 data pilot that refers
to low-value shipments, where we are working closely with
platforms----
Senator Whitehouse. Let me get to some of the areas----
Mr. Overacker [continuing]. And areas to get additional----
Senator Whitehouse. Yes; you are a little bit off the point
of my question, so let me interrupt, because I have 2 minutes
left.
What do you know about the extent to which either the
Secretary or the White House was informed about the hazards of
the marketplace? I am assuming that you have reported this to
your superiors, and that works its way up through the system,
but is it correct that the Secretary and the White House are
aware of the dangers and hazards of this marketplace?
Mr. Overacker. They are most definitely aware of the
dangers and hazards of the e-commerce marketplace. The
President issued a memorandum over a year ago asking DHS to put
together an action plan for how to address vulnerabilities in
the e-commerce marketplace. And so they are very much aware.
Senator Whitehouse. Okay----
Mr. Overacker. And I see----
Senator Whitehouse. Mr. Francis?
Mr. Francis. To Mr. Overacker's point, I have been part of
the presidential memorandum on counterfeiting and the
trafficking of counterfeit and pirated goods that was issued by
the President in April of 2019.
Senator Whitehouse. What is discouraging to me--and I will
just close with this statement--representing Rhode Island, is
that we got thrown into this marketplace on our own with no
support from the Federal Government in the procurement, as Ms.
Correa said, with full knowledge that this was a dangerous and
hazardous marketplace, and with no real support or interest in
fixing it.
And the result was sort of a clown show performance. Our
Governor talks about fighting to try to get a truck full of PPE
into Rhode Island through the FEMA process and, although you
can track your Amazon package to where it is, nobody could tell
us where the damn truck was.
So for days, and through multiple agencies, we had to hunt
the truck that at the peak of our surge was bringing
desperately needed PPE. And sure enough, glory day, the truck
arrived. The truck was empty.
That is the kind of nonsense that we have had to put up
with because of the absence of real leadership here from the
Federal Government.
The Chairman. Now the most patient Senator here is the last
speaker, the Senator from Washington State.
Senator Cantwell. Thank you, Mr. Chairman.
I wanted to ask Customs and Border Patrol about just the
issue of resources and people. Because I look at this two ways.
One, we certainly in the State of Washington have over 52,000
people who have been infected with COVID. We had one of the
first cases in the Nation, and we have lost lives. But the
issue of personal protective equipment is--we have had an
incident where I think the Governor had to return over 200,000
masks in a 2-week time period because the FDA took a foreign
manufacturer off the authorized list.
And then we have had the opposite, where we have actually
gotten production companies that have switched modes of what
they were manufacturing and tried to help the effort, and then
they are trying to produce both surgical and N95 masks and
still have not gotten everything they need to move forward on
the approval of that.
So I look at that and I think, what is the underlying issue
here? And so I want to ask whether you feel like you have the
people and the resources to meet the challenge of this job?
Mr. Overacker. So, Senator, with respect to processing
cargo as it arrives in the United States, or even export cargo,
Congress and the Senators have been very generous with CBP with
respect to our CBP officer resources, and we are very grateful
for that.
And we have done a very good job over the last 5 years of
turning around our hiring capabilities so that we are now in a
better position than we have been in in years with respect to
our CBP officer resources.
And these are the resources that work at our ports of
entry. These are the first line of defense with respect to
processing cargo and getting cargo into the United States.
Senator Cantwell. Well, listen. I am from a big cargo
State, and I definitely understand about cargo. But my point
is, do you have specially trained officers in this area of PPE
equipment?
Mr. Overacker. Not necessarily, but through our
Pharmaceuticals, Health, and Chemicals Center of Excellence and
Expertise, we work with that industry to understand what their
needs are. And then we try to expedite whatever processing we
can on their behalf. But we rely on the private sector to
explain to us what those needs are.
Senator Cantwell. I am not talking about the needs now. I
am talking about not letting products into the country that do
not qualify. So I am curious as to whether you are coordinating
with DHS and FDA to ensure that the PPE equipment that is
imported meets the quality standards so that we do not have
product running around, and people assuming that we have
product, and then having it have to be recalled or reclaimed by
our States.
Mr. Overacker. Yes, Senator. We work very closely with
FEMA. And you mentioned emergency use authorization, I believe.
One of the things that FEMA communicates to us are who are the
authorized manufacturers of products, so that we can look at
that to segment the risk.
We turn over product to FDA for their review and approval
on a regular basis. And whenever FDA makes changes to those
emergency use authorizations and identifies changes in those
manufacturer lists, then we adjust our capabilities accordingly
using our automated systems.
Senator Cantwell. Well, I would suggest we have specially
trained people to help with this. I think, look, we do not want
to create three or four steps. And there are many aspects of
the COVID crisis where we have had to knock down those three or
four steps, whether it was testing and getting our universities
up to speed on testing, or a whole variety of things.
So I would definitely want to see more coordination between
CBP and the FDA on those issues. There is just no reason we
should allow product in that we know is defective or not going
to help.
But the other issue is, I feel like we are not being
aggressive enough in really understanding and communicating
with our manufacturers. I think Korea decided they were just,
they were like, we are just going domestic production. That is
it. We are going domestic production.
So you want to get the supply chain and the authority and
the lines of responsibility to those manufacturers so we can
move ahead. We should not have millions of masks--this is what
is happening to us right now--millions of masks, both N95 and
other, sitting stored somewhere in Pioneer Square when we have
health-care workers who are dying.
They are in need of those products. So I want to expedite
this product process and make sure that we know what the U.S.
manufacturers are required to do, that they are meeting this
process, and that we expedite that. So if we are going to go
this route of a domestic route--and you know I am proud of
these companies that have switched over--we need to make sure
that we can do it in safe but timely fashion.
Thank you, Mr. Chairman.
The Chairman. Well, thank you very much.
I want to thank the witnesses and all my staff who
cooperated in getting this done at a reasonable hour on a very
important subject that we need to continue to discuss. And I
thank the staff for putting together a very difficult hearing,
under the circumstances of how these hearings are held because
of the pandemic.
And I hope that we, as a result of this hearing, do some
things that will continue to improve the reliability of our
medical supply chain. Congress must ensure that the
administration takes all necessary steps to properly protect
the integrity of this chain and the supplies that are in it. We
must work together to make sure that our health-care workers
and hospitals receive the supplies they need, and that they can
have a safe workplace.
We must also engage with U.S. manufacturers, suppliers, and
distributors to quell PPE shortages caused by the pandemic.
Today we have highlighted many of the problems our medical
supply chain has recently faced. We must discuss serious policy
solutions to provide safely manufactured medical supplies for
our health-care workers and hospitals.
With that, do we have an announcement on the questions? Oh,
it is right here in the last sentence. The deadline for our
members to submit questions for answering in writing is August
the 4th at the close of business.
Thank you all for attending and for faithfully trying to
answer our questions. The meeting is adjourned.
[Whereupon, at 1:11 p.m., the hearing was concluded.]
A P P E N D I X
Additional Material Submitted for the Record
----------
Prepared Statement of Soraya Correa, Chief Procurement Officer,
Department of Homeland Security
introduction
Chairman Grassley, Ranking Member Wyden, and distinguished members
of the committee, thank you for the opportunity to appear before you
today to discuss how procurement enables supply chain integrity at the
U.S. Department of Homeland Security (DHS or the Department).
I am Soraya Correa, the Department's Chief Procurement Officer. I
have been a career civil servant for more than 39 years, and I am proud
to say that I have been with DHS since its inception. At DHS, I have
served in various leadership positions in procurement and program
management including as the Head of the Contracting Activity for U.S.
Immigration and Customs Enforcement and Associate Director of the U.S.
Citizenship and Immigration Services Immigration Records and Identity
Services (formerly the Enterprise Services Directorate). I am deeply
committed to the missions of the Department.
In my current position, I oversee the work of 10 contracting
organizations composed of approximately 1,400 contracting professionals
that provide operational procurement services to DHS Components,
Directorates, and offices across the country. In fiscal year 2019, DHS
procurement professionals obligated $23.9 billion through over 74,000
procurement actions. My office manages the Department's procurement
policy and processes and provides enterprise-level procurement tools
and contract vehicles to support the DHS contracting organizations. I
am an advocate for innovative procurement approaches, reducing
administrative burdens, and ensuring the procurement workforce has the
tools necessary to conduct their work with integrity to enable the DHS
mission.
I am honored to serve in this role and to lead the hardworking
professionals who procure the goods and services to meet the
Department's mission needs. We are proud to buy a wide array of
products and services including the supplies needed to respond to
disasters or other national emergencies.
procurement enables supply chain integrity
As our country and the Department were confronted by the COVID-19
pandemic, the DHS procurement organization quickly adapted and
continues to meet mission needs. Our organization understands emergency
contracting operations and managing supply chain risk, including the
importance of ensuring contracts and orders are awarded to only those
contractors who are deemed responsive and responsible in accordance
with the Federal Acquisition Regulation (FAR).
Policy and Oversight Actions
As with other major disaster declarations and national emergencies,
I invoked all special emergency contracting flexibilities within my
authority under the FAR as the DHS Senior Procurement Executive,
immediately after the President declared a national emergency for
COVID-19. Specifically, and working in partnership with the
Department's Chief Financial Officer, I increased the purchase card
limit so that the Department, including the Federal Emergency
Management Agency (FEMA) in its emergency response capacity, could more
easily procure larger volumes of emergency supplies and services. I
eliminated certain paperwork requirements so that DHS could purchase
COVID-19 related supplies and services quickly, cutting the normal
procurement lead time from weeks to days or even hours.
I also instituted improvements within the regulatory framework so
the DHS acquisition team, including program managers, contracting
professionals and contractors, could continue work without disruption
in a virtual environment. This effort included eliminating the
requirement for hard copy documents, wet signatures, notarization,
seals on bonds and other scenarios. These flexibilities allowed DHS,
including FEMA in its emergency response role, to quickly support
urgent needs for COVID-19 supplies and services within the regulatory
framework. These flexibilities went into effect in March 2020 and will
remain in effect as appropriate to ensure continued timely support of
COVID-19 response and recovery operations. Throughout this process, DHS
procurement professionals performed required contractor responsibility
determinations before awarding a contract.
Meaningful Communications
In early March 2020, I began communicating with industry and DHS
contracting staff on a regular basis to ensure that everyone was aware
of the flexibilities available to them. I regularly held conference
calls with the contracting activities, legal counsel, and others to
ensure DHS Components had all the information and tools necessary to
respond to mission needs. As a broader DHS community, we answered
industry questions and collaborated on ways to accomplish our mission
remotely or on site as essential employees.
In April 2020, we initiated weekly virtual meetings with industry
associations to discuss issues related to COVID-19. These discussions
focused on the supply chain and how industry could support DHS
operational requirements in response to the pandemic. We also hosted
industry events focused on return to the workplace. In these sessions,
we discussed and addressed industry's concerns and perspective as they
plan to return to the workplace. These industry association meetings
continue because they have proven to be an exceptional way to stay
connected and transparent with business entities supporting or
interested in supporting DHS with the COVID-19 response. We not only
answer their questions, but also provide critical and timely
information for them to disseminate to their members.
Process Enhancements
As we began to see a significant surge in incoming inquiries from
industry and offers of help to DHS in response to the pandemic, I
established two teams at DHS composed of subject matter experts to
support our COVID-19 response efforts: the Supplier Verification Team
and the Procurement and Acquisition Innovation Response (PAIR) Team.
These teams serve as centralized points to expeditiously review, vet,
and refer information about companies offering COVID-19 solutions to
the appropriate Components or offices within DHS. These teams examine
the potential viability of a supplier based on several factors
including the extent to which the supplier has been in the business of
selling the related products or services. The teams compile reports and
disseminate them to the DHS contracting organizations and senior
program officials. The work of these teams supplement the Contracting
Officers' efforts and provide information to support them as they
conduct market research and perform responsibility determinations. Once
these teams provide market research information, it becomes the
responsibility of the acquisition team to conduct further checks and/or
testing of the products.
The Supplier Verification Team sub-divided itself into two teams;
one focuses on personal protective equipment (PPE) (i.e., aligned with
the Coronavirus Aid, Relief, and Economic Security Act (CARES Act)
definition of PPE) and the other focuses on non-PPE (e.g., COVID-19
test kits). Early in the pandemic response, we recognized that
shortages of PPE would affect the DHS front-line mission operations, as
well as FEMA's role in supporting emergency response efforts. Thus, the
Supplier Verification Team researches vendor leads, conducts phone
screening, and vets vendors through publicly available databases, such
as the Better Business Bureau and the System for Award Management. This
vetting process examines the legitimacy of a supplier based on several
factors including the extent to which the supplier has been in the
business of selling the specific PPE product, has existing inventory
located within the United States, has existing mechanisms to receive
the products domestically, including existing contracts or
relationships with manufacturers, the model numbers of products
offered, and whether the supplier would require for DHS to pay for the
product in advance of receipt. This initial review provides valuable
market research information for our procurement professionals who
formally enter into the contracts and orders for PPE.
The PAIR Team, unlike the Supplier Verification Team, reviews and
researches industry inquiries that offer innovative approaches and
solutions submitted in support of DHS's response to COVID-19. The PAIR
Team conducts market research to determine the potential viability of
offered solutions and shares their findings with program officials and
contracting personnel across DHS. Industry capabilities and offerings
reviewed to date include information technology (IT) solutions for
contact tracing, health screening, alternatives to PPE, disinfection
products, medical supplies, and others.
As part of the Federal efforts to scour the globe for PPE and
consider all opportunities, FEMA and its Federal partners explored
thousands of leads both across the country and overseas. Whether a lead
came from the White House Coronavirus Task Force, members of Congress
representing businesses in their State, or through an enterprise's
unaffiliated inquiry, FEMA processed all leads through standard vetting
procedures and the Federal procurement process. To be clear, DHS
follows the law and all applicable procedures, including those
prescribed by the FAR, in entering into contracts. To ensure the
integrity of the process, FEMA established a firewall between those
responsible for identifying leads and those responsible for
accomplishing the purchase.
Additionally, my office, in partnership with the Department's
Office of the Chief Readiness Support Officer, established a
centralized ordering process to utilize the funds DHS received under
section 3618 of the CARES Act for Departmental PPE needs.
Innovative Solutions
We have used various methods across the Department to seek
innovative solutions that support our COVID-19 response effort. I have
long been an advocate of innovative approaches to our work, and the
COVID-19 response is no exception.
FEMA used an open solicitation that immediately alerted industry to
all the COVID-19 PPE and related items that FEMA needed. The open
solicitation approach covered a broad number of items and saved
significant time compared to posting separate solicitations for each
item. FEMA's approach avoided a lengthy evaluation process while
obtaining necessary items at fair and reasonable prices as quickly as
possible.
DHS released a general solicitation in April 2020 using our
Commercial Solutions Opening Pilot Program Authority for innovative
commercial solutions relevant to the DHS response to COVID-19 and other
microbial threats. The purpose of the solicitation is to obtain
innovative commercial products that may help meet our new and emerging
mission needs that have resulted from the COVID-19 pandemic and to
prepare us as we consider future outbreaks or similar threats. Vendors
may propose solutions in any of several broad categories to include PPE
alternatives, decontamination or disinfection solutions, contact
tracing solutions, screening solutions, and other IT categories. The
solicitation will remain open until August 31, 2020.
In addition, we partnered with other DHS offices and industry to
identify innovative ways to obtain and distribute needed supplies and
to enable greater use of the supplies in our inventory. For example,
the DHS procurement team worked with U.S. Customs and Border Protection
to obtain a donation from Exxon Mobil Chemical Company of medical-grade
hand sanitizer for distribution by the FEMA National Response
Coordination Center. Approximately 20,000 gallons were delivered weekly
to first responders and hospitals over a 6-week period.
conclusion
The Chief Procurement Office remains fully committed to ensuring
the Department has the products and services needed to fulfill its
critical mission to safeguard the American people, our homeland, and
our values. We will continue to look for every opportunity to increase
the efficiency and effectiveness of our policies and processes to
ensure the integrity of the supply chain throughout the procurement
process. We will seek out new ideas and innovations to get the best
possible solutions to the people in the field as quickly as possible,
while being good stewards of taxpayer dollars.
Thank you again for the opportunity to testify today, and I look
forward to your questions.
______
U.S. Department of Homeland Security
Washington, DC 20528
Assistant Secretary for Legislative Affairs
August 13, 2020
The Honorable Charles E. Grassley
Chairman
U.S. Senate
Committee on Finance
Washington, DC 20510
Dear Chairman Grassley:
I write to respectfully request this letter be entered into the hearing
record to correct a statement made by the Department of Homeland
Security (DHS) at a recent hearing.
The DHS Chief Procurement Officer, Soraya Correa, testified before the
Senate Committee on Finance on July 28, 2020, at the hearing entitled,
``Part 1: Protecting the Reliability of the U.S. Medical Supply Chain
During the COVID-19 Pandemic.'' During her testimony, she was asked why
the Federal Emergency Management Agency (FEMA) awarded a contract to
the company Fillakit. Ms. Correa stated that Fillakit had an emergency
use authorization (EUA) provided by the Food and Drug Administration
(FDA).
Subsequent to the hearing, Ms. Correa learned she had received
inaccurate information concerning Fillakit having an EUA. FEMA
contracting officials confirmed that Fillakit did not receive an EUA.
Instead, FEMA awarded the Fillakit contract after they confirmed that
the FDA allowed the type of alternative test kit media that Fillakit
proposed. FDA has also confirmed that Fillakit did not receive an EUA
for the test kits acquired by FEMA. Prior to signing the contract, FEMA
did perform the required reviews to determine that Fillakit was
eligible for a contract award and able to perform the contract before
FEMA signed the contract.
This letter is submitted to ensure that the record is accurate. Thank
you for your understanding and for your support of this request.
Respectfully,
Beth Spivey
Assistant Secretary for Legislative Affairs
______
Questions Submitted for the Record to Soraya Correa
Questions Submitted by Hon. Chuck Grassley
low-income communities
Question. Last month, the CDC reported that minorities are being
disproportionally impacted by COVID-19 and are 3 to 4 times more likely
to be hospitalized by the virus. Many of these individuals are also
low-income, and are struggling to afford housing, food, and medical
care. It is paramount that we do not overlook the needs of this most
vulnerable population during the pandemic.
How is your office working with industry and other DHS components
to ensure that hospitals that serve low-income communities receive
lifesaving medical equipment?
Answer. The U.S. Department of Homeland Security's (DHS) Office of
the Chief Procurement Officer (OCPO) is not authorized to provide
medical equipment to hospitals. The U.S. Department of Health and Human
Services (HHS) has this authority under title 42. The OCPO will assist
HHS in meeting its mission if called upon to do so.
prioritizing businesses
Question. How is your office prioritizing minority-owned, veteran-
owned, and women-owned small businesses who seek to provide aid and
support to the Federal Government during the pandemic? Please provide
data on the number of small businesses that have reached out to your
office with offers of aid. Please break out the data by type of small
business, product and/or service offered, and outcome of theses
discussions. If your office does not collect this type of data, please
explain.
Answer. OCPO established a team to receive general information from
companies that wanted to aid DHS during the pandemic, but the team did
not gather information on the size of the companies that were offering
the aid. This type of information was not needed to determine whether
the company was a viable supplier.
The U.S. Department of Homeland Security (DHS) remains a leader in
Federal small business contracting. Preliminarily, the available data
indicates that DHS will award over $21 billion in prime contracts and
that $7.6 billion of that amount will be awarded to small businesses.
