Supply Chain Security
Feasibility and Cost-Benefit Analysis Would Assist DHS and Congress in Assessing and Implementing the Requirement to Scan 100 Percent of U.S.-Bound Containers Gao ID: GAO-10-12 October 30, 2009U.S. Customs and Border Protection (CBP), within the Department of Homeland Security (DHS) is responsible for, among other things, the security of cargo containers shipped to the United States. In fiscal year 2008, 611 ports shipped a total of 9.8 million containers to the country. The 9/11 Commission Act (9/11 Act) requires 100 percent of U.S.-bound cargo containers to be scanned by 2012, and CBP has begun implementing the Secure Freight Initiative (SFI) to address this requirement. GAO was requested to assess CBP's efforts to implement the 9/11 Act requirement. This report addresses (1) CBP's progress at the initial ports participating in the SFI program, (2) CBP plans to implement SFI, (3) the extent to which CBP has estimated costs and conducted a cost-benefit analysis of 100 percent scanning, and (4) any challenges to integrating 100 percent scanning with existing container security programs. GAO reviewed operating procedures for the SFI ports and analyzed cost data. GAO also visited six of the seven original SFI ports and spoke to officials from CBP, foreign governments, and private industry.
CBP has made limited progress in scanning containers at the initial ports participating in the SFI program, leaving the feasibility of 100 percent scanning largely unproven. Since the inception of the SFI program, CBP has not been able to achieve 100 percent scanning at any participating port. While CBP has been able to scan a majority of the U.S.-bound cargo containers at the comparatively low volume ports, it has not achieved sustained scanning rates above five percent at the comparatively larger ports. CBP has not developed a plan to scan 100 percent of U.S.-bound container cargo by 2012, but has a strategy to expand SFI to select ports where it will mitigate the greatest risk of WMD entering the United States. CBP does not have a plan to scan cargo containers at all ports because, according to agency officials, challenges encountered thus far in implementing SFI indicate that doing so worldwide will be difficult to achieve. However, CBP has not conducted a feasibility analysis of expanding 100 percent scanning, as required by the SAFE Port Act. Such an analysis could help both CBP and Congress determine the most effective way forward to enhance container security. Recognizing that its strategy will not meet the requirement to scan all U.S.-bound cargo containers, DHS plans to issue a blanket extension to all foreign ports by July 2012 to be in compliance with the 9/11 Act. DHS officials acknowledged that they may revisit this plan before the July 2012 deadline. CBP, while identifying some SFI program costs, has not developed a complete estimate of U.S. program costs because of the lack of a decision on a clear path forward. CBP has also not conducted any cost-benefit analysis which would include other economic costs, including those borne outside the United States, which would be important to any analysis of alternatives to achieving the 100 percent scanning requirement. While uncertainties exist, a cost estimate and cost-benefit analysis, consistent with federal best practices, could assist DHS and CBP in better communicating the magnitude of the costs and benefits to Congress and in designing a clear path forward for enhancing cargo container security. CPB faces a number of potential challenges in integrating the 100 percent scanning requirement into its existing container security programs. The 100 percent scanning requirement is a departure from existing container security programs in that it requires that all containers be scanned before CBP determines their potential risk level. Senior CBP officials and international trading partners say this change differs from CBP's current risk-based approach based on international supply chain security standards. Our work also indicates that the 100 percent scanning requirement could present challenges to the continued operation of existing container security programs--depending upon how the SFI program is implemented and 100 percent scanning is achieved. Some foreign governments have stated they may adopt a reciprocal requirement that all U.S. origin containers be scanned, which would present additional challenges at domestic U.S. ports.
RecommendationsOur recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
Director: Team: Phone:GAO-10-12, Supply Chain Security: Feasibility and Cost-Benefit Analysis Would Assist DHS and Congress in Assessing and Implementing the Requirement to Scan 100 Percent of U.S.-Bound Containers
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Requirement to Scan 100 Percent of U.S.-Bound Containers' which was
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Report to Congressional Requesters:
United States Government Accountability Office:
GAO:
October 2009:
Supply Chain Security:
Feasibility and Cost-Benefit Analysis Would Assist DHS and Congress in
Assessing and Implementing the Requirement to Scan 100 Percent of U.S.-
Bound Containers:
GAO-10-12:
GAO Highlights:
Highlights of GAO-10-12, a report to Congressional Requesters.
Why GAO Did This Study:
U.S. Customs and Border Protection (CBP), within the Department of
Homeland Security (DHS) is responsible for, among other things, the
security of cargo containers shipped to the United States. In fiscal
year 2008, 611 ports shipped a total of 9.8 million containers to the
country. The 9/11 Commission Act (9/11 Act) requires 100 percent of
U.S.-bound cargo containers to be scanned by 2012, and CBP has begun
implementing the Secure Freight Initiative (SFI) to address this
requirement. GAO was requested to assess CBP‘s efforts to implement the
9/11 Act requirement. This report addresses (1) CBP‘s progress at the
initial ports participating in the SFI program, (2) CBP plans to
implement SFI, (3) the extent to which CBP has estimated costs and
conducted a cost-benefit analysis of 100 percent scanning, and (4) any
challenges to integrating 100 percent scanning with existing container
security programs. GAO reviewed operating procedures for the SFI ports
and analyzed cost data. GAO also visited six of the seven original SFI
ports and spoke to officials from CBP, foreign governments, and private
industry.
What GAO Found:
CBP has made limited progress in scanning containers at the initial
ports participating in the SFI program, leaving the feasibility of 100
percent scanning largely unproven. Since the inception of the SFI
program, CBP has not been able to achieve 100 percent scanning at any
participating port. While CBP has been able to scan a majority of the
U.S.-bound cargo containers at the comparatively low volume ports, it
has not achieved sustained scanning rates above five percent at the
comparatively larger ports.
CBP has not developed a plan to scan 100 percent of U.S.-bound
container cargo by 2012, but has a strategy to expand SFI to select
ports where it will mitigate the greatest risk of WMD entering the
United States. CBP does not have a plan to scan cargo containers at all
ports because, according to agency officials, challenges encountered
thus far in implementing SFI indicate that doing so worldwide will be
difficult to achieve. However, CBP has not conducted a feasibility
analysis of expanding 100 percent scanning, as required by the SAFE
Port Act. Such an analysis could help both CBP and Congress determine
the most effective way forward to enhance container security.
Recognizing that its strategy will not meet the requirement to scan all
U.S.-bound cargo containers, DHS plans to issue a blanket extension to
all foreign ports by July 2012 to be in compliance with the 9/11 Act.
DHS officials acknowledged that they may revisit this plan before the
July 2012 deadline.
CBP, while identifying some SFI program costs, has not developed a
complete estimate of U.S. program costs because of the lack of a
decision on a clear path forward. CBP has also not conducted any cost-
benefit analysis which would include other economic costs, including
those borne outside the United States, which would be important to any
analysis of alternatives to achieving the 100 percent scanning
requirement. While uncertainties exist, a cost estimate and cost-
benefit analysis, consistent with federal best practices, could assist
DHS and CBP in better communicating the magnitude of the costs and
benefits to Congress and in designing a clear path forward for
enhancing cargo container security.
CPB faces a number of potential challenges in integrating the 100
percent scanning requirement into its existing container security
programs. The 100 percent scanning requirement is a departure from
existing container security programs in that it requires that all
containers be scanned before CBP determines their potential risk level.
Senior CBP officials and international trading partners say this change
differs from CBP‘s current risk-based approach based on international
supply chain security standards. Our work also indicates that the 100
percent scanning requirement could present challenges to the continued
operation of existing container security programs”depending upon how
the SFI program is implemented and 100 percent scanning is achieved.
Some foreign governments have stated they may adopt a reciprocal
requirement that all U.S. origin containers be scanned, which would
present additional challenges at domestic U.S. ports.
What GAO Recommends:
GAO recommends CBP complete a feasibility analysis, cost estimates, and
a cost-benefit analysis, and provide these results to Congress. DHS
partially agreed. It stated it has published reports addressing most of
the recommendations, but GAO analysis revealed that these reports did
not fully satisfy the recommendations‘ intent.
View GAO-10-12 or key components. For more information, contact Stephen
Caldwell at 202-512-9610 or caldwells@gao.gov.
[End of section]
Contents:
Letter:
Results in Brief:
Background:
CBP's Progress with SFI Implementation and Operation to Date Has Been
Limited, Leaving the Feasibility of 100 Percent Scanning Largely
Unproven:
CBP Plans to Improve Container Security Through Two Initiatives, but
These Plans Will Not Achieve 100 Percent Scanning and Will Require a
Process to Grant Extensions to Non-Compliant Ports:
CBP Has Not Identified Total Program Costs of SFI Implementation or
Conducted a Cost-Benefit Analysis to Assist in Evaluating Alternatives
to Achieving the 100 Percent Scanning Requirement:
Requirement for 100 Percent Scanning Creates Potential Challenges for
CBP that May Hinder the Continued Operation of Existing Container
Security Programs and Raises Concerns with International Partners:
Conclusions:
Recommendations for Executive Action:
Agency Comments and Our Evaluation:
Appendix I: Objectives, Scope, and Methodology:
Appendix II: Comments from the Department of Energy:
Appendix III: Comments from the Department of Homeland Security:
Appendix IV: GAO Contact and Staff Acknowledgments:
Related GAO Products:
Tables:
Table 1: Description of DHS and DOE Cargo Security Initiatives:
Table 2: Information on Ports Initially Agreeing to Participate in the
SFI Program:
Table 3: Data on Containers Scanned and Container Volume at SFI Ports:
Table 4: Costs Incurred by DHS and DOE to Implement and Operate SFI
Program, through June 2009:
Figures:
Figure 1: Overview of Key Participants Involved in Shipping Containers
in the International Supply Chain:
Figure 2: World Map Indicating the 157 WCO Customs Administrations That
Have Signed Letters of Intent to Implement the WCO SAFE Framework:
Figure 3: Examples of Scanning Equipment Used at SFI Ports:
Figure 4: Example of Scanning Outputs and Equipment at SFI Ports:
[End of section]
United States Government Accountability Office:
Washington, DC 20548:
October 30, 2009:
Congressional Requesters:
Concerns about the ability of terrorists to smuggle weapons of mass
destruction (WMD) inside cargo containers bound for the United States
have heightened since the terrorist attacks of September 11, 2001.
[Footnote 1] Oceangoing cargo containers play a vital role in the
movement of cargo between global trading partners. In fiscal year 2008,
611 foreign ports shipped a total of 9.8 million cargo containers to
the United States. Balancing security concerns with the need to
facilitate the free flow of commerce remains an ongoing challenge for
the public and private sectors alike. While U.S. Customs and Border
Protection (CBP), within the Department of Homeland Security (DHS), has
maintained that the likelihood of terrorists smuggling WMD into the
United States in cargo containers is relatively low, the consequence of
such an action could be devastating. For example, studies have
estimated costs of a WMD attack at a U.S. port to range from $58
billion to as high as $1 trillion.[Footnote 2]
In the federal government, CBP is responsible for overseeing oceangoing
container security and reducing the vulnerabilities associated with the
supply chain--the flow of goods from manufacturers to retailers. As CBP
performs this mission, it maintains two overarching and sometimes
conflicting goals--increasing security while efficiently facilitating
legitimate trade and commerce. CBP has developed a layered security
strategy to address container security concerns. Core components of the
layered security strategy include analyzing information to identify
containers that may be at high-risk of transporting WMD, working with
host governments to examine high-risk containers at foreign ports, and
providing benefits to companies that comply with predetermined security
measures. In addition to CBP's layered programs, the Department of
Energy (DOE) provides radiation detection equipment to foreign
governments to prevent terrorists from smuggling WMD in cargo
containers through foreign seaports. Related to these U.S. container
security programs, CBP has worked through the World Customs
Organization (WCO) to develop and promote implementation of the SAFE
Framework of Standards for supply chain security, which as of June
2009, 157 countries have agreed to implement.[Footnote 3]
To further address container security concerns, Congress passed, and
the President signed, the Security and Accountability for Every (SAFE)
Port Act in 2006.[Footnote 4] The SAFE Port Act requires that pilot
projects be established at three ports to test the feasibility of
scanning 100 percent of U.S.-bound containers at foreign ports.
[Footnote 5] To fulfill this requirement and determine the overall
feasibility and efficacy of 100 percent scanning, in December 2007,
DHS, the Department of State, and DOE jointly announced the formation
of the Secure Freight Initiative (SFI) pilot program. In August 2007, 2
months before the SFI pilot began operations,[Footnote 6] the
Implementing Recommendations of the 9/11 Commission Act of 2007 (9/11
Act) was enacted,[Footnote 7] which requires, among other things, that
by July 2012, 100 percent of all U.S.-bound cargo containers be scanned
before being placed on a vessel at a foreign port, with possible
extensions for ports at which certain conditions exist.[Footnote 8]
While foreign ports are not required to participate, the 9/11 Act
scanning requirement provides that cargo containers loaded on a vessel
in a foreign port that have not been scanned are not to be allowed into
the United States. This replaced a similar provision in the SAFE Port
Act that called for 100 percent scanning but did not have a deadline
for full implementation of the scanning requirement. The 9/11 Act did
not, however, specify who is to conduct the container scans or who is
to pay for scanning equipment or operations and maintenance. According
to CBP officials, with the passage of the 9/11 Act, efforts to
implement 100 percent scanning at participating ports changed from a
pilot test of the operational feasibility of scanning 100 percent of
U.S.-bound containers to an initial phasing in of the 100 percent
scanning requirement.[Footnote 9]
Both DHS and CBP, as well as foreign governments and customs
organizations, have expressed serious concerns regarding the
feasibility and efficacy of the 100 percent scanning requirement. In
April 2009, the Acting Commissioner for CBP testified that much had
been done to enhance the security of cargo containers relative to other
modes of transportation, and added that the area of maritime security
should not be overemphasized to the detriment of other transportation
modes. He also emphasized that the threat of a significant nuclear
weapon in a container remains remote and requested that the scanning
requirement be thoughtfully reconsidered by Congress. In January 2009,
the Secretary of the Department of Homeland Security also stated that
any requirement regarding container scanning from Congress must be
achievable and affordable and noted that the July 2012 deadline for 100
percent container scanning appeared to be unattainable. In April 2009,
the Secretary determined that CBP would focus deployment of the SFI
program to foreign locations of strategic importance in a way that will
maximize security benefits given its limited resources. In addition to
DHS' concerns that the requirement to scan all U.S.-bound cargo
containers cannot be met, foreign governments and customs organizations
have expressed their opposition to the requirement. For example, in
June 2008, members of the WCO unanimously endorsed a resolution
expressing concern that implementation of 100 percent scanning would be
detrimental to world trade and could result in unreasonable delays,
port congestion, and international trading difficulties.[Footnote 10]
Similarly, in May 2008, the European Parliament issued a resolution
calling for the United States to repeal the 100 percent scanning
requirement.
In response to your request, we are providing you with information on
CBP's efforts to implement the SAFE Port and 9/11 Acts. This report
addresses the following questions:
* What progress has CBP made toward implementing 100 percent scanning
at the initial ports participating in the SFI program?
* What planning efforts has CBP made to address the requirement to scan
all U.S.-bound cargo containers by July 2012?
* What are the estimated costs to date of the SFI program, and to what
extent have future implementation costs been estimated?
* What challenges, if any, does CBP face in integrating the 100 percent
scanning requirement with its existing container security programs?
To address these questions, we compared data on the volume of U.S.-
bound cargo containers and the number of containers scanned at SFI
ports to the scanning requirement set forth in the 9/11 Act. After
speaking with CBP officials to resolve inconsistencies with the
scanning data, we determined that the data provided were sufficiently
reliable for our purposes. We reviewed available CBP documentation on
expanding the SFI program, including the SFI program management plan
and implementation strategy, and assessed it against A Guide to the
Project Management Body of Knowledge.[Footnote 11] We obtained
available data on costs for operating the SFI program as reported by
CBP and DOE, which we determined to be sufficiently reliable after
assessing how CBP and DOE collect and manage cost data. We assessed
CBP's cost estimates for further implementation of the SFI program
using the GAO Cost Estimating and Assessment Guide.[Footnote 12] We
reviewed the need to do a cost-benefit analysis using criteria in DHS'
Cost-Benefit Analysis Guidebook[Footnote 13] and Office of Management
and Budget (OMB) Circulars.[Footnote 14] We reviewed bilateral and
multilateral efforts to enhance container security, such as the WCO
SAFE Framework of Standards. We conducted site visits at six of the
seven foreign ports that have been involved in the SFI program, and
spoke with foreign government, CBP, and terminal operator officials
during these visits.[Footnote 15] While the results of these site
visits and interviews cannot be generalized across all ports that ship
cargo containers to the United States, by observing operations at six
of the seven ports involved with the SFI program to date--Busan, South
Korea; Puerto Cortes, Honduras; Salalah, Oman; Southampton, United
Kingdom; Hong Kong; and Singapore--we gained an understanding of the
factors and challenges associated with implementing SFI at foreign
ports. In addition, we met with CBP, DOE, and State Department
officials who have program responsibilities for SFI and other programs
that are part of the U.S. government's layered maritime cargo container
security strategy. Further, we met with representatives from the WCO
and European Commission, and officials from seven foreign governments,
five of which contain an SFI pilot port, to discuss multilateral and
bilateral efforts to promote supply chain security. We also spoke with
six members of CBP's Customs Trade Partnership against Terrorism (C-
TPAT) program.[Footnote 16] Our interviews with these trade industry
representatives were based on a nonprobability sample, so while they
are not generalizable to the entire maritime trade industry, they
provide insight into the relationship between the SFI and C-TPAT
programs. We met with CBP officials at domestic ports, as well as
domestic port authorities to understand the impact of a reciprocal
scanning requirement. As appropriate, we also relied on our prior body
of work on container security conducted over the last several years
(see list of Related GAO Products at the end of this report).
