Container Security
Expansion of Key Customs Programs Will Require Greater Attention to Critical Success Factors Gao ID: GAO-03-770 July 25, 2003Since September 11, 2001, concern has increased that terrorists could smuggle weapons of mass destruction in the 7 million ocean containers that arrive annually at U.S. seaports. In response to this concern, the U.S. Customs Service (Customs) implemented the Container Security Initiative (CSI) to screen for high-risk containers at overseas ports and Customs-Trade Partnership Against Terrorism (CTPAT) to improve global supply chain security in the private sector. GAO (1) describes the purpose and elements of these new programs, (2) examines Customs' implementation of CSI and C-TPAT during the first year, and (3) assesses the extent to which Customs has focused on factors critical to the programs' long-term success and accountability.
Announced in January 2002, CSI places Customs staff at designated foreign seaports to screen containers for weapons of mass destruction. In November 2001, Customs also initiated C-TPAT, in which private companies improve the security of their supply chains in return for the reduced likelihood that their containers will be inspected for weapons of mass destruction. Customs quickly implemented both programs in the first year. It concluded bilateral arrangements with foreign governments to place Customs personnel at 24 foreign ports and deployed staff to 5 of these ports under CSI, and it enrolled more than 1,700 companies in C-TPAT. Customs is developing critical program elements intended to ensure that C-TPAT companies improve and maintain their security practices. GAO found that Customs' implementation of these programs evolved in response to challenges it encountered. Although Customs is preparing to devote significantly more resources to CSI and C-TPAT as it expands the programs, it has not taken adequate steps to incorporate factors necessary for the programs' long-term success and accountability. These factors include human capital planning, development of performance measures, and strategic planning. GAO found the following: (1) although CSI seeks to staff Customs officials at more than 30 overseas ports and C-TPAT expects to hire more than 150 additional staff, Customs has not devised systematic human capital plans to meet longterm staffing needs for both programs; (2) while Customs has created some performance measures to quantify operational activities and efforts, it has not developed measures to establish accountability and measure program achievement; and (3) in its efforts to rapidly implement the programs and enroll participants, Customs focused on short-term planning. Customs lacks a strategic plan that would allow it to establish accountability for approximately $73 million in planned expenditures for fiscal year 2004.
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-03-770, Container Security: Expansion of Key Customs Programs Will Require Greater Attention to Critical Success Factors
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Report to Congressional Requesters:
July 2003:
Container Security:
Expansion of Key Customs Programs Will Require Greater Attention to
Critical Success Factors:
GAO-03-770:
GAO Highlights:
Highlights of GAO-03-770, a report to congressional requesters
Why GAO Did This Study:
Since September 11, 2001, concern has increased that terrorists could
smuggle weapons of mass destruction in the 7 million ocean containers
that arrive annually at U.S. seaports. In response to this concern,
the U.S. Customs Service (Customs) implemented the Container Security
Initiative (CSI) to screen for high-risk containers at overseas ports
and Customs-Trade Partnership Against Terrorism (C-TPAT) to improve
global supply chain security in the private sector. GAO (1) describes
the purpose and elements of these new programs, (2) examines Customs‘
implementation of CSI and C-TPAT during the first year, and (3)
assesses the extent to which Customs has focused on factors critical
to the programs‘ long-term success and accountability.
What GAO Found:
Announced in January 2002, CSI places Customs staff at designated
foreign seaports to screen containers for weapons of mass destruction.
In November 2001, Customs also initiated C-TPAT, in which private
companies improve the security of their supply chains in return for
the reduced likelihood that their containers will be inspected for
weapons of mass destruction.
Customs quickly implemented both programs in the first year. It
concluded bilateral arrangements with foreign governments to place
Customs personnel at 24 foreign ports and deployed staff to 5 of these
ports under CSI, and it enrolled more than 1,700 companies in C-TPAT.
Customs is developing critical program elements intended to ensure
that C-TPAT companies improve and maintain their security practices.
GAO found that Customs‘ implementation of these programs evolved in
response to challenges it encountered.