This equates to almost 36 percent of DHS dollars awarded to small
businesses. For small disadvantaged businesses, the preliminary FY 2020
prime contracting data indicates that over $3.2 billion dollars or 15.4
percent of dollars were awarded to these firms. This amount is 10.4
percent higher than the statutory goal of 5 percent.
advance procurement
Question. What steps can DHS and its components take to procure
goods and services in advance of national emergencies in the future?
From a procurement perspective, what lessons have we learned from the
coronavirus pandemic?
Answer. DHS routinely assesses future needs as part of its
strategic sourcing and category management program. If there is a
likely need to procure goods and services to meet DHS's mission needs
in the future, DHS will consider creating contracting vehicles to
ensure that when the need arises, DHS can procure items efficiently.
While we will continue to identify lessons learned as we progress
through the pandemic, we have identified the following lessons learned:
Consistent and persistent communications, collaboration, and
connectivity channels, both internally and externally with industry and
partner agencies are critical.
Performing the contracting process through electronic tools
allowed DHS to award and administer contracts remotely so the DHS
workforce and industry counterparts remained safe while meeting DHS's
mission needs.
The COVID-19 Commercial Solutions Opening Pilot solicitation
created an opportunity for DHS to find innovative solutions that could
help with the COVID-19 response, as well as respond to similar
microbial threats in the future.
Establishing procurement flexibilities immediately after the
national emergency was declared allowed the Heads of the Contracting
Activities to respond nimbly to emerging operational needs. Providing
support to the operational teams as issues arose including assessing
inquiries, interpreting section 3610 of the CARES Act and addressing
staffing needs enabled the contracting activities to remain focused on
purchasing the needed items efficiently.
secure the supply chain
Question. What steps is your office taking to secure the U.S.
medical supply chain as we go into the fall and beyond?
Answer. U.S. Customs and Border Protection (CBP) has the lead
within DHS, in concert with other offices, on securing the medical
supply chain. CBP will support HHS and others as they determine which
medical supplies are needed for DHS's mission and the appropriate steps
needed to ensure defective and counterfeit items are not ordered or
received. OCPO has added safeguards to its review of vendors that do
not have a history of providing the Department with a product. In these
cases, the contracting officer (CO) will perform additional checks to
ensure DHS does not award to a company that is likely to deliver
defective or fraudulent items.
______
Questions Submitted by Hon. Ron Wyden
ice ppe
Question. The health conditions at ICE detention facilities during
the pandemic have been appalling. More than 3,700 detainees and
hundreds of staff have tested positive for the disease. Prior to the
pandemic, there was a long list of disturbing issues such as
overcrowding, abusive and negligent practices, and lack of adequate
medical care. In recent weeks, the inspector general has reported that
ICE doesn't have sufficient PPE. Such issues fit with previous
inspector general reports that raised concern inadequate pandemic
preparedness, including having enough PPE on hand, at ICE and other DHS
agencies.
As the chief procurement officer for DHS, what is the status on PPE
now?
Answer. The status and inventory management of personal protective
equipment (PPE) at ICE facilities is monitored and overseen by
appropriate ICE officials. When a need for additional PPE is identified
for employees or detainees, it would normally be procured by ICE
contracting officials. In an effort to support ICE during the pandemic,
the procurement of some PPE was coordinated through the DHS Office of
the Chief Readiness Support Officer and the Office of Procurement
Operations at DHS Headquarters. Please note, there is no shortage of
PPE at ICE-controlled detention centers. Some facilities are the
responsibility of State and local governments while others are managed
by an ICE contractor. In those cases, the contractor is required to
provide PPE for their employees, visitors, and detainees. As of August
31, 2020, none of these contractors have reported to the Office of the
Chief Procurement Officer that they have shortages of PPE.
No vendor has reported to the ICE Office of Acquisition Management
any issues of acquiring PPE. Vendors are required to adhere to all
detention standards contained in the contracts and agreements,
including healthy and safety requirements, and ICE ERO issued Pandemic
Response Requirements to all vendors that incorporated additional
health and safety requirements. Provision of PPE is already within
scope of current detention contracts and agreements, and vendors were
reminded of this earlier this year.
Question. Is it possible for ICE to ensure the health and safety of
everyone at these facilities, if it lacks sufficient PPE?
Answer. The Centers for Disease Control and Prevention (CDC) is the
authoritative source for information regarding health and safety
standards. The appropriate ICE officials are responsible for
implementing the safety protocols at ICE facilities. For instance,
during the intake process ICE tests detainees who arrive at ICE-owned
facilities for COVID-19. ICE houses detainees separately (cohorts) from
the general population for 14 days after their arrival and monitors
them for symptoms. This process protects the new detainee who tests
positive for COVID-19 and helps to prevent the spread of COVID-19 to
others in the facility.
Further, the ICE Health Service Corps (IHSC) provides direct daily
care to detainees housed at 20 IHSC designated facilities throughout
the Nation. IHSC provides medical case management and oversight for all
other ICE detainees housed at non-IHSC-staffed detention facilities
across the country. As previously mentioned, no vendor has reported to
the ICE Office of Acquisition any issues of acquiring PPE.
atd
Question. Do you agree that ICE must maximize its use of
alternatives to detention to reduce the risk to staff and detainees
immediately?
Answer. ICE has many options to reduce the potential spread of
COVID-19 among detainees and staff at detention facilities. In March,
ICE's Enforcement and Removal Operations convened a working group
between medical professionals, disease control specialists, detention
experts, and field operators to identify enhanced steps to minimize the
spread of the virus. Based on CDC's guidance, ICE has since evaluated
its detained population to identify those who might be at higher risk
for severe illness as a result of COVID-19, and to determine whether
continued detention of those individuals was appropriate. Resultingly,
ICE released over 900 individuals after evaluating their immigration
history, criminal record, potential threat to public safety, flight
risk, and national security concerns. This same methodology is
currently being applied to other potentially vulnerable populations
currently in custody and while making custody determinations for all
new arrestees.
Additionally, detainees who meet CDC criteria for epidemiologic
risk of exposure to COVID-19 are housed separately from the general
population. ICE places detainees with fever and/or respiratory symptoms
in a single medical housing room, or in a medical airborne infection
isolation room specifically designed to contain biological agents, such
as COVID-19. This action prevents the spread of the agent to staff,
other individuals at the facility and the general public. ICE
transports individuals with moderate to severe symptoms, or those who
require higher levels of care or monitoring, to appropriate hospitals
with expertise in high-risk care. Detainees who do not have fever or
symptoms, but meet CDC criteria for epidemiologic risk, are housed
separately in a single cell, or as a group, depending on available
space. ICE reviews CDC guidance daily and continues to update protocols
to remain consistent with CDC guidance.
quality oversight
Question. In a recent interview, you said it is important that DHS
maintain the ``right level of compliance'' in its contracting
activities, but that not every ``i can be dotted or t crossed.'' You
expressed concern that 100-percent compliance might mean the Department
would ``not be getting things out as quickly as you need to.''
This interview was posted online in May, in the middle of the
COVID-19 pandemic, when FEMA's contracting practices, which are under
your purview, have had serious problems. FEMA has entered large
contracts with companies that had no prior record of government
contracts or importing medical supplies. Some of these companies were
formed just days before being granted a FEMA contract, and some
contracts have since been canceled for non-performance.
But DHS's contracting problems didn't start with the coronavirus.
The Inspector General and Government Accountability Office have
expressed concern for years about contracting processes at DHS and its
agencies. To this end, I would like to understand the guard rail on
FEMA's procurement process.
Please explain what has been done to ``right the ship'' and make
sure there is increased oversight regarding quality of the procured
PPE. Please explain how these procedures are applied to imported
products, versus domestically produced products.
Answer. As part of the contract for distribution, both the Federal
Emergency Management Agency (FEMA) and the Defense Logistics Agency's
(DLA) vendors have an extensive PPE quality assurance process that
includes fraud detection, product sample review, and product
inspection/testing. The vendor also provides for replacement of damaged
goods or technical assistance if the situation arises. As an example, a
few nursing homes reported challenges with the Level 3 ``blue gowns,''
and in response, the vendor provided more detailed instructions for the
customer.
In each direct vendor shipment, the vendor provides contact
information for the staff should any issues arise with PPE shipments.
If PPE items are damaged or missing, staff can contact the vendor with
any issues pertaining to shipments. Once the customer contacts the
hotline, if a replacement is needed, items are usually shipped within
24-48 hours. If and when fraud is discovered with imported shipments,
notification goes to acquisition teams for fraudulent activity and CBP
for future screening.
These quality standards are also used during the Department's
inspection and acceptance activities for PPE items and apply whether
the item is manufactured domestically or imported from another country.
DHS relies on these standards to ensure PPE performs effectively.
Additionally, CBP conducts inspections of shipments of imported
products and works with ICE Homeland Security Investigations to prevent
as well as find and remove counterfeit and defective PPE from the
medical supply chain. While this effort is independent of the
contracting process, these organizations are available to assist with
inspection of PPE procured for the DHS workforce, when needed.
contracting process
Question. Please explain what has been done to ensure the bidding
and contracting process in the context of the pandemic is meeting the
Federal Acquisition Regulations and other procurement requirements.
Answer. DHS trains each contracting professional on acquisition
related laws, regulations, and policies and warrants COs commensurate
with the level of their training and experience. DHS also uses
appropriate checks and balances to ensure procurements are compliant
with Federal and agency regulations and policies. For example, in
accordance with the Homeland Security Acquisition Manual 3004.7002,
with limited exceptions all contract actions over $500,000 are reviewed
by the policy branch or at least one level above the CO within the
chain of command. The OCPO performs periodic independent oversight
reviews to verify compliance with these reviews as well as other
acquisition laws, regulations and policies.
oversight responsibilities
Question. As the DHS Chief Procurement Officer, what oversight
responsibilities do you have related to reviewing component
procurements, including procurement by FEMA? Please provide citations
and thresholds where appropriate.
Answer. OCPO has oversight responsibilities for DHS procurements.
The Chief Procurement Officer (CPO) ensures each contracting activity
has access to DHS procurement experts to support complex, high value or
other high interest procurements through a Procurement Strategy
Roadmap. The CPO also reviews and approves various pre-award documents
including Acquisition Plans valued over $100 million and all
Justifications and Approvals for other than Full and Open competition
exceeding the statutory thresholds established in the Federal
Acquisition Regulations (FAR).
Additionally, the Procurement Innovation Lab and Oversight and
Pricing Branch are available to assist Component contracting activities
in developing solicitations at all levels, but generally they assist on
those contracts valued above $25 million, to ensure the use of
innovative methods to efficiently and effectively procure goods and
services. OCPO reviews the contract files of half of the DHS
contracting activities each year. These reviews include a statistically
significant sample of contract actions awarded in the previous 12
months and ensures the contracting activities consistently comply with
acquisition laws, regulations and policies. The review also includes
the sharing of best practices and identification and elevation of any
problems for prompt resolution.
Question. How, if at all, has your review of procurements changed
during the response to COVID-19? For example, has your review of
certain high-dollar procurements been waived to more quickly award
contracts in response to COVID-19, and if so, what procurement risks
does that pose?
Answer. The CPO did not change its oversight of procurements in
response to COVID-19. However, the CPO directed the Component Heads of
the Contracting Activities (HCA) to make use of certain flexibilities
authorized in the FAR or acquisition policy to award COVID-19 contract
actions more efficiently and expeditiously, where necessary. In
addition, the OCPO issued Homeland Security Acquisition Manual (HSAM)
Class Deviation 20-01 to suspend certain requirements to facilitate the
rapid procurement of supplies and materials required during the COVID-
19 emergency. These requirements include temporary suspension of:
One-Bid Award Questionnaire. COs are not required to complete
the questionnaire when only one quotation/offer is received in response
to a solicitation.
Procurement strategy roadmap (PSR). Rather than formal
briefings or written documentation for those procurements meeting the
HCA's PSR threshold, HCAs are required to keep the CPO informed of
COVID-19 related procurements.
Acquisition Planning Forecast System (APFS). Completion of the
APFS record is suspended for COVID-related actions over the simplified
acquisition threshold.
Buy American Act (BAA) advance review and approval
requirements. While the CO continued to implement FAR 25.103 and 25.202
to purchase American made products, the CPO delayed the notification
that a needed COVID-19 item was not available as an American made
product at the quantities and delivery schedules required. Instead of
notifying the CPO prior to soliciting industry for a non-American made
product, the CO notified the CPO of the non-availability concurrently
with making the contract award. This did not suspend a CO's
responsibility to ensure the contract file for the effected procurement
includes sufficient documentation to support the exception to the BAA.
components responsibilities
Question. What responsibilities do Components' Heads of Contracting
have to ensure that contracts being awarded in response to COVID-19
have clear requirements and are going to responsible contractors that
are capable of fulfilling them?
Answer. The HCAs are required to ensure that each award is made to
a responsible contractor and that the contracting process complies with
all applicable laws, regulations and policies. The HCAs also foster
collaboration with requirements' owners to ensure that the statements
of work are clear, and the customers' needs are met.
strategic national stockpile
Question. Evidence suggests that the United States was poorly
prepared for a nationwide event like a pandemic, despite years of
warning that an influenza type virus could strike. The Strategic
National Stockpile, as well as stores kept by DHS and FEMA appear
insufficient to address the COVID-19 crisis.
Please clarify how prior to the pandemic your office worked to
ensure sufficient procurement occurred to stock and replenish
stockpiles of PPE, medicine, and other critical products.
Answer. Section 319F-2 of the Public Health Service Act (42 U.S.
Code Sec. 247d-6b) authorizes only the Secretary of Health and Human
Services to make procurement decisions and take procurement actions
regarding the national stockpile. The Act allows the Secretary of
Homeland Security to provide consultation services. For additional
information on this matter, I respectfully refer you to HHS.
potential increases
Question. Given the challenges experienced procuring medical and
testing equipment and supplies, what steps are DHS and its components
taking to prepare for procuring the goods and services needed to
respond to potential increases in COVID-19 cases now and in the future?
Answer. DHS is continuously assessing and preparing to meet the
procurement needs of the Department in response to COVID-19. During the
initial wave of the pandemic, OCPO was a leader in immediately
establishing working groups to support the DHS response to COVID-19.
These efforts included establishing vendor vetting teams for PPE and
non-PPE, and centralized processes for reviewing informal and formal
innovative solutions from industry.
Working with Components and other lines of business at the
Headquarters level, OCPO has a centralized process for procuring PPE
and is currently procuring strategically sourced contract vehicles for
COVID-19 testing solutions. These and many other actions help prepare
DHS to meet future internal needs in response to the pandemic. DHS is
taking other steps to be ready to procure goods and services if there
is an increase in COVID-19 cases, but many of these steps are outside
of the procurement office's purview.
national interest action code
Question. A key mechanism available to agencies, Congress, and the
public for tracking use of contracts in response to COVID-19 is the
National Interest Action code. We understand that, at the current time,
the National Interest Action code for COVID-19 will expire on September
30, 2020.
Given the increases in cases over the past month, do you anticipate
extending the National Interest Action code? If so, for how long?
What factors do you consider when making the decision of how long
to keep a National Interest Action code open?
Answer. The National Interest Action (NIA) code for COVID-19 has
been extended through March 31, 2021.
Question. What factors do you consider when making the decision of
how long to keep a National Interest Action code open?
Answer. DHS, along with the U.S. Department of Defense (DoD),
considers several factors when recommending the extension of a NIA
code. Two of these factors include looking at whether procurement
thresholds raised pursuant to Federal Acquisition Regulation Part 18 in
response to the emergency have returned to their original levels, and
whether the number of actions with the NIA code reported to the Federal
Procurement Data System have significantly decreased.
Question. To what extent do you consider the needs of, for example,
our committee and others in Congress, as well as the American people,
to be able to transparently identify information about contracts the
Federal Government is awarding in response to COVID-19?
Answer. The DHS CPO considers transparency to the American people
to be fundamental for all procurements. Therefore, DHS follows all
applicable laws, regulations and policies to ensure transparency. In
the case of COVID-19, the Office of Management and Budget in their Memo
20-21 directed all agencies to track COVID-19 dollars obligated using a
Disaster Emergency Funding Code (DEFC) in the financial systems, not
the NIA code. This DEFC is then tied back to contract and grant awards
on the USASpending.gov website. This process maximizes transparency to
Congress and to the American people. In addition, it fulfills the
requirements under the Federal Funding, Accountability, and
Traceability Act, which was further refined under the Data Act.
USASpending.gov provides information on all contract and grant spending
in one place, making it easy for the public to find and use this
information.
Note that the NIA code policy was created before USASpending.gov
was developed. The NIA code does not specifically identify emergency
funds obligated under a contract action. In fact, a contract action
identified with an NIA code may contain both COVID-19- and non-COVID-
19-related requirements and funds, making them less transparent to the
Congress and the American people than the information available on
USASpending.gov that uses the DEFC.
Question. In April 2019, GAO recommended that the Memorandum of
Agreement between DHS, DOD, and GSA about the National Interest Action
code be revisited to assess the extent to which the criteria for
closing National Interest Action codes meet long-term visibility needs
for high visibility events and account for the needs of users, such as
FEMA, other agencies, and the Congress. To date, that recommendation is
still open. Has DHS, in coordination with DoD and GSA, done such an
assessment?
Answer. DHS, DoD, and the General Services Administration review
the NIA Code Memorandum of Agreement (MOA) annually in keeping with
project management best practices. The Government Accountability Office
(GAO) recommendation under GAO-19-281 entitled ``Disaster Contracting:
Actions Needed to Improve the Use of Post-Disaster Contracts to Support
Response and Recovery,'' suggested that the MOA agencies consider the
visibility needs for high visibility events and account for the needs
of users, such as FEMA, other agencies, and the Congress when reviewing
the MOA criteria. In response to that recommendation the MOA agencies
revised the MOA criteria in 2019 to clarify that an NIA code would be
closed if there was a consistent decline in the number of contract
actions reported using the NIA designator. The visibility of
information is a consideration of the MOA agencies in each annual
review of the NIA criteria.
fema workforce shortages
Question. GAO's prior work has identified acquisition workforce
shortages at FEMA, particularly at FEMA's regional offices, which have
been involved in communicating information and responding to questions
from State and local governments during the response to COVID-19.
What challenges have these workforce shortages posed for FEMA's
ability to procure medical and testing equipment and supplies in
response to COVID-19?
Answer. FEMA's staffing limitations did not adversely impact FEMA's
ability to procure medical and testing equipment and supplies in
response to COVID-19 and the specific workforce challenges discussed in
the question are not associated with FEMA's contracting workforce. The
CPO monitors and assists the Head of FEMA's contracting activity in
achieving and maintaining the required number of fully trained
contracting professionals. Although FEMA's vacancy rate has fluctuated,
as of August 1, 2020, FEMA had a 7.1-percent vacancy rate in the
contracting career field. FEMA uses all available hiring authorities
and flexibilities to recruit sufficient numbers of highly skilled
contracting professionals.
Question. Has FEMA taken steps to assess its acquisition workforce
and develop a plan, including timelines, to address any gaps, as GAO
recommended in April 2019?
Answer. The gaps that the GAO identified in FEMA's workforce do not
pertain to contracting personnel. The specific steps that FEMA has
taken to assess its non-contracting positions within the acquisition
workforce and develop a plan including timelines to address any gaps is
outside the CPO's purview.
______
Questions Submitted by Hon. Debbie Stabenow
fillakit contract
Question. In response to one of my questions, you stated that when
entering into a contact with Fillakit, FEMA relied on an emergency use
authorization provided to Fillakit by the Food and Drug Administration
(FDA).
FDA has stated that there was no emergency use authorization
awarded to Fillakit and that your statements to the record were
therefore inaccurate.
