[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.

                                   