Although Customs is preparing to devote significantly more resources
to CSI and C-TPAT as it expands the programs, it has not taken
adequate steps to incorporate factors necessary for the programs‘ long-
term success and accountability. These factors include human capital
planning, development of performance measures, and strategic planning.
GAO found the following:
* Although CSI seeks to staff Customs officials at more than 30
overseas ports and C-TPAT expects to hire more than 150 additional
staff, Customs has not devised systematic human capital plans to meet
long-term staffing needs for both programs.
* While Customs has created some performance measures to quantify
operational activities and efforts, it has not developed measures to
establish accountability and measure program achievement.
In its efforts to rapidly implement the programs and enroll
participants, Customs focused on short-term planning. Customs lacks a
strategic plan that would allow it to establish accountability for
approximately $73 million in planned expenditures for fiscal year
2004.
What GAO Recommends:
To ensure that CSI and C-TPAT achieve their long-term objectives, GAO
recommends that the Secretary of Homeland Security, working with the
Commissioner of Customs and Border Protection and managers for both
programs
* develops human capital plans that clearly describe how the programs
will recruit, train, and retain staff;
* expands efforts to develop performance measures that include outcome-
oriented indicators; and
* develops strategic plans that clearly lay out the programs‘ goals,
objectives, and implementation strategies.
www.gao.gov/cgi-bin/getrpt?GAO-03-770.
To view the full product, including the scope and methodology, click
on the link above. For more information, contact Loren Yager at (202)
512-4347 or yagerl@gao.gov.
[End of section]
Contents:
Letter:
Results in Brief:
Background:
Key Customs Programs Developed to Address Container Security:
Customs Quickly Rolled Out CSI and C-TPAT, Adapting Programs to Meet
Challenges:
Customs Has Not Adequately Incorporated Factors Critical to Programs'
Success and Accountability:
Conclusions:
Recommendations for Executive Action:
Agency Comments and Our Evaluation:
Appendixes:
Appendix I: Scope and Methodology:
Appendix II: Comments from the Bureau of Customs and Border
Protection:
GAO Comments:
Appendix III: GAO Contact and Staff Acknowledgments:
GAO Contact:
Staff Acknowledgments:
Tables:
Table 1: Top 10 Foreign Ports, by Number of U.S.-bound Containers,
2001:
Table 2: Top 10 U.S. Ports, by Number of U.S.-bound Containers, 2002:
Table 3: CSI Budget Plans and Obligations, Fiscal Years 2002-2004:
Table 4: C-TPAT Budget Plans and Obligations, Fiscal Years 2002-2004:
Table 5: Dates of CSI Bilateral Arrangements and Deployments by
Targeted Ports, May 2003:
Table 6: Status of C-TPAT Membership by Industry Sector and Key Program
Elements, January 2003 and May 2003:
Figures:
Figure 1: Steps in Supply Chain and Some Points of Potential
Vulnerability:
Figure 2: CSI Task Force Organization Chart, March 2003:
Figure 3: C-TPAT Organizational Structure, May 2003:
Figure 4: Time line of C-TPAT Enrollment Opportunities:
Figure 5: Budgets and Anticipated Growth for CSI Ports and C-TPAT
Staff, Fiscal Years 2002 and 2004:
Abbreviations:
CSI: Container Security Initiative:
C-TPAT: Customs-Trade Partnership Against Terrorism:
DOD: Department of Defense:
DHS: Department of Homeland Security:
PIERS: Port Import Export Reporting Service:
WMD: weapons of mass destruction:
Letter July 25, 2003:
The Honorable Charles E. Grassley
Chairman,
Committee on Finance
United States Senate:
The Honorable Max Baucus
Ranking Minority Member,
Committee on Finance
United States Senate:
The Honorable Bill Thomas
Chairman, Committee on Ways and Means
House of Representatives:
The Honorable Charles B. Rangel
Ranking Minority Member, Committee on Ways and Means
House of Representatives:
Ocean containers play a vital role in the movement of cargo between
global trading partners. In 2002, more than 7 million ocean cargo
containers arrived at U.S. seaports. Responding to heightened concern
about national security since September 11, 2001, several U.S.
government agencies have acted to prevent terrorists from smuggling
weapons of mass destruction (WMD) in cargo containers from overseas
locations to attack the United States and disrupt international trade.