Please respond to the following: please provide an explanation for
the discrepancy between your statements on the record and FDA's
assertion that Fillakit did not have an emergency use authorization,
and that the FDA was not involved in the contracting process.
Answer. The CPO was provided erroneous information regarding the
contract award to Fillakit. Unfortunately, the DHS Office of the
Inspector General (OIG) has asked that specific information not be
provided and instead this and all questions regarding Fillakit be
referred to the DHS OIG for an accurate and complete response.
Question. Please provide a revised and corrected response to the
request that you detail the criteria for awarding sole-source contracts
and what steps were taken by FEMA to verify the accuracy of any
representations or assurances made by Fillakit.
Answer. All questions regarding Fillakit should be referred to the
DHS OIG so they can provide an accurate and complete response.
fillakit contract letter
Question. On July 6, 2020, Secretary Azar and Administrator Gaynor
received a letter from Senators Stabenow and Peters requesting
information regarding the Fillakit contract. They have yet to receive a
response.
Please provide an explanation for this lack of responsiveness.
Answer. All questions regarding Fillakit should be referred to the
DHS OIG so they can provide an accurate and complete response.
unsuitable testing supplies
Question. Please provide responses to the following: which States
have received testing supplies purchased by FEMA and HHS that have
subsequently been determined to be unsuitable, including those provided
by Fillakit? Please provide a summary of the nature and quantity of the
unsuitable supplies received by each State.
Answer. All questions regarding Fillakit should be referred to the
DHS OIG so they can provide an accurate and complete response.
testing supplies
Question. What steps are FEMA and HHS taking to ensure that any
States, including Michigan, that have received COVID-19 testing
supplies will receive the supplies needed to continue testing at
adequate levels? When can States expect to receive those supplies?
Answer. As of July 13, 2020, the Department of Health and Human
Services (HHS) took over the distribution of testing supplies
nationwide. DHS respectfully defers to HHS on the timeline for the
distribution of testing supplies.
estimated tests
Question. What is the estimated number of COVID-19 tests in the
United States that have been administered with supplies purchased from
Fillakit?
What is the estimated number of COVID-19 tests that States have
been unable to perform due to lack of supplies since FEMA and HHS
issued guidance against using Fillakit supplies on June 20, 2020?
Answer. All questions regarding Fillakit should be referred to the
DHS OIG so they can provide an accurate and complete response.
fillakit contract and statements
Question. Please provide us with copies of any contracts between
FEMA or HHS and Fillakit.
Please provide us with copies of any contractor assurance
statements provided to FEMA or HHS by Fillakit.
Answer. The DHS OIG has respectfully requested that this and all
questions regarding Fillakit be referred to the DHS OIG so they can
provide an accurate and complete response.
verify statements
Question. What steps were taken by FEMA or HHS during the
contracting process to verify the accuracy of any representations or
assurances made by Fillakit?
Answer. All questions regarding Fillakit should be referred to the
DHS OIG so they can provide an accurate and complete response.
fema position
Question. Is it the position of FEMA or HHS that Fillakit is in
breach of contract? If so, what steps are being taken to hold it
liable? If not, why not?
Answer. All questions regarding Fillakit should be referred to the
DHS OIG so they can provide an accurate and complete response.
controls in place
Question. What controls do FEMA or HHS have in place to ensure that
other entities that have been awarded contracts to provide COVID-19
testing supplies are in fact providing supplies fit for COVID-19
testing purposes?
Answer. FEMA received guidance from HHS on the requirements of the
testing products, to include requirements put forth from the CDC. The
contract states the requirement for sterility in the supplies; as this
is a commercially available item. Therefore, FEMA relies on the subject
matter experts with the requirement [program office], receiving the
deliverables, to conduct an inspection as best it can, using the
guidelines it received from HHS/CDC.
In addition, as of July 2020, FEMA and all DHS Components are
required to include the Component medical officer as part of the
decision-making team when selecting the testing processes and supplies
for internal use, to ensure that the appropriate testing supplies are
procured.
______
Questions Submitted by Hon. Robert Menendez
fema's procedures
Question. In April of this year, FEMA awarded Panthera Worldwide a
$55-million procurement contract for 10 million N95 protective masks.
The company failed to deliver the equipment on time and the contract
was canceled. The company had never manufactured N95 masks nor had they
previously distributed medical equipment.
Please provide this committee information on FEMA's procedures when
awarding large disaster contracts for delivery of critical goods.
Answer. FEMA awards all contracts in accordance with the FAR, and
applicable agency supplements. FEMA generally uses full and open
competition in accordance with the FAR to award multiple commercial
contracts or agreements for critical disaster response or recovery
items. For instance, FEMA has multiple award blanket purchasing
agreements for bottled water and meals. These large contracts or
agreements for routine emergency response and recovery items are
negotiated well in advance of the need and include a process to quickly
compete orders among the approved providers to ensure prompt delivery
at a fair and reasonable price.
In accordance with FAR subpart 9.103, the CO must make an
affirmative determination of responsibility before award, and that
responsibility must reflect the requirements of the proposal. To be
determined responsible, a prospective contractor must satisfy the
following requirements: ability to comply with schedule, satisfactory
performance record, and satisfactory integrity and ethics. The award
process includes reviewing the contractor's proposal in concert with
review of Federal Awardee Performance and Integrity Information System
(FAPIIS); Contractor Performance Assessment Reporting System; and
System Award Management (SAM.gov) to assess the contractor's technical,
financial and performance capability.
Question. Were FEMA's contracting procedures followed in the
awarding of the contract to Panthera Worldwide?
Answer. Yes, FEMA followed all laws, regulations and DHS policies
when awarding the Panthera contract.
fema awarding
Question. Why did FEMA sign a high-dollar contract with a company
that is not a trusted medical manufacturer or distributor?
Answer. No purchase or award is made unless the prospective awardee
is determined to be a responsible contractor in accordance with the
requirements of Federal Acquisition Regulation subpart 9.1, Responsible
Prospective Contractors. The review of the company and its proposal
lead FEMA to conclude the offeror would be able to fulfill the
contract. In addition, the CO performed a contractor responsibility
determination in accordance with FAR part 9 and found the contractor
responsible.
On the day of award to Panthera Worldwide, the CO reviewed records
from FAPIIS, and the Excluded Parties List System, now included as part
of SAM.gov. These databases assist Government Contracting Offices with
determining if the contractors have, within the last 5 years, been the
subject of a criminal, civil and/or administrative proceeding at the
Federal or State level in connection with a Federal award that resulted
in a conviction or finding of fault or liability. They also provide
information on Suspensions, Debarments, and active exclusions. When
vendors register in SAM.gov, they have to provide their Taxpayer
Identification Number, and the Federal Government reviews all tax
documents before they are approved and become active in SAM.gov to
accept a government contract. Vendors are required to re-apply with
SAM.gov every 12 months. The CO verified all representations and
certifications were current, accurate, and complete; and ensured no
exclusion existed for the awardee in SAM.gov. Therefore, there was no
information that would have precluded Panthera from receiving an award.
panthera worldwide cancellation
Question. Please provide this committee information on what
happened with FEMA and Panthera Worldwide that led to the cancellation
of the contract.
Answer. Panthera failed to deliver the items ordered by the
required date, and that failure to deliver resulted in termination of
the contract. Panthera received no payments under this contract.
investing in domestic manufacturers
Question. As Chief Procurement Officer at DHS, what steps has your
office taken to identify and invest in domestic manufacturers who are
known and trusted suppliers of PPE to help them ramp up production and
meet demand?
Answer. DHS supports domestic manufacturers and procures PPE from
these sources when it is available to meet DHS needs. In doing so, DHS
adheres to FAR part 25, Foreign Acquisition, which details the
application of the BAA and Trade Agreements Act (TAA), including the
dollar thresholds at which the TAA supersedes the BAA and when
nondomestic trading partners receive equal treatment with domestic
sources. DHS has a supplement to the FAR, known as the Homeland
Security Acquisition Regulation (HSAR), which addresses statutes and
other matters unique to DHS, such as the Kissell Amendment. The HSAM-
DHS's internal acquisition policies and procedures--implements or
supplements requirements of the FAR and HSAR.
______
Questions Submitted by Hon. Benjamin L. Cardin
moving supply chains
Question. In Maryland and across the country, shortages of PPE have
crippled our ability to protect our front-line workers from COVID-19.
Though they have taken piecemeal actions, there has been a complete and
total absence of a national plan from the Trump administration to
address PPE shortages. The result has been States, localities, health-
care systems, and other industries deemed essential fending for
themselves and competing against one another to procure PPE.
The Trump administration could have taken numerous actions to
increase the supply of PPE, including fully utilizing the Defense
Production Act. Had the Trump administration used the DPA, we might
have developed better domestic capabilities to address PPE supply
shortages. In lieu of substantive action or direction by this
administration, I am curious to hear the panel's thoughts on actions
the private sector is taking on their own initiative.
What are the plans to move portions of supply chains in-country in
order to protect against reliance on foreign country resources?
Answer. Effective use of the Defense Production Act (DPA) and other
authorities such as the CARES Act have allowed the United States to
grow the domestic industrial base to meet the increased demands
associated with operating in a COVID-19 environment. We are now
starting to see these actions result in increased production capacity.
As stated earlier, domestic production of N95 masks is well underway.
Growth in glove, gown, and surgical mask production is also gaining
momentum. In addition, the USG is pursuing efforts to now on-shore
critical pharmaceuticals.
To date, we are witnessing increased procurement of PPE
substantially from domestic and international sources and steps are
being made to increase domestic manufacturing capabilities and capacity
to reduce the reliance on foreign markets. Already, a robust U.S. oil
refining industry is meeting domestic demand, as well as, a substantial
overseas demand for polypropylene. Through various partnerships, the
Federal Government and domestic manufacturers are expanding the
capability to conduct more on-shore extrusion to increase domestic
poly-fabric production. To further aid our domestic manufacturing
industry and overcome immediate shortages and meet future demand, FEMA,
HHS and DoD used DPA authorities to ensure prioritization of Federal
contracts on PPE production lines and to expand domestic production
capacity for melt-blown fiber/filter media. The joint government team
let industrial base expansion contracts to offset foreign market risk
associated with manufacture of poly-fabrics, and ultimately final
assembly of PPE.
ramping up production
Question. What are suppliers doing to ramp up production now to
minimize need for allocations to hospitals?
Answer. Effective use of the DPA and other authorities such as the
CARES Act have allowed the United States to grow the domestic
industrial base to meet the increased demands associated with operating
in a COVID-19 environment. We are now starting to see these actions
result in increased production capacity. As stated earlier, domestic
production of N95 masks is well underway. Growth in glove, gown, and
surgical mask production is also gaining momentum. In addition, the
U.S. Government is pursuing efforts to now on-shore critical
pharmaceuticals.
To date, we are witnessing increased procurement of PPE
substantially from domestic and international sources and steps are
being made to increase domestic manufacturing capabilities and capacity
to reduce the reliance on foreign markets. Already, a robust U.S. oil
refining industry is meeting domestic demand, as well as, a substantial
overseas demand for polypropylene. Through various partnerships, the
Federal Government and domestic manufacturers are expanding the
capability to conduct more on-shore extrusion to increase domestic
poly-fabric production. To further aid our domestic manufacturing
industry and overcome immediate shortages and meet future demand, FEMA,
HHS, and DoD used DPA authorities to ensure prioritization of Federal
contracts on PPE production lines and to expand domestic production
capacity for melt-blown fiber/filter media. The joint government team
let industrial base expansion contracts to offset foreign market risk
associated with manufacture of poly-fabrics, and ultimately final
assembly of PPE.
defective ppe
Question. Maryland health providers have been fortunate to not have
received exceptional amounts of counterfeit personal protective
equipment like some other States. However, some of our long-term health
facilities reported that they received an order of 6,000 medical gowns
that were counterfeit. This senior care provider association returned
the counterfeit gowns to the vendor and refused delivery of a
subsequent order.
This same senior care provider association also reported that many
Maryland long-term care facilities received gowns from FEMA that were
not usable as effective personal protective equipment as they were
actual bags with holes cut out for a head.
When a health provider receives a shipment of defective PPE from
the Federal Government, for example FEMA, who should they report the
issue to?
Answer. The health provider should report any shipment of defective
PPE to the U.S. Food and Drug Administration (FDA), as well as the
department or agency from which it was received. If received from FEMA,
it should be reported to the State's respective FEMA Region.
Question. What steps does FEMA take to ensure the recipient
receives a quality product in the Federal PPE shipments?
Answer. If FEMA procures PPE, FEMA will ensure that the contract
cites the Federal regulation and the technical specification as
required by the FDA.
lead on hoarding and price gouging
Question. On March 23, 2020, President Trump signed an executive
order (EO 13910) to prevent hoarding of health and medical resources
necessary to respond to COVID-19 within the United States. The order
prohibits any person from accumulating designated materials such as
personal protective equipment (1) in excess of the reasonable demands
of business, personal, or home consumption or (2) for the purpose of
resale at prices in excess of prevailing market prices.
This April, there were reports that the Department of Justice (DOJ)
and the Department of Health and Human Services (HHS) seized hundreds
of thousands of N95 respirators, gloves, and surgical masks from a New
York City man allegedly hoarding these supplies. However, when my
office reached out to both DOJ and HHS for an update on enforcement
actions and policy guidance, my staff was told that the Department of
Homeland Security (DHS) was now the agency in charge of enforcement and
policy guidance for this executive order.
Has DHS been officially designated the lead on this executive order
to prevent hoarding and price gouging?
Answer. No, DHS has not been officially designated the lead on this
executive order to prevent hoarding and price gouging.
enforcement actions
Question. Is DHS working with HHS to release additional policy
guidance on the executive order in regards to what constitutes hoarding
and price gouging in excess of the prevailing market price?
What enforcement actions to date has DHS taken to ensure that
people are not hoarding materials or price gouging our health system,
health providers, and State and local governments?
Answer. No additional administrative materials are being
collaborated on at this time.
Question. What enforcement actions to date has DHS taken to ensure
that people are not hoarding materials or price gouging our health
system, health providers, and State and local governments?
Answer. As DHS has not been officially designated the lead on the
executive order to prevent hoarding and price gouging, DHS has not
taken any enforcement actions for such cases against any health system,
health providers, or State and local government.
The Department of Justice has assembled a COVID-19 Hoarding and
Price Gouging task force to identify cases of price gouging and may
alert FEMA to some shipments and stockpiles of PPE. Under DPA
authorities, FEMA may then compel a price gouger to sell PPE in its
control to FEMA at prevailing market prices, not gouging prices.
secure the supply chain
Question. Throughout this COVID-19 pandemic, many State and local
health departments and health providers have felt at the mercy of a
wholly inadequate medical supply chain. During March, April, and May,
my office fielded calls from local health departments and providers who
were unable to obtain sufficient personal protective equipment for
their staff.
Fortunately, the Maryland Hospital Association and the Maryland
Department of Health have worked closely together to ensure our State
has adequate PPE throughout the fall. However, nursing homes, home
health providers, and other essential health workers still struggle to
find PPE. We must have sufficient PPE for our frontline workers in
order to successfully overcome this public health crisis.
What steps is your agency and/or department taking to secure the
U.S. medical supply chain as we go into the fall?
Answer. Under title VII of the DPA, FEMA formed the ``Voluntary
Agreement for the Manufacture and Distribution of Critical Healthcare
Resources Necessary to Respond to a Pandemic'' to facilitate
collaboration with the private sector during a pandemic. This agreement
is valid for 5 years and will assist with the ongoing response to the
COVID-19 pandemic and any future events.
Additionally, FEMA published a Temporary Final Rule (TFR) in the
Federal Register on August 10, 2020 allocating certain health and
medical resources for domestic use during the COVID-19 pandemic. This
TFR is an extension and modification of a TFR published on April 10,
2020 which outlined the implementation of the President's Memorandum,
``Allocating Certain Scarce or Threatened Health and Medical Resources
to Domestic Use.'' This extension allows the TFR to remain in effect,
with certain modifications, through December 31, 2020. FEMA published a
Fact Sheet to answer questions about the TFR, its exemptions, and its
implementation.
DHS Office of the Chief Information Officer (OCIO) Cybersecurity
Supply Chain Risk Management (SCRM) Program is currently responsible
for the evaluation of DHS's internal Information and Communications
Technology (ICT) use for the Department. This evaluation would
encompass an ICT SCRM review of medical ICT should DHS purchase/use,
but not specifically end products such as ``test tubes.'' For example,
this type of fraudulent activity may be best evaluated by the DHS OIG
Investigations office. Their role is to look into fraudulent aspects
related to the subject of this request.
DHS OCIO continues to work with OCPO to address risk as we procure
the appropriate future medical supplies to meet departmental needs.
Question. Do you need additional authorities from Congress to
secure the supply chain? If so, what authority do you need?
Answer. Securing the supply chain is an ongoing priority for the
Department. The Chief Information Officer and the Chief Information
Security Officer are assessing authorities the Department may need. To
date, they have not identified any specific authorities the Department
immediately needs to implement its SCRM process.
distribution challenges
Question. What challenges have you faced and continue to face in
obtaining PPE and distributing it to State and local governments?
Answer. DHS does not procure PPE for distribution to State and
local governments at this time. FEMA received a delegation from HHS
pursuant to the Stafford Act to obtain and assist HHS in distributing
PPE in March 2020. This delegation was transferred to DLA effective
June 5, 2020. DLA has not advised my office that they are currently
experiencing any issues obtaining PPE or distributing it to State and
local governments. However, DHS respectfully defers you to DLA for
additional information on this matter.
______
Questions Submitted by Hon. Sherrod Brown
riot personnel
Question. The Department of Homeland Security's presence at
demonstrations for racial justice has been well-documented at multiple
cities across the country.
Please identify the DHS personnel that were dispatched to respond
to demonstrations for racial justice, including the number of
personnel, the rank of personnel, and the DHS department from which the
personnel were dispatched.
Answer. The Department provided robust support to our State and
local law enforcement partners due to the civil unrest after the death
of Mr. George Floyd. This has included standing up the Protecting
American Communities Task Force to ensure that iconic monuments and
Federal property are protected. Over the 4th of July weekend, the
following entities deployed law enforcement officers to protect iconic
property:
Federal Protective Service (FPS): 97.
CBP: 58.
U.S. Immigration and Customs Enforcement (ICE): 38.
Transportation Security Administration (TSA): 18.
U.S. Secret Service: 3.
Over the 4th of July weekend, the Department deployed to
Washington, DC, Pennsylvania, Virginia, Oregon, Maryland, and the State
of Washington.
Additionally, the Department has a continued presence in Portland,
Oregon to protect Federal property against violent opportunists. As of
August 25, the following DHS entities were deployed:
FPS: 91.
CBP: 62.
ICE: 47.
DHS Office of Intelligence and Analysis: 2.
Question. Please identify the individual responsible for making the
decision to dispatch DHS personnel to respond to demonstrations for
racial justice.
Answer. The Department's leadership provides overall direction for
deployment due to civil unrest. The Office of Operations Coordination
facilitates coordination and synchronization between Components and the
interagency to ensure efficient and effective deployment. Each of the
Department's Operational Components has its own respective command and
control structure to ensure appropriate deployment for respective
missions.
riot equipment
Question. Please identify the equipment or vehicles that were
deployed to communities in response to demonstrations for racial
justice. Please provide details on the use of that equipment at each
location to which it was deployed, including whether any of the
equipment was involved in any interactions with demonstrators that
resulted in injury or casualty.