We conducted this performance audit from August 2008 through October
2009 in accordance with generally accepted government auditing
standards. Those standards require that we plan and perform the audit
to obtain sufficient, appropriate evidence to provide a reasonable
basis for our findings and conclusions based on our audit objectives.
We believe that the evidence obtained provides a reasonable basis for
our findings and conclusions based on our audit objectives. A detailed
discussion of our scope and methodology is contained in appendix I.
Results in Brief:
CBP has made limited progress in working with the initial seven SFI
ports to ensure the scanning of U.S.-bound container cargo, and the
feasibility of 100 percent scanning remains largely unproven. CBP and
DOE have been successful in integrating images of scanned containers
onto a single computer screen that can be reviewed remotely from the
United States. They have also been able to use these initial ports as a
test bed for new applications of existing technology, such as mobile
radiation scanners. However, the SFI ports' level of participation, in
some cases, has been limited in terms of duration (e.g., the Port of
Hong Kong stopped their participation in scanning after approximately
16 months) or scope (e.g., the Port of Busan, Korea allowed scanning in
only one of the eight terminals). In addition, one port has withdrawn
from the SFI program and another port has yet to begin scanning
operations. Furthermore, since the inception of the SFI program in
October 2007, no participating port has been able to achieve 100
percent scanning. While 54 to 86 percent of the U.S.-bound cargo
containers were scanned at three comparatively low-volume ports that
are responsible for less than 3 percent of container shipments to the
United States, sustained scanning rates above 5 percent have not been
achieved at two comparatively larger ports--the type of ports that ship
most containers to the United States. Scanning operations at the
initial SFI ports have encountered a number of challenges--including
safety concerns, logistical problems with containers transferred from
rail or other vessels, scanning equipment breakdowns, and poor quality
scan images. Both CBP and GAO had previously identified many of these
challenges, and CBP officials are concerned that they and the
participating ports cannot overcome them. Thus, the feasibility of 100
percent scanning remains largely unproven.
CBP has planned two initiatives to improve container security; however,
neither initiative would achieve the 9/11 Act requirement to scan 100
percent of all U.S.-bound cargo by July 2012. The first initiative, the
"strategic trade corridor strategy," would involve scanning 100 percent
of U.S.-bound containers at selected foreign ports where CBP believes
it will mitigate the greatest risk of WMD entering the United States.
The Secretary of Homeland Security approved this strategy and,
according to CBP, it is in negotiations with foreign governments to
expand SFI to ports in those countries. Because negotiations are
ongoing, details on the number of ports involved are not yet finalized.
The second initiative, known as the "10+2" program, requires importers
to provide 10 data elements and vessel carriers to provide 2 data
elements on containers and their cargo to CBP, adding to the
information available to CBP and improving its ability to identify
containers that may pose a risk for terrorism for additional scrutiny--
such as scanning or physical inspection. CBP believes the strategic
trade corridor strategy, combined with its recently implemented 10+2
program, will enhance cargo container security. Based on discussions
with DHS and CBP officials, it is unclear whether DHS intends for the
strategic trade corridor strategy and 10+2 program to be implemented in
lieu of the 100 percent scanning requirement or whether it is the first
phase of implementation at all ports worldwide. While the strategic
trade corridor strategy and 10+2 may improve container security, they
do not achieve the legislative requirement to scan 100 percent of U.S.-
bound containers. According to CBP, it does not have a plan for full-
scale implementation of the statutory requirement by July 2012 because
challenges encountered thus far in implementing the SFI program
indicate that implementation of 100 percent scanning worldwide by the
2012 deadline will be difficult to achieve. However, it has not
performed a feasibility analysis of the SFI pilot and expanding 100
percent scanning to other foreign ports as required by the SAFE Port
Act. Furthermore, best practices for project management call for the
feasibility of a program to be considered early on, which can be done
through evaluating alternatives. The analysis should consider the
scope, objectives, time line and resources needed to achieve 100
percent scanning to determine if it is feasible and if so what is the
best way to achieve it, or if it is not feasible, what are the other
alternatives. Given the challenges encountered in implementing SFI at
the initial ports, such an analysis could help CBP and Congress
determine the most effective way forward to enhance container security.
Further, senior DHS and CBP officials acknowledge that most, if not all
foreign ports, will not be able to meet the July 2012 target date for
scanning all U.S.-bound cargo, and DHS will need to issue extensions to
such ports to allow the continued flow of commerce and still comply
with the 9/11 Act. DHS officials told us that the department had made a
decision to grant a blanket extension to all foreign ports rather than
on a port-by-port basis since some of the conditions listed in the 9/11
Act as a basis for granting extensions can be applied systemically to
all ports. Specifically, DHS believes the last two conditions--that the
use of the equipment would significantly impact trade capacity and the
flow of cargo, and that scanning equipment does not adequately provide
automatic notification of an anomaly in a container--could apply to all
foreign ports and, thus, warrant the use of a blanket extension because
two conditions are sufficient to justify an extension under the
statute. DHS officials acknowledged that this plan for extensions could
be revisited if there are significant changes (e.g., advancements in
scanning technology) before the July 2012 deadline.
CBP and DOE have tracked some information on their own costs for
implementing SFI--about $100 million to date--but CBP has not developed
a comprehensive estimate for future U.S. program costs, or conducted a
cost-benefit analysis that compares the costs and benefits of the 100
percent scanning requirement with other alternatives, such as the
strategic trade corridor strategy. The SAFE Port Act requires CBP to
report on costs for implementing the SFI program at foreign ports, but
CBP has not yet estimated total U.S. program costs because of both the
lack of a decision by DHS on a clear path forward and the unique set of
challenges that each foreign port presents. While uncertainties exist
regarding a path forward for the program, a credible cost estimate
consistent with cost estimating best practices could better aid DHS and
CBP in determining the most effective way forward for SFI and
communicating the magnitude of the costs to Congress for use in annual
appropriations. In evaluating the 9/11 Act, the Congressional Budget
Office assumed that foreign ports would pay for implementing the
scanning systems at their ports; however, CBP and DOE have paid the
majority of SFI costs for operating the SFI program to date. The SAFE
Port Act and 9/11 Act do not address the issue of who is expected to
pay the cost of developing, maintaining, and using the infrastructure,
equipment, and people needed for the 100 percent scanning requirement,
but implementing the requirement would entail costs beyond U.S.
government program costs, including those incurred by foreign
governments, private terminal operators, and could result in higher
prices for American consumers. CBP has not estimated these additional
economic costs, though they are relevant in assessing the balance
between improving security and maintaining trade capacity and the flow
of cargo. Both the Office of Management and Budget and DHS guidance
cite cost-benefit analysis as a key practice for agencies to use in
making decisions and allocating resources. Conducting a cost-benefit
analysis would allow CBP to evaluate the costs and benefits of
achieving 100 percent scanning as well as other alternatives for
enhancing container security. Such an analysis could provide important
information to CBP and to Congress to determine the most effective way
forward to enhance container security.
CBP faces a number of potential challenges in integrating the 100
percent scanning requirement with its existing container security
programs as it may hinder the continued operation of such programs, and
its international trading partners have raised concerns regarding,
among other things, the effectiveness of the 100 percent scanning
requirement. The scanning requirement is a departure from existing
container security programs because it requires CBP to apply the
scrutiny of scanning to all containers rather than conducting analyses
to determine the containers' potential risk level to determine whether
scanning is needed. Senior CBP officials have stated that the 100
percent scanning requirement differs from the risk-based strategy it
uses to identify containers that may require more scrutiny--such as
scanning and physical inspection. Our work also indicates that the 100
percent scanning requirement could present potential challenges to the
continued operation of other existing container security programs,
depending upon how the SFI program is expanded and 100 percent scanning
is implemented. For example, at one of the pilot ports we visited, the
continued operation of the SFI program reduced the willingness of the
foreign government to work with CBP to identify and physically inspect
containers under an existing bilateral program. The implementation of
100 percent scanning could also present challenges by reducing the
willingness of private companies to partner with CBP to improve their
internal security programs. For example, as a benefit, when importers
currently partner with CBP through the C-TPAT program (and share
information on their internal security practices), their containers
generally receive less scrutiny. With the potential worldwide
requirement to scan all U.S.-bound containers, regardless of the
importer's membership in C-TPAT, importers could lose one of the key
benefits of participating in C-TPAT. The new requirement has also
created challenges for CBP in its overall working relationships with
foreign governments. Because of the global nature of the supply chain,
international cooperation has been a key tenant of U.S. maritime
security strategy and practices. However, the 100 percent scanning
requirement is being put forth solely by the United States, in contrast
to some existing container security programs that were negotiated
multilaterally or bilaterally with willing partners. Officials at
international organizations and foreign governments we spoke with have
raised concerns to CBP about 100 percent scanning, stating that the new
requirement is inconsistent with the risk-based strategy adopted in
international standards for supply chain security that CBP uses in its
existing programs. The officials also stated the new requirement will
diminish security by reducing resources available to focus on high-risk
containers. If the United States enforces the 100 percent scanning
requirement, the European Commission has stated the European Union may
impose a reciprocal scanning requirement. This could present further
challenges to CBP. CBP officials and terminal operators at domestic
U.S. ports we met with stated that they would have a difficult time
meeting such a foreign-required scanning process and it could come at
the expense of their ability to secure the United States from inbound
containers that might contain WMD.
To better position DHS to comply with the scanning provisions of the
SAFE Port and 9/11 Acts, improve container security, and better inform
Congress on CBP's efforts to implement 100 percent scanning, we are
recommending that the Secretary of Homeland Security, working with the
Commissioner of CBP and in consultation with the Secretaries of Energy
and State as appropriate (1) conduct a feasibility analysis of
implementing the 100 percent scanning requirement in light of the
challenges faced; (2) develop comprehensive and credible estimates of
total U.S. program costs; (3) conduct a cost-benefit analysis
(including all significant economic costs) of 100 percent scanning and
alternative container security programs, and (4) report the results of
the feasibility analysis, cost estimates, and cost benefit analysis to
Congress, to assist DHS and Congress in addressing existing challenges
and determining the best path forward to enhance container security.
In commenting on a draft of this report, DHS stated that it concurred
with three of our recommendations related to developing a feasibility
analysis and a comprehensive cost estimate and providing the results of
these and other analyses to Congress, but that it had already published
reports that had addressed these recommendations. We disagree because
our analysis of these reports reveals that DHS has not fully satisfied
the intent of the recommendations as its reports do not include a
feasibility analysis that includes specific elements required by the
SAFE Port Act and its cost estimates are not comprehensive. DHS also
said that it agreed in part with our recommendation that it develop a
cost benefit analysis of 100 percent scanning, acknowledging that the
recommended analyses would better inform Congress, but stated the
recommendations should be directed to the Congressional Budget Office.
While CBO does prepare cost estimates for pending legislation, we think
the recommendation is appropriately directed to CBP. DHS's comments are
reprinted in Appendix III. CBP and the State Department also provided
technical comments, which we incorporated as appropriate.
Background:
Vulnerabilities of Containers in the International Supply Chain:
Ports are critical gateways for the movement of commerce through the
international supply chain. The facilities, vessels, and infrastructure
within ports, and the cargo containers passing through them, all have
vulnerabilities that terrorists could exploit. Containers carrying
goods that are shipped in oceangoing vessels are of particular concern
because they can be filled overseas at many different locations and are
transported through complex logistics networks before reaching U.S.
ports. In addition, transporting a shipping container from its
international point of origin to its final destination involves many
different participants and many points of transfer. The container, or
material in it, can be affected not only by the manufacturer or
supplier of the material being shipped, but also by carriers who are
responsible for getting the material to a port, as well as by personnel
who load containers onto the ships. Others who interact with the cargo
or have access to the records of the goods being shipped include
exporters who make arrangements for shipping and loading, freight
consolidators who package disparate cargo into containers, and
forwarders who manage and process the information about what is being
loaded onto the ship. Figure 1 illustrates many of the key participants
and points of transfer involved from the time that a container is
loaded for shipping to its arrival at the destination port and
ultimately the importer.
Figure 1: Overview of Key Participants Involved in Shipping Containers
in the International Supply Chain:
[Refer to PDF for image: 3 photographs and associated data]
Export Side:
Exporter:
Freight consolidator:
Inland carrier (e.g., truck, rail):
Terminal operator:
Freight forwarder.
Import Side:
Customs broker:
Customs inspectors:
Terminal operator:
Inland carrier (e.g., truck, rail):
Importer.
Photographs:
Containerized goods ready for shipment;
Shipment aboard ocean carrier;
Arrival at receiving port.
Source: GAO, DHS.
[End of figure]
Several studies of maritime security conducted by federal, academic,
nonprofit, and business organizations have concluded that the movement
of oceangoing cargo in containers is vulnerable to some form of
terrorist action. Every time responsibility for cargo in containers
changes hands along the supply chain there is the potential for a
security breach. As a result, vulnerabilities exist that terrorists
could take advantage of by, for example, placing a WMD into a container
for shipment to the United States or elsewhere. U.S. government
officials believe that the likelihood of terrorists smuggling WMD into
the United States in cargo containers is relatively low. While there
have been no known incidents of containers being used to transport WMD,
criminals have exploited containers for other illegal purposes, such as
smuggling weapons, people, and illicit substances.
The U.S. Government Is Engaged in Efforts to Secure Containers in the
International Supply Chain:
In the federal government, CBP is responsible for overseeing oceangoing
container security and reducing the vulnerabilities associated with the
supply chain. While CBP officials at domestic ports continue efforts to
identify and examine imports arriving in containers that may pose a
risk for terrorism, CBP's post-9/11 strategy also involves focusing
security efforts beyond U.S. borders to target and examine cargo that
may pose a risk for terrorism before it enters U.S. ports. CBP's
strategy is based on a layered approach of related initiatives that
attempt to focus limited resources on potentially risky cargo shipped
in containers bound for the United States while allowing other
containers carrying cargo to proceed without unduly disrupting
commerce. CBP's layered strategy to address container security is
complimented by DOE's efforts to prevent the proliferation of nuclear
materials. DOE has led U.S. efforts to detect radioactive material in
cargo containers originating at foreign ports. A brief description of
CBP and DOE initiatives is provided in table 1.
Table 1: Description of DHS and DOE Cargo Security Initiatives:
Initiative and year introduced: Automated Targeting System (ATS), 1999;
Department currently responsible: DHS;
Description: CBP uses ATS--a mathematical model that uses weighted
rules to assign a risk score to arriving cargo shipments based on
shipping information--to help identify and prevent potential terrorists
and terrorist weapons from entering the United States. ATS is a
computerized decision support tool used by CBP to review documentation,
including cargo manifest information[A] submitted by the ocean carriers
on all arriving shipments, and entry data (more detailed information
about the cargo) submitted by brokers, to develop risk scores that help
identify containers for additional examination.
Initiative and year introduced: 24-hour Rule, 2002;
Department currently responsible: DHS;
Description: CBP generally requires ocean carriers to electronically
transmit cargo manifests to CBP's Automated Manifest System 24 hours
before the U.S.-bound cargo is loaded onto a vessel at a foreign port.
Carriers and importers are to provide information to CBP that is used
to strengthen how ATS assigns risk scores. The cargo manifest
information is submitted by ocean carriers on all arriving cargo
shipments.
Initiative and year introduced: Container Security Initiative (CSI),
2002;
Department currently responsible: DHS;
Description: CBP places staff at participating foreign ports to work
with host country customs officials to target and examine high-risk
container cargo for weapons of mass destruction before they are shipped
to the United States. CBP officials identify the containers that may
pose a risk for terrorism and request that their foreign counterparts
examine the contents of the containers.
Initiative and year introduced: Customs-Trade Partnership Against
Terrorism (C-TPAT), 2001;
Department currently responsible: DHS;
Description: CBP develops voluntary partnerships with members of the
international trade community comprised of importers; customs brokers;
forwarders; air, sea, and land carriers; and contract logistics
providers. Private companies agree to improve the security of their
supply chains in return for various benefits, such as a reduced
likelihood that their containers will be examined.
Initiative and year introduced: Megaports Initiative, 2003;
Department currently responsible: DOE;
Description: DOE installs radiation detection equipment at key foreign
ports, enabling foreign government personnel to use radiation detection
equipment to screen shipping containers entering and leaving these
ports, regardless of the containers' destination, for nuclear and other
radioactive material that could be used against the United States and
its allies. As of June 2009, the Megaports Initiative was fully
operational at 23 foreign ports and in various stages of implementation
at 21others.
Initiative and year introduced: Standards to Secure and Facilitate
Global Trade (SAFE) Framework of Standards, 2005;
Department currently responsible: DHS;
Description: CBP, along with international partners developed the WCO
Framework of Standards to Secure and Facilitate Global Trade (commonly
referred to as the SAFE Framework), the core concepts of which are
based on components in CBP's CSI and C-TPAT programs. In June 2005, the
173-member customs administrations of the World Customs Organization
adopted the SAFE Framework and as of June 2009, 157 member countries,
including the United States, had signed letters of intent for
implementing the SAFE Framework.