Because of its frontline responsibilities for inspection at U.S. ports
of entry, the U.S. Customs Service[Footnote 1] assumed the lead role in
improving ocean container security and reducing the vulnerabilities
associated with the overseas supply chain. By January 2002, Customs had
initiated the Container Security Initiative (CSI) and Customs-Trade
Partnership Against Terrorism (C-TPAT) to enhance the security of the
global supply chain and deter international acts of terrorism, as well
as facilitate the smooth passage of commerce across U.S. borders. The
purpose of CSI is to enable Customs to screen for high-risk containers
in key ports overseas, while the purpose of C-TPAT is to improve global
supply chain security in the private sector.
In response to your interest in Customs' efforts to counter potential
threats posed by ocean containers as they move through the global
supply chain, we have (1) described the purpose and program elements of
the new CSI and C-TPAT programs, (2) examined Customs' implementation
of the programs during the first year, and (3) assessed the extent to
which Customs has focused on factors critical to the programs' long-
term success and accountability.
To address our objectives, we met with U.S. Customs officials in
Washington, D.C., with program responsibilities for CSI and C-TPAT. We
also met with private companies and industry associations in the United
States to learn how C-TPAT affects the private sector. To learn about
Customs' early experiences with CSI, we visited Canada, the
Netherlands, and France, the countries where CSI was first implemented,
to meet with the U.S. Customs attachés responsible for managing the
implementation in the ports of Vancouver, Rotterdam, and Le Havre,
respectively. We also met with members of the CSI team deployed at
these three ports. In addition, we interviewed officials representing
the governments of Canada, the Netherlands, and France who were
involved in CSI negotiations and implementation. We also spoke with
private sector officials in these countries to understand their
perspectives on both CSI and C-TPAT. In addition, we reviewed Customs'
Web site for information on the programs' status and activities.
Finally, we used GAO reports on factors critical to the long-term
success of organizations such as the Department of Homeland Security
(DHS). Our methodology primarily relied on interviews with
knowledgeable officials because both programs are new and Customs was
not able to provide documentation regarding many of the issues that
were the subject of our review. (For additional information on our
scope and methodology, see app. I.):
Results in Brief:
Customs developed CSI and C-TPAT in response to security
vulnerabilities created by ocean container trade and to the concern
that terrorists could exploit these vulnerabilities to transport or
detonate WMDs in the United States. Announced in January 2002, CSI
allows U.S. Customs to screen containers at CSI-designated foreign
seaports. Placement of a CSI team overseas allows Customs to work with
foreign customs officials to identify and examine high-risk containers
prior to their arrival at U.S. ports. Customs initially targeted the
top 20 foreign ports that shipped 66 percent of total containers to the
United States for CSI inclusion, and then expanded the program to
additional strategic ports. In November 2001, Customs initiated C-TPAT
to improve the security of containers as they move through the global
supply chain. Under C-TPAT, Customs officials work in partnership with
private industry, reviewing supply chain security plans and
recommending improvements. In return, C-TPAT members receive the
benefit of a reduced likelihood that containers traveling along their
supply chains will be inspected for WMDs. For fiscal year 2003, the CSI
budget is about $28 million, and the C-TPAT budget is about $9 million.
These budgets combined are expected to increase to more than $73
million for fiscal year 2004 as the programs expand.