Answer. The Department deployed in multiple cities across the
United States to protect American communities. This included the
deployment of personnel and assets.
use of force investigations
Question. Were any DHS personnel involved in any interactions with
demonstrators that resulted in injury or casualties?
Answer.
------------------------------------------------------------------------
State/Local/Tribal LEO
Federal LEO Injuries Injuries
------------------------------------------------------------------------
May/June nationwide 147 930
civil unrest
------------------------------------------------------------------------
Portland \1\ 343 21
------------------------------------------------------------------------
\1\ As of August 25, 2020.
Additionally, one FPS officer was shot and killed protecting
Federal property in Oakland, CA. We honor the life and legacy of
Officer Patrick Underwood, his family, and the men and women of FPS
that sacrifice their safety to protect Federal employees and our
homeland.
Question. Please provide details for each interaction that resulted
in injury or casualty, including the status of an investigation by DHS
and any other agency into the interaction.
Have any DHS personnel been reprimanded for use of excessive force
or other infractions committed during their deployment in response to
demonstrations for social justice?
Please provide details on the number of personnel, the infractions
for which the personnel were cited, and the actions taken against
personnel who were cited.
Answer. The Department cannot provide a written response due to
pending investigations, including those being conducted by the OIG.
grant programs
Question. Please identify the grant programs through which States
and localities can fund purchases of equipment or vehicles for law
enforcement use.
Answer. While there is no DHS program that is dedicated or specific
for this purpose, there are a few FEMA-administered grant programs that
allow the purchase of equipment or vehicles for law enforcement (LE)
use:
Homeland Security Grant Program (HSGP) (includes the State
Homeland Security Program, Urban Area Security Initiative, and
Operation Stonegarden): Recipients (e.g., the State Administrative
Agency) and subrecipients are permitted to purchase LE equipment or
vehicles, subject to statutory and regulatory requirements and
limitations in the applicable Notice of Funding Opportunity, the
Preparedness Grants Manual, and the Authorized Equipment List.
Port Security Grant Program (PSGP): Recipients are permitted to
purchase LE equipment or vehicles, subject to statutory and regulatory
requirements and limitations in the applicable Notice of Funding
Opportunity, the Preparedness Grants Manual, and the Authorized
Equipment List.
Transit Security Grant Program (TSGP): Recipients and
subrecipients are permitted to purchase LE equipment or vehicles,
subject to statutory and regulatory requirements and limitations in the
applicable Notice of Funding Opportunity, the Preparedness Grants
Manual, and the Authorized Equipment List.
Tribal Homeland Security Grant Program (THSGP): Recipients and
subrecipients are permitted to purchase LE equipment or vehicles,
subject to statutory and regulatory requirements and limitations in the
applicable Notice of Funding Opportunity, the Preparedness Grants
Manual, and the Authorized Equipment List.
Additionally, FEMA Information Bulletin (IB) 426 (Guidance to
Recipients and Subrecipients of FEMA Preparedness Grants Regarding
Implementation of Executive Order 13809 Restoring State, Tribal, and
Local Law Enforcement's Access to Life-Saving Equipment and Resources,
November 1, 2017) reinforces that grant funds may not be used for the
purchase of equipment not approved by DHS/FEMA, and lists specifically
prohibited items including:
Weapons and weapons accessories.
Firearms.
Ammunition.
Grenade launchers.
Bayonets.
Weaponized aircraft, vessels, or vehicles of any kind with
weapons installed.
As further detailed in IB 426, equipment intended to be used for
riot suppression including riot batons, riot helmets, and riot shields
are an unallowable expense under any FEMA preparedness grant program.
Question. Please identify whether any equipment or vehicles used by
State or local law enforcement to respond to demonstrations for social
justice were funded through a DHS grant program. Please provide the
specific equipment, the State or locality that purchased it through a
DHS grant program, and the grant program that provided funding for the
equipment or vehicles.
Answer. The purpose of PSGP is to implement Area Maritime
Transportation Security Plans and facility security plans, so any
requests for funding must be used to correct U.S. Coast Guard-
identified port vulnerabilities and ensure compliance with the security
plans per 46 U.S.C. Sec. 70107. The purpose of TSGP is to fund security
improvements for public transportation agencies, and all requests for
funding must be used to address items included in a security assessment
or further a security plan per 6 U.S.C. Sec. 1135. Any and all
purchases must comply with applicable statutory and regulatory
requirements, as well as limitations in the applicable Notice of
Funding Opportunity, the Preparedness Grants Manual, and the Authorized
Equipment List.
Additionally, and as noted in the previous response, equipment
intended to be used for riot suppression including riot batons, riot
helmets, and riot shields are an unallowable expense under any FEMA
preparedness grant program. While it is possible that allowable
equipment or vehicles that were purchased using FEMA-administered grant
funding were used in response to demonstrations or civil unrest, FEMA
is not aware of any such instances.
Question. Please also indicate whether any DHS-funded equipment or
vehicle was involved in any interactions with demonstrators that
resulted in injury or casualty. Please provide details on each
interaction in which DHS-funded equipment was used and resulted in
injury or casualty.
Answer. We are unaware if any DHS-funded equipment or vehicles were
involved in any interactions with demonstrators that resulted in injury
or casualty. In addition, DHS grant funding is not tracked to specific
equipment or vehicles.
cbp spending
Question. Last year, multiple children died in CBP custody and CBP
claimed they didn't have enough resources to provide adequate medical
care to the families who were arriving at the southern border. In
response, Congress provided emergency funding and appropriated funding
specifically for humanitarian needs and yet instead of spending money
on medical care, food, and clothing, like we instructed, CBP bought
dirt bikes and ATVs, upgraded their computers, purchased supplies for
their canine program, and fixed their sewer system. In response to
this, the GAO issued a legal decision in June finding that this
spending was very likely illegal, as a violation of the Antideficiency
Act.
As the Chief Procurement Officer for the Department, can you
explain this complete mismanagement of funds? If Congress instructs
that money be spent on ``consumables and medical care,'' why would CBP
think it's okay to spend that money on ATVs?
In light of this GAO decision, is DHS making any changes to its
procurement processes to make sure this does not happen again?
Answer. Although the GAO stated that CBP obligated some
appropriated funds for purposes other than consumables and medical
care, it is important to note that: (1) all obligations were for
lawfully authorized consumable goods and services, such as food and
hygiene products, as well as medical care goods and services including
defibrillators, masks, and gloves needed to accomplish CBP's mission
and agency operations in the midst of an unprecedented humanitarian
crisis; and (2) only a very small percentage of these obligations were
inaccurately categorized.
Specifically, in response to GAO's legal opinion, CBP counsel and
others carefully reviewed all obligations and determined that the
majority--including the vehicle purchases--were, in fact, properly
charged. In addition, a CBP Office of Finance analysis determined that
these obligations only represented 0.35 percent of the $1.1B
supplemental bill, and $3.9M (or 3.48 percent) of the total $112M
consumables and medical care line item. CBP is in the process of
remedying the categorization of the transactions by making the
appropriate accounting adjustments and has already taken steps to see
that the remaining 2019 emergency supplemental appropriations act
expenditures are charged appropriately in the first instance. CBP takes
the need to safeguard taxpayer dollars appropriated by Congress very
seriously and is committed to accurately recording all of its
obligations.
Question. Does DHS have any systems in place to ensure that when
Congress appropriates money for a specific purpose, the money is
actually spent that way?
Answer. DHS follows the budget execution and management control
regulations found in the Office of Management and Budget (OMB) Circular
A-11 as well as section 2.4 of the DHS Financial Management Policy
Manual, ``Budget Execution,'' which supplements the OMB guidance. The
purpose of section 2.4 is to ensure that budgeted resources are used
properly and accounted for consistently during the execution process,
in full compliance with the Anti-Deficiency Act (ADA) (Pub. L. 97-258,
as amended). Further, DHS requires resource managers to complete an ADA
training course every 2 years. Newly hired resource managers have 60
calendar days from the entry-on-duty date to complete their initial
training.
Question. In light of this GAO decision, is DHS making any changes
to its procurement processes to make sure this does not happen again?
Answer. No, the OCPO already trains all DHS contracting
professionals on appropriations law principles. A representative from
the Chief Financial Officer's Office reviews each procurement and
certifies that the type of funding is appropriate for the procurement
in accordance with appropriations law, regulation and DHS policy before
the contracting officer is authorized to sign the contract.
______
Prepared Statement of Steve Francis, Assistant Director, Global Trade
Investigations Division; and Director, National Intellectual Property
Rights Coordination Center, Immigration and Customs Enforcement,
Department of Homeland Security
introduction
Chairman Grassley, Ranking Member Wyden, and distinguished members
of the committee, thank you for the opportunity to testify before the
committee on U.S. Immigration and Customs Enforcement (ICE) Homeland
Security Investigations' (HSI) response to those exploiting the
Coronavirus Disease 2019 (COVID-19) pandemic.
As the largest investigative agency within the U.S. Department of
Homeland Security (DHS), HSI investigates and enforces more than 400
Federal criminal statutes, including the U.S. customs laws under title
19 of the United States Code, and general Federal crimes under title 18
of the United States Code, as well as many others. HSI Special Agents
use this unique and broad statutory authority to investigate all types
of cross-border criminal activity and work in close coordination with
our Federal, State, local, tribal, and international partners in a
unified effort to target those nefarious actors trying to capitalize on
the COVID-19 pandemic through fraud.
COVID-19 is a worldwide pandemic affecting nearly every country in
the world. Despite widespread illness and death caused by COVID-19,
individuals and organizations operating around the globe are actively
seeking to exploit the pandemic for illicit financial gain. The illicit
schemes these entities employ compromise legitimate trade and financial
systems, threaten the integrity of the U.S. border, and endanger the
safety and security of the American public. In April 2020, HSI launched
Operation Stolen Promise to utilize the agency's unique authorities,
robust cyber capabilities, and strategic partnerships worldwide to
protect the Homeland from the increasing and evolving threat posed by
COVID-19-related fraud and criminal activity.
covid-19-related criminal activity
As the COVID-19 pandemic has evolved and intensified, concerned
Americans have sought to acquire test kits, personal protective
equipment (PPE), medicines, hygiene products, and other medical
equipment and supplies to protect themselves from the virus. Criminal
networks and nefarious individuals worldwide are capitalizing on this
sudden global demand, and are flooding the Internet with fraudulent,
counterfeit, substandard, or unapproved products. Illicit websites are
selling fake goods, defrauding consumers, degrading the integrity of
legitimate commerce and trade, and endangering the lives of U.S.
consumers. As new kits to test for COVID-19 and drugs to treat the
virus have been developed and tested, criminal actors have shifted
their operations accordingly; and they continue to sell counterfeit,
unapproved, and substandard kits and pharmaceuticals, predominantly in
online marketplaces.
Criminal organizations that historically have been engaged in
financial scams such as bank and loan fraud, romance scams, Internal
Revenue Service (IRS) scams, investment opportunity scams, and business
email compromise are now pivoting to exploit this pandemic and
associated lending opportunities and stimulus packages for illegal
financial gains. At the same time, crimes of victimization continue to
persist, with vulnerable populations being exploited by financial fraud
schemes and offers of counterfeit, substandard, or non-existent PPE. As
the pandemic has continued to take grip, financial fraud scams
involving financial relief, paycheck protection program, and stimulus
checks have also surged. In addition to the financial industry, these
fraud scams also impact government public benefit agencies that are in
the process of distributing aid and providing assistance.
hsi response
Since March 2020, HSI offices domestically and internationally have
seen a significant increase in COVID-related fraud and other criminal
activity. In response, HSI has intensified collaboration and
partnership with multiple Federal departments and agencies, along with
business and industry representatives, to ensure the surging criminal
activity surrounding the COVID-19 pandemic is met with an equally
robust investigative response. Together, HSI and its partners are
actively targeting those who attempt to sell counterfeit, substandard
or otherwise unlawful pharmaceuticals and medical supplies and exploit
this pandemic for illicit financial gain, as well as the platforms and
Internet provider accounts enabling this illicit activity.
Additionally, HSI special agents are working alongside domestic and
foreign law enforcement, regulatory agencies, financial institutions,
and non-governmental organizations to identify and investigate COVID-19
related financial schemes targeting both the public and private
sectors, to include government, businesses, and individuals. Taking a
victim-centered approach, HSI endeavors to remedy, as much as possible,
financial losses to individuals, businesses, and public and private
institutions by ensuring that money acquired through fraud is returned
to victims. As of July 24, 2020, HSI efforts have disrupted illicit
transactions and recovered victims' funds of approximately $17.9
million.
operation stolen promise overview
In April 2020, HSI officially launched Operation Stolen Promise to
protect the homeland from the increasing and evolving threat posed by
COVID-19-related fraud and criminal activity. Operation Stolen Promise
is a strategic plan which combines HSI's expertise in global trade,
financial fraud, international operations and cyber-crime to
investigate financial fraud schemes, the importation of unlawful
pharmaceuticals and medical supplies, websites defrauding consumers,
and any other illicit criminal activities associated with the virus
that compromises legitimate trade or financial systems and endangers
the public.
Since the launch of this operation, HSI has opened over 570
investigations nationwide, seized over $7 million in illicit proceeds,
made 53 arrests, executed 75 search warrants, analyzed over 50,000
COVID-19-related domain names, and worked alongside U.S. Customs and
Border Protection (CBP) to seize over 900 shipments of mislabeled,
fraudulent, or unauthorized COVID-19 test kits, treatment kits,
homeopathic remedies, purported anti-viral products, and PPE.
Operation Stolen Promise was built around four central pillars:
partnership, investigation, disruption, and education. Each represents
a core element of the HSI approach to addressing COVID-19 fraud. Since
the operation's inception, HSI has implemented key actions under each
of these pillars to take a comprehensive, multi-faceted approach to
combatting COVID-19-related fraud across multiple fronts.
operation stolen promise central pillars
Partnership
HSI, using its network of 80 Attache offices in 50 countries, is
partnering with both government and private-sector partners around the
world to comprehensively and effectively prevent and investigate
criminal activity surrounding the pandemic. Strong partnerships are
critical to strengthening global supply-chain security and will
ultimately protect the American public from victimization.
HSI works alongside CBP on a daily basis to identify and
investigate the illegal import and export of unlawful pharmaceuticals
and medical supplies. As of July 24, 2020, HSI and CBP have
collaborated to seize over 900 shipments of mislabeled, fraudulent, or
unauthorized COVID-19 test kits, treatment kits, homeopathic remedies,
purported anti-viral products, and PPE.
HSI also works closely with the Food and Drug Administration (FDA),
the IRS, the U.S. Postal Inspection Service (USPIS), the Small Business
Administration (SBA), the Federal Bureau of Investigation, the
Department of Justice (DOJ) Consumer Protection Branch, the DOJ
Computer Crime and Intellectual Property Section, U.S. Attorney's
Offices around the country, and other Federal, State, and local
agencies to investigate and prosecute all forms of COVID-19-related
fraud and criminal activity. These collaborative efforts span across
multiple HSI components, including the National Intellectual Property
Rights Coordination Center (IPR Center), the National Targeting
Center--Investigations (NTC-I), the Illicit Finance and Proceeds and
Crime Unit (IFPCU), the Cyber Crimes Center (C3), and HSI International
Operations. The IPR Center also receives funding from the Department of
State to deliver training and technical assistance to foreign law
enforcement partners designed to strengthen their ability to cooperate
with us.
With over 80 international offices in more than 50 countries, HSI
has one of the largest international footprints in U.S. law
enforcement. Positioned within embassies, consulates, and combatant
commands around the world, HSI personnel abroad are leveraging
relationships with other nations to exchange information and to jointly
investigate illicit COVID-19 fraud schemes. On a daily basis, HSI
special agents worldwide are engaging foreign law enforcement and
customs partners to prevent shipments of unlawful pharmaceuticals and
medical supplies from reaching the U.S., to disrupt or dismantle
illegal supply networks at the point of origin, to thwart illicit
financial fraud as it occurs, and to assist in repatriating funds to
victims. To date, the Five Eyes Law Enforcement Working Group has been
a core component to HSI's international efforts on Operation Stolen
Promise.
The HSI-led IPR Center, which stands at the forefront of the United
States Government's response to combating global intellectual property
(IP) theft and enforcing international trade laws, is working with its
25 Federal and industry partners to identify, interdict, and
investigate individuals, companies, and criminal organizations engaging
in the illegal importation of COVID-19-related products. As part of
this effort, on May 5, 2020, industry leaders from Pfizer, 3M, Citi,
Alibaba, Amazon, and Merck announced that they joined forces with the
IPR Center in an unprecedented public-private partnership to combat
fraud and other illegal activity surrounding COVID-19. Additionally,
HSI is working closely with banks, money services businesses, and other
financial institutions to identify, target, and disrupt COVID-19
financial fraud schemes, and is leveraging its partnerships with the
cyber security industry and its cyber threat intelligence capabilities
to identify and take down websites being utilized to facilitate COVID-
19-related fraud and criminal activity.
Investigation
HSI and its partners are developing and pursuing actionable
intelligence and investigative leads into those criminally exploiting
the pandemic. These efforts are led by HSI special agents in domestic
and international field offices and are being spearheaded by HSI's IPR
Center, NTC-I, C3, and IFPCU. Investigative efforts center on global
trade investigations, financial investigations, and cyber
investigations.
The IPR Center and the NTC-I lead the U.S. government's response to
combating global IP theft and enforcement of its international trade
laws and serve as the primary HSI entities for the exchange of
information and intelligence related to COVID-19 illicit criminal
activity. Through established relationships with government and
private-sector partners, the IPR Center and NTC-I are spearheading
efforts to identify, interdict, and investigate individuals, companies,
and criminal organizations engaging in the illegal importation of
COVID-19-related pharmaceuticals and medical items, such as test kits
and PPE.
HSI's investigative efforts pursuant to Operation Stolen Promise
have revealed that the degree of fraud being perpetrated is
representative of the panic resulting from the pandemic. As information
on potential cures, tests, PPE, etc., spreads to the public, the types
of fraud quickly change to meet these perceived new needs. This was
true, for example, with hydroxychloroquine.
Many of the items detained by CBP and HSI have not been approved or
otherwise authorized by the FDA or the Environmental Protection Agency.
Unfortunately, consumers have no way to know if these items are in fact
legitimate or if they will work if ordered from third-party
marketplaces or non-medical websites. Based on the seizures made in
conjunction with HSI's partners at CBP, approximately 56 percent of
seizures originate in China and Hong Kong. The largest percentage of
seizures have been COVID test kits at 45 percent, followed by
pharmaceuticals at 27 percent, viral lanyards at 16 percent, and PPE at
10 percent. While all products are not necessarily counterfeit, they
may not meet U.S. regulatory standards nor provide the medical benefits
they claim. To date, HSI has seen a substantial number of inbound
COVID-19 test kits going to residential addresses. Acting upon
information obtained through CBP seizures, HSI has leverged our
longstanding relationships with foreign customs and law enforcement
officials to provide actionable intelligence which has resulted in
arrest and seizures overseas. These arrests and seizures have prevented
substandard and unregulated pharmaceuticals, PPE, and test kits from
entering the domestic medical supply chain.
Since the launch of Operation Stolen Promise, the HSI IFPCU has
worked closely with HSI field offices around the world and with its key
partners to initiate, pursue, and support HSI investigations related to
COVID-19 fraud. HSI has seen that scammers have attempted to profit
from the pandemic through a number of means, including bank and loan
fraud, fraudulent fundraising for fake charities, various medical scams
and online sales of counterfeit medicines, medical supplies, testing
kits, and PPE. Additionally, HSI has directed agents to pursue
criminals who are engaged in crimes of victimization, with a particular
focus on those who exploit vulnerable populations including the
elderly.