Initiative and year introduced: Secure Freight Initiative (SFI), 2006;
Department currently responsible: DHS, DOE;
Description: CBP and DOE program at selected ports to scan 100 percent
of U.S.-bound container cargo for nuclear and radiological materials
overseas using integrated examination systems that couple non-intrusive
inspection (NII) and radiation detection equipment.
Initiative and year introduced: Domestic Port Radiation Detection
Scanning, 2007;
Department currently responsible: DHS;
Description: CBP program to scan 100 percent of containers arriving in
the United States with radiation detection equipment prior to leaving a
domestic port. As of April 2009, CBP had 409 radiation portal monitors
deployed at domestic ports, through which approximately 98 percent of
all arriving containers passed through.
Initiative and year introduced: Mutual Recognition Arrangements, 2007,
2008, 2009;
Department currently responsible: DHS;
Description: CBP bilateral program to develop mutual recognition of
Authorized Economic Operator (AEO) programs.[B] This occurs when
customs administrations agree to recognize the members of their
respective programs. As of June 2009, CBP has signed mutual recognition
arrangements with New Zealand, Canada, Jordan, and Japan. Furthermore,
the United States is in discussions with the European Union regarding
the possibility of entering into a nonbinding mutual recognition
arrangement.
Initiative and year introduced: Importer Security Filing and Additional
Carrier Requirements (also known as 10+2), 2009;
Department currently responsible: DHS;
Description: CBP regulation that requires importers and vessel carriers
to provide additional data elements for improved identification of
containers that may pose a risk for terrorism. The importer is
responsible for supplying CBP with 10 shipping data elements 24 hours
prior to lading while the vessel carrier is required to provide 2 data
elements in addition to those previously required.
Source: GAO summary of information obtained from DHS, DOE, and WCO.
[A] Cargo manifests are prepared by the ocean carrier and are composed
of bills of lading for each shipment of cargo loaded on a vessel to
describe the contents of the shipment.
[B] Authorized Economic Operators are those companies that participate
in a country's customs-to-business partnership programs and may
include, for example, manufacturers, importers, and exporters.
Incentives for businesses participating in AEO programs are defined and
offered by the individual member states.
[End of table]
CBP Has Taken Steps to Promote Customs Security Standards
Internationally:
CBP has taken a lead role in working with foreign customs
administrations on approaches to standardize supply chain security
worldwide. In 2004, CBP, along with 11 other member customs
administrations of the WCO, formed the High Level Strategic Group to
develop international standards for customs security practices. The
group developed the WCO Framework of Standards to Secure and Facilitate
Global Trade (commonly referred to as the SAFE Framework), the core
concepts of which are based on components in CBP's CSI and C-TPAT
programs. For example, just as in the CSI program, the SAFE Framework
states that members should use a risk-management system to target and
identify cargo that may pose a risk for terrorism. Similar to C-TPAT,
the SAFE Framework incorporates the concept of the Authorized Economic
Operator (AEO) and provides technical guidance for customs
administrations to develop an AEO program that offers incentives to
companies that comply with predetermined minimum supply chain security
standards. According to data from the WCO, as of July 2009, about 70
countries, including the 27 members states of the European Union, have
implemented or have begun developing AEO programs. In the United
States, C-TPAT is the designated AEO program and businesses
participating in the program are Authorized Economic Operators. In June
2005, the 173-member customs administrations of the WCO adopted the
SAFE Framework. Further, as of June 2009, 157 WCO members, including
the United States, had signed letters of intent to implement the SAFE
Framework (see figure 2).
Figure 2: World Map Indicating the 157 WCO Customs Administrations That
Have Signed Letters of Intent to Implement the WCO SAFE Framework:
[Refer to PDF for image: map and associated data]
WCO member countries that intend to implement the SAFE Framework:
South, North and Central America, and the Carribean:
Argentina;
Bahamas;
Bermuda;
Bolivia;
Brazil;
Canada;
Chile;
Colombia;
Costa Rica;
Cuba;
Dominican Republic;
Ecuador;
El Salvador;
Guatemala;
Haiti;
Honduras;
Jamaica;
Mexico;
Netherlands Antilles;
Nicaragua;
Panama;
Paraguay;
Peru;
Saint Lucia;
Trinidad and Tobago;
United States;
Uruguay.
Europe:
Albania;
Armenia;
Azerbaijan;
Belarus;
Croatia;
Georgia;
Iceland;
Israel;
Kazakhstan;
Kyrgyzstan;
Moldova;
Montenegro;
Norway;
Russian Federation;
Serbia;
Tajikistan;
The Former Yugoslav Republic of Macedonia;
Turkey;
Ukraine;
Uzbekistan;
European Union – 27 Member States.
Africa, Middle East:
Angola;
Bahrain;
Benin;
Botswana;
Burkina Faso;
Burundi;
Cameroon;
Cape Verde;
Central African Republic;
Chad;
Comoros;
Congo (Republic of the);
Côte d'Ivoire;
Democratic Republic of the Congo;
Egypt;
Ethiopia;
Gabon;
Gambia;
Ghana;
Guinea;
Iraq;
Jordan;
Kenya;
Kuwait;
Lebanon;
Lesotho;
Liberia;
Libyan Arab Jamahiriya;
Madagascar;
Malawi;
Mali;
Mauritania;
Mauritius;
Morocco;
Mozambique;
Namibia;
Niger;
Nigeria;
Oman;
Qatar;
Rwanda;
Saudi Arabia;
Senegal;
Sierra Leone;
South Africa;
Sudan;
Syrian Arab Republic;
Swaziland;
Tanzania;
Togo;
Tunisia;
Uganda;
United Arab Emirates;
Yemen;
Zambia;
Zimbabwe.
Far East, South and Southeast Asia, Australia and the Pacific:
Afghanistan;
Australia;
Bhutan;
Cambodia;
China;
Fiji;
Hong Kong, China;
India;
Indonesia;
Iran (Islamic Republic of);
Japan;
Korea (Republic of);
Japan;
Korea (Republic of);
Lao People's Democratic Republic;
Macau, China;
Malaysia;
Maldives;
Mongolia;
Myanmar;
Nepal;
New Zealand;
Pakistan;
Papua New Guinea;
Philippines;
Singapore;
Sri Lanka;
Thailand;
Vietnam.
Source: GAO (map art), Map Resources (map), WCO (data).
Note: Countries' names and geographic regions have been defined by WCO.
[End of figure]
While CBP has developed cooperative relationships with foreign
governments to enhance the security of U.S.-bound cargo containers
before they are placed on a vessel, several factors at foreign ports
that impact the security of cargo are beyond CBP's control. For
example, while CBP has developed specific standards for the inspection
equipment used to scan cargo containers at domestic ports, CBP has
potentially limited assurance that this inspection equipment is capable
of detecting and identifying potential WMD at foreign ports.
Additionally, while CBP can issue a "do not load" order so that a
specific cargo container would not be allowed on a U.S.-bound vessel,
it has no authority to compel host governments to participate in
security programs or to scan cargo containers that it has determined
may pose some risk. For example, when CBP determines that cargo in a
particular container at a CSI or SFI port poses some risk, it must
request that the host government's customs service conduct a physical
examination of the container since CBP has no authority to do so
itself. Similarly, unlike domestic ports, CBP cannot compel private
sector entities operating at foreign ports to participate in security
initiatives. For example, at one port, for a period of approximately 2
months, the terminal operator ceased to provide CBP information on
which containers leaving the port were bound for the United States. As
a result, CBP had greater difficulty determining which containers were
U.S.-bound and, therefore, should be scanned with imaging equipment.
Under these circumstances, CBP would still have the option of
preventing the cargo containers from being loaded onto U.S. bound
vessels, or flagging the containers for further inspection once they
arrive in the United States.
Equipment Used to Conduct Examinations of Cargo Containers:
There are generally two types of cargo container examinations--scanning
equipment and physical searches--used as part of the SFI and CSI
programs. There are two basic types of scanning equipment currently
used to examine cargo containers that do not require the container to
be opened: (1) radiation detection equipment, including radiation
portal monitors, and (2) non-intrusive imaging equipment (NII), which
may use X-rays or gamma rays. Radiation detection equipment, such as
radiation portal monitors (RPM) and radiation isotope identification
devices (RIID) detect the presence of radioactive material that may be
in a container. RIIDs and certain types of RPMs can identify the type
of material emitting the radiation and whether the material poses a
threat or is a naturally occurring radioactive material, such as that
found in certain ceramic tiles.[Footnote 17] We observed at domestic
and foreign ports that if radioactive emissions were detected from a
cargo container, customs officials used a handheld RIID to determine
whether the radiation being emitted posed a threat. The second type of
equipment, referred to as NII, uses X-rays or gamma rays to scan a
container and create images of the container's contents without opening
it. Examples of a RPM, handheld RIID, and NII are depicted in figure 3.
Figure 3: Examples of Scanning Equipment Used at SFI Ports:
[Refer to PDF for image: 3 photographs]
Radiation portal monitor (RPM);
Handheld radiation isotope identification device (RIID);
Non-intrusive imaging (NII) scanner.
Source: GAO.
[End of figure]
CBP officials, along with host government officials, review the images
produced with the NII to detect anomalies or shielding that could
indicate the presence of WMD. The 100 percent scanning provision of the
9/11 Act requires containers to be scanned with both radiation
detection and NII equipment; doing so may identify WMD material that is
successfully shielded from detection by RPM. The average time at which
a container is processed through the scanning system is 3 to 5 minutes.
If the use of the RIID is necessary, the average time increases another
5 to 10 minutes.
Secure Freight Initiative (SFI):
In response to the SAFE Port Act requirement to implement a pilot
program to determine the feasibility of scanning 100 percent of U.S.-
bound containers with both RPM and NII equipment, CBP, the State
Department, and DOE jointly announced the formation of SFI in December
2006 as an effort to build upon existing container security measures by
enhancing the U.S. government's ability to ensure containers are
scanned for nuclear and radiological material overseas and better
assess the risk of inbound containers. In essence, SFI builds upon the
CSI and Megaports programs by combining each program's scanning
technology equipment. To accomplish this, CBP met with terminal
operators to identify foreign ports for inclusion in the pilot program
to scan 100 percent of U.S.-bound containers. Based on discussions with
terminal operators and subsequent discussions with host government
officials, three ports were selected to implement the SAFE Port Act
pilot program: Qasim, Pakistan; Puerto Cortes, Honduras; and
Southampton, United Kingdom. According to CBP officials, while
initiating the SFI program at these ports satisfied the SAFE Port Act
requirement to implement the program at three ports,[Footnote 18] CBP
also selected the ports of Hong Kong; Busan, South Korea; and Salalah,
Oman to more fully demonstrate the capability of the integrated
scanning system at larger, more complex ports with higher percentages
of transshipment container cargo--cargo containers from one port that
are taken off a vessel at another port to be placed on another vessel
bound for the United States. For example, port officials told us that
at the Ports of Hong Kong, Singapore, and Salalah, transshipment cargo
constitutes about 50 percent, 87 percent, and 99 percent of U.S.-bound
containers, respectively. CBP officials also stated that with the
passage of the 9/11 Act, the focus of the SFI program shifted from
determining the feasibility of 100 percent scanning to becoming the
first phase of CBP's phased-in approach to implementing the 100 percent
scanning requirement.
CBP's Progress with SFI Implementation and Operation to Date Has Been
Limited, Leaving the Feasibility of 100 Percent Scanning Largely
Unproven:
While CBP and DOE have made progress in integrating new technologies as
part of the SFI program, progress in implementing and expanding the
scanning of U.S.-bound cargo containers at participating ports has been
limited. Some ports that initially agreed to participate in the SFI
program did so for a limited time, or on a limited basis. Logistical,
technological, and other problems at participating ports, as well as
concerns regarding the safety of the NII equipment used for the SFI
program, have prevented any of the participating ports from achieving
100 percent scanning, as ultimately required by the 9/11 Act, leaving
the feasibility and efficacy of 100 percent scanning largely unproven.
Moreover, attempts to implement 100 percent scanning at these foreign
ports have confirmed challenges previously identified by CBP and GAO.
[Footnote 19]
CBP and DOE Have Made Progress in Integrating and Modifying Scanning
Equipment:
CBP has been successful in integrating outputs from the various types
of scanning equipment used to scan cargo containers at foreign ports
participating in the SFI program. CBP and DOE were able to integrate
the outputs from RPM and NII equipment with the Automated Targeting
System (ATS) so a CBP officer can review all the data and information
associated with a container on a single screen.[Footnote 20] CBP
officers can also access scanning information remotely and do not need
to be present at an SFI port to analyze the RPM results and NII images
of containers. For example, at the National Targeting Center-Cargo
(NTCC), we observed that outputs from RPM and NII equipment located at
Port Qasim in Pakistan were accessible to CBP officers located in the
United States.[Footnote 21] These officers could observe the scanning
equipment outputs in combination with information from ATS to make
determinations as to whether to request that the cargo container being
scanned be more closely examined by host government personnel. CBP
officers could also observe scans of cargo containers being conducted
at the port in real time via cameras that can be operated remotely from
the United States. Examples of scanning outputs and equipment used at
an SFI port are shown in figure 4.
Figure 4: Example of Scanning Outputs and Equipment at SFI Ports:
[Refer to PDF for image: 2 photographs]
CBP officer reviewing outputs from SFI scanning equipment in ATS, Port
of Southampton, United Kingdom;
Radiation detection equipment known as Mobile Radiation Detection
Identification System (MRDIS), Port of Salalah, Oman.
Source: GAO.
[End of figure]
This integration of technologies has also allowed CBP to transfer
targeting efforts involving the Port of Southampton, United Kingdom, to
domestic ports. Currently, CBP officers in Newark, Baltimore, Savannah,
and other domestic port locations have been trained to incorporate the
scanned data from the Port of Southampton into their targeting
methodology and coordinate secondary examinations with the SFI team at
the port. Similarly, at Puerto Cortes in Honduras, we observed that
scan data from imaging and RPM equipment were available for review by
CBP and Honduran Customs officials almost instantly after the images
were generated by the inspection equipment. Honduran Customs officials
stated that, in addition to CBP's interest in detecting WMD, having
this information available greatly assisted in their efforts to detect
and identify contraband, such as narcotics, being shipped in cargo
containers through the port.
Ports participating in the SFI program have also been able to serve as
a testing ground for new inspection technologies. For example, at the
Port of Salalah in Oman, we observed the testing of mobile platforms to
carry large format radiation detection equipment, known as Mobile
Radiation Detection Identification Systems (MRDIS) that Pacific
Northwest National Laboratory, in conjunction with DOE, has developed
(see figure 4). The MRDIS units were built to more effectively capture
transshipment cargo (cargo taken off of one vessel to be placed on a
U.S.-bound vessel) as it is being unloaded from a vessel without
creating congestion. However, the effectiveness of the MRDIS, and its
impact on the flow of containers, has not been fully tested because the
SFI program is not yet operational at the Port of Oman.
Foreign Port Participation in the SFI Program Has Been Limited:
CBP reached arrangements with foreign governments to implement the SFI
program at seven foreign ports. As of June 2009, SFI operations have
been conducted at five ports, but in some cases for a limited time or
on a limited basis. In addition, one port has withdrawn and another has
yet to begin scanning operations.
As shown in table 2, the SFI program has operated continuously since
October 2007 at Port Qasim, Pakistan; Puerto Cortes, Honduras; and the
Port of Southampton, United Kingdom and the majority of U.S.-bound
cargo containers from these ports have been scanned. Host government
officials at Puerto Cortes have expressed a desire to continue with the
SFI program and have allocated personnel to support program operations.
At the Port of Southampton, the host government has allowed SFI
operations to continue, but withdrew customs personnel originally
allocated to support program operations after the 6-month arrangement
it had with CBP to participate in the SFI program came to an end.
Customs officials in the United Kingdom stated that the costs
associated with assigning personnel to assist CBP with SFI program
operations were preventing these officials from fulfilling their
domestic responsibilities, such as detecting drugs. As a result, the
SFI program at the Port of Southampton is now solely supported by CBP
officers working directly with the terminal operator.
Table 2: Information on Ports Initially Agreeing to Participate in the
SFI Program:
SFI port: Qasim, Pakistan;
Date of SFI operations: October 12, 2007 to present.
SFI port: Puerto Cortes, Honduras;
Date of SFI operations: October 12, 2007 to present.
SFI port: Southampton, United Kingdom;
Date of SFI operations: October 12, 2007 to present[A].
SFI port: Hong Kong;
Date of SFI operations: January 11, 2008 to April 30, 2009.
SFI port: Busan, South Korea;
Date of SFI operations: March 18, 2009 to present.
SFI port: Salalah, Oman;
Date of SFI operations: Program postponed with no planned initiation
date.
SFI port: Singapore[B];
Date of SFI operations: CBP and the Government of Singapore mutually
agreed the Port of Singapore would not participate in SFI prior to
operations beginning.
Source: GAO analysis of data provided by CBP.
[A] Although SFI operations at the Port of Southampton are ongoing, the
SFI program is operated solely by CBP officials. United Kingdom customs
withdrew its participation from the program in April 2008, after the 6-
month arrangement it had to participate came to an end.
[B] While CBP and the Government of Singapore initially signed a
declaration of principles in December 2007 to establish the Port of
Singapore's participation in the SFI program, this decision was later
mutually rescinded.