During the first year, Customs quickly designed and rolled out CSI and
C-TPAT, modifying operations over time. Customs achieved strong
participation among the countries and companies, respectively, that it
sought to enroll in CSI and C-TPAT. In CSI's first year, Customs
reached agreement with 15 governments to place Customs personnel at 24
ports and placed four or five-member CSI teams in 5 of these
ports.[Footnote 2] In C-TPAT's first year, more than 1,700 companies
agreed to participate in the program, and most received the key
benefit, a reduced likelihood of inspections for WMDs. As participation
in these programs grew, Customs implementation evolved in response to
challenges as they arose. For example, the first CSI team deployed in
Europe discovered that critical information that it needed from the
host customs administration was not readily available and, as a result,
the CSI team was unable to achieve its goal of thoroughly screening
containers overseas. To address this challenge, Customs implemented a
"24-Hour Rule" requiring carriers to supply key information directly to
Customs. Similarly, Customs initially expected that its account
managers, who had experience working with the trade community, would
recruit new C-TPAT members and assist companies with the development of
their action plans. However, Customs later realized that C-TPAT needed
staff with greater knowledge of supply chain security to help with the
action plans as well as assist with other program elements. In
response, Customs created a new supply chain specialist position, which
was announced in May 2003. These supply chain specialists will play a
key role in implementing critical program elements designed to ensure
that member companies are improving and maintaining supply chain
security practices.
Customs' management and operations of CSI and C-TPAT to date show that
Customs has not taken adequate steps to incorporate factors crucial to
the programs' long-term success and accountability. More than 1 year
into the implementation of CSI, Customs has not developed a systematic
human capital plan to recruit, train, and assign the more than 120 CSI
program staff that may be needed for long-term assignments in a wide
range of foreign ports, some of which may require unique language
capabilities and diplomatic skills. Likewise, Customs has not developed
such a plan to govern the planned 15-fold expansion of C-TPAT, from a
10-person organization to one with more than 160 staff positions.
Without human capital plans, Customs may be unable to anticipate
potential challenges and put in place the workforce needed to implement
CSI and C-TPAT in a timely manner. Similarly, Customs lacks performance
measures that demonstrate program achievements and establish
accountability, although they are tracking elements such as the number
of countries and companies involved in CSI and C-TPAT. For example, the
existing performance measures do not assess how CSI's presence overseas
helps improve the targeting of high-risk containers beyond Customs'
existing capabilities. In addition, Customs has not developed any
effective indicators to ascertain whether C-TPAT has had an impact on
the members' supply chain security practices. Without indicators that
measure program outcomes, Customs may not be able to accurately assess
the programs' success or establish a basis for program oversight.
Finally, Customs' focus on short-term operational planning in order to
quickly implement the programs impeded its ability to systematically
carry out strategic planning. As a result, Customs lacks elements of
strategic planning that would improve the management of the programs
and allow Customs to establish accountability for approximately $73
million in planned expenditures for fiscal year 2004.
This report makes recommendations to the Secretary of the Department of
Homeland Security to improve the management and oversight of CSI and C-
TPAT as they expand by developing human capital plans that will drive
future recruitment, training and retaining strategies, expanding on
existing performance measures to reflect outcome-oriented indicators,
and developing strategic plans that clearly lay out the programs'
goals, objectives, and detailed implementation strategies. Customs
agreed with our recommendations and overall observations that it needs
to take adequate steps to incorporate human capital planning, expand
efforts to develop performance measures and develop strategic plans--
factors necessary for the long-term success and accountability of CSI
and C-TPAT.
Background:
Ocean-going cargo containers are a critical link in the system of
global trade. With the rise of the "just-in-time" delivery system,
which allows companies to reduce their inventories, as well as the
efficiencies of the maritime transportation system, the U.S. and world
economies have become increasingly reliant on the cargo container to
transport their goods. In fact, approximately 90 percent of the world's
trade moves by cargo container. Although these containers arrive from
various ports throughout the world, about 49 percent of U.S.-bound
containers arrive from the top 10 international ports listed in table
1.
Table 1: Top 10 Foreign Ports, by Number of U.S.-bound Containers,
2001:
Foreign ports: Hong Kong, China; Number of U.S.-bound containers:
558,600; Percentage of total containerized U.S.-bound cargo, by volume:
9.8.
Foreign ports: Shanghai, China; Number of U.S.-bound containers:
330,600; Percentage of total containerized U.S.-bound cargo, by volume:
5.8.
Foreign ports: Singapore; Number of U.S.-bound containers: 330,600;
Percentage of total containerized U.S.-bound cargo, by volume: 5.8.