To date, reporting from HSI domestic and international field
offices and from the Federal Trade Commission all suggest that
previously existing online fraud schemes and mass marketing scams have
pivoted to exploit the COVID-19 pandemic. HSI is working closely with
numerous Federal agencies including the DOJ, IRS, USPIS, the Treasury
Inspector General for Tax Administration, and the SBA Office of the
Inspector General to analyze data associated with individuals and
businesses attempting to exploit the economic stimulus package and
defraud the United States Government.
Through an HSI-led COVID-19 Virtual Task Force, respective agencies
provide guidance and direction to field agents to collaborate with
members in order to identify vulnerabilities and provide resources and
expertise to effectively combat illicit actors engaged in financial
fraud activities. HSI has integrated its Office of Intelligence and
Innovation Lab into this effort to support ongoing activities by HSI
and its partners to research and track investigative leads related to
COVID-19 fraud. These leads are being sent to HSI field offices and to
the COVID-19 Fraud Task Force partners for further investigation. As of
July 24, 2020, Operation Stolen Promise has led to the seizure of over
$2.2 million related to CARES Act fraud.
The HSI C3 and its cybersecurity partners have continued to use the
full extent of their investigative, analytical, and technical resources
to collaboratively process and enrich data to target individuals and
criminal organizations attempting to exploit this pandemic for illegal
financial gains via fraudulent schemes. As Operation Stolen Promise has
unfolded, C3 has committed to increasing enforcement by targeting
online platforms and dark web sites enabling the sale and distribution
of illicit materials related to COVID-19 and victimizing the American
people. In addition to investigating the criminal elements operating
illegally on the web, C3 has achieved significant success within the
third pillar of Operation Stolen Promise, disruption. These efforts
will be further described soon.
Disruption
Since launching Operation Stolen Promise, HSI has utilized the full
breadth of its authorities to disrupt and dismantle fraud schemes;
takedown illicit websites and other illegal online marketplaces; seize
counterfeit or illicit pharmaceuticals and medical devices; and arrest
and dismantle the organizations responsible. As of July 24, 2020, HSI
special agents have seized over $7 million in illicit proceeds, made 53
arrests, executed 75 search warrants, conducted 42 disruptions of
potential criminal activity, took appropriate disruption activity on
thousands of illicit websites, and seized over 900 shipments of
unlawful pharmaceuticals or medical supplies. Furthermore, HSI
disrupted the flow and blocked the transfer of approximately $18
million being sent to fraudulent entities which were offering goods,
services, or financial support under the guise of COVID-19 relief,
protecting those consumers who were being defrauded.
A key element to HSI's disruption activities under Operation Stolen
Promise are C3's efforts in the cyber realm. C3 leads the agency's
response to preventing transnational criminal organizations, nefarious
individuals, and malicious actors from exploiting this pandemic through
online fraudulent schemes and the sale and distribution of illicit
COVID-19 materials through nefarious online markets and the dark net.
Pursuant to Operation Stolen Promise, C3 has partnered with public/
private and cybersecurity partners as well as other Federal law
enforcement agencies to identify and analyze fraudulent websites,
social media platforms and other online forums responsible for the
advertisement of illicit COVID-19-related material. C3 and HSI special
agents in the field work with website hosts and U.S. registrars to
disrupt these illicit sites and to prevent the flow of dangerous items
as quickly as possible, while still maintaining evidence for potential
criminal investigation and prosecution. Once a suspected fraudulent
domain is identified, it is referred to a field office for criminal
investigation or referred to Internet governance partners for
appropriate action.
To date, C3 has analyzed over 50,000 COVID-19 suspected fraudulent
domains for appropriate disruption action. These included phishing
websites impersonating legitimate businesses selling COVID-19 supplies
and charitable organizations conducting COVID-19 fundraising.
Additional websites have been set up for the purpose of executing
malware and for selling COVID-19-related supplies that the sellers
never intend on sending to the customer.
Education
One of the main goals of Operation Stolen Promise is to educate the
public on the various types of fraudulent activity associated with the
pandemic. To that end, HSI launched a robust public awareness
campaign--S.T.O.P. COVID-19 Fraud--to relay critical information to the
public on COVID-19 fraud and criminal activity. Through this
initiative, HSI is able to provide facts, tips, and red flags on
pandemic-related crime and to guide the public on how to recognize
potential fraud, protect themselves from it, and report it to
authorities. HSI has developed outreach materials specifically for this
effort, which are posted online in English and Spanish, and are
available for HSI personnel to share with both public and private
sector partners at meetings and other outreach events.
Additionally, HSI launched a dedicated COVID-19 webpage on ICE.GOV
to provide information to the public on COVID-19-related fraud schemes.
The page highlights the investigative efforts the agency is taking to
counter the threats posed by individuals and criminal organizations
seeking to exploit the pandemic for illicit financial gain and what HSI
and its partners are doing to protect the public during the COVID-19
pandemic. HSI's S.T.O.P. COVID-19 Fraud campaign is also highlighted on
that page.
conclusion
In the midst of a relentless global pandemic, the American people
are counting on law enforcement to safeguard the public and ensure that
our States, cities, and communities are protected from individuals and
organizations intent on exploiting the pandemic through fraud. This is
why HSI launched Operation Stolen Promise, and why the men and women of
HSI have worked day in and day out to identify, disrupt, and dismantle
these schemes rapidly and effectively utilizing the unique and
extensive tools at HSI's disposal.
HSI's work through Operation Stolen Promise has yielded tremendous
statistical results in just a matter of months. These actions have kept
unlawful pharmaceuticals, testing kits, and medical supplies out of the
hands of American consumers; have prevented Americans from being
victimized by financial scams; and have helped secure the integrity of
the U.S. financial and trade systems. Despite being faced with an
unprecedented global health crisis, HSI personnel throughout the
country and around the world have remained dedicated to carrying out
this important mission. HSI is proud of its role in responding to
COVID-19 fraud and on the impact Operation Stolen Promise has made on
the lives of the American public, which the men and women of HSI have
sworn to protect and serve.
Thank you again for the opportunity to submit this testimony for
the record.
______
Questions Submitted for the Record to Steve Francis
Questions Submitted by Hon. Chuck Grassley
connection to foreign governments
Question. COVID-19 has given foreign governments the opportunity to
engage in financial fraud schemes or other illicit criminal activity
against the United States. For example, Federal law enforcement
agencies have told us that the People's Republic of China is targeting
research organizations working on COVID-19 vaccines.
During your agency's investigative efforts to stop illicit criminal
activity associated with the virus, has HSI found any connection to
foreign governments? If so, which ones? And, what kinds of illicit
activity are these foreign actors engaged in?
Answer. To date, U.S. Immigration and Customs Enforcement (ICE)
Homeland Security Investigations (HSI) is not aware of any instances of
a foreign government having direct involvement in an illicit
coronavirus disease 2019 (COVID-19) scheme or activity against the
United States.
cybersecurity partners
Question. Is HSI working with its cybersecurity partners to alert
the health-care, pharmaceutical, and research sectors of the threat of
foreign interference? If so, please elaborate on these efforts.
Answer. ICE HSI Cyber Crimes Center (C3) has not received
information related to the threat of foreign interference that could be
used to alert the health-care, pharmaceutical, or research sectors.
However, C3 is aware of other partners working on this issue;
specifically CISA, as referenced on their website at https://us-
cert.cisa.gov/ncas/current-activity/2020/07/16/malicious-activity-
targeting-covid-19-research-vaccine-development. In the event that C3
receives information related to the threat of foreign interference that
could be used to alert the health-care, pharmaceutical, or research
sectors in the future, it will alert the appropriate stakeholders.
C3 works closely with public and private cybersecurity partners as
well as other domestic and international law enforcement agencies to
prevent transnational criminal networks and malicious actors from
exploiting the COVID-19 pandemic for illicit financial gains and other
criminal activity. Additionally, ICE HSI is collaborating with the
Internet Corporation for Assigned Names and Numbers and U.S. based
domain registrars to identify, disrupt, and investigate malicious
registration of domain names related to COVID-19, also known as Domain
Name System fraud and abuse.
As of August 2020, ICE HSI referred over 11,000 COVID-19 suspected
fraudulent domains for appropriate disruption action, including:
Websites that were identified by ICE HSI as phishing websites
impersonating legitimate businesses selling COVID-19 supplies and
charitable organizations conducting COVID-19 fundraising. These
websites were suspected of being set up to steal a victim's personally
identifiable information.
Websites that posed as COVID-19 informational websites but
were identified by ICE HSI as being set up for the purpose of executing
malware.
Websites that were identified by ICE HSI as being set up for
the purpose of selling COVID-19-related supplies (i.e., personal
protective equipment (PPE), hand sanitizers, disinfectant wipes, etc.)
but never sent said products to the customer.
The ICE HSI-led Intellectual Property Rights Coordination Center
(IPRC) takes an active role in protecting the U.S. health-care,
pharmaceutical, and research sectors through consistent communication
and information exchange with public and private-sector partners. The
IPRC maintains relationships with pharmaceutical and medical supply
companies such as Pfizer, Merck, Johnson & Johnson, and 3M. An open
dialog is maintained to allow for the flow of information between
government and partners to aid in identification of trends regarding
counterfeit pharmaceuticals and PPE.
The IPRC has a strong working relationship with the U.S. Customs
and Border Protection (CBP) National Targeting Center (NTC). The IPRC
staff investigators at the NTC to assist in the exchange of
information, which improves targeting by CBP analysts and results in
the identification and seizure of counterfeit and illicit medicine and
medical equipment.
The IPRC has 25 partner agencies to include the Food and Drug
Administration (FDA) and Environmental Protection Agency (EPA). These
relationships have been an integral part of responding to COVID-19-
related fraud. Specifically, the EPA has taken the lead in the
identification of unauthorized testing kits and in the identification
of unauthorized pesticides used in virus shut-out lanyards/cards.
ICE HSI is proud of its current connections within the
pharmaceutical and medical device community and views its continued
outreach efforts as an integral part of the work done at the IPRC.
Staff participate in presentations and discussions with private-sector
associations to provide education and make new connections with
companies that have a vested interest in combatting, or may be
susceptible to, fraud. ICE HSI intends to continue to develop, engage,
and leverage its important connections within the pharmaceutical and
medical device communities.
corporate partnerships
Question. What is the current status of this partnership? And, how
is HSI communicating with these companies to facilitate the exchange of
intelligence? Do you anticipate expanding this partnership to include
additional companies? If not, why not?
Answer. The ICE HSI-led IPRC takes an active role in protecting the
U.S. medical supply chain through consistent communication and
information exchange with public and private-sector partners. The IPRC
maintains relationships with pharmaceutical and medical supply
companies such as Pfizer, Merck, Johnson & Johnson, and 3M. An open
dialog is maintained to allow for the flow of information between
government and partners to aid in identification of trends regarding
counterfeit pharmaceuticals and personal protective equipment. The IPRC
also has a strong working relationship with the CBP NTC. The IPRC
maintains staffing of investigators at the NTC to assist in the
exchange of information, which improves targeting by CBP analysts and
results in the identification and seizure of counterfeit and illicit
medicine and medical equipment.
A robust outreach effort is an integral part of the work done at
the IPRC and HSI intends to continue to develop, engage, and leverage
its important connections within the pharmaceutical and medical device
communities. IPRC staff participate in presentations and discussions
with private sector associations to provide education and make new
connections with companies that have a vested interest in combating
fraud.
The ICE HSI C3 works closely with public and private cybersecurity
partners, as well as other law enforcement agencies, to prevent
transnational criminal networks and malicious actors from exploiting
the COVID-19 pandemic for illicit financial gains and other criminal
activity. To date, ICE HSI C3 has not received information from
cybersecurity partners related to threats of foreign interference. ICE
HSI C3 is collaborating with the Internet Corporation for Assigned
Names and Numbers and U.S. based domain registrars to identify,
disrupt, and investigate malicious registration of domain names related
to COVID-19, also known as Domain Name System fraud and abuse.
counterfeit origination
Question. Before the COVID-19 pandemic, over 60 percent of
counterfeit goods originated in China or Hong Kong.
How has this changed during the COVID-19 pandemic? Where are COVID-
19 infringing products originating from now?
Answer. Based on the seizures made in conjunction with ICE HSI
partners at CBP, approximately 52 percent of items seized entering the
United States that are determined to be prohibited COVID-19 products
have originated in China or Hong Kong. To date, there have been a total
of 49 countries of origin for such items, with these nations being the
top 5: China/Hong Kong--52 percent; United Kingdom--7 percent;
Nigeria--5 percent; Mexico--4 percent; and Thailand--3 percent.
In early April 2020, ICE HSI launched Operation Stolen Promise to
disrupt individuals or organizations who attempt to exploit and profit
from the COVID-19 pandemic. Utilizing ICE HSI's expertise within global
trade investigations, financial fraud schemes, cyber-enabled crimes,
and our international footprint, ICE HSI has accomplished the following
(as of August 2020):
Made over 1,000 seizures;
Analyzed over 58,000 COVID-19-related domains/websites;
Referred nearly 1,300 leads to domestic/international ICE HSI
offices;
Initiated over 600 criminal investigations;
Executed 85 search warrants;
Conducted 64 arrests;
Secured 27 indictments;
Seized over $7.9 million in illicit proceeds;
Seized over $2.4 million relating to the Coronavirus Aid,
Relief, and Economic Security (CARES) Act fraud; and
Disrupted and/or recovered over $17.9 million in fraudulent
transactions related to illicit fraud schemes.
organized crime
Question. Have you found any connections to organized crime such as
MS-13 or other terrorist organizations?
Answer. ICE HIS is aware of cases involving COVID-19-related
criminal activity that have been tied to organized crime groups and
terrorist organizations.
HSI has seen organized crime groups attempt to capitalize on the
pandemic through the sale of counterfeit/fraudulent medical items, such
as test kits and PPE. HSI has not found any connection between MS-13
and COVID-19-related crime.
HSI has seen international terrorist organizations attempt to
finance their activities through COVID-19 fraud scams perpetrated
online. Additionally, HSI is aware of an investigation into a subject
tied to domestic terrorism who was involved in CARES Act Fraud.
Due to the ongoing nature of these investigations and the fact that
many of them are worked in conjunction with other agencies, HSI is
unable to provide any additional details pertaining to these cases.
______
Question Submitted by Hon. Ron Wyden
counterfeit respirators
Question. My State of Oregon relied on an emergency use
authorization from the Food and Drug Administration to purchase
respirators from China to protect medical personnel.
These respirators were supposed to meet the N95 standard for
performance, but after they arrived in the U.S., they failed quality
tests by the Federal agency that certifies safety equipment, the
National Institute of Occupational Safety and Health, also known as
NIOSH.
After failing the test, the FDA retracted its approval not just for
the respirators Oregon bought, but for a significant number of other
foreign manufacturers. NIOSH says that some of the Chinese
manufacturers now claim the faulty respirators were counterfeit.
Either way, desperately needed imported equipment didn't meet the
U.S. standards they were supposed to meet. Either way, the result is
unacceptable.
Please explain what your agency is doing to track down how these
substandard respirators got into the United States. To the extent
possible, please clarify which respirators may have been counterfeit,
which were simply not up to U.S. standards when they were made and
sold.
What actions are being taken against the suppliers that provided
that equipment?
Answer. ICE HSI launched Operation Stolen Promise to combat COVID-
19-
related fraud and other criminal activity. Operation Stolen Promise
leverages and concentrates existing collaborative efforts among
multiple Federal departments and agencies, along with business and
industry representatives. Surging criminal activity surrounding the
COVID-19 pandemic requires an equally robust investigative response to
protect the American public.
Regarding respirators, ICE HSI works closely with its partners at
the U.S. Food and Drug Administration (FDA), the National Institute for
Occupational Safety and Health, and CBP to prevent violative medical
devices and personal protective equipment from entering into U.S.
commerce. If ICE HSI receives information that a supplier has imported
or introduced a product into U.S. commerce that is counterfeit or
otherwise violates U.S. laws or regulations, it may initiate an
investigation. Investigations that conclude a supplier or product is in
violation of U.S. laws or regulations may result in criminal or
administrative charges, and/or the seizure of the violative product.
______
Question Submitted by Hon. Benjamin L. Cardin
counterfeit ppe
Question. Maryland health providers have been fortunate to not have
received exceptional amounts of counterfeit personal protective
equipment like some other States. However, some of our long-term health
facilities reported that they received an order of 6,000 medical gowns
that were counterfeit. This senior care provider association returned
the counterfeit gowns to the vendor and refused delivery of a
subsequent order.
This same senior care provider association also reported that many
Maryland long-term care facilities received gowns from FEMA that were
not usable as effective personal protective equipment as they were
actual bags with holes cut out for a head.
When a health provider receives a shipment of counterfeit PPE from
a vendor, who should they report the issue to?
What steps have you taken to address counterfeit PPE and make the
purchaser whole?
Answer. ICE HSI launched Operation Stolen Promise to combat COVID-
19-
related fraud and other criminal activity. Operation Stolen Promise
intensifies collaboration with multiple Federal departments and
agencies, along with business and industry representatives. Surging
criminal activity surrounding the COVID-19 pandemic requires an equally
robust investigative response to protect the American public.
ICE HSI works closely with its partners at the FDA and CBP to
prevent the importation of substandard medical devices and PPE from
entering United States commerce.
Anyone, including health-care providers, who suspects that they may
have received a shipment of counterfeit PPE can provide information to
ICE HSI at [email protected]. When ICE HSI receives information
alleging that a supplier has sold a product that is counterfeit,
substandard, or otherwise violates United States laws, it initiates an
investigation. Depending on the circumstances, an investigation may
result in criminal charges, administrative charges, and/or simply the
seizure of the violative product in order to prevent it reaching the
public.
______
Prepared Statement of Hon. Chuck Grassley,
a U.S. Senator From Iowa
Good morning. I'd like to welcome everyone to the Finance
Committee's hearing on ``Protecting the Reliability of the U.S. Medical
Supply Chain During the COVID-19 Pandemic.'' This is the first hearing
of a series of hearings to discuss the integrity of our Nation's
medical supply chain.
Today, we will hear from the Department of Homeland Security (DHS),
and in a few days we will hear from private-sector stakeholders. This
is an extremely important topic to discuss and one that impacts the
safety of all Americans. It's Congress's responsibility to ensure that
DHS upholds its responsibility to protect the public health by properly
ensuring that Americans on the front line get safe and effective
medical supplies.
I think we can all agree: the COVID-19 pandemic has exposed several
vulnerabilities in our Nation's medical supply chain. Some of these
vulnerabilities are new, while others have been around long before the
pandemic and have been further exacerbated by this crisis. Indeed, I've
been asking questions long before the pandemic brought these issues to
the forefront of national debate. In November of last year, I finalized
my oversight activities on the proliferation of counterfeit and other
illicit goods sold on e-commerce platforms.
The ranking member and I issued a report on our findings and
highlighted the threat counterfeits pose to our Nation's economic
security, and the health and safety of Americans. We also highlighted
that many counterfeits originate in China and Hong Kong. At this point,
I think it's fair to say that China has serious quality control
problems. It was evident then, and even more so now.
Before the coronavirus pandemic, hospitals and health-care workers
could avoid purchasing counterfeits by tapping into tried-and-true
supply chains. However, as the demand for PPE skyrocketed, some of
these providers have had to go outside their normal supply chains to
source supplies, and in some cases have inadvertently purchased fake,
faulty, and even illicit medical supplies. The problem of counterfeit
and faulty products is something that I've looked into for a very long
time, dating back to when I was chairman of the Judiciary Committee.