[End of table]
Among ports that participated in the SFI program, the largest port in
terms of container volume shipped to the United States, the Port of
Hong Kong, participated in the program for about 16 months--scanning
containers at one of the nine terminals on a voluntary basis. The
program ended as scheduled in April 2009 and was not renewed at the
mutual decision of the Hong Kong government and DHS. Discussing their
decision not to extend SFI, Hong Kong port officials observed that CBP-
provided statistics showed no trade facilitation benefits for
containers passing through SFI scanning and noted CBP's efforts to
focus container scanning at those ports where there was greater risk.
They also stated that they saw no benefit to participation in the
program in terms of their own port security and expressed concerns that
equipment and infrastructure costs, as well as costs to port
efficiency, would make full implementation of the SFI program at all of
its terminals unfeasible.
Similarly, according to CBP officials, the government of South Korea
agreed to allow the Port of Busan to participate in the SFI program for
6 months at one terminal at the port. CBP officials stated that the
South Korean government has agreed to extend the program for another 6
months, but no permanent arrangement has been reached.
In addition, two ports that had initially agreed to participate in the
program have since withdrawn or postponed their operations. DHS and the
government of Singapore mutually agreed to suspend the SFI program at
the Port of Singapore before the program began scanning operations,
noting concerns about the potential adverse impact on port efficiencies
due to the large volume and complexity of operations at the port. In
this instance, both DHS and Singapore agreed that the benefits of
initiating the program with existing technology were outweighed by the
potential impact the operations could have on trade flow through the
port. Also, according to CBP officials, Port Salalah in Oman had
initially agreed to participate in the SFI program for 6 months.
However, according to U.S.-government officials, implementation of the
SFI program at Port Salalah has been postponed due to port management
concerns regarding the scope, time line, and criteria for success for
the program. The officials said that U.S. government personnel are
working with Omani Customs to find a path forward, but no firm plans or
time line yet exist for initiating SFI operations at the Port of
Salalah.
Government officials we spoke with in Asia and Europe generally stated
that they viewed the implementation and operation of the SFI program to
be a pilot--with a definite start and end date--to determine the
feasibility and usefulness of further implementation. As such, they
stated that they do not view the SFI program as being permanent.
Scanning Rates at Larger SFI Ports Have Been Far Short of 100 Percent:
While CBP has been able to scan a majority of U.S.-bound cargo
containers from three comparatively low-volume ports participating in
the SFI program, at two higher volume ports--which constitute
approximately 17 percent of containers arriving in the United States--
it has been able to scan no more than 5 percent of U.S.-bound cargo
containers, on average, most of which were scanned after they were
determined to be high risk by CBP officers as part of the CSI program,
according to CBP officials.[Footnote 22] As shown in table 3, at Port
Qasim, Puerto Cortes, and the Port of Southampton--which together
account for 2.4 percent of U.S.-bound cargo containers with little or
no transshipment cargo containers--CBP has been able to scan, on
average, 54 percent to 86 percent of the U.S.-bound cargo containers.
In contrast, at the Ports of Hong Kong and Busan--which together
account for 16.6 percent of U.S.-bound cargo containers and have larger
percentages of transshipped cargo--CBP has been able to scan, on
average, 3 to 5 percent of the U.S.-bound cargo containers. CBP
officials stated that while scanning percentages are low, operations at
these ports have been limited to a single terminal or to an area within
a single terminal. They added that these larger ports would only agree
to participate in the program if SFI operations were limited in scope,
and the agency has worked with host governments to expand operations.
However, as of yet, CBP has not made arrangements to expand operations
at these ports.
Table 3: Data on Containers Scanned and Container Volume at SFI Ports:
SFI port: Qasim[B];
Average percentage of U.S.-bound containers scanned during SFI program:
RPM[A]: 85;
Average percentage of U.S.-bound containers scanned during SFI program:
NII: 86;
Number of U.S.-bound containers exported from SFI ports, fiscal year
2008: 29,191;
Rank of SFI ports in terms of volume of containers exported to the
U.S., fiscal year 2008: 61st;
Percentage of all cargo containers that arrived in U.S. from SFI ports,
fiscal year 2008: 0.3.
SFI port: Puerto Cortes[B];
Average percentage of U.S.-bound containers scanned during SFI program:
RPM[A]: 76;
Average percentage of U.S.-bound containers scanned during SFI program:
NII: 78;
Number of U.S.-bound containers exported from SFI ports, fiscal year
2008: 188,438;
Rank of SFI ports in terms of volume of containers exported to the
U.S., fiscal year 2008: 21st;
Percentage of all cargo containers that arrived in U.S. from SFI ports,
fiscal year 2008: 1.9.
SFI port: Southampton[B];
Average percentage of U.S.-bound containers scanned during SFI program:
RPM[A]: 54;
Average percentage of U.S.-bound containers scanned during SFI program:
NII: 56;
Number of U.S.-bound containers exported from SFI ports, fiscal year
2008: 20,687;
Rank of SFI ports in terms of volume of containers exported to the
U.S., fiscal year 2008: 63rd;
Percentage of all cargo containers that arrived in U.S. from SFI ports,
fiscal year 2008: 0.2.
SFI port: Hong Kong[C];
Average percentage of U.S.-bound containers scanned during SFI program:
RPM[A]: 3;
Average percentage of U.S.-bound containers scanned during SFI program:
NII: 3;
Number of U.S.-bound containers exported from SFI ports, fiscal year
2008: 894,080;
Rank of SFI ports in terms of volume of containers exported to the
U.S., fiscal year 2008: 3rd;
Percentage of all cargo containers that arrived in U.S. from SFI ports,
fiscal year 2008: 9.2.
SFI port: Busan[D];
Average percentage of U.S.-bound containers scanned during SFI program:
RPM[A]: 5;
Average percentage of U.S.-bound containers scanned during SFI program:
NII: 5;
Number of U.S.-bound containers exported from SFI ports, fiscal year
2008: 720,582;
Rank of SFI ports in terms of volume of containers exported to the
U.S., fiscal year 2008: 4th;
Percentage of all cargo containers that arrived in U.S. from SFI ports,
fiscal year 2008: 7.4.
SFI port: Salalah;
Average percentage of U.S.-bound containers scanned during SFI program:
RPM[A]: Not yet operational;
Number of U.S.-bound containers exported from SFI ports, fiscal year
2008: 55,053;
Rank of SFI ports in terms of volume of containers exported to the
U.S., fiscal year 2008: 37th;
Percentage of all cargo containers that arrived in U.S. from SFI ports,
fiscal year 2008: 0.6.
Source: GAO analysis of data provided by CBP.
[A] The radiation detection equipment used to scan containers are
referred to as radiation portal monitors (RPM).
[B] Scanning percentages at Port Qasim, Puerto Cortes, and the Port of
Southampton reflect operations conducted from November 2007 through May
2009.
[C] Scanning percentages at the Port of Hong Kong reflect operations
conducted from February 2008 through April 2009.
[D] Scanning percentages at the Port of Busan reflect operations
conducted from April 2009 through May 2009.
[End of table]
The Feasibility of 100 Percent Scanning Remains Largely Unproven as
Efforts to Implement and Operate the SFI Program at Participating Ports
Have Confirmed Previously Identified Challenges:
To date, attempts to implement 100 percent scanning at foreign ports
have confirmed challenges, some of which we and CBP have previously
reported.[Footnote 23] For example, challenges associated with the
perceived safety of the NII scanning equipment, scanning cargo
containers arriving at a port by rail, or scanning transshipment cargo
containers, among other things, have prevented CBP from achieving 100
percent scanning at participating ports.[Footnote 24] Specifically:
* Safety Concerns: Port officials at five of the seven ports that
initially agreed to participate in the SFI program expressed concerns
regarding the safety of drivers and port operators who work near NII
scanning equipment, which generates radiation in order to generate an
image of a container's contents. CBP provided information or conducted
town hall meetings on the safety of the equipment to officials and
workers at participating ports. However, to address these concerns and
allow for the equipment to be used, port officials required that
passage through the NII equipment at the ports of Hong Kong and Busan
be voluntary, thus limiting efforts to test the feasibility of using
the NII equipment, as well as the SFI program's overall effectiveness.
* Logistics: Logistics issues and costs associated with moving cargo
containers to scanning areas at the Port of Southampton resulted in the
cessation of scans of cargo containers arriving by rail. Initially, CBP
and the terminal operator agreed that the terminal operator would
absorb the costs to place cargo containers arriving by rail onto trucks
so that those containers could pass through SFI scanning systems, at a
cost of approximately $60 per container, but this arrangement ended in
April 2008.
* Transshipment: Transshipment cargo containers--those taken off of one
vessel to be placed on a U.S.-bound vessel--present significant
challenges to scanning because of logistical difficulties associated
with transporting these containers.[Footnote 25] Transshipment cargo
containers are only available for scanning for a comparatively short
period of time and may be difficult to access. For example, UK customs
officials stated that it was not possible to route transshipment
containers that arrived by sea through the SFI equipment. As a
consequence, the scanning of transshipment containers was delayed at
the Port of Southampton, United Kingdom. Further, in April 2009, the
Acting Commissioner of CBP testified that there is no proven technology
that can scan these containers.
* Equipment Breakdowns: Scanning and communication equipment breakdowns
have occurred at several ports. For example, two of the three seaports
fully participating in the SFI pilot program experienced weather-
related mechanical breakdowns of scanning equipment. Specifically, at
the Port of Southampton, a piece of radiation scanning equipment failed
because of rainy conditions and had to be replaced, resulting in 2
weeks of diminished scanning capabilities. Additionally, Port Qasim in
Pakistan has experienced difficulties with scanning equipment because
of the extreme heat. Because of the range of climates at the more than
600 foreign ports that ship cargo to the United States, these types of
technological challenges could be experienced elsewhere.
Additionally, while cargo containers may be scanned at SFI ports, the
images obtained through these scans may not always be sufficiently
clear to determine the potential presence of WMD. For example, we
observed that some trucks carrying cargo containers at the Port of Hong
Kong passed through imaging equipment too quickly to obtain a clear
enough image to verify the contents of the container. This problem is
not isolated to scans that were taken at the Port of Hong Kong, as CBP
officials at the Port of Long Beach also showed us images taken at
other SFI ports that were not clear enough to read because the driver
drove through the NII equipment too quickly. The CBP officials also
showed us an image in which one-third of the container was not
captured. The CBP officials further explained that if the container was
determined to pose a risk for terrorism by CBP through targeting
activities, it would need to be examined again with imaging equipment
upon arrival in the United States because of the inadequacy of the
image scan at the SFI port.
CBP Plans to Improve Container Security Through Two Initiatives, but
These Plans Will Not Achieve 100 Percent Scanning and Will Require a
Process to Grant Extensions to Noncompliant Ports:
CBP plans to implement SFI at select ports it believes would help
mitigate the greatest risk. CBP officials maintain that this strategy,
combined with a plan to gather additional cargo container information,
would enhance container security. However, DHS and CBP acknowledge that
not all foreign ports will be in a position to scan 100 percent of U.S.-
bound cargo containers by July 2012. While CBP has expressed concerns
about the feasibility of scanning 100 percent of U.S.-bound cargo
containers, it has not conducted a feasibility analysis of expanding
100 percent scanning to nonpilot ports, as required by the SAFE Port
Act. Also, because of concerns about the feasibility of the scanning
requirement, DHS plans to issue a blanket extension for all ports
pursuant to the extension provisions of the 9/11 Act.
DHS Plans to Improve Container Security by Expanding SFI to Strategic
Corridors and Gathering Additional Data for Assessing Risks:
DHS Plans to Improve Security by Expanding SFI to Strategic Trade
Corridors:
In April 2009, the Secretary of DHS endorsed the strategic trade
corridor strategy as the path forward for implementing the SFI program.
The Secretary was presented with three options ranging from
implementing SFI at 70 ports that account for shipping over 90 percent
of U.S.-bound containers to seeking repeal of the 100 percent scanning
requirement. The strategic trade corridor strategy selected by the
Secretary focuses cargo container scanning efforts on a limited number
of ports where CBP has determined SFI will help mitigate the greatest
risk of potential WMD from entering the United States.[Footnote 26] CBP
determined which ports were strategic by working with DOE to develop a
joint analysis of the potential risk of cargo containers from all
foreign seaports that ship directly and indirectly to the United
States. This analysis focused on issues such as known smuggling routes,
volume of container traffic, proximity to special nuclear material
sources, and known presence of terrorist cells operating in the country
and according to CBP, had been validated by the intelligence community.
DHS has endorsed the strategic trade corridor concept, recognizing DHS
will fund the majority of costs if not all, but has not yet finalized
decisions regarding the specific number of strategic ports to be
included or developed a time frame for implementation. However, it is
unclear whether DHS intends for the strategic trade corridor strategy
to be implemented in lieu of the 100 percent scanning requirement or
whether it is an initial step towards full implementation at all ports.
While DHS is still developing specific details, CBP is working on
expanding the SFI program to strategic ports.
CBP Plans to Improve Security by Gathering Additional Data through its
10+2 Program for Assessing Risks:
CBP officials stated that the strategic trade corridor strategy,
combined with additional information on U.S.-bound cargo containers it
receives through the recently implemented "10+2" program, will enhance
container security. The Importer Security Filing and Additional Carrier
Requirements (also known as "10+2") is a regulation issued pursuant to
the SAFE Port Act that requires importers and vessel carriers to
provide additional data elements for U.S.-bound cargo containers to
CBP. As of January 2009,[Footnote 27] the importer is responsible for
supplying CBP with 10 shipping data elements, including shippers'
addresses and cargo destinations, 24 hours prior to lading.
Additionally, the vessel carrier is required to provide 2 data
elements, the vessel stow plan, which is used to identify the location
of containers onboard a vessel, and container status messages, which
are used to track the movement of containers through the supply chain.
The data supplements the advanced cargo data CBP receives through the
24-hour rule. CBP believes the additional data provided through 10+2
will enhance security by improving the targeting process used to
identify containers that may pose a risk for terrorism.
While DHS and CBP Question Ability to Achieve 100 Percent Scanning,
They Have Not Conducted a Feasibility Analysis:
While security may be enhanced through the strategic trade corridor
strategy and 10+2 program, these efforts will not achieve the 9/11 Act
requirement to scan 100 percent of U.S.-bound cargo containers by July
2012. Furthermore, DHS and CBP do not have a plan on how they will work
with foreign ports to ensure that 100 percent of U.S.-bound cargo
containers are scanned by July 2012 to meet the requirements set forth
in the 9/11 Act. According to DHS and CBP officials, they have not
developed a plan to achieve 100 percent scanning by July 2012 because
challenges encountered thus far in implementing the SFI program
indicate that implementation of 100 percent scanning worldwide by the
2012 deadline will be difficult to achieve. While both DHS and CBP
question the security value and feasibility of achieving 100 percent
scanning by 2012, they have yet to conduct an analysis of the
feasibility of scanning all U.S.-bound containers to demonstrate
whether the 9/11 Act requirement can be met. The SAFE Port Act requires
an analysis of the feasibility of expanding scanning to other foreign
ports participating in the Container Security Initiative. [Footnote 28]
Furthermore, standard practices for project management call for the
feasibility of programs to be considered early on, which can be done
through evaluating alternatives.[Footnote 29] CBP should determine
whether 100 percent scanning is feasible and if so what is the best way
to achieve it, or if it is not feasible, what are the other
alternatives. The analysis should consider the scope, objectives, time
line, and resources needed to achieve 100 percent scanning or the
alternatives, if appropriate. Such an analysis would ensure that a
complete assessment of feasibility is conducted and the results are
communicated so that DHS and Congress could determine key challenges,
ways they can be addressed, and potential courses of action for
enhancing container security.
DHS Plans to Grant Blanket Extensions to Ports Unable to Meet the 2012
Deadline:
DHS acknowledged it will not be able to meet the July 2012 deadline for
full-scale implementation of the 9/11 Act's scanning requirement and
will need to grant extensions to those foreign ports unable to meet the
scanning deadline in order to maintain the flow of trade and comply
with the 9/11 Act prohibition on allowing containers that have not been
scanned to enter the United States. To grant an extension, the 9/11Act
requires DHS to certify that at least two of six conditions
exist.[Footnote 30] The act also requires DHS to report to Congress 60
days before any extension takes effect on the container traffic
affected by the extension, the evidence supporting the extension, and
the measures DHS is taking to ensure that scanning can be implemented
as early as possible at the ports covered by the extension.[Footnote
31] DHS has the authority to grant extensions to any number of foreign
ports for which at least two of the six conditions exist, which could
mean granting a blanket extension to all ports where such conditions
exist or on a port-by-port basis. Granting extensions on a port-by-port
basis could, according to international organizations we spoke with,
potentially give a competitive advantage to some ports and lead to
trade disruptions. They cited a possible example where one port that
invests in scanning equipment would be able to meet the scanning
requirement, but another port that does not invest in scanning
equipment could not meet the requirement. If the latter port gets an
extension, it could have a temporary competitive advantage over the
former port because its costs of operations do not include the costs of
investments in scanning equipment. Similarly, officials from Industrial
Economics, Inc.--a firm contracted by CBP to assess the economic impact
of 100 percent scanning--told us that if multiple ports in an area are
accessible and one port does not have a scanning system but is
temporarily exempt from the 100 percent requirement, it may get a
competitive advantage in the region because the private industry would
likely choose to ship containers from ports where it believes it will
experience the fewest delays.
