Q&A: COVID-19 Sharpens Focus on Supply Chains
With U.S. Senator Chuck Grassley
Q: Why did you conduct congressional hearings to examine overseas supply chains?
A: Even before COVID-19 reached America, I’ve led oversight and investigations into supply chain issues, such as the sale of counterfeit goods and our reliance on foreign countries for active pharmaceutical ingredients. In both cases, these products are shipped predominately from China and India into the United States. Consider that China manufactures roughly 40 percent of global personal protective equipment (PPE), and yet it was snapping up global supplies of PPE before it informed the rest of the world about the contagious virus. In 2020, COVID-19 brings greater urgency to efforts to build resiliencies into our essential supply chains required to avoid shortages and protect American lives. From food to medicine, manufacturing and service industries, the pandemic exposed the vulnerabilities of our medical and manufacturing supply chains vital to public health and the U.S. economy. This dependence also impacts our economic recovery. During my county meetings in July, an Iowa small business owner shared concerns about fault lines in the distribution of component parts he needs to run his business. He’s encountered supply shortages for as much as 40 percent of the products he uses in his operation that are imported from China or Mexico. Since the novel coronavirus reached our shores, I’ve also gotten feedback from Iowa first responders and front line workers about serious challenges they’ve experienced accessing personal protective equipment (PPE). Congress and the Trump administration significantly beefed up resources to help state and local governments obtain medical supplies needed to serve their communities. Ensuring these resources are used as efficiently and effectively as possible is an important part of my job to conduct checks and balances. As chairman of the Senate Finance Committee, which has jurisdiction over international trade matters, I called together federal officials and industry experts to drill down on the problems facing our nation’s health care industry as we work to fight the virus, save lives and untangle the economic recovery from weaknesses in supply chains. According to witness testimony at my hearings, approximately 85 percent of all federal seizures of counterfeit goods in the past five years have originated from China and Hong Kong, including about 56 percent of seized pandemic-related counterfeit goods. At the hearings, we discussed measures that would strengthen procurement processes so that critical supply chains are returned to the Western Hemisphere and extend the timeframe for federal contracts to give certainty to domestic suppliers who would need to make considerable investment to expand production here in the United States. From my leadership position in the U.S. Senate, I will continue my efforts to combat intellectual property theft and root out criminal enterprise rings that compromise the integrity of our medical supplies and put public health and the U.S. economy in jeopardy.
Q: What efforts are underway to mitigate pandemic-related fraud?
A: Across the federal government, all hands are on deck to combat fraud and accelerate delivery of top quality personal protective equipment and supplies. Customs and Border Protection said it has processed more than 1.3 billion pieces of PPE in its efforts to help meet demand. Immigration and Customs Enforcement's Homeland Security and Investigations (HSI) announced its agents have seized more than 900 shipments of counterfeit or substandard medical equipment, test kits, treatments and supplies at U.S. ports of entry since April. In its first 100 days since the launch of Operation Stolen Promise, HSI has seized more than $7 million of illicit proceeds, including $2.2 million from CARES Act resources. At my hearing, HSI said it has returned more than $17 million to victims of COVID-19 fraud. As a longtime taxpayer watchdog, the trillions of dollars of pandemic-related emergency funding offers a target-rich jackpot for fraud. A slew of bad actors, contractors and middlemen have come out of the woodwork that endangers public health and defrauds taxpayer money. It’s important for all Americans to be extra vigilant. Follow your gut instinct. HSI has deployed a robust campaign to fight financial fraud, cyber-crime, websites defrauding consumers and importation of prohibited pharmaceuticals and medical supplies. Learn more about red flags to identify fraudulent scams and fake medical supplies that endanger consumers. Report COVID-19 fraud to the Strategic Targeted Outreach Program (S.T.O.P.) at COVID19FRAUD@dhs.gov.