As the virus began its foothold in the United States, I also sent a
letter to Vice President Mike Pence and several other agency heads to
express my concern that PPE shortages were allowing bad actors to take
advantage of hospitals and health-care workers desperate for supplies.
I've talked to hospitals all over the country and have heard stories of
price gouging, shady middlemen, and PPE that was ordered and then never
arrived, or was unusable. In my letter, I asked the administration to
take this issue seriously and to prosecute bad actors to the fullest
extent of the law.
Today, we'll hear from a representative from U.S. Immigration and
Customs Enforcement's Homeland Security Investigations on their efforts
to do just that. Before we hear from today's witnesses, I want to
discuss the substance of today's hearing. We will discuss several
issues confronting our Nation's supply chain as our country continues
to battle the coronavirus pandemic. First, I want to go back to the
beginning and expose the root cause of why the United States--and
frankly, the world--is experiencing a breakdown of their supply chains.
China is the largest manufacturer of PPE in the world, with more
than 40 percent of PPE manufactured there. In the beginning of the
pandemic, China did the unthinkable. They turned off the taps of PPE
manufacturing and heavily restricted their exports of PPE. The Chinese
Government also directed its local and state governments to source more
supplies from the international market. As global demand soon spiked
and China restricted exports, distributors and suppliers were unable to
fulfill orders. As a result, some hospitals report estimated delays of
3 to 6 months for supplies.
Some pundits say China did what it did it to address a domestic
health crisis. However, it's important to remember that, in the
beginning, China downplayed the seriousness of the coronavirus threat
to the world while it redirected vast quantities of PPE towards its
domestic needs. In the United States, China's decision to redirect
medical supplies occurred when States, territories, localities, and
tribes began to desperately need these critical supplies.
While China has since reversed course and allowed PPE to leave the
country, the United States has continued to struggle to meet demand,
with most of our supply chains heavily dependent on China or Mexico. We
cannot allow our supply chains to rely so heavily on China, and I look
forward to working with my colleagues on both sides of the aisle to
discuss how we can diversify our supply chains and increase our
domestic manufacturing capacity. I want to turn now to how shortages
have affected hospitals and health-care workers.
Before the coronavirus pandemic, hospitals and health-care
providers employed a ``just-in-time'' approach to sourcing supplies
from trusted distributors. However, as the virus gained a foothold in
the United States, everyone rushed to compete for supplies, further
exacerbating the shortages. As a result, some health-care providers
resorted to purchasing PPE from unverified suppliers, and some even
turned to the Internet to source supplies. By doing so, these providers
sometimes received fake, fraudulent, and even illicit goods not safe
for use in treating patients with the coronavirus. In other cases,
providers faced price gouging or hoarding. Fake N95 masks have become
so prolific that 3M recently filed suit against several purported PPE
sellers profiting from COVID-19 at the expense of the sick and
vulnerable.
Large health-care systems have told me that the supply chain is
doing better now, with more PPE coming in daily, which gives them the
ability to avoid unverified suppliers altogether. However, smaller
providers continue to face horrific shortages which may cause them to
continue to turn to unverified suppliers, or even the Internet, to
source supplies. Even more concerning is that smaller providers, like
safety-net clinics and rural hospitals, tend to treat low-income
families, a majority of which are African Americans and Latinos.
This population has been hit the hardest by the pandemic, and is
four to five times more likely to be hospitalized for contracting the
coronavirus. This is an issue that cannot be sugarcoated or spun for
some political purpose. It's a fact. The black and brown community is
suffering.
As members of Congress and stewards of the public trust, we must do
everything in our power to protect this vulnerable population. This
committee is considering several proposals to do just that. And one way
we can help this vulnerable population is to do everything in our power
to shore up the integrity of our Nation's supply chain and make sure
that all hospitals and health-care providers get the quality supplies
they need to treat COVID-19 patients.
With that said, I want to now turn to the Department of Homeland
Security's efforts to protect the integrity of our Nation's supply
chain, as we have witnesses before us today who can speak to this very
issue. DHS and its components are engaged in an unprecedented, whole-
of-government response to combat the coronavirus pandemic. Our Nation
has not faced a pandemic like the coronavirus in more than 100 years.
Even so, we can't deny that the Federal Government's approach to
emergency preparedness has always been fraught with problems, going
back to President Obama's administration and beyond. This is not some
partisan point. It's a fact. It also shows that no matter which party
is in the White House, we can always do more to prepare.
Today, we will hear from witnesses who represent DHS's Office of
Procurement, U.S. Customs and Border Protection, and ICE's Homeland
Security Investigations. Thank you for being here. I look forward to
hearing from all of you.
In closing, I want to say two things. First, I want to thank the
DHS officials who work tirelessly to ensure the integrity of our
Nation's supply chain, and for their efforts to ensure that those in
most need get critical, quality medical supplies. Your job is
incredibly difficult right now, but it is also incredibly important.
Second, we must come together to address vulnerabilities in our
Nation's supply chain. I hope today we can have a good-faith discussion
so that we can better understand what we, as a Congress, need to do to
protect America's front-line workers and prepare our country for future
national health emergencies.
______
Submitted by Hon. Maggie Hassan,
a U.S. Senator From New Hamshire
White House COVID-19 Supply Chain Task Force
RADM John P. Polowczyk
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
______
Prepared Statement of Thomas F. Overacker, Executive Director, Cargo
and Conveyance Security, Customs and Border Protection, Department of
Homeland Security
Chairman Grassley, Ranking Member Wyden, and members of the
committee, it is my honor to appear before you today to discuss what
U.S. Customs and Border Protection (CBP) is doing to ensure the
integrity of medical supply chains and to facilitate the importation of
vital medical supplies to support the fight against the COVID-19
pandemic in the United States.
The global scale of this pandemic has required a comprehensive
response. CBP serves steadfastly on the frontlines, implementing and
supporting the U.S. response, effectively managing travel and trade,
and mitigating risk. Our efforts to expedite the import of legitimate
cargo like medical supplies and protective equipment while also
preventing the unlawful import of counterfeit, mislabeled, or unsafe
products have become increasingly important during this pandemic.
Expediting legitimate trade while protecting Americans from dangerous
products are parallel and crucial efforts, and CBP has stepped up to
the challenge of balancing them in order to protect American health and
safety.
CBP acknowledges that a successful U.S. response demands strong
partnerships with other government agencies, private-sector
stakeholders, medical organizations, and our international
counterparts. CBP has prioritized communication with all parties
involved in the global medical supply chain. We are working with
agencies like the Food and Drug Administration (FDA) and the Federal
Emergency Management Agency (FEMA); importers, brokers, and carriers;
State and local health agencies; medical organizations; and other
stakeholders to ensure critical medical supplies and personal
protective equipment (PPE) reach their intended destinations for the
battle against COVID-19 here in the United States.
During fiscal year (FY) 2019, CBP processed 35.5 million entries
valued at over $2.7 trillion and more than 28.7 million imported cargo
containers at U.S. ports of entry (POEs). Over the last 6 months and as
a direct result of the global pandemic, CBP has seen a 12-percent
decline in overall volume and a 13-percent decline in the value of
imports when compared to the same period for 2019. These declines
reached their peak in May when the volume and value of imports were 26-
percent and 27-percent lower, respectively, than in May of last year.
While the U.S. is working with Canada, Mexico, and other
international partners to implement certain border restrictions for
non-essential travel, U.S. borders remain open for commerce, and CBP
continues to facilitate legitimate commercial trade at POEs nationwide.
facilitating critical medical supplies
As the pandemic has evolved within the United States, demand for
PPE, COVID-19 test kits, ventilators, and other medical supplies has
increased. CBP has witnessed an unprecedented surge in imports of these
medical products, in particular masks and gloves. In April alone,
import quantities of medical commodities increased by 227 percent. The
number of new actors in the supply chain has also dramatically
increased. For example, while Malaysia remains the largest source
country for surgical and medical gloves, the number of sellers of these
products has increased by 128 percent. Similarly, while China remains
the largest source country for masks, including N95 respirators, the
number of consignees acquiring masks has increased by 160 percent.
The clearance process for medical products is complex; most medical
devices and PPE are regulated commodities, and therefore must meet FDA
or Environmental Protection Agency (EPA) standards for safety and
efficacy. CBP regularly receives guidance from and shares data with
other Federal agencies, including FDA and EPA, to ensure imported
products meet these stringent requirements. CBP's existing partnerships
with these Federal agencies became even more critical as the number of
imports grew in response to COVID-19, and particularly as new suppliers
and buyers began importing these products into the United States.
COVID-19 Cargo Resolution Team
With the significant growth in medical supply and PPE import
volume, CBP leadership recognized the need for a centralized response
team that could leverage the agency's expertise to respond to requests
in real time. At the end of March, CBP created the COVID-19 Cargo
Resolution Team (CCRT), composed of a network of subject matter experts
from across the agency. The CCRT is managed by CBP's Pharmaceuticals,
Health, and Chemicals Center of Excellence and Expertise, one of 10
industry-aligned centers designed to focus CBP's trade expertise and
develop relationships with agencies, importers, and other stakeholders
in specific industries. The Pharmaceuticals Center, with its
longstanding expertise in the medical and health products industry, was
well-positioned to manage the CBP response to this unprecedented strain
on the global medical supply chain.
The CCRT has fulfilled a range of mission needs: triaging incoming
requests from importers and customers; coordinating with Federal,
State, and local government agencies; facilitating inbound shipments
through POEs; and responding directly to inquiries about the import of
PPE, COVID-19 test kits, ventilators, and other medical supplies. The
CCRT coordinates with affected POEs and government agencies to ensure
that legitimate shipments are not unnecessarily delayed. CBP also
created an online portal to triage inquiries and provide up-to-date
guidance from CBP and links to guidance from other government agencies.
To date, the knowledge base has received more than 21,000 views.
One of the CCRT's most important partners is the FDA, which has
regulatory authority over and expertise in many medical and PPE
products. The CCRT interacts daily with FDA leadership and staff,
sharing data needed to clear inbound shipments, identifying proper
product labels and classification, and ensuring that imported supplies
meet U.S. safety standards. The CCRT is also able to direct certain
inquiries about FDA regulations to FDA's own response team, which
ensures that importers meet key data requirements and reduces potential
shipment delays.
The CCRT is also working with the U.S. Department of Health and
Human Services (HHS) to facilitate importations of equipment and
materials in support of Operation Warp Speed, which aims to deliver 300
million doses of a safe, effective vaccine for COVID-19 by January 2021
as part of a broader strategy to accelerate the development,
manufacturing, and distribution of COVID-19 vaccines, therapeutics, and
diagnostics (collectively known as countermeasures).\1\
---------------------------------------------------------------------------
\1\ U.S. Department of Health and Human Services, ``Fact Sheet:
Explaining Operation Warp Speed,'' June 16, 2020, https://www.hhs.gov/
about/news/2020/06/16/fact-sheet-explaining-operation-warp-speed.html
(July 17, 2020).
To date, the CCRT has fielded approximately 2,500 incoming
inquiries, which range from providing guidance on importing PPE,
resolving holds, or expediting import release of medical supplies, to
facilitating donations of PPE to U.S. recipients. The efforts of the
CCRT, working with our interagency and private sector partners, have
helped secure the importation of approximately $1.2 billion in medical
supplies for the COVID-19 response.
The Supply Chain Task Force/Project Air Bridge
CBP also worked with FEMA's Supply Chain Stabilization Task Force
on Project Air Bridge, which significantly sped up the delivery of
high-demand medical and PPE supplies from overseas manufacturers.
Project Air Bridge cut the amount of time it took for American cities
to receive supplies from manufacturers abroad from months to days. CBP
worked closely with FEMA to identify the flights, screen the importers
and shipments, alert the relevant arrival airports, and ensure the
cargo was cleared and released as quickly as possible upon arrival into
the United States. The program concluded on July 1, but retains the
ability to be reactivated in accordance with shifting conditions.
During the time it operated, CBP successfully cleared 416 Project Air
Bridge and other FEMA procurement flights from 14 countries at 17
different U.S. airports, and facilitated the delivery of 1.3 billion
pieces of PPE.
Customs Trade Partnership Against Terrorism
CBP is also leveraging existing partnerships with industry to
facilitate the import of legitimate medical supplies. The Customs-Trade
Partnership Against Terrorism (CTPAT) is a voluntary public-private
sector partnership program that was established in 2001. This program
allows member companies to meet rigorous security criteria and vetting
standards in return for enhanced facilitation, including expedited CBP
processing.
Today, there are more than 11,600 certified partners who have
agreed to work with CBP to protect the supply chain, identify security
gaps, and implement specific security measures and best practices.
CTPAT members account for approximately 54.3 percent (by value) of all
U.S. imports, and the compliance rate of CTPAT members with the
program's overall requirements, including having to successfully pass a
CTPAT validation, is 97.5 percent. Of the members, more than 3,900 are
U.S. importers--that is more than 34 percent of the total membership.
Forty-one of these importers are part of the medical supply chain.
In response to the COVID-19 pandemic, CBP's CTPAT team worked
closely with CTPAT members from the medical manufacturing and supply
industry, ensuring that some of the largest importers of PPE and
medical equipment in the United States were able to expedite clearance
of these critical goods when needed most. This trusted trade
partnership is critical to mitigating supply chain risks, and ensuring
that safe, legitimate supplies move quickly into U.S. markets.
protecting u.s. medical supplies
CBP also is supporting FEMA by identifying outbound shipments
subject to relevant executive orders regarding the Defense Production
Act, working with the relevant exporters and CBP personnel on the
ground to identify and examine the shipments, and providing relevant
information to FEMA for review and adjudication.
Timely reviews have been a priority in this process. CBP is
expediting data sharing, review, and cargo examination as much as
possible to ensure FEMA can make decisions quickly. As of July 22nd,
CBP had identified and referred 159 export supply shipments to FEMA. Of
those, 142 were subsequently cleared for export and 16 were canceled
and returned to the U.S. supply chain. Under this authority, FEMA and
CBP have returned 3.6 million protective masks and nearly 150,000 sets
of gloves to U.S. markets.
safeguarding the medical supply chain
As a core component of CBP's mission, ensuring the safety and
legitimacy of imported goods has become increasingly important in the
context of the COVID-19 pandemic. With imports of medical supplies and
PPE growing dramatically to meet the U.S. demand, so too did attempts
to circumvent the Nation's trade and customs laws. CBP has seen an
increasing number of potentially dangerous counterfeit or unauthorized
COVID-related products. Since the pandemic began until the end of June,
CBP has seized more than 120,000 unlawful COVID-19 test kits in 339
separate incidents. These items were either refused admission into the
U.S. because they did not meet U.S. regulatory or legal requirements,
or they were potentially unlicensed. As of June 30, we have also seized
more than 10 million counterfeit face masks in 80 separate incidents;
3,000 EPA-prohibited anti-virus lanyards in 95 incidents; 24,000 FDA-
prohibited chloroquine and hydrochloroquine tablets in 148 incidents;
and 4,000 tablets of counterfeit or unsafe antibiotics, such as
azithromycin, in 76 incidents.
CBP has also increased targeting for possible counterfeit or
infringing merchandise in the international mail and express
consignment cargo environments. We are leveraging the trade industry
and other government agency partnerships to gather essential
information that is being used to target and prevent illicit actors
from attempting to circumvent import requirements or take advantage of
the current COVID-19 pandemic.
Targeting High-Risk Shipments
CBP coordinates with U.S. industries, 49 agency partners, and
foreign governments to detect anomalies, trends, and violations in the
global supply chain, to target high-risk shipments, and to promote
compliance. CBP's National Targeting Center (NTC) uses state-of-the-art
technologies and highly skilled specialists to identify, target, and
coordinate examination of high-risk shipments while permitting
legitimate trade to flow unimpeded. The NTC leverages classified, law
enforcement, commercial, and open-source data, as well as deep subject-
matter expertise, to assess and segment risk at every stage in the
supply chain. This enables NTC staff to identify high-risk shipments at
the earliest possible point prior to arrival in the United States. The
analysis and information coming out of the NTC not only helps stop
potentially dangerous inbound shipments, but also provides critical
information for longer-term investigations into bad actors behind those
shipments.
To bolster its targeting mission, the NTC collaborates daily with
critical partners, including U.S. Immigration and Customs Enforcement
Homeland Security Investigations (ICE-HSI), the U.S. Drug Enforcement
Administration, the Federal Bureau of Investigation, the U.S. Postal
Inspection Service (USPIS), and members of the intelligence community.
ICE-HSI and USPIS investigative case data are fused with CBP targeting
information to bolster investigations targeting illicit narcotics
smuggling and trafficking organizations. Moreover, the NTC works in
close coordination with several pertinent task forces, including the
Organized Crime Drug Enforcement Task Forces, the High Intensity Drug
Trafficking Areas, the Joint Interagency Task Force-West, the DHS Joint
Task Force-West, and DHS Joint Task Force Investigations. Effective
targeting and interdiction prevents inadmissible high-risk passengers,
cargo, agriculture, and bioterrorism threats from reaching U.S. POEs.
This extends our border security initiatives outward, making our
borders not the first line of defense, but one of many.
The NTC has established the Integrated Trade Targeting Network
(ITTN) as an integrated operational network among all of CBP's trade
targeting assets to improve communications, coordinate actions, and
standardize procedures for more effective trade targeting. In addition
to the ITTN, the NTC also partners with ICE-HSI via the Tactical Trade
Targeting Unit to utilize all available trade data for further research
to bolster trade and target questionable operations related to fraud
and trade-based money-laundering investigations.
As part of the ITTN, the Commercial Targeting and Analysis Center
(CTAC), also led by CBP, is composed of multiple, co-located government
agencies responsible for targeting and intercepting commercial
shipments that pose a threat to the health and safety of Americans.
Twelve Federal agencies--including the FDA, EPA, and our colleagues at
ICE-HSI--share targeting information as part of CTAC, and to prevent,
deter, interdict, and investigate violations of U.S. import and export
laws.
Advance Data Collection
Key to these targeting efforts are the data CBP collects. An
important element of CBP's layered security strategy is obtaining
advance information to help identify shipments that pose a higher risk
of containing contraband. Under section 343 of the Trade Act of 2002,
as amended, and under the Security and Accountability for Every Port
Act or SAFE Port Act of 2006, CBP has the legal authority to collect
key cargo data elements provided by air, sea, and land commercial
transport companies. This information is automatically fed into the
Automated Targeting System, a secure intranet-based enforcement and
decision-support system that compares cargo and conveyance information
against intelligence and other enforcement data.
Safeguarding the E-Commerce Supply Chain
Over the past 5 years, e-commerce has grown exponentially as
consumers make more direct purchases online. These purchases are
typically shipped directly to consumers and cross our borders through
multiple modes of transportation. While international mail volumes
peaked in 2017, mail still accounts for over 80 percent of these
shipments. Over the last 5 years, air, truck, and express consignment
shipments have increase by 79 percent. Pre-COVID, CBP processed
approximately 1.9 million shipments per day across all modes, with 91
percent of those valued at $800 or less. Criminals are attempting to
exploit this volume, presenting the United States with economic risks
in the form of intellectual property rights (IPR) infringement, as well
as safety risks from poor quality and untested consumer products, such
as fraudulent or prohibited COVID-19 products and PPE.
CBP has taken an active approach to addressing these trends. For
example, late last year, CBP initiated an e-commerce data pilot
pertaining to low-value, de minimis shipments of $800 or less. Under
this pilot, CBP is receiving certain advance data from e-commerce
supply chain partners, including online marketplaces, to help identify
the entity causing the shipment to move, the final recipient, and the
contents of the package. The pilot's participants represent a wide
range of e-commerce supply-chain companies including eBay, FedEx, DHL,
and UPS, with others set to begin sharing data in the near future.