During the course of our review, DHS was developing its approach for
granting extensions. CBP program officials told us that DHS had been
considering granting extensions on port-by-port basis, which they
stated would be a lengthy process. According to these officials, site
surveys would be needed to assess each of the ports that ship
containers directly to the United States to determine the feasibility
of establishing a scanning system. CBP program officials estimated each
site survey would take approximately 2 weeks to complete, plus the
additional time needed to draft the report to Congress justifying the
extension. In September 2009, DHS officials told us that the department
had determined that port-by-port site visits were not required to
invoke a condition to claim an extension. According to DHS officials,
at least some of the conditions listed in the 9/11 Act as a basis for
granting extensions can be applied systemically to all ports rather
than on a port-by-port basis. At a minimum, DHS believes the last two
conditions--use of the equipment to scan all U.S.-bound containers
would significantly impact trade capacity and the flow of cargo, and
scanning equipment does not adequately provide automatic notification
of an anomaly in a container--could apply to all foreign ports and,
thus, may warrant the use of a blanket extension. DHS officials
acknowledged that their current position could change if there are
significant changes (e.g., advancements in scanning technology) before
the July 2012 deadline.
CBP Has Not Identified Total Program Costs of SFI Implementation or
Conducted a Cost-Benefit Analysis to Assist in Evaluating Alternatives
to Achieving the 100 Percent Scanning Requirement:
CBP and DOE have identified costs borne by the U.S. government for
implementing SFI--about $100 million to date--but CBP has not developed
a cost estimate for future U.S. program costs, or conducted a cost-
benefit analysis that compares the costs of the scanning requirement
with other alternatives, such as the strategic trade corridor strategy.
In addition, CBP has not estimated costs to stakeholders, such as
foreign governments and terminal operators; or nonfinancial costs, such
as trade disruptions, which could be greater than operating and
maintaining the scanning systems.
9/11 Act Does Not Specify Funding Responsibilities, but the United
States Has Paid Most SFI Costs to Date:
CBP and DOE Have Funded Much of the Costs at SFI Ports:
The SAFE Port Act requires CBP to report on U.S. government costs of
deploying integrated scanning equipment at foreign ports as part of the
SFI program, and CBP and DOE have identified costs borne by the United
States of about $100 million for implementing and operating the SFI
program at six participating ports through June 2009. While CBP and DOE
have purchased cargo container scanning equipment thus far for foreign
ports that have participated in the SFI program, it is unclear who will
pay for additional resources--including increased staff, equipment, and
infrastructure to continue the program--or who will be responsible for
operating and maintaining the equipment used for the 100 percent
scanning statutory requirement. While DHS has the authority to provide
nonintrusive inspection and radiation detection equipment to foreign
ports, neither the SAFE Port Act nor the 9/11 Act specifies who is to
pay for the scanning of U.S.-bound cargo containers at foreign ports.
[Footnote 32] While the Congressional Budget Office assumed that
foreign ports would pay for installing and maintaining the systems at
their ports as a means for continuing trade with the United States, the
U.S. government has borne a majority of the SFI program costs to date.
[Footnote 33] DHS officials stated that they anticipate that the U.S.
government will continue to pay the majority of the costs for
implementing the SFI program. Table 4 provides additional details on
SFI costs by port and department.
Table 4: Costs Incurred by DHS and DOE to Implement and Operate SFI
Program, through June 2009 (Dollars in thousands):
SFI Port: Port Qasim, Pakistan;
DHS: $5,295;
DOE: $2,315.
SFI Port: Puerto Cortes, Honduras;
DHS: $1,048;
DOE: $4,393.
SFI Port: Port of Southampton, United Kingdom;
DHS: $4,091;
DOE: $10,125.
SFI Port: Port of Hong Kong;
DHS: $3,555;
DOE: $1,414.
SFI Port: Port of Busan, South Korea;
DHS: $3,643;
DOE: $9,384.
SFI Port: Port Salalah, Oman;
DHS: $5,520;
DOE: $12,940.
SFI Port: Port of Singapore;
DHS: $305;
DOE: $2,826.
SFI Port: Costs not attributable by port;
DHS: $29,860;
DOE: $0.
SFI Port: Total;
DHS: $53,313;
DOE: $43,396.
Source: Cost data provided by DHS and DOE.
[End of table]
Foreign Governments and Terminal Operators Have Also Funded Costs, but
Expressed Unwillingness to Do So Going Forward:
Government officials from Europe, Asia, and the Middle East that we
spoke with have stated that the SFI program and 100 percent scanning
are primarily for the security benefit of the United States and, as
such, they are unwilling to pay for this security initiative. However,
while the U.S. government has paid a majority of the costs for
implementing the SFI program at participating ports, foreign
governments have incurred personnel, infrastructure, and other costs to
implement the program. For example, the Customs service in the United
Kingdom dedicated 12 officers to work on the SFI program for 6 months,
and the Hong Kong Customs service dedicated a team of 18 officers to
work on the SFI program and pulled officers from other teams, as
necessary, to conduct more thorough examinations of container cargo
using equipment to determine whether radiation being emitted from a
container is dangerous. Terminal operators have also incurred costs for
implementing the SFI program. For example, one terminal operator at the
Port of Hong Kong set up a control room and an information technology
infrastructure to support the SFI program at a cost of approximately
$260,000. Additionally, the terminal operator at the Port of
Southampton paid approximately $60 per container to move cargo
containers arriving by rail to the scanning facility. Further, European
customs officials stated that to fully implement the 100 percent
scanning requirement at large ports with complex operations would
likely result in the need for a fundamental redesign of several ports,
entailing substantial costs to terminal users.
Terminal Operators Propose a Separate Model to Purchase, Operate, and
Maintain Scanning Equipment at SFI Ports:
In January 2009, a consortium of four international terminal operators
formed the Terminal Operator Security Study Group to examine the 100
percent scanning requirement and outline potential collaborative
approaches to expand the SFI program in partnership with the U.S.
government.[Footnote 34] The group proposed, among other things, that
the U.S. government reach out to host governments to determine the
extent to which terminal operators could be involved in running
portions of the SFI program in foreign countries. According to an
official from the group, if foreign governments do not want to conduct
scans of U.S.-bound containers, terminal operators would purchase,
operate, and maintain the SFI equipment for scanning cargo containers
entering the port on trucks. Transshipment cargo containers would not
be included in the program, however, since no technical solution
currently exists for scanning these containers. The terminal operators
would also be responsible for adjudicating scanning equipment alarms
with local government officials. Terminal operators would recoup their
costs for purchasing, operating, and maintaining the equipment by
charging a fee to users of the terminals. An official from the
consortium stated that at ports where the volume of cargo containers is
such that fees would not cover the cost of purchasing, operating, and
maintaining the scanning equipment, the U.S. government would be
responsible for covering the cost of SFI program operations. In
addition, the U.S. government would be responsible for purchasing and
operating equipment to conduct secondary inspections--more involved
inspections of cargo containers determined to pose a risk--as well as
be responsible for providing personnel to review scanned images of the
cargo containers. According to the terminal operators' representative,
this model would lessen the financial burden on the U.S. government and
allow for scanning equipment to be deployed to the terminals where
these terminal operators are located in about 18 months.
DHS has indicated that it is open to the possibility of working with
terminal operators to receive scan data; however, CBP officials stated
that they do not approve of the plan proposed by the Terminal Operator
Security Study Group because terminal operators have an incentive to
move cargo containers through their facilities quickly and there is
little assurance that they will adequately review scanning equipment
outputs. The officials also stated that this proposal is not consistent
with CBP's strategic trade corridor strategy--which aims to focus
scanning efforts at those ports where doing so would provide the
greatest benefit--because it includes ports outside the proposed
corridor.
CBP Has Not Developed an Estimate of Complete U.S. Program Costs or
Performed a Cost-Benefit Analysis that Includes Other Economic Costs:
While CBP has reported costs of the SFI program to date, it has not
developed a comprehensive life-cycle cost estimate for full
implementation of 100 percent scanning of U.S.-bound cargo containers.
CBP reported in December 2008 that establishing a single scanning lane
costs approximately $9.7 million for infrastructure, construction, and
equipment and roughly 2,100 scanning lanes would be needed at foreign
ports to fully implement the program at all ports that ship cargo to
the United States. CBP acknowledged that this $20 billion estimate of
program implementation costs was rough and based on the costs of
implementing SFI thus far. CBP officials also developed rough
implementation cost estimates for potential deployment options for SFI
consistent with its secure trade corridor strategy. These estimates
range from $500 million (with most SFI costs paid by the trade
community or foreign governments) to $1.6 billion (with SFI costs at 70
ports paid by DHS). However, the officials acknowledged that none of
these estimates were developed in a manner consistent with the DHS cost
estimation guidelines. CBP officials stated that they have not
developed a more comprehensive cost estimate because DHS has not
specified a clear path forward for the program. CBP officials added,
though, that it is difficult to estimate the cost for implementing SFI
at a single port without conducting a thorough assessment of the port
and obtaining the input of local government officials. Given the
agency's limited resources they stated that they cannot conduct these
types of detailed assessments at all ports that ship cargo containers
to the United States. These officials added that any estimates of costs
for full implementation would be of limited use given the complexity
and variability of operations at individual ports. Additionally,
officials from Industrial Economics, Inc. concurred that cost
estimating would be difficult because of the different factors beyond
CBP's control that would need to be considered, including whether the
port was publicly or privately held, whether port operations are
centralized or spread out over a large geographic area, the willingness
of the host government to accommodate the scanning program, and whether
and to what extent the port had communications and information
technology infrastructure available.
While U.S. program cost of implementing the SFI program at individual
ports will likely vary based on factors beyond CBP's control,
commonalities exist among ports that allow for assumptions to be made
regarding costs for program implementation. Examples of such
commonalities include the need for inspection equipment at foreign
ports participating in the program--which has generally been paid for
by the U.S. government--and the need for personnel to review images
produced by imaging equipment. DHS's guidance on cost estimation states
that program managers need to keep analysis of costs moving forward,
even in periods of ambiguous, partial, or even missing information, and
that this is best managed by making assumptions to resolve uncertainty
and allow analysis to continue.[Footnote 35] Further, as we have
previously reported, having a realistic cost estimate makes for
effective resource allocation and increases the probability of a
program's success.[Footnote 36] Additionally, a cost estimate can serve
as a basis for establishing and defending budgets and driving
affordability analyses. A cost estimate also helps agencies determine
whether a program is feasible and the resources needed to support it.
While we recognize that CBP may have difficulty developing cost
estimates because of the uncertainties and assumptions that will have
to be made, having a more comprehensive cost estimate could provide CBP
with valid cost information to share with Congress to allow it to make
sound and prudent decisions regarding SFI program implementation, and
could better position CBP and Congress to evaluate alternatives for SFI
program configuration and implementation.
In addition to not identifying estimates of U.S. program costs, CBP has
not developed estimates of economic costs to other stakeholders such as
costs that would result from lowering terminal efficiency. For example,
Industrial Economics, Inc. concluded that 100 percent scanning will
likely reduce port and terminal efficiency as well as increase costs.
Officials from Industrial Economics, Inc. stated that these increased
costs would be due to costs to accommodate scanning--additional land,
labor, and equipment--as well as to delays caused by 100 percent
scanning. These officials also stated that while the precise degree to
which costs may increase is uncertain, some costs could be substantial,
particularly for larger volume ports or ports with significant amounts
of transshipment cargo containers as operations at these ports would
need to be more significantly altered to accommodate 100 percent
scanning. Further, officials from the World Bank and the WCO with whom
we spoke stated that implementing 100 percent scanning would likely
create additional shipping costs in certain parts of the world because
of changes in trade routes that would be necessary. In particular, the
officials stated that U.S.-bound cargo containers may have to be
funneled through hub ports that could accommodate and operate the
scanning equipment before the containers are then shipped to the United
States. They noted that these additional logistics costs would have a
disproportionately negative economic impact on developing economies and
countries with comparatively small ports.
Furthermore, CBP has not performed a cost-benefit analysis to assess
alternatives to achieving 100 percent scanning, such as its proposed
strategic trade corridor strategy and, as appropriate, other
alternatives for enhancing container security. According to CBP
officials, they have not performed this type of analysis because it is
not legally required since the 100 percent scanning requirement was
mandated and not initiated by CBP. Although we recognize the 100
percent scanning requirement was mandated by law, development of a
systematic cost-benefit analysis, which incorporates more comprehensive
cost estimates, could better inform CBP and Congress of the relative
costs and benefits of different alternatives for achieving 100 percent
scanning of U.S.-bound goods from all ports that ship directly to the
United States as well as alternatives for a path forward to enhance
container security. This type of analysis could, in turn, help DHS and
Congress identify whether and to what extent other viable options exist
to implementing the 100 percent scanning requirement.
The Office of Management and Budget states that any cost-benefit
analysis that serves as a basis for evaluating government programs or
policies should identify and measure overall societal costs and
benefits, not solely costs and benefits to the federal
government.[Footnote 37] For example, as discussed later in this
report, the implementation of the 100 percent scanning requirement
could potentially create challenges to the continued operation of CBP's
existing layered security programs and hinder their implementation by
reducing the willingness of foreign countries and industry to
participate. If participation is diminished, this could constitute a
cost (e.g., reduced implementation and effectiveness of other
programs), which would be one element to consider in any cost-benefit
analysis. As noted earlier, other costs beyond the federal government
are those incurred by foreign governments, the shipping industry, and
consumers.
Further, OMB cites as a key element of cost-benefit analysis the
consideration of alternative means of achieving program objectives by
examining different program methods of provision and different degrees
of government involvement. Additionally, DHS's Cost-Benefit Analysis
Guidebook states that cost-benefit analysis is designed to identify the
superior financial solution amongst competing alternatives, and that it
is a proven management tool to support planning and managing costs and
risks.[Footnote 38] By utilizing cost-benefit analysis to compare the
current implementation requirements of SFI with other alternatives,
which might include its proposed strategic trade corridor strategy or
CBP's existing layered strategy, CBP could more fully ensure that it is
efficiently allocating and prioritizing its limited resources, as well
as those of individual ports, in a way that maximizes the effectiveness
of its cargo container security efforts. This analysis could also
provide information on other potential alternatives for achieving the
100 percent scanning requirement.
Requirement for 100 Percent Scanning Creates Potential Challenges for
CBP that May Hinder the Continued Operation of Existing Container
Security Programs and Raises Concerns with International Partners:
The 100 percent scanning requirement is a departure from several
existing container security programs, which creates potential
challenges for CBP as it may hinder the programs' continued operation.
The scanning requirement differs from existing container security
programs because it requires CBP to scan all containers before
performing analysis to determine their potential risk level. Our work
also indicates that the 100 percent scanning requirement could hinder
implementation of some existing container security programs by reducing
the willingness of some foreign governments to work with CBP to
identify and examine containers at their ports, and the willingness of
some private companies to partner with CBP to improve their internal
security programs. Some foreign governments have expressed concern that
the 100 percent scanning requirement is being put forth solely by the
United States, in contrast to existing container security programs that
were negotiated multilaterally or bilaterally with willing partners. In
addition, some foreign governments have expressed the possibility of
imposing a reciprocal scanning requirement on the United States.
The 100 Percent Scanning Requirement May Hinder the Continued Operation
of CBP's Existing Container Security Programs:
Our work has indicated that the 100 percent scanning requirement is a
departure from existing container security programs built on bilateral
partnerships with foreign governments and the private sector. This
situation may hinder continued operation of these existing programs,
depending on how the SFI program is expanded and how the 100 percent
scanning requirement is implemented.
Automated Targeting System (ATS):
The 100 percent scanning requirement is a departure from CBP's use of
ATS and the 24-hour rule to first determine risk before scanning
containers. Through ATS and the 24-hour rule, CBP gathers advanced
information on U.S.-bound cargo containers provided by carriers and
importers and makes determinations as to the risk level associated with
the cargo containers before using imaging equipment to examine
containers' contents. At CSI ports, when it is determined through
advanced information that a U.S.-bound container poses some potential
risk of WMD, CBP typically requests that the host government scan the
container with radiation detection and NII equipment. If these scans
indicate the potential presence of WMD, CBP requests that the host
government conduct physical examination of the container, which could
involve physically removing the container's contents for inspection. If
the host government declines a request to give the container additional
scrutiny, CBP can issue a "do not load" order for the container--so it
is refused entry onto the vessel--or flag the container for further
inspection upon arrival at a domestic port. In contrast, under the 100
percent scanning concept required by the 9/11 Act, all U.S.-bound
containers are required to be scanned with radiation detection and NII
equipment before any analysis of risk. At the three operational SFI
pilot ports we visited, we observed CBP officers reviewing scanning
equipment outputs without the use of ATS targeting information.
Information is generally not available in ATS at the time of scanning
since containers are being scanned upon arrival at the foreign port
before the container's information is received by CBP under the 24-hour
rule. Thus, depending on how SFI and the 100 percent scanning
requirement are implemented, CBP may face challenges in integrating the
scans into its existing ATS program to identify high risk containers.
Container Security Initiative (CSI):
Depending on how it is implemented, SFI or other efforts to achieve 100
percent scanning may potentially replace the CSI program at foreign
ports. CBP built the CSI program on bilateral partnerships with foreign
governments that allow CBP to place its staff at 58 foreign ports to
work with host country customs officials to identify and scan high-risk
cargo before it is shipped to the United States. CSI allows for a
reciprocal arrangement in which foreign governments may also place
staff at U.S. ports.[Footnote 39] According to CBP, the strength of the
CSI program is the information gained from host government officials
that CBP would otherwise not have access to. We have also previously
reported instances where the CSI program establishes trust and
collegiality, leading to increased information sharing, as well as more
effective targeting and examination of high-risk cargo containers. For
example, CBP officers noted instances in which host government customs
officials would notify them of cargo containers they thought could be
high risk so that CBP could take a closer look at the information
available in ATS related to the containers. However, our work at three
of the four operational pilot ports indicates that implementing the SFI
program at foreign ports could result in reduced collaboration between
CBP and host government customs officials or the end of the CSI
program. For example, at the Port of Southampton, United Kingdom,
customs officials previously worked side by side to share information
with CBP officers as part of the CSI program and during the initial
transition from CSI to SFI. However, United Kingdom customs officials
no longer participate in SFI, as they withdrew their support for the
program after the first 6 months of operation, which was the agreed-
upon time frame for their participation. CBP officials stationed at the
Port of Southampton stated that it has been more difficult to have
containers they determine may pose some risk physically inspected by
their British counterparts because of this reduced interaction caused
by the transition from CSI to SFI. This reduced interaction and
challenges in having U.S.-bound containers physically inspected may be
because the port's participation in the program was viewed by the
British government as a pilot and would not necessarily occur when
implementing SFI or another form of 100 percent scanning on a more
permanent basis. If the SFI program is implemented in such a way that
CBP officials are stationed overseas, and if host nation officials work
with them to jointly research shipping data on containers, then this
type of information sharing could continue under the 100 percent
scanning requirement. However, foreign government officials from
Singapore and South Korea we spoke with said that given the many
security programs the United States has adopted, the United States
should choose whether it wants to continue CSI or implement SFI, but
that it cannot do both.
C-TPAT and AEO Programs:
The willingness of private companies to voluntarily enhance their
security practices to join C-TPAT may be diminished if a key benefit of
membership is reduced by 100 percent scanning. Through the C-TPAT
program, members of the trade community (e.g., importers, vessel
carriers, and others) voluntarily enter into an agreement with CBP to
improve their security programs in return for various trade-related
benefits, such as reduced scrutiny of their cargo containers upon
arrival in the United States. [Footnote 40] As part of this voluntary
agreement, C-TPAT participants share sensitive, corporate security
plans with CBP and provide CBP with access to their facilities. This
level of information sharing would otherwise not be available to CBP
for companies that are not C-TPAT members.
According to a survey conducted in 2007 by the University of Virginia,
the most important motivation for businesses joining C-TPAT was
reducing the time and cost of getting cargo released by CBP. [Footnote
41] However, this benefit could be diminished by the 100 percent
scanning requirement since, under such a requirement all cargo is to be
scanned regardless of membership in C-TPAT. While the six C-TPAT
members we interviewed generally expressed their intent to remain in
the program, three stated that there would be less incentive to
maintain membership, or for other companies to join C-TPAT if the 100
percent scanning requirement is fully implemented. If companies drop
out of or do not join C-TPAT, it could be difficult for CBP to
determine what, if any, security initiatives have been undertaken by
the companies, unless other programs or methods were developed to do
so. CBP officials have stated that they do not believe 100 percent
scanning will affect membership in the C-TPAT program, and that the C-
TPAT program has some benefits that will continue to exist regardless
of container scanning. For example, they note that C-TPAT members that
transfer cargo by truck to the United States from Canada or Mexico will
not be affected by the requirement. However, given that other companies
who use maritime shipping may lose an incentive for joining C-TPAT or
maintaining membership, the potential security benefit associated with
the program could be diminished to the extent that C-TPAT membership
does not grow or decreases.
AEO programs--programs similar to C-TPAT run by other countries--may be
hindered by 100 percent scanning because it may be viewed as a
deterrent to private companies to join AEO programs. A core concept of
the SAFE Framework is a system of mutual recognition, whereby two
nations' AEO programs are mutually recognized by the respective customs
administrations. Mutual recognition of AEO programs occurs when customs
administrations agree to recognize one another's AEO programs and
security features and to provide comparable benefits to members of the
respective programs. As of June 2009, CBP had signed mutual recognition
arrangements with New Zealand, Canada, Jordan, and Japan. Furthermore,
the United States is discussing entering into a nonbinding arrangement
with the European Union. According to data from the WCO, as of July
2009, about 70 countries had implemented or had begun developing their
own national AEO programs. Foreign government, World Bank, and WCO
officials we interviewed expressed concern that implementation of SFI
or other efforts to achieve 100 percent scanning may hinder mutual
recognition efforts because, under such a program, if all U.S.-bound
cargo is to be scanned, there is little incentive for companies to join
such partnerships, or governments to develop these partnership
programs, without one of the common benefits--reduced scrutiny of cargo
containers.
The 100 Percent Scanning Requirement Is a Departure from Multilateral
Partnerships, Raising Concerns with Key Trading Partners and Leading to
Calls for Reciprocal Scanning Requirements:
CBP has traditionally worked with its international partners to enhance
the security of the supply chain. The International Outreach and
Coordination Strategy, one of eight supporting plans for The National
Strategy for Maritime Security, establishes the goal of developing a
coordinated policy for U.S. government maritime security activities
with foreign governments, international and regional organizations, and
the private sector. According to the strategy, the United States must
forge cooperative partnerships and alliances with other nations, as
well as with public and private stakeholders in the international
community, to achieve effective maritime security. As CBP has
recognized in security matters, the United States is not self-
contained, either in its problems or in its solutions. The growing
interdependence of countries requires policy makers to recognize the
need to work in partnerships across international boundaries to achieve
vital national goals. As such, CBP has taken a lead role in working
with the WCO and foreign customs administrations to establish and
implement international customs security standards that benefit all
participants. For example, CBP was a principal author of the
multilateral SAFE Framework of Standards--based on CBP's existing
layered security strategy--unanimously adopted by the members of the
WCO, and CBP officials have stated that its existing layered strategy
constitutes U.S. efforts to implement the elements of the SAFE
Framework.
However, the 100 percent scanning requirement is a departure from these
existing efforts to enhance cargo container security through
partnerships. Existing CBP efforts to enhance cargo container security,
such as collaboration with the WCO to develop the SAFE Framework, have
been based on a bilateral and multilateral approach meant to enhance
security for all participants. Foreign government and international
organization officials with whom we met have also expressed concern
that the 100 percent scanning requirement is inconsistent with
multilaterally adopted customs security standards, may negatively
impact trade, and could diminish container security. For example,
customs and other officials from foreign governments, including the
European Union, South Korea, Hong Kong, and Singapore, as well as
international organizations, including the WCO, have expressed their
belief that scanning 100 percent of U.S-bound containers is
inconsistent with the risk-based strategy agreed to in the SAFE
Framework because it treats all containers as having the same risk
level before any analysis of the risks they may pose is
performed.[Footnote 42] Foreign government and international
organization officials we spoke with added that, given limited
resources, 100 percent scanning could provide a lower level of
security, as the focused attention on specific high-risk shipments is
replaced by a blanket approach applying to all containers.
Because the100 percent scanning requirement was initiated solely by the
United States, government officials in Europe, Asia, and the Middle
East with whom we met have stated that the requirement is perceived as
being for the sole security benefit of the United States. The European
Union has formally stated that the 100 percent scanning requirement was
imposed unilaterally and implies extraterritoriality. In June 2008, WCO
members unanimously endorsed a resolution expressing concern that
implementation of 100 percent scanning would be detrimental to world
trade and could result in unreasonable delays, port congestion, and
international trading difficulties.[Footnote 43] Similarly, in May
2008, the European Parliament issued a resolution calling for the
United States to repeal the 100 percent scanning requirement. Further,
in June 2009, the governments of five developing countries submitted a
position paper to the WCO opposing 100 percent scanning due to the
disproportionate impact it will have on their developing economies.
[Footnote 44]
According to State Department officials with whom we met, the 100
percent scanning requirement has negatively impacted interactions with
other countries on various issues.[Footnote 45] State Department
officials overseas have acknowledged that the 100 percent scanning
requirement has already impacted or could have impact on future U.S.
interests. For example, according to these officials, they have
experienced difficulty making progress on U.S. concerns related to
agricultural exports and registration of chemical products because they
cannot discuss these issues without foreign governments raising their
concerns with 100 percent scanning.
Related to these international concerns, some foreign government
officials with whom we spoke are considering requiring a reciprocal
scanning requirement for cargo coming from the United States.
Specifically, government officials in Honduras and the European
Commission--which represents the 27 member states of the European
Union--have indicated that they may consider a reciprocal container
scanning requirement in which containers from the United States that
are being shipped to these countries would have to be scanned. Although
the European Commission indicated it does not think scanning will
enhance security, it added it would be difficult not to ask for
reciprocity if their member states are initiating cargo scanning
programs for the security benefit of the United States.
According to CBP and domestic port terminal officials, and our
observations at the domestic ports we visited, scanning outbound
containers to meet a reciprocity requirement would be challenging and
require additional resources. CBP officials noted that the difficulty
negotiating and obtaining space from terminal operators to install
scanning equipment for inbound containers would also apply to
installing equipment needed to scan outbound containers should
reciprocity be required. CBP officials also noted additional staff
would be needed to review container images and adjudicate identified
anomalies. Further, it would be difficult to identify the destination
of outbound cargo containers, according to CBP and port officials.
Therefore, even if a few countries asked that goods bound from their
countries be examined, it might be necessary for CBP to examine all
outbound goods. CBP officials stated scanning outbound containers could
come at the expense of their ability to secure the United States from
inbound containers that might contain WMD.
Given the situation, foreign governments and the trade industry are
awaiting information on how CBP plans to implement 100 percent
scanning. Although the scanning requirement is a U.S. law, officials
from the European Commission stated that they are aware that DHS and
CBP have stated that implementing the law by July 2012 is likely not
feasible, which has created a sense of uncertainty regarding future
implementation of the scanning requirement. DHS acknowledged this
concern, noting that without a clear path forward for SFI, partnerships
with foreign governments would be put at risk. Although the Secretary
of DHS consequently endorsed the strategic trade corridor strategy as
the path forward, the department has not specified whether
implementation of 100 percent scanning at strategic corridors would
constitute the entirety of CBP's efforts to implement 100 percent
scanning or was an initial phase of a broader effort to implement 100
percent scanning.
Foreign terminal operators have also expressed concerns regarding the
lack of a clear path forward for the SFI program. During our discussion
with the Federation of European Private Port Operators, the terminal
operator representatives noted the July 2012 deadline was quickly
approaching, but there was a lack of information as to how the
requirement would be achieved. The terminal operator representatives
added that decisions needed to be made regarding who is required to pay
for and operate the scanning equipment, among other things. The
officials noted that they did not want to purchase scanning equipment
without standards being established because they did not want to bear
this expense and later learn that the scanning equipment they purchased
is not considered sufficient.
Conclusions:
Challenges in scanning U.S.-bound cargo containers at participating
ports to date, as well as challenges in getting additional ports to
participate, have raised questions about the feasibility of scanning
100 percent of U.S.-bound cargo containers. While CBP officials have
stated that they may not be able to overcome these challenges based on
the experiences of the SFI program to date, the agency has not
conducted an analysis of the feasibility of implementing 100 percent
scanning. Such an analysis could assist both the agency and Congress by
providing important information regarding CBP's ability to fully
implement the 100 percent scanning requirement and determining a path
forward to enhance container security.
As CBP attempts to expand the SFI program, it will need more
comprehensive cost estimates. Such cost estimates could provide CBP
with valid cost information to share with Congress to allow it to make
sound and prudent decisions regarding SFI program implementation. CBP
and Congress could also benefit from a cost-benefit analysis (that
includes costs to international maritime stakeholders) to evaluate the
relative costs and benefits of various alternatives for implementing
the 100 percent scanning requirement, to include its strategic trade
corridor strategy. Such an analysis could help to guide CBP and
Congress in attempting to implement the 100 percent scanning
requirement, as well as assessing other alternatives short of 100
percent scanning for enhancing container security.
DHS and CBP officials have acknowledged that they will likely not be
able to achieve 100 percent scanning of U.S.-bound cargo containers by
2012, and expressed concerns over the feasibility, costs, and security
benefits associated with the requirement. However, without conducting
feasibility and cost-benefit analyses, DHS and CBP will not be able to
fully evaluate various alternatives for implementing the 100 percent
scanning requirement or other alternatives that enhance cargo container
security in a cost-efficient manner.
Recommendations for Executive Action:
To better position DHS to implement the cargo container scanning
provisions of the SAFE Port and 9/11 Acts, improve container security
programs, and better inform Congress, we recommend that the Secretary
of Homeland Security, working with the CBP Commissioner, in
consultation with the Secretaries of Energy and State as appropriate,
take the following actions:
* conduct a feasibility analysis of implementing the 100 percent
scanning requirement of all U.S.-bound cargo containers in light of the
challenges faced at the initial SFI ports;
* develop more comprehensive cost estimates for achieving the
requirement to scan 100 percent of U.S.-bound cargo containers,
consistent with best practices for implementing, operating, and
maintaining U.S. government programs;
* conduct a cost-benefit analysis (to include all significant economic
costs) of different alternatives for achieving the 100 percent scanning
requirement, to include as appropriate, other alternatives short of
achieving 100 percent scanning, to enhance container security, and to
address the impact that 100 percent scanning may have on other
container security programs; and:
* provide the results of the feasibility analysis, U.S. program cost
estimates, and cost-benefit analysis outlined above to Congress, along
with various cost-effective alternatives to implementing the 100
percent scanning requirement, as appropriate.
Agency Comments and Our Evaluation:
We provided a copy of this report to the State Department, the
Department of Energy (DOE), and the Department of Homeland Security
(DHS) for comment. The State Department did not provide written
comments to include in the report, but provided technical comments that
have been incorporated into the report, where appropriate. DOE provided
comments on October 19, 2009, that cite the need to distinguish between
challenges regarding the use of radiation versus nonintrusive image
scanning equipment. We have modified the report to include this
distinction. DOE made no comments on the recommendations since they
were directed towards DHS and CBP. A copy of DOE's comments are
reprinted in appendix II. DHS and CBP provided technical comments that
have been incorporated into the report, where appropriate.
DHS also provided written comments--that incorporated comments from
CBP--on October 19, 2009. A copy of DHS's comments are reprinted in
appendix III. In commenting on a draft of this report, DHS noted that
it concurred with three recommendations and concurred in part with one.
It also commented that CBP views these recommendations as having been
largely achieved through its publication of previous reports to
Congress. We disagree with this for the reasons discussed in the
paragraphs below.
Regarding our first recommendation to conduct a feasibility analysis
for implementing the 100 percent scanning requirement for all U.S.-
bound cargo containers, DHS noted that CBP concurred with our
recommendation. The agency further stated that the recommendation had
been achieved in its June 2008 report to Congress, "Report to Congress
on Integrated Scanning Systems Pilot (Security and Accountability for
Every Port Act of 2006), Section 231," where it discussed challenges to
implementing the requirement at participating seaports. Specifically,
CBP noted that its report concluded that the 100 percent scanning of
U.S.-bound maritime container is possible on a limited scale in
locations with an array of accommodating and supportive conditions,
such as host nation cooperation, low cargo volumes, low transshipment
rates and technology and infrastructure costs covered primarily by the
U.S. government. It also noted that its report determined that these
conditions would not likely exist at all ports shipping to the United
States. During our review, we analyzed the June 2008 report and while
it discusses these and other challenges that exist at participating
ports, we do not believe that it constitutes a feasibility analysis of
the 100 percent scanning requirement, as required by the SAFE Port Act.
In particular, as we have noted in this report, the SAFE Port Act
requires certain specific elements to be included when evaluating the
feasibility of expanding 100 percent scanning to other ports, including
an analysis of the infrastructure requirements to implement 100 percent
scanning and an analysis of requirements, including costs, to install
and maintain an integrated scanning system at ports participating in
the Container Security Initiative. These analyses were not included in
the 2008 report and CBP has acknowledged that they have not been
conducted.
Regarding our second recommendation to develop more comprehensive cost
estimates for achieving the requirement to scan 100 percent of U.S.-
bound cargo containers, consistent with best practices, DHS commented
that CBP concurred with the recommendation and had already achieved it
through issuance of its June 2008 report to Congress. In particular,
CBP stated that it believes that it is incumbent upon the agency to
develop realistic cost estimates for the overall operational elements
associated with implementing legislative mandates, such as the 100
percent scanning requirement. However, as acknowledged by CBP, the cost
estimates generated by CBP to date were not developed in a manner that
is consistent with cost estimation guidelines. For example, estimates
developed by CBP to date cover implementation of the program as it
currently exists, but do not examine costs over the life of the
program, which is a best practice identified by GAO and accepted by
DHS. As a result, total costs for the life of the SFI program could be
significantly greater than CBP's current cost estimates. As we have
noted in this report, having more comprehensive cost estimates could
provide CBP with valid cost information to share with Congress to allow
it to make sound and prudent decisions regarding SFI program design and
implementation.