Partnerships with e-commerce leaders are critical for identifying
counterfeit and unsafe medical supplies and PPE shipments before they
reach U.S. consumers, as well as stopping those responsible for
attempting to circumvent U.S. safety standards.
Interagency Enforcement Efforts
CBP works extensively with other U.S. Federal and foreign
government agencies to address transnational threats at POEs,
international mail facilities, and express consignment facilities.
Joint operations and task forces conducted under the auspices of multi-
agency enforcement teams enhance targeting, detection, and interdiction
capabilities. CBP works closely with ICE-HSI to conduct Operation
Stolen Promise (OSP), targeting the evolving threat posed by COVID-19-
related fraud and criminal activity. OSP has resulted in an array of
investigations, seizures of illicit products and proceeds, arrests of
criminals engaged in fraud, and a number of website domain seizures.
CBP is also a member of the Department of Justice's (DOJ) Consumer
Fraud Coordination Workgroup. This workgroup is investigating COVID-
related fraud schemes, many of which involve the fraudulent import or
sale of medical products or PPE. CBP's data and information sharing
assists DOJ efforts to pursue and shut down criminal actors and
networks.
Forced Labor Enforcement
U.S. law prohibits the entry of goods produced in whole or in part
with forced labor.\2\ In September 2019, CBP issued a withhold release
order (WRO) on a Malaysian manufacturer of rubber gloves, WRP Asia
Pacific Berhad (BHD), based on reasonable suspicion that the gloves
imported into the United States were produced with forced labor and in
violation of U.S. law. Over the next 6 months, CBP worked with the
manufacturer to successfully remediate the forced labor conditions.
Based upon information demonstrating the manufacturer's successful
efforts to remediate those conditions, CBP revoked the WRO on March
24th. CBP continues to examine the medical supply chain for forced
labor. On July 15th, CBP issued a WRO on two more Malaysian rubber
glove manufacturers, Top Glove BHD and TG Medical BHD, based on
reasonable suspicion that their rubber gloves were being produced with
forced labor. These enforcement efforts align with Congress's mandate
that CBP takes action regardless of U.S. consumptive demand.
---------------------------------------------------------------------------
\2\ 19 U.S.C. Sec. 1307.
Additionally, Federal Acquisition Regulations prohibit Federal
contractors from engaging in trafficking in persons, and include a
prohibition on the use of forced labor. These regulations also prohibit
Federal agencies from acquiring products made with forced or indentured
child labor. These actions send a clear and direct message to the
international trade community that the illicit, inhumane, and
exploitative practice of forced labor will not be tolerated in U.S.
supply chains.
cbp's agency-wide response to the pandemic
CBP continues to prioritize information sharing and communication
with not only other government agencies, but industry as well. CBP has
created a dedicated website \3\ and contact points for private industry
and other government agencies to easily find answers on COVID-19
product admissibility and import guidance, cargo hold and facilitation,
classification, and duties. This information enables new and existing
importers to effectively and expediently navigate the import process
during this unprecedented time. Meanwhile, we continue to look for
other ways to assist private-sector stakeholders.
---------------------------------------------------------------------------
\3\ Imports.cbp.gov.
In an executive order signed on April 18th, the President provided
the Secretary of the Department of the Treasury authority to extend
temporarily deadlines on certain payments of duties and taxes for
importers suffering significant financial hardship due to the
pandemic.\4\ This important step provided American companies with
financial flexibility while ensuring that revenue owed to the U.S.
government will still be paid.
---------------------------------------------------------------------------
\4\ White House, ``Executive Order on National Emergency Authority
to Temporarily Extend Deadlines for Certain Estimated Payments,'' April
19, 2020, https://www.whitehouse.gov/presidential-actions/executive-
order-national-emergency-authority-temporarily-extend-deadlines-
certain-estimated-payments/ (July 15, 2020).
---------------------------------------------------------------------------
conclusion
CBP continues to carry out its mission of facilitating and
safeguarding the global supply chain, and has increased its focus on
the critical medical supply chain and products needed for the Nation's
response. The agency's targeting, data-collection, interagency
partnerships, and collaboration with trade stakeholders bolster the
efforts of the men and women on the front lines of CBP's trade mission.
CBP's dedicated front-line personnel are vigilantly on the lookout for
counterfeit, substandard, and unapproved COVID-19 products like PPE,
pharmaceuticals, and test kits. CBP's agents, officers, and specialists
remain committed to safeguarding our border and facilitating the flow
of legitimate trade. CBP continues to stand guard at U.S. borders to
ensure the safety and health of all Americans.
Thank you for the opportunity to testify today, and I look forward
to your questions.
______
Questions Submitted for the Record to Thomas F. Overacker
Questions Submitted by Hon. Chuck Grassley
educating port personnel
Question. In your testimony, you indicated that bad actors are
trying to profit from the coronavirus pandemic by introducing
unauthorized, unproven, and potentially unsafe goods into the United
States' supply chain. It appears that they are targeting us when we are
at our greatest need.
Can you please describe how CBP is educating port personnel on
COVID-19 illicit or infringing products?
Answer. U.S. Customs and Border Protection (CBP) provided
information to port and Center of Excellence and Expertise personnel
regarding trends and intelligence about illicit or infringing products
through memoranda and guidance documents. Additionally, webinars and
virtual training sessions were conducted that provided information on
COVID-19 illicit or infringing products to port personnel.
As part of its continuous efforts to educate port personnel on
fraudulent imports, CBP has several programs including providing
Intellectual Property Rights (IPR) specific training to port personnel
as well as virtual webinars, which connect rights holders with the
ports and Centers of Excellence directly.
Question. How many of these seizures occur in the international
mail and express shipment environment?
Answer. Please see table below for the data from January 1, 2020 to
July 31, 2020 on COVID-19-related seizures in the international mail
and express shipping environment. This data includes illicit goods of
the following sorts: COVID-19 diagnostic test kits, antibody test kits,
masks, chloroquine, hydroxychloroquine, azithromycin, respiratory
equipment and ventilators, hand sanitizer, and virus shut-out lanyards.
------------------------------------------------------------------------
International Express
Mail Seizures Quantity Shipments Seizures Quantity
------------------------------------------------------------------------
COVID-19- 192 23,901 COVID-19- 481 595,123
related related
goods goods
------------------------------------------------------------------------
engaging with manufacturers
Question. How is CBP engaging with intellectual property right
holders, distributors, suppliers, common carriers, and other interested
parties on COVID-19 infringing products?
Answer. In response to the COVID-19 pandemic, CBP's Pharmaceutical,
Health, and Chemical Center of Excellence and Expertise (PHC Center)
reached out to its industry partners and gathered information on
legitimate U.S. Food and Drug Administration (FDA)-approved, -cleared,
or -authorized COVID-19 test kits, treatments for COVID-19, and other
related COVID-19 items. Eight industry partners provided information
about their COVID-19-related items and shipping procedures, allowing
the PHC Center to generate and share several informational reports
within the CBP Office of Field Operations (OFO) and the CBP Office of
Trade.
CBP has worked to develop and disseminate relevant guidance and
educational materials for Federal employees, the trade community, and
the U.S. public regarding COVID-19-related goods and to promote
consumer awareness of safety standards and informed compliance by
commercial entities contributing to emergency response. When the
Centers for Disease Control and Prevention's National Institute for
Occupational Safety and Health (NIOSH) becomes aware of counterfeit
respirators or those misrepresenting NIOSH approval on the market, the
masks are posted on the NIOSH website to alert users, purchasers, and
manufacturers. The CBP Commercial Targeting and Analysis Center (CTAC)
and the PHC Center have been ongoing sources of intelligence for NIOSH
regarding bad actors and online vendors of counterfeit products, which
can be found online: https://www.cdc.gov/niosh/npptl/usernotices/
counterfeitResp.html.
Additionally, CBP launched a public-facing site for CBP COVID-19
updates and announcements: www.cbp.gov/newsroom/coronavirus. This
website consolidates COVID-19-related information with an interface to
trade facilitation and trade security, including updates to Federal
agency guidance regarding importation of personal protective equipment
(PPE) and medical supplies. It also provides consumer awareness for
COVID-19 safety: Consumer Awareness for COVID-19 Safety guidelines
warning American consumers about online sellers of counterfeit or
substandard sanitation products and safety equipment. CBP has also used
social media platforms such as Twitter to keep the public up-to-date on
information surrounding IPR health- and safety-related seizures as well
as the harm that these IPR violative goods pose to the American public.
This information can be also found on Twitter--@cbptradegov.
Question. Is CBP engaging with 3M, Honeywell, and other PPE
manufacturers? If so, please provide us a list of manufacturers CBP has
engaged with and give us an update on those engagements.
Answer. On March 24, 2020, the Industrial and Manufactured
Materials Center of Excellence and Expertise (IMM Center) participated
in a meeting with 3M's Trademark Counsel and Trade Compliance personnel
to gather intelligence from 3M to strategically develop targeting
parameters and identify and mitigate cargo delays. Joining the IMM
Center were colleagues from the Miami National Threat Analysis Center
(NTAC). After further review, the IMM Center developed the information
into an IPR enforcement alert distributed to various OFO and Office of
Trade component offices.
The IMM Center and Miami NTAC have developed targeting parameters
to identify counterfeit 3M N95 respirators. The IMM Center continues to
work with 3M to mitigate delays or impacts with cargo entering the
United States. To date, IMM Center partners have not experienced any
delays or impacts with cargo entering the United States.
The IMM Center continues to reach out to partnership accounts to
obtain advance information on the importation of COVID-19 response
materials (e.g., PPE, sanitary supplies) in an effort to facilitate the
importation of legitimate goods from our trusted partners.
securing the supply chain
Question. What steps is your agency taking to secure the U.S.
medical supply chain as we go into fall and beyond?
Answer. Through active participation in COVID-19-related task
forces and working groups led by the U.S. Department of Justice, FDA,
and U.S. Immigration and Customs Enforcement's (ICE) Homeland Security
Investigations (HSI), CBP obtains critical information that increases
the effectiveness of efforts to target illicit COVID-19-related
products and will continue to help to secure the U.S. medical supply
chain moving forward.
forced labor programs
Question. CBP has previously blocked Chinese imports that were a
product of forced labor. To be specific, the People's Republic of China
has been placing Uighurs, a Muslim minority, in ``reeducation'' camps
and utilizing their forced labor.
Generally, how do we ensure that Uighurs and other oppressed
populations are not part of our medical supply chain?
Answer. DHS is committed to enforcing against the People's Republic
of China's serious human rights abuses, including forced labor, against
Uyghurs and other ethnic and religious minorities. Both CBP and ICE are
receiving and reviewing information on forced labor in China.
Information is widely available that detail the People's Republic of
China's use of forced and prison labor in China. Tracing medical goods
produced with forced labor in the People's Republic of China to the
United States is challenged by the limited transparency of supply
chains, availability of information, and ability to verify reporting.
CBP collaborates with other U.S. agencies to identify goods that might
be produced with forced labor.
Any type of goods, including medical goods, produced with forced
labor are prohibited from importation into the United States. Companies
should understand the legal and compliance risks when sourcing from
China. Importers have the duty to exercise reasonable care and due
diligence to ensure that goods produced with forced labor do not enter
their supply chains. Tracing medical goods produced with forced labor
in the People's Republic of China to the United States is challenging
due to limitations regarding the transparency of supply chains,
availability of information, and ability to verify reporting.
Information is widely available that details the People's Republic of
China's use of forced and prison labor in China. Companies should
understand the legal and compliance risks when sourcing from China.
CBP is taking enforcement action to the extent possible. Charged
with enforcing 19 U.S.C. Sec. 1307, CBP has issued multiple withhold
release orders (WROs) on goods produced by forced Uyghur labor. The
most updated list of WROs can be found at the CBP.gov website. CBP will
continue to issue WROs when information reasonably indicates that goods
produced with forced labor are being, or are likely to be, imported
into the United States.
Question. How can we ensure that the products we need most are not
mass produced by those in Chinese reeducation facilities or other
forced labor programs?
Answer. DHS is taking enforcement action or developing cases for
enforcement action against forced labor connected to mass internment
camps in China, given that this remains a serious trade and human
rights issue. Importers must ensure their supply chains are free of
forced labor; failing to do so may result in administrative, civil, and
criminal consequences. Accurate, open-source reporting about labor
conditions overseas and transparency of company supply chains can help
importers identify and remediate forced labor found in supply chains.
Importers should use available information to exercise reasonable care
to ensure they do not import goods produced with forced labor, and they
must factor forced labor into a company's risk assessments and
corporate compliance program. CBP will continue to investigate and take
enforcement action on any goods produced with forced labor.
rulemaking status
Question. Last year, Ranking Member Wyden and I issued a bipartisan
report on counterfeits sold on e-commerce platforms. We found that
certain legal barriers prevent CBP from sharing packing information
with anyone other than the importer on record. We also learned that
this information could help identify high-volume sellers, who often
flood the supply chain with fake or faulty products. I imagine these
same types of sellers are now trying to profit off the coronavirus
pandemic.
Earlier this year, CBP indicated its intent to create a procedure
for the disclosure of information otherwise protected by the Trade
Secrets Act which would address this very issue. Can you tell us the
status of this rulemaking?
Answer. Consistent with the U.S. Department of Homeland Security
(DHS) Report on Combating Trafficking in Counterfeit and Pirated Goods,
CBP is working with its interagency partners to evaluate potential
regulatory changes that would allow for the enhanced information
sharing you refer to. CBP is assessing additional statutory authorities
that may be required to share information with non-traditional actors,
such as online platforms.
CBP is finalizing its responses to public comments on the Proposed
Rule on Enforcement of Copyrights and the Digital Millennium Copyright
Act (October 16, 2019; 84 FR 55251), which concerns advanced
information-sharing with respect to the seizure of circumvention
devices and other copyright-infringing goods. Six public comments were
received and are in review. The comments will be addressed in a final
rule, which will be developed during Fiscal Year 2021.
Question. And, are you working with stakeholders during this
process?
Answer. CBP has been working with the trade community, including
online marketplaces, to identify potential areas for improved
information sharing. Notably, CBP recently convened a task force group
of trade participants that, among other focus areas, will explore
information-sharing opportunities within CBP's existing statutory and
regulatory authorities. Moreover, the public has a two-month window to
comment on the Proposed Rule on Enforcement of Copyrights and Digital
Millennium Copyright Act.
legal barriers
Question. Are there any other legal barriers that are preventing
you from sharing information with right holders on COVID-19 infringing
products?
Answer. There are generally no legal barriers preventing the
sharing of certain information with right holders on COVID-19
infringing products, assuming that the right holder has followed the
correct procedures. Specifically, if the trademarks and copyrights that
are suspected of being infringed are federally registered and have been
recorded with CBP, 19 CFR part 133 provides for extensive information
sharing with right holders. In the context of copyrights, in accordance
with section 304 of the Trade Facilitation and Trade Enforcement Act of
2015, CBP permits unregistered copyrights to be recorded for a period
of 6 months as long as the applicant includes evidence that it has a
pending application with the U.S. Copyright Office, with the option of
an additional 6-month extension.
______
Questions Submitted by Hon. Ron Wyden
ppe problems
Question. Prior to the coronavirus pandemic, nearly 50 percent of
face shields, protective garments, masks, gloves, and goggles were
imported from China. The U.S. was even more dependent on China for some
other types of personal protective equipment like face masks.
Were counterfeit, fraudulent, or otherwise substandard PPE a
significant problem at U.S. ports prior to this pandemic?
Answer. CBP has always placed emphasis on Priority Trade Issues
(PTIs), which are high-risk areas that can cause significant revenue
loss, harm the U.S. economy, and/or threaten the health and safety of
the American people. IPR and Import Safety are both PTIs. Additionally,
depending on the seizure trends that we observe from year to year, CBP
re-focuses its efforts to adapt to the agile nature of counterfeits.
As a result, CBP consistently works to address health and safety
threats that counterfeit goods pose to American consumers. Counterfeit
goods, including fraudulent COVID-19-related PPE, can affect the health
and safety of the public and, as such, are a focus in CBP's enforcement
efforts.
Question. Or is the issue around counterfeit or fraudulent PPE
entirely driven by the massive surge in demand for PPE and the
administration's failure to properly stockpile equipment prior to the
pandemic, and its ongoing failure to procure quality safety equipment
as the pandemic continued?
Answer. As noted above, because IPR and Health and Safety are PTIs,
CBP works to address health and safety threats that counterfeit goods
pose to American consumers based on three areas of emphasis: (1)
targeting, intercepting, and taking meaningful enforcement actions on
imports of counterfeit and dangerous imports; (2) interagency
facilitation and expedited clearance of large shipments of PPE from
legitimate vendors and international donors; and (3) development and
dissemination of guidance and educational materials for Federal
employees, the trade community, and U.S. public. Depending on the
seizure trends that we observe from year to year, CBP re-focuses its
efforts to adapt to the agile nature of counterfeits.
forced labor programs
Question. Recent reporting has revealed that the United States
buyers have received PPE made by Chinese companies who participate in a
government-sponsored forced labor program. Federal law prohibits
imports of products manufactured using forced labor and subjects such
products to exclusion or seizure.
Why were PPE products manufactured using forced labor allowed to be
imported into the United States in violation of Federal law?
Answer. Importing goods produced with forced labor is a violation
of Federal law, and companies and individuals may face administrative,
civil, and criminal consequences. If goods produced with forced labor
were previously imported into the United States, there is still the
possibility for administrative, civil, and criminal consequences for
those who violated Federal law.
Both CBP and ICE are receiving and reviewing information on forced
labor in China. CBP is aggressively pursuing allegations received with
the many challenges and limited visibility that the Chinese supply
chains bring. Of the thirteen WROs CBP issued this fiscal year, nine
were issued to detain products from China. Eight were specific to the
Xinjiang region. Additionally, CBP collected civil penalties on Chinese
imports made with forced labor. This action is the first forced labor
penalty that the agency has issued, and demonstrates another
enforcement tool in CBP's ongoing effort to prevent goods made with
forced labor from entering the United States.
Importers have the duty to exercise reasonable care and due
diligence to ensure that goods produced with forced labor do not enter
their supply chains. Tracing goods produced with forced labor in China
to the United States is challenged by limited supply-chain
transparency, availability of information, and accuracy of reporting.
CBP works collaboratively with the U.S. interagency,
nongovernmental, and civil society organizations to identify goods of
highest risk. CBP publicizes its strong interest in receiving
allegations of goods produced with forced labor in U.S. supply chains.
Question. Why weren't such products blocked at the border and/or
seized?
Answer. Unlike counterfeit goods and other violative merchandise,
goods produced with forced labor generally cannot be identified by
examination upon arrival at a U.S. port of entry. CBP must have
reasonable suspicion that forced labor is used in the production or
manufacture of U.S. imports before shipments can be detained.
Reasonable suspicion is realized through research that results in a
WRO. A Finding, which is a seizure order, requires a higher standard of
evidence than a WRO.
Question. Is DHS and/or CBP investigating these apparently illegal
imports?
Answer. Both CBP and ICE are receiving and reviewing information on
forced labor in China. CBP and ICE are aware of allegations about PPE
manufactured under forced labor conditions by Chinese companies. CBP
will aggressively pursue enforcement action where evidence reasonably
indicates that these goods from China are manufactured with forced
labor and imported into the United States.
Question. Please explain what steps CBP is taking to ensure that
PPE and other medical supplies procured in response to COVID-19 aren't
produced with forced labor.