Regarding our third recommendation to conduct a cost-benefit analysis
(to include all significant economic costs) of different alternatives
for achieving the 100 percent scanning requirement, to include as
appropriate, other alternatives short of achieving 100 percent
scanning, DHS commented that CBP concurred in part with our
recommendation. In its response CBP acknowledged that a cost-benefit
analysis would be helpful to frame the discussion and better inform
Congress; however, it noted that such a comprehensive study would place
significant burdens on its limited resources. Given the potential costs
to the United States, foreign governments and trade industry of
implementing 100 percent scanning, we believe a cost-benefit analysis
is warranted to evaluate other alternatives. CBP added that neither the
SAFE Port Act nor the 9/11 Act require CBP to conduct such an analysis
and suggests that the Congressional Budget Office is the most
appropriate entity to conduct such an analysis. While CBO does prepare
cost estimates for pending legislation, as we mention in this report,
CBO has evaluated the 9/11 Act and assumed that foreign governments
would pay for implementing scanning systems at their port, which has
generally not been the case thus far. We believe that, given its daily
interaction with foreign customs services and its direct knowledge of
port operations, CBP is in a better position to conduct any cost-
benefit analysis and bring results to Congress for consideration.
Further, as noted in this report, DHS cites cost-benefit analysis as a
proven management tool to support planning and manage costs. We believe
that the challenges faced in implementing the program thus far, and the
potential costs of implementing and operating the 100 percent scanning
requirement--particularly non-financial costs such as reductions in the
effectiveness of existing container security programs like CSI and C-
TPAT--emphasize the importance of such an analysis. This analysis could
assist both the agency and Congress in understanding CBP's ability to
implement the 100 percent scanning requirement as well provide Congress
more complete understanding of the scanning requirement's advantages
and disadvantages. Congress could then use this information in its role
providing oversight over the program or in considering alternatives for
enhancing cargo container security in a cost-efficient manner.
Finally, regarding our fourth recommendation to provide results of the
feasibility analysis, U.S. program costs estimates, and cost-benefit
analysis to Congress, along with various cost-effective alternatives to
implementing the 100 percent scanning requirement, DHS commented that
CBP concurred with our recommendation, had already achieved it, and
outlined its intent to continue to explore the full range of costs
associated with scanning efforts at foreign ports. Specifically, CBP
stated that in June 2008, it submitted to Congress the findings of the
feasibility study required under Section 231 of the SAFE Port Act. It
added that this report and the number of subsequent reports provided at
6-month intervals detailed CBP and DOE expenditures under SFI,
including the cost of scanning equipment, as well as personnel
expenditures for each potential scanning site. While these reports have
contained useful information, as mentioned previously, our view is that
they do not contain comprehensive analyses of the feasibility or costs
of the 100 percent scanning requirement or evaluate potential program
alternatives to determine which may be most feasible and cost
effective. We believe that feasibility and cost-benefit analyses are
critical to help ensure that DHS and CBP have the necessary information
to assist the Congress as it considers options for implementing the 100
percent scanning requirement or other alternatives to enhancing cargo
container security. This information should include more definitive
information on the feasibility of the scanning requirement--to include
the factors discussed in the SAFE Port Act such as infrastructure
requirements, impact on processing times, ability to meet forecasted
container volume, costs, and personnel needs--across different
alternative implementation scenarios.
As arranged by your offices we plan no further distribution until 30
days after the date of this report. At that time, we will send copies
of this report to the Secretaries of Energy, Homeland Security, and
State; and other interested parties. In addition, the report will be
available on GAO's Web site at [hyperlink, http://www.gao.gov].
If you or your staff have any questions about this report, please
contact me at (202) 512-9610 or at caldwells@gao.gov. Key contributors
to this report are listed in appendix IV. This report will also be
available at no charge on the GAO Web site at http://www.gao.gov.
Signed by:
Stephen L. Caldwell:
Director, Homeland Security and Justice Issues:
List of Requesters:
The Honorable John D. Rockefeller IV:
Chairman:
Committee on Commerce, Science, and Transportation:
United States Senate:
The Honorable Joe Lieberman:
Chairman:
The Honorable Susan Collins:
Ranking Member:
Committee on Homeland Security and Governmental Affairs:
United States Senate:
The Honorable Bennie G. Thompson:
Chairman:
Committee on Homeland Security:
House of Representatives:
The Honorable John Dingell:
Chairman Emeritus:
Committee on Energy and Commerce:
House of Representatives:
The Honorable George V. Voinovich:
United States Senate:
[End of section]
Appendix I: Objectives, Scope, and Methodology:
Our objectives were to identify (1) what progress U.S. Customs and
Border Protection (CBP) has made toward implementing 100 percent
scanning at the initial ports participating in the Secure Freight
Initiative (SFI) program; (2) what planning efforts CBP has made to
address the requirement to scan all U.S.-bound cargo containers by July
2012; (3) the estimated costs to date of the SFI program, and to what
extent future implementation costs have been estimated; and (4) what
challenges, if any, CBP faces in integrating the 100 percent scanning
requirement with its existing container security programs.
To determine the progress CBP has made in implementing the requirement
to scan 100 percent scanning of U.S.-bound cargo containers, we
conducted site visits at six of the seven foreign ports that have been
involved in SFI, and spoke with foreign government, U.S. customs, and
terminal operator officials during these visits. While the results of
these site visits and interviews cannot be generalized across all ports
that ship cargo containers to the United States, by observing
operations at six of the seven ports involved with the SFI program to
date--Busan, South Korea; Puerto Cortes, Honduras; Salalah, Oman;
Southampton, United Kingdom; Hong Kong; and Singapore--we gained a
critical understanding of the factors and challenges associated with
implementing SFI at these ports. Due to ongoing security concerns, we
did not conduct a site visit at Port Qasim, Pakistan. Instead, we
observed CBP's remote operation of the SFI program in Qasim from the
National Targeting Center-Cargo in Virginia. To assess CBP's progress
implementing SFI at individual ports, we compared data on the number of
containers scanned to the total volume of U.S.-bound containers at each
SFI port, to the requirement set forth in the 9/11 Act. CBP was unable
to provide container scan data based on container arrival mode (e.g.,
truck, rail, and transshipment) due to system limitations. After
reviewing possible limitations of all the data sources, we determined
that the data provided were sufficiently reliable for the purposes for
which we have used them in this report.
To identify the planning efforts CBP has undertaken to achieve the
requirement to scan 100 percent of U.S.-bound cargo containers, we
reviewed relevant documents, including the SFI program management plan,
the coordinating strategy and operations plan, and the concept of
operations/standard operating procedures documents for the SFI ports
visited. We supplemented our document reviews and analyses with
interviews of CBP officials in the SFI program office to determine
future plans for expansion of 100 percent scanning through the
strategic trade corridor strategy. Furthermore, we discussed the extent
to which the Department of Homeland Security (DHS) and CBP have
developed criteria, and a methodology and time line for granting
extensions to ports that cannot meet the 2012 deadline for scanning
U.S.-bound containers. We compared CBP's planning efforts to best
practices in A Guide to the Project Management Body of Knowledge.
To examine the estimated costs of implementing 100 percent scanning of
U.S.-bound cargo containers at foreign ports, we interviewed CBP and
Department of Energy (DOE) officials, international organization
personnel, foreign government officials, and terminal operators to
obtain their views as to the types of costs associated with
implementing 100 percent scanning. To determine the costs to the U.S.
government of implementing, operating, and maintaining the SFI program,
we reviewed documentation on CBP's and DOE's expenditures to date.
After reviewing possible limitations of the cost data provided, we
determined that the data provided were sufficiently reliable for the
purposes for which we have used them in this report. We compared CBP's
methods for developing cost estimates to further implement 100 percent
scanning with the best practices outlined in the GAO Cost Estimating
and Assessment Guide. We examined DHS's Cost-Benefit Analysis
Guidebook, as well as Office of Management and Budget (OMB) Circular
No. A-11 Preparation, Submission, and Execution of the Budget, OMB
Circular No. A-94 Guidelines and Discount Rates for Benefit-Cost
Analysis of Federal Programs, and OMB Circular A-4 Regulatory Analysis
to identify the need for, and elements of a comprehensive cost-benefit
analysis. To understand the costs to entities other than the U.S.
government, we spoke with terminal operators and officials from foreign
governments participating in the SFI program. We also interviewed the
World Customs Organization (WCO) and the World Bank to further
understand other costs that may result from 100 percent scanning, such
as changes in trade flow and impacts on developing economies. We
reviewed economic studies conducted on the issue, including those
conducted by the University of Le Havre and Industrial Economics, Inc.
Furthermore, we discussed with officials from foreign governments,
representatives of the European Commission, and terminal operators,
including the Federation of European Private Port Operators, their
willingness to share the costs of container scanning with the United
States at SFI ports.
To determine any challenges CBP faces in integrating 100 percent
scanning with existing container security programs, we assessed the
potential impact of scanning on the core elements of CBP's current
security programs, DOE's Megaports Initiative, and the security
strategy advocated by the WCO through the SAFE Framework. As
appropriate, we also relied on our extensive body of work on container
security conducted over the last several years (see list of Related GAO
Products at the end of this report). To determine the impact of
scanning on the use of the Automated Targeting System in conjunction
with the 24-hour rule, we interviewed CBP officers working at the ports
of Baltimore, Maryland and Los Angeles/Long Beach, California--domestic
ports with access to SFI data--to discuss how the availability of SFI
data affects adjudication of high-risk containers. We observed how
domestic CBP officers access and review SFI scan data. To determine the
impact of scanning on the Container Security Initiative (CSI), we
interviewed foreign government officials at ports participating in both
CSI and SFI on how the programs operate simultaneously, and the
resulting impact on collaboration between U.S. and host government
customs officials. We interviewed CBP's Customs-Trade Partnership
Against Terrorism (C-TPAT) office and six members of C-TPAT to
determine what impact 100 percent scanning may have on the benefits of
membership and how this will affect participation in C-TPAT. Our
interviews with these trade industry representatives were based on a
nonprobability sample, so while their views are not generalizable to
the entire maritime trade industry, they provide knowledgeable insight
into the relationship between the SFI and C-TPAT programs. We spoke
with DOE officials responsible for implementing the Megaports
Initiative to understand the impact of 100 percent scanning on efforts
to expand the Megaports Initiative. We interviewed representatives of
the WCO, International Maritime Organization, International Chamber of
Shipping, European Commission, and foreign government officials to
obtain their views on the consistency of 100 percent scanning with
multilateral and bilateral efforts to promote supply chain security.
With these entities, we discussed how scanning may affect core
principles of the SAFE Framework, including the establishment of
customs-to-business partnerships and mutual recognition between
countries of these partnerships. While we obtained the perspective of
all foreign governments participating in the SFI program that intend to
implement the SAFE Framework, with the exception of Pakistan, these
views are not necessarily representative of all foreign governments
intending to implement the SAFE Framework. We interviewed State
Department officials in Washington D.C.; at the U.S. Mission to the
European Union; and the U.S. Embassy in Seoul, to discuss how the 100
percent requirement affects the ability of the State Department to
defend U.S. interests. With foreign government officials and
representatives of the European Commission we discussed their
intensions to require a reciprocal 100 percent container scanning
requirement of the United States. We also discussed the impact of
reciprocity on domestic ports with CBP officials at the Ports of
Baltimore, Houston, and Los Angeles/Long Beach; as well as the Houston
and Miami Port Authorities.
We conducted this performance audit from August 2008 through October
2009 in accordance with generally accepted government auditing
standards. Those standards require that we plan and perform the audit
to obtain sufficient, appropriate evidence to provide a reasonable
basis for our findings and conclusions based on our audit objectives.
We believe that the evidence obtained provides a reasonable basis for
our findings and conclusions based on our audit objectives.
[End of section]
Appendix II: Comments from the Department of Energy:
Department of Energy:
National Nuclear Security Administration:
Washington, DC 20585:
October 19, 2009:
Mr. Stephen L. Caldwell:
Director, Homeland Security and Justice Team:
Government Accountability Office:
Washington, D.C. 20548:
Dear. Mr. Caldwell:
The National Nuclear Security Administration (NNSA) appreciates the
opportunity to review the Government Accountability Office's (GAO)
draft report, GAO-10-20, Supply Chain Security: Feasibility and Cost-
Benefit Analysis Would Assist DHS and Congress in Assessing and
Implementing the Requirement to Scan 100 Percent of U.S.-Bound
Containers. We understand that this work was done at the request of the
Senate Committees on Commerce, Science and Transportation; and Homeland
Security and Governmental Affairs; and the House Committees on Energy
and Commerce; and Homeland Security. GAO was asked to determine (1) the
extent Customs designed and implemented the Secure Freight Initiative
pilot program to demonstrate the feasibility of 100 percent scanning of
cargo containers at foreign ports; (2) the extent Customs is obtaining
comprehensive cost data to conduct cost benefit analyses; (3) the
extent Customs is able to integrate the various technologies; and (4)
the extent that 100% scanning is consistent with existing domestic and
international programs to enhance container security and the impact on
overall U.S. cargo security. Based on your conclusions, recommendations
were made to the Department of Homeland Security (DHS), to work with
Energy and State as appropriate.
NNSA does not take exception to the contents or conclusions of the
draft report, but we do have a comment: Page 25, 1st paragraph it
states, "CBP officials added that because of the lack of current
technology to effectively scan transshipped containers that are moved
from one vessel to another with comparatively little time at the
port..."
NNSA suggests GAO distinguish between the challenge of radiation versus
Non-Intrusive Imaging image scans of transshipped containers as
reflected in the Transshipment write-up on page 27 which speaks to the
issue on transship containers ...only cargo containers that trigger
radiation alarms are to be scanned with imaging equipment."
Since the recommendations are directed to DHS, we have no further
comment.
If you have any questions about this response, please contact JoAnne
Parker, Acting Director, Policy and Internal Controls Management, at
202-586-1913.
Sincerely,
Signed by:
Michael C. Kane:
Associate Administrator for Management and Administration:
[End of section]
Appendix III: Comments from the Department of Homeland Security:
U.S. Department of Homeland Security:
Washington, DC 20528:
October 19, 2009:
Mr. Steve Caldwell:
Director:
Homeland Security and Justice Issues:
U.S. Government Accountability Office:
Washington, DC 20548:
Dear Mr. Caldwell:
Thank you for providing us with a copy of the draft report entitled
"Supply Chain Security: Feasibility and Cost-Benefit Analysis Would
Assist DHS and Congress in Assessing and Implementing the Requirement
to Scan 100 Percent of U.S.-Bound Containers" (GAO-10-12). For this
review GAO assessed 1) U.S. Customs and Border Protection's
(CBP) progress at the initial ports participating in the Secure Freight
Initiative (SFI) program, 2) CBP plans to implement SFI, 3) the extent
to which CBP has estimated costs and conducted a cost-benefit analysis
of 100% scanning, and 4) any challenges to integrating SFI with
existing container security programs.
Overall, CBP concurs with GAO's recommendations on the need for a
feasibility study, cost estimate, and cost-benefit analysis of the SFI
program. CBP has analyzed the feasibility of implementing 100% scanning
of all U.S.-bound containers by conducting the 100% scanning pilot
study, which was mandated by the Security and Accountability for Every
(SAFE) Port Act. Moreover, CBP went beyond this legislative mandate and
deployed scanning technologies to additional locations to test the
feasibility of scanning containers in high-volume and transshipment
ports. CBP reported its findings to Congressional requesters in June
2008.
In addition, CBP created detailed cost estimates based on the best
available information regarding the cost of scanning equipment,
communications, hardware and software, as well as personnel
expenditures for each potential scanning site that were provided to
GAO.
The recommendation to complete a cost-benefit analysis creates
additional burdens on the agency's resources and invites the
establishment of precedents that question the roles of the legislative
and executive components. As an alternative, CBP believes that the
Congressional Budget Office is the responsible party to conduct this
analysis when assessing the feasibility and impact of implementing such
legislation.
Responses to the recommendations follow.
To better position DHS to implement the cargo container scanning
provisions of the SAFE Port and 9/11 Acts, improve container security
programs, and better inform Congress, we recommend that the Secretary
of Homeland Security, working with the CRP Commissioner, in
consultation with the Secretaries of Energy and State as appropriate,
take the following actions:
Recommendation 1: Conduct a feasibility analysis of implementing the
100 percent scanning requirement of all U.S.-bound cargo containers in
light of the challenges faced at the initial SFI ports.
Response: Concur. This recommendation has been achieved with CBP's
report entitled "Report to Congress on Integrated Scanning Systems
Pilot (Security and Accountability For Every Port Act of 2006, Section
231" submitted to Congress in June 2008. In this report, CBP has
analyzed the feasibility of implementing 100% scanning of all U.S.-
bound containers by conducting the 100% scanning pilot study which was
mandated by the SAFE Port Act.
CBP met the legislative requirement to establish a 100% scanning pilot
program in three foreign ports (Port Qasim, Pakistan; Puerto Cortes,
Honduras; and the Port of Southampton, UK) as mandated by the SAFE Port
Act. Additionally, CBP went beyond this legislative mandate and
deployed scanning technologies to three additional locations (Modern
Terminal, Hong Kong; Port Salalah, Oman; and Gamman Terminal, Susan,
South Korea) to test the feasibility of scanning containers in high-
volume and transshipment ports. As required in Section 231(d) of the
SAFE Port Act, CBP submitted a report to Congress detailing the
operational lessons learned as well as the technical, operational, and
diplomatic challenges identified from the 100% scanning pilots. CBP
analyzed the results of the pilot study and concluded that 100 percent
scanning of U.S.-bound maritime containers is possible on a limited
scale in locations with an array of accommodating and supportive
conditions, such as considerable host nation cooperation, low cargo
volumes, low transshipment rates, and technology and infrastructure
costs covered primarily by the United States Government. As noted in
the 2008 report to Congress, CBP determined that these conditions would
not likely exist in all ports shipping to the United States. However,
as the data obtained by the scanning technology does have the potential
to enhance targeting, CBP will focus future scanning deployments to
locations of strategic importance where the additional data will be the
most beneficial.
Recommendation 2: Develop more comprehensive cost estimates for
achieving the requirement to scan 100 percent of U.S.-bound cargo
containers, consistent with best practices for implementing, operating
and maintaining U.S. government programs.
Response: Concur. This recommendation has been achieved with CBP's
report entitled "Report to Congress on Integrated Scanning Systems
Pilot (Security and Accountability For Every Port Act of 2006, Section
231" submitted to Congress in June 2008.
CBP believes that it is incumbent upon the agency to develop realistic
cost estimates for the overall operational elements associated with
implementing legislative mandates such as the 100% container scanning
requirement in the 9/11 Commission Recommendation Act. In developing
possible strategic options to meet the law's mandate, CBP created
detailed cost estimates based on the best available information
regarding the cost of scanning equipment, communications, hardware and
software, as well as personnel expenditures for each potential scanning
site. While the cost estimates were based on CBP's experience with the
SFI pilots and not on site assessments of hundreds of ports, the agency
believes that the data presents valid possibilities on costs.
Recommendation 3: Conduct a cost-benefit analysis (to include all
significant economic costs) of different alternatives for achieving the
100 percent scanning requirement, to include as appropriate, other
alternatives short of achieving 100 percent scanning, to enhance
container security, and to address the impact that 100 percent scanning
may have on other container security programs.
Response: Concur in part. While CBP acknowledges that a version of the
recommended cost-benefit analysis would be helpful to frame the
discussion and better inform Congress, such a comprehensive study would
place significant burdens on agency resources. Further, neither the
SAFE Port Act of 2006 nor the 9/11 Act of 2007 require CBP to conduct a
cost-benefit analysis. CBP suggests that the Congressional Budget
Office is the most appropriate entity to conduct such an analysis when
assessing the feasibility and impact of implementing legislation.
Recommendation 4: Provide the results of the feasibility analysis, U.S.
program cost estimates, and cost-benefit analysis outlined above to
Congress, along with various cost-effective alternatives to
implementing the 100 percent scanning requirement, as appropriate.
Response: Concur. As mentioned in the response to the second GAO
recommendation, CBP submitted to Congress in June 2008 the findings of
the feasibility study required under Section 231 of the SAFE Port Act.
This report, and the number of subsequent reports provided at six-month
intervals detailed CBP and Department of Energy (DOE) expenditures
under the Secure Freight Initiatives, including the cost of scanning
equipment, communications, hardware and software, as well as personnel
expenditures for each potential scanning site. CBP will continue to
explore the full range of costs associated with scanning abroad and
will work to ensure that scanning complements the layered and risk-
based approach to security currently in place. However, as a
comprehensive cost-benefit analysis, CBP suggests that the
Congressional Budget Office is the responsible entity to conduct such
an analysis when assessing the feasibility and impact of implementing
legislation.
Thank you for the opportunity to provide comments to the draft report.
Sincerely,
Signed by:
Jerald E. Levine:
Director:
Departmental GAO/OIG Liaison Office:
[End of section]
Appendix IV: GAO Contact and Staff Acknowledgments:
GAO Contact:
Stephen L. Caldwell, (202) 512-9610 or caldwells@gao.gov:
Acknowledgments:
In addition to the contact named above, Christopher Conrad, Assistant
Director, and Robert Rivas, Analyst-in-Charge, managed this review.
Lisa Canini and Julia Coulter made significant contributions to the
work. Chuck Bausell, Richard Hung, Stanley J. Kostyla, and Timothy M.
Persons assisted with design, methodology, and data analysis. Frances
Cook, Geoffrey Hamilton, and Jan Montgomery provided legal support.
Katherine Davis and Sally Williamson provided assistance in report
preparation. Avrum Ashery and Pille Anvelt helped develop the report's
graphics.
[End of section]
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Detection Portal Monitors, but Preliminary Results Show Limits of New
Technology. [hyperlink, http://www.gao.gov/products/GAO-09-655].
Washington, D.C.: May 21, 2009.
Combating Nuclear Smuggling: DHS's Phase 3 Test Report on Advanced
Portal Monitors Does Not Fully Disclose the Limitations of the Test
Results. [hyperlink, http://www.gao.gov/products/GAO-08-979].
Washington, D.C.: September 20, 2008.
Supply Chain Security: CBP Works with International Entities to Promote
Global Customs Security Standards and Initiatives, but Challenges
Remain. [hyperlink, http://www.gao.gov/products/GAO-08-538].
Washington, D.C.: August 15, 2008:
Supply Chain Security: Challenges to Scanning 100 Percent of U.S.-Bound
Cargo Containers. [hyperlink, http://www.gao.gov/products/GAO-08-533T].
Washington, D.C.: June 12, 2008.
Supply Chain Security: Examinations of High-Risk Cargo at Foreign
Seaports Have Increased, but Improved Data Collection and Performance
Measures Are Needed. [hyperlink,
http://www.gao.gov/products/GAO-08-187]. Washington, D.C.: January 25,
2008.
Maritime Security: The SAFE Port Act: Status and Implementation One
Year Later. [hyperlink, http://www.gao.gov/products/GAO-08-126T].
Washington, D.C.: October 30, 2007.
Maritime Security: One Year Later: A Progress Report on the SAFE Port
Act. [hyperlink, http://www.gao.gov/products/GAO-08-171T]. Washington,
D.C.: October 16, 2007.
Maritime Security: The SAFE Port Act and Efforts to Secure Our Nation's
Seaports. [hyperlink, http://www.gao.gov/products/GAO-08-86T].
Washington, D.C.: October 4, 2007.
Combating Nuclear Smuggling: Additional Actions Needed to Ensure
Adequate Testing of Next Generation Radiation Detection Equipment.
[hyperlink, http://www.gao.gov/products/GAO-07-1247T]. Washington,
D.C.: September 18, 2007.
Maritime Security: Observations on Selected Aspects of the SAFE Port
Act. [hyperlink, http://www.gao.gov/products/GAO-07-754T]. Washington,
D.C.: April 26, 2007.
Customs Revenue: Customs and Border Protection Needs to Improve
Workforce Planning and Accountability. [hyperlink,
http://www.gao.gov/products/GAO-07-529]. Washington, D.C.: April 12,
2007.
Cargo Container Inspections: Preliminary Observations on the Status of
Efforts to Improve the Automated Targeting System. [hyperlink,
http://www.gao.gov/products/GAO-06-591T]. Washington, D.C.: March 30,
2006.
Combating Nuclear Smuggling: Efforts to Deploy Radiation Detection
Equipment in the United States and in Other Countries. [hyperlink,
http://www.gao.gov/products/GAO-05-840T]. Washington, D.C.: June 21,
2005.
Container Security: A Flexible Staffing Model and Minimum Equipment
Requirements Would Improve Overseas Targeting and Inspection Efforts.
[hyperlink, http://www.gao.gov/products/GAO-05-557]. Washington, D.C.:
April 26, 2005.
Homeland Security: Key Cargo Security Programs Can Be Improved.
[hyperlink, http://www.gao.gov/products/GAO-05-466T]. Washington, D.C.:
May 26, 2005.
Maritime Security: Enhancements Made, but Implementation and
Sustainability Remain Key Challenges. [hyperlink,
http://www.gao.gov/products/GAO-05-448T]. Washington, D.C.: May 17,
2005.
[End of section]
Footnotes:
[1] For the purpose of this report, WMD generally refers to
radiological or nuclear materials.
[2] See M. Gerencser, J. Weinberg, and D. Vincent, Port Security War
Games: Implications for U.S. Supply Chains, (Booz, Allen, and Hamilton,
2002) and C. Meade and R. Molander, Considering the Effects of a
Catastrophic Terrorist Attack, (Rand Center for Terrorism Risk
Management Policy, 2006).
[3] The WCO is an independent international organization whose mission
is to enhance the efficiency and effectiveness of customs
administrations.
[4] Pub. L. No. 109-347, 120 Stat. 1884.
[5] 6 U.S.C. § 981. A similar requirement was enacted that same year by
the Department of Homeland Security Appropriations Act, 2007 (Pub. L.
No. 109-295, 120 Stat. 1355 (2006)) and is codified at 6 U.S.C. § 981a.
Both statutes specify scanning as examination with both radiation
detection equipment and non-intrusive imaging (NII) equipment. 6 U.S.C.
§§ 981(a), 981a(a)(1). This scanning is done in order to identify
radiation being emitted from a container and anomalies in a container's
image which could indicate the presence of shielding material,
respectively.
[6] To address the requirements of the SAFE Port Act, the SFI program
became operational in October 2007 at three ports: Qasim, Pakistan;
Puerto Cortes, Honduras; and Southampton, United Kingdom.
[7] Pub. L. No. 110-53, § 1701(a), 121 Stat. 266, 489-90 (amending 6
U.S.C. § 982(b)).
[8] The 9/11 Act scanning provision includes possible extensions for a
port or ports for which DHS certifies that at least two out of a list
of specific conditions exist. Among others, these conditions include
(1) adequate scanning equipment is not available or cannot be
integrated with existing systems, (2) a port does not have the physical
characteristics to install the equipment, or (3) use of the equipment
will significantly impact trade capacity and the flow of cargo. See 6
U.S.C. § 982(b)(4). The entire set of conditions is discussed in more
detail later in this report.
[9] In addition to the three initial ports selected for the SFI
Program, CBP also pursued four additional ports, the Port of Hong Kong;
the Port of Busan, Korea; the Port Salalah, Oman; and the Port of
Singapore for participation in the program.
[10] The United States abstained from the vote.
[11] The Project Management Institute, A Guide to the Project
Management Body of Knowledge©, (Newton Square, Pa.: 2008).
[12] GAO Cost Estimating and Assessment Guide: Best Practices for
Developing and Managing Capital Program Costs, [hyperlink,
http://www.gao.gov/products/GAO-09-3SP] (Washington, D.C.: March 2009).
[13] Department of Homeland Security, Cost-Benefit Analysis (CBA)
Guidebook, Version 2.0 (February 2006).
[14] See Circular No. A-11 Preparation, Submission, and Execution of
the Budget (August 2009); Circular No. A-94 Guidelines and Discount
Rates for Benefit-Cost Analysis of Federal Programs (October 1992); and
Circular A-4 Regulatory Analysis (September 2003).
[15] Due to ongoing security concerns, we did not conduct a site visit
at Port Qasim, Pakistan. Instead, we observed CBP's remote operation of
the SFI program in Qasim from the National Targeting Center-Cargo (NTC-
C) in Virginia.
[16] Through C-TPAT, CBP develops voluntary partnerships with members
of the trade community where private companies agree to improve the
security of their supply chains in return for various benefits, such as
a reduced likelihood that their containers will be examined.
[17] DHS, through its Domestic Nuclear Detection Office (DNDO), is
currently sponsoring testing of the Advanced Spectroscopic Portal (ASP)
monitors, which are designed to both detect and identify the specific
type of source material. We have previously identified deficiencies
associated with testing the ASP. For additional details see Combating
Nuclear Smuggling: DHS Improved Testing of Advanced Radiation Detection
Portal Monitors, but Preliminary Results Show Limits of New technology,
GAO-09-655 (Washington, D.C.: May 21, 2009).
[18] The act required CBP to identify three distinct ports through
which containers pass or are transshipped to the United States with
unique features and differing levels of trade volume. 6 U.S.C. §
981(a).
[19] GAO, Supply Chain Security: Challenges to Scanning 100 Percent of
U.S.-Bound Cargo Containers, [hyperlink,
http://www.gao.gov/products/GAO-08-533T] (Washington, D.C.: June 12,
2008).
[20] ATS is a computerized decision support tool to review electronic
documentation, including electronic manifest information submitted by
ocean carriers to help identify shipments requiring additional
scrutiny.
[21] According to CBP, the National Targeting Center (NTC) was
established in response to the need for proactive targeting aimed at
preventing acts of terror and to seize, deter, and disrupt terrorists
and implements of terror. NTC originally combined both passenger and
cargo targeting in one facility. It was later divided into the NTC-C
and the National Targeting Center-Passenger. For purposes of this
report, we use NTC-C in our references since its mission is to support
CBP cargo-targeting operations.
[22] Under the CSI program, CBP personnel work with host country
customs officials to identify high-risk cargo before it is loaded on a
U.S.-bound vessel. CBP officials then request that their foreign
counterparts examine the contents of the container.
[23] [hyperlink, http://www.gao.gov/products/GAO-08-533T]. In this
testimony we cited the following potential challenges to conducting 100
percent scanning: workforce planning, host nation examination
practices, measuring performance, resource responsibilities, logistics,
technology and infrastructure, use and ownership of data, consistency
with risk management, and reciprocity and trade concerns.
[24] Some examples of these challenges cannot be included in this
report due to the security sensitive nature of the information. Rather,
we have included examples from public documents.
[25] According to DOE, while scanning transshipment containers remains
a significant challenge, DOE has modified current radiation detection
technologies to scan a high percentage of transshipped containers at
some foreign ports. For example, in Freeport, Bahamas, DOE mounted
radiation detection panels on straddle carriers to scan transshipped
containers while stacked in the container yard.
[26] According to CBP officials, the agency's plan is to scan those
containers arriving by truck at strategic ports, until the technology
is available to scan transshipment containers without disrupting the
flow of trade.
[27] Although 10+2 went into effect in January 2009, CBP has
implemented a 'flexible enforcement period' until January 2010, or
later, to allow industry an opportunity to become familiar with and
adjust to the new requirements.
[28] 6 U.S.C. § 981(d)(5). Neither the SAFE Port Act nor its
legislative history contains an explicit definition of the term
"feasibility" with respect to the scanning requirement. However, the
act indicates that the pilot-related "need and feasibility analysis"
should include some of the following factors: (1) infrastructure
requirements, (2) effect on average processing time for containers, (3)
scalability to meet current and future forecasted trade flows, (4)
ability of system to maintain and catalog appropriate data for
reference and analysis, (5) cost to install and maintain an integrated
scanning system, (6) ability of administering personnel to efficiently
manage and utilize the data, (7) the ability to safeguard commercial
data generated, and (8) an assessment of the reliability of currently
available technology to implement an integrated scanning system.
[29] The Project Management Institute, A Guide to the Project
Management Body of Knowledge.
[30] The 9/11 Act scanning requirement authorizes DHS to grant
extensions for a port or ports if at least two of the following six
conditions exist: (1) equipment to scan all U.S.-bound containers is
not available for purchase and installation; (2) equipment to scan all
U.S.-bound containers does not have a sufficiently low false alarm
rate; (3) equipment to scan all U.S.-bound containers cannot be
purchased, deployed, or operated at a port or ports (including where
this is due to the physical characteristics of the port); (4) equipment
to scan all U.S.-bound containers cannot be integrated with existing
systems; (5) use of the equipment to scan all U.S.-bound containers
would significantly impact trade capacity and the flow of cargo; or (6)
the scanning equipment does not adequately provide automatic
notification of an anomaly in a container. 6 U.S.C. § 982(b)(4).
[31] 6 U.S.C. § 982(b)(6).
[32] See 6 U.S.C. § 983.
[33] Congressional Budget Office Cost Estimate, H.R. 1 Implementing the
9/11 Commission Recommendations Act of 2007 (Feb. 2007).
[34] The four member terminal operators are APM Terminals, PSA
International, Hutchison Port Holdings, and Dubai Ports World.
[35] Department of Homeland Security, Cost-Benefit Analysis (CBA)
Guidebook.
[36] A realistic cost estimate is developed using four characteristics:
well-documented, comprehensive, accurate, and credible. For additional
information see [hyperlink, http://www.gao.gov/products/GAO-09-3SP].
[37] See Circular No. A-94 Guidelines and Discount Rates for Benefit-
Cost Analysis of Federal Programs.
[38] Department of Homeland Security, Cost-Benefit Analysis (CBA)
Guidebook.
[39] Currently Japan and Canada have customs staff placed at U.S. ports
to help determine the risk of cargo bound for their respective
countries.
[40] The security guidelines for C-TPAT program members address a broad
range of topics including personnel, physical, and procedural security;
access controls; education; training and awareness; threat awareness;
and others. Companies that apply to C-TPAT must sign an agreement with
CBP that commits their organization to the program's security
guidelines.
[41] University of Virginia, Customs-Trade Partnership Against
Terrorism (C-TPAT) Cost/Benefit Survey (August 2007).
[42] Foreign governments and international organizations we spoke with
stated that they are generally not opposed to the use of radiation
detection equipment, such as that used as part of the Megaports
Initiative, but to the use of nonintrusive imaging equipment because of
the likelihood that it may hinder trade and reduce security by
consuming a large amount of scarce customs resources for little
benefit.
[43] The United States abstained from the vote.
[44] The position paper was submitted by the governments of Ecuador,
Bolivia, the Dominican Republic, Uruguay, and Cuba.
[45] In addition to noting concerns from international partners, the
State Department also indicated its own concerns regarding the scanning
of diplomatic shipments. According to the State Department, it intends
to work with DHS to ensure that, consistent with section 6 U.S.C. §
982(b)(9), implementation of the scanning requirement does not violate
the international conventions that prohibit scanning of diplomatic
pouches, as well as the presumption against inspection of personal
baggage of diplomats, as set forth in the Vienna Convention on
Diplomatic Relations.
[End of section]
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