Answer. Under the Federal Acquisition Regulation, U.S. Government
departments and agencies must conduct due diligence to eliminate the
risks of forced labor in their procurement supply chains. CBP notifies
departments or agencies when entities affected by a forced labor
enforcement action is discovered in their procurement supply chain.
Question. What improvements could be made to ensure the U.S. does
not facilitate forced labor?
Answer. Importers have the duty to exercise reasonable care and due
diligence to ensure that goods produced with forced labor do not enter
their supply chains. Increased supply chain transparency, through
increased disclosure requirements, may improve the traceability of
goods produced with forced labor and imported into the U.S.
To better understand complex supply chains and financial and
political relationships of business entities operating in or connected
to the Xinjiang Uygur Autonomous Region (XUAR) and China, a prioritized
level of effort to develop intelligence and analyze information across
the Intelligence Community and Federal inter-
agency is needed.
______
Questions Submitted by Hon. Benjamin L. Cardin
stopping counterfeit goods
Question. In the port of Baltimore and other mid-Atlantic ports,
DHS Customs and Border Protection officials have continued to seize
counterfeit and unapproved COVID-19 protective equipment and
medications. Such seizures have included unapproved and counterfeit
COVID-19 test kits, counterfeit N95 respirator masks, counterfeit ACCU-
CHEK test trips, and unapproved and potentially counterfeit medicines,
including Hydroxychloroquine Sulfate, Chloroquine, Azithromycin,
Lianhua Qingwen and Liushen Jiaonang.
I have noticed that these products have come from all over the
world, including China, South Korea, Turkey, Saudi Arabia, Nigeria,
Senegal, Germany, and the United Kingdom, and these products were
heading to numerous States in the mid-Atlantic region and throughout
the United States.
What tactics or techniques have you found to be most effective in
stopping the importation of these counterfeit goods?
Answer. CBP and interagency efforts to facilitate trade in critical
medical and protective supplies as well as efforts to identify and
intercept non-compliant, substandard, unsafe, and/or counterfeit PPE
and Medical Countermeasures (MCM) imports has proven effective.
CBP's information sharing and advance targeting nets efforts are
the most meaningful enforcement action on imports of violative and
potentially dangerous COVID-19-related materials such as fraudulent,
illicit, or otherwise substandard test kits, ventilators, and
disinfectants and pesticides (anti-viral and anti-bacterial). Since the
outset of the COVID-19 pandemic response, CBP has leveraged real-time
intelligence from partners serving with CBP's CTAC--most notably FDA,
the U.S. Environmental Protection Agency, and ICE HSI--to identify
areas of highest risk and to inform CBP National Targeting Center and
PHC Center targeting on fraudulent and substandard COVID-19 PPE and
medical supplies.
CBP is also an active contributor to the interagency COVID-19
consumer fraud working group led by the DOJ, whose work has led to
several recent arrests for sales of illegal COVID-19 imports. For
additional information, go to https://www.justice.gov/usao-ndga/pr/
georgia-resident-arrested-selling-illegal-products-claiming-protect-
against-viruses and https://www.justice.gov/usao-cdca/pr/uk-national-
charged-shipping-mislabeled-and-unapproved-treatments-patients-
suffering.
This interagency facilitation expedited clearance of large-scale
shipments of critical medical supplies and PPE from legitimate vendors
and international donors, through newly established structures like
CBP's COVID-19 Coordinated Response Team and the State Department and
FEMA-led International Resources Coordination Group (IRCG).
CBP efforts to streamline the entry of legitimate shipments result
in the allocation of safe and plentiful PPE and MCM to health-care
providers and other front-line users, and enable the U.S. Government to
focus surveillance on bad actors and high-risk areas. This risk-
calibrated approach was essential, and CBP plans to maintain this
strategy, given the massive uptick in shipments of PPE this year.
Through its participation in the IRCG, CBP continues to facilitate
the importation of donations of PPE from other foreign governments and
hundreds of private-sector donors. CBP also engages the trade community
to develop relief mechanisms on a case-by-case basis to facilitate the
timely clearance of critical cargo (e.g., extension of certain
administrative deadlines).
Question. Which countries have been most and least helpful in terms
of intercepting these products before they reach the United States?
Answer. As noted above, CBP has implemented COVID-19 specific
initiatives in addition to its normal IPR enforcement activity. In
addition to this, CBP coordinates with international organizations such
as the Organization for Economic Cooperation and Development on best
practices in dealing with COVID-19-related illicit trade. Further, CBP
does have in place Customs Mutual Assistance Agreements with 14
economies that assist us in jointly targeting and interdicting
counterfeit goods. CBP also leverages our network of CBP and ICE
attaches to facilitate the coordination with these economies on joint
operations and customs procedures. An example of some of this
cooperative work can be seen in the joint operation, Operation Stolen
Promise, where CBP has worked with ICE HSI on to seize and interdict
illicit COVID-19-related goods. For more publicly available information
and seizure statistics on Operation Stolen Promise, please visit
https://www.ice.gov/topics/operation-stolen-promise.
coordination with fda
Question. To what extent do you coordinate with the Food and Drug
Administration to prioritize your scarce resources to seize the most
dangerous types of drugs and products?
Answer. To enhance collaboration between CBP and other U.S.
Government agencies including the FDA, the CTAC was established in 2009
and is located within CBP's Office of Trade. The CTAC serves as a
fusion center where CBP, FDA, and other participating personnel are co-
located at a single site, sharing targeting resources and expertise to
achieve the common mission of protecting the American public. The CTAC
enhances CBP and FDA's ability to streamline national trade targeting
efforts and coordinate among the participating agencies. This includes
sharing critical import safety information and best practices, reducing
duplicated targeting/examinations across agencies, and serving as a
central point of response for import safety events of interest to FDA,
CBP, and other agencies present. The mission of the CTAC is in line
with the President's Food Safety Working Group, which calls for
agencies with an interest/authority in import safety to coordinate
efforts and resources, and focuses on the core principles of
prevention, surveillance, and response. Through a unique memorandum of
understanding, agencies at CTAC are able to share information and
systems access to conduct joint import safety targeting at the national
level.
______
Questions Submitted by Hon. Sherrod Brown
forced labor programs
Question. It is well-documented that the Chinese Government has
pursued systemic policies to eradicate the culture and religion of the
Uyghurs. Reports indicate that tens of thousands of Uyghurs are subject
to forced labor conditions in the Xinjiang Province as part of this
Chinese Government policy. The Australian Strategic Policy Institute
(ASPI) identified 27 factories in the province that contribute to the
supply chain of dozens of well-known brands, including Nike, Apple,
H&M, and others. CBP has issued two withhold release orders (WRO) for
hair products from producers in the Xinjiang Province on May 1, 2020
and June 17, 2020, but other imports from Xinjiang Province do not
appear to be covered by WROs.
Does DHS believe products, including products from the above-
mentioned brands, are being imported to the U.S. that were made with
Uyghur forced labor?
Answer. DHS is committed to enforcing against the People's Republic
of China's serious human rights abuses, including forced labor, against
Uyghurs and other ethnic and religious minorities. Both CBP and ICE are
receiving and reviewing information on forced labor in China. ICE
cannot comment on ongoing criminal investigations. Importing goods
produced with forced labor is a violation of Federal law, and companies
and individuals may face administrative, civil, and criminal
consequences.
DHS, CBP, and ICE are committed to working with the interagency,
business, and civil society communities to identify and stop forced
labor-derived goods from entering the United States. Information is
widely available that detail the People's Republic of China's use of
forced and prison labor in China. Tracing goods produced with forced
labor in China to the United States is challenging due to limitations
regarding supply chain transparency, availability of information, and
accuracy of reporting. However, DHS and CBP are committed to working
with the interagency, business, and civil society communities to
identify and stop forced labor-derived goods from entering the United
States.
DHS along with U.S. Departments of State, Treasury, and Commerce
published a Xinjiang Supply Chain and Business Advisory, warning
businesses of reputational, economic, and legal risks of involvement
with entities engaged in forced labor and other human rights abuses in
Xinjiang. Additionally, in September 2020, CBP announced five new WROs
against entities operating in or connected to Xinjiang, covering an
array of products. Linking entities that use forced labor to U.S.
importers is difficult. Of the 13 WROs CBP issued this fiscal year, 9
were issued to detain products from China. Eight were specific to the
Xinjiang region.
Question. What actions is DHS taking to address Chinese Government-
mandated forced labor among the Uyghurs and to prevent imports produced
with forced labor from entering the U.S. market?
Answer. CBP continues to investigate allegations of forced labor in
the XUAR and elsewhere in China. CBP will pursue enforcement action
where evidence reasonably indicates that goods from China manufactured
with forced labor are imported to the United States. CBP has
prioritized allegations focused in the XUAR and China as a whole. As
noted above, of the thirteen WROs CBP issued this fiscal year, nine
were issued to detain products from China. Eight were specific to the
Xinjiang region. CBP continues to review additional allegations
surrounding the region.
communications with retailers
Question. Has DHS communicated with any of the retailers named in
the ASPI report regarding the possible presence of Uyghur forced labor
in their supply chains? If so, please describe the nature of those
communications.
Answer. DHS along with the U.S. Departments of State, Treasury, and
Commerce published a Xinjiang Supply Chain and Business Advisory,
warning businesses of reputational, economic, and legal risks of
involvement with entities engaged in forced labor and other human
rights abuses in Xinjiang. Linking entities that use forced labor to
U.S. importers is difficult. CBP welcomes any information businesses,
or any member of the public, wish to share about allegations of forced
labor in the XUAR and elsewhere in China.
forced labor programs
Question. Recent reports have also indicated the use of Uyghur
forced labor in medical equipment and personal protective equipment
supply chains.
Is DHS actively investigating the presence of forced labor,
including Uyghur forced labor, in personal protective equipment supply
chains? If so, please describe those actions.
Answer. CBP is aware of the allegations about PPE manufactured
under forced labor conditions by Chinese companies. CBP will pursue
enforcement action where evidence reasonably indicates that goods from
China are manufactured with forced labor imported to the United States.
On July 15, 2020, CBP issued a WRO to U.S. ports of entry to detain
shipments of disposable rubber gloves from a Malaysian manufacturer for
the use of forced labor.
Question. Has DHS blocked any shipments of medical equipment or PPE
believed to have been made with Uyghur forced labor?
Answer. CBP has not yet issued a WRO to U.S. ports of entry to
detain shipments of medical equipment believed to have been made with
Uyghur forced labor.
Question. Please describe all actions DHS is taking to address
Uyghur forced labor in medical equipment and PPE supply chains.
Answer. CBP continues to investigate allegations of forced labor in
the XUAR and elsewhere in China. While CBP has taken a number of
enforcement actions against violators in Xinjiang, the we will continue
pursue enforcement action where evidence reasonably indicates that
other goods from China, including medical equipment and PPE, are
manufactured with forced labor destined for the U.S.
______
Questions Submitted by Hon. Catherine Cortez Masto
medical commodities surge
Question. In your testimony you describe the surge in demand for
medical commodities specifically that import quantities increased by
227 percent in April alone. How does that compare to what you were
seeing in March or even February?
Answer. Compared to data from the same period in 2019, import
quantities for medical commodities began to increase in January--March,
but rose much more dramatically in April 2020. Import quantities peaked
in May 2020, and though still higher than the same periods in 2019,
have subsided in June and July. April import quantities were 227
percent higher than quantities in March 2020. May 2020 quantities were
46 percent higher than April 2020.
Question. When did the U.S. demand begin to surge and has it
subsided?
Answer. Compared to 2019 data, import volumes in January and
February were higher than 2019, but increased dramatically in April and
May. While still higher than 2019 totals, medical supply import
quantities have begun to decrease, beginning in June.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
project airbridge distributions
Question. PPE that came through via Project Airbridge appears to
have been distributed directly to health care providers, which
circumvented the State's role as the resource coordinator. What efforts
were undertaken to make sure that Governors were made aware of those
distributions so that they could plan accordingly?
Answer. FEMA and HHS established the Supply Chain Stabilization
Task Force to address the limited supply of critical protective and
life-saving equipment during the COVID-19 pandemic response. Project
Airbridge was a Task Force initiative created to shorten the amount of
time it takes for U.S. medical supply distributors to bring PPE and
other critical medical supplies into the U.S. CBP defers to FEMA and
HHS to describe the Task Force's efforts in informing governors of
Project Airbridge distributions.
project airbridge reactivation
Question. You noted in your testimony that Project Airbridge
``concluded on July 1st, but retains the ability to be reactivated in
accordance with shifting conditions.'' What specific conditions would
trigger a reactivation?
Answer. CBP defers to FEMA and HHS regarding what conditions would
trigger the reactivation of Project Airbridge. However, CBP stands
ready to assist should the United States have a future emergent need
for critical PPE due to the COVID-19 pandemic.
______
Prepared Statement of Hon. Ron Wyden,
a U.S. Senator From Oregon
This week the Finance Committee will hold two hearings looking at
why State governments and health-care providers have struggled to get
the PPE and gear they need to fight the coronavirus.
Some members want this to be all about counterfeits and China. In
my view, that story is way off the mark. If you want to know what's
contributing most to the PPE shortage, you have to start with Donald
Trump shirking his responsibility to lead, causing States and hospitals
to compete against each other for supplies they need, and exposing them
to scammers on the PPE gray market.
From the very beginning to this day, the President is blowing off
his number one responsibility, which is to keep Americans safe. The
pandemic has claimed 150,000 American lives and counting, but instead
of focusing on that, the President is launching paramilitary
occupations of American cities, including my hometown of Portland. It's
all a big campaign-season deflection from the enormous human and
economic toll the pandemic is taking.
So Oregon is a perfect example of how the Trump administration's
priorities are totally out of whack. Let me explain why. Back in the
spring, the President was in full-on denial mode that he was
responsible for helping our doctors and nurses and caregivers and other
front-line workers find the PPE and other equipment they needed.
In mid-March, during one of his infamous coronavirus press
briefings, he said the Federal Government is, quote, ``not a shipping
clerk'' and that when it came to acquiring PPE, quote, ``Governors are
supposed to be doing it.''
His disinterest in leading any kind of coordinated effort to
acquire and distribute PPE forced the States to compete against each
other on the open market. It gave room for a whole lot of sketchy
suppliers and scam artists to rip off the American taxpayer and
endanger front-line public health workers with unsafe and sub-
standard PPE.
The State of Oregon, for example, purchased close to 1 million N95
masks from a supplier in China. After those masks arrived, they were
de-certified because they could not pass a key safety screening. The
U.S. agency that tests respirators, NIOSH, now says that some of the
Chinese respirators they rejected could have been counterfeit, but no
one knows for sure.
The fact that Oregon, like so many other States and medical
providers, had to go out on its own and buy critical safety equipment
in the middle of a global pandemic is a disgrace. And the pandemic is
continuing to rage there. But Donald Trump isn't trying to find new
ways to help Oregon deal with this pandemic.
Instead, he is terrorizing my friends and neighbors in Portland
with a secret police force of hundreds of paramilitary units. Night
after night, they have tear-gassed a ``Wall of Moms,'' including my
friend Sharon Meieran, a county Commissioner and ER doc who was out
protesting peacefully and was gassed without provocation. They've shot
peaceful protesters with impact munitions that are unquestionably
capable of killing somebody. They have snatched people off the streets
into unmarked vans, holding and interrogating them without
justification or charges. Trump is deploying these forces to other
cities. He wants to take this violence nationwide.
So what's happened in Oregon over the last few weeks and months is
just one example of how Donald Trump is neglecting his responsibilities
when it comes to the pandemic and abusing his office to try to get
reelected.
He ought to be attacking this virus, not peaceful protesters in my
hometown. And then he could actually contribute to the effort to get
PPE into the hands of all the Americans who need it.
So there's a lot to talk about today. I want to thank our witnesses
for joining the committee. They are a group of career officials--not
political appointees--from agencies within the Department of Homeland
Security. I wish the people who ran that department shared their focus
on fighting the pandemic instead of using their authority to abuse
Portlanders.
I also want to thank Chairman Grassley for working with us to
arrange the second hearing on Thursday, when the committee will be able
to speak with representatives from the medical community, including the
head of the American Nurses Association. They'll also have important
testimony for the committee.
______
Communication
----------
Center for Fiscal Equity
14448 Parkvale Road, #6
Rockville, MD 20853
[email protected]
Statement of Michael G. Bindner
Chairman Grassley and Ranking Member Wyden, thank you for the
opportunity to submit these comments for the record to the Committee. I
will not pull any punches on how bad things are.
This crisis is worse than you think. For whatever reason, the
Coronavirus Task Force has ignored the first round of symptoms of this
ailment. In my experience, it begins as a cold with heavy product. Bad
timing made many sufferers believe that they were merely suffering from
hay fever. There is then a week of dormancy. If you assume that
exposure occurs 2 weeks prior to the first symptoms, there are 4 weeks,
rather than 2, before SARS symptoms are manifested, including fever,
fatigue from low oxygen levels and fatigue from the manufacture of
immunity (which feels like a gut punch over a 2-week period). The CDC
has just added nasal symptoms to the list, but has not yet emphasized
their role in starting transmission.
In addition to masking, patients must quarantine from the first
productive sneeze and stay isolated for 3 weeks or until the SARS and
fatigue symptoms have passed, whichever is later. Every asymptomatic
adult in the household must be quarantined until 3 weeks after everyone
with symptoms has completed their quarantine. A
society-wide shutdown is not required if this discipline is kept, both
here and abroad.
Most nations that shut down merely guaranteed a second wave. There
are people who will get sick no matter what is done, usually those with
degraded immune systems due to fastidious cleaning prior to the
pandemic. Young people who vape are also at high risk. The only way to
assure the international supply chain is not interrupted is to limit
quarantine to households where someone has nasal symptoms. The
alternative is the supply chain coming to a screeching halt.
The following comments are from those submitted to the Ways and
Means Subcommittee on Trade (which were excluded from Part 2 of this
hearing).
Supply chains are global, and many nations who have controlled the
virus by shutting down the economy rather than tailored quarantines
will quickly find that many with less robust immune systems will get
very sick when it opens. There will be a second wave in these nations,
and a third, and a fourth. The supply chain will be stressed, if not
stopped, even if draconian openings and closings can be imposed in
China.
Draconian measures may be efficient, but they may add a different
kind of fever, one that the regime will likely underestimate.
Revolution kills production lines once people have too much. China,
Inc. may not be as efficient a partner in a post-
revolutionary future. Workers with more freedom to bargain and vote
will want more stuff, which means higher prices here. Higher prices
mean higher wages will be required, but jobs will come back as the
economy changes.
Current trade policy is the wrong way to go about long-term change,
especially when led by an irresponsible actor. Let me restate what we
have previously written from Trade Policy comments:
Trade negotiations with China . . . have taken on the character
of economic gunboat diplomacy, but without the Navy. These
occur because the President is ill-equipped by his background
as a businessman to work cooperatively, which is the essence of
governance in a free society. He has a freer hand in trade
negotiations. Sadly, his experience as a CEO has not served the
nation well. The modus operandi of most executives is to break
things in order to be seen fixing them. This must stop. The
public is not amused, including the Chamber of Commerce,
farmers and the stock and commodity markets.
Today's witnesses are not likely to say their boss is a
vainglorious idiot, so allow me to. It is well known that in
this administration, professional diplomatic expertise is not
valued. Mr. Trump prefers to shoot from the lip. The
incompetence of this President is tragic for our ongoing trade
policy, which relies on a high degree of professionalism and
careful work over a period of several administrations.
Thank you for the opportunity to address the committee. We are, of
course, available for direct testimony or to answer questions by
members and staff.