Foreign ports: Kaohsiung, Taiwan; Number of U.S.-bound containers:
319,200; Percentage of total containerized U.S.-bound cargo, by volume:
5.6.
Foreign ports: Rotterdam, The Netherlands; Number of U.S.-bound
containers: 290,700; Percentage of total containerized U.S.-bound
cargo, by volume: 5.1.
Foreign ports: Pusan, South Korea; Number of U.S.-bound containers:
285,000; Percentage of total containerized U.S.-bound cargo, by volume:
5.0.
Foreign ports: Bremerhaven, Germany; Number of U.S.-bound containers:
256,500; Percentage of total containerized U.S.-bound cargo, by volume:
4.5.
Foreign ports: Tokyo, Japan; Number of U.S.-bound containers: 159,600;
Percentage of total containerized U.S.-bound cargo, by volume: 2.8.
Foreign ports: Genoa, Italy; Number of U.S.-bound containers: 119,700;
Percentage of total containerized U.S.-bound cargo, by volume: 2.1.
Foreign ports: Yantian, China; Number of U.S.-bound containers:
114,000; Percentage of total containerized U.S.-bound cargo, by volume:
2.0.
Foreign ports: Total (top 10 ports); Number of U.S.-bound containers:
2,764,500; Percentage of total containerized U.S.-bound cargo, by
volume: 48.5.
Source: GAO analysis of Customs data.
Note: Number of containers has been rounded.
[End of table]
In 2002, roughly 7 million containers entered U.S. seaports. About 87
percent of these ocean containers entered 10 U.S. seaports, as shown in
table 2. More than half--approximately 58 percent--of ocean container
arrivals are concentrated in three of the largest U.S. ports: Los
Angeles, Long Beach, and New York-New Jersey.
Table 2: Top 10 U.S. Ports, by Number of U.S.-bound Containers, 2002:
U.S. ports: Los Angeles; Number of U.S.-bound containers: 1,774,000;
Percentage of total containerized U.S.-bound cargo, by volume: 24.7.
U.S. ports: Long Beach; Number of U.S.-bound containers: 1,371,000;
Percentage of total containerized U.S.-bound cargo, by volume: 19.1.
U.S. ports: New York-New Jersey; Number of U.S.-bound containers:
1,044,000; Percentage of total containerized U.S.-bound cargo, by
volume: 14.6.
U.S. ports: Charleston; Number of U.S.-bound containers: 376,000;
Percentage of total containerized U.S.-bound cargo, by volume: 5.2.
U.S. ports: Savannah; Number of U.S.-bound containers: 312,000;
Percentage of total containerized U.S.-bound cargo, by volume: 4.3.
U.S. ports: Norfolk; Number of U.S.-bound containers: 306,000;
Percentage of total containerized U.S.-bound cargo, by volume: 4.3.
U.S. ports: Seattle; Number of U.S.-bound containers: 284,000;
Percentage of total containerized U.S.-bound cargo, by volume: 4.0.
U.S. ports: Tacoma; Number of U.S.-bound containers: 273,000;
Percentage of total containerized U.S.-bound cargo, by volume: 3.8.
U.S. ports: Oakland; Number of U.S.-bound containers: 268,000;
Percentage of total containerized U.S.-bound cargo, by volume: 3.7.
U.S. ports: Houston; Number of U.S.-bound containers: 233,000;
Percentage of total containerized U.S.-bound cargo, by volume: 3.3.
U.S. ports: Total (top 10); Number of U.S.-bound containers: 6,241,000;
Percentage of total containerized U.S.-bound cargo, by volume: 87.0.
Source: GAO analysis of Port Import Export Reporting Service (PIERS)
data as reported by U.S. Maritime Administration.
Note: Number of containers has been rounded.
[End of table]
According to research initiated by the U.S. Department of
Transportation's Volpe National Transportation Systems Center (Volpe),
cargo security is affected by the number of individual companies
contracted to facilitate the handling and movement of cargo through its
supply chain.[Footnote 3] To move a container from production
facilities overseas to distribution points in the United States, an
importer faces various choices regarding the logistical process such as
routes and the selection of freight forwarders. For example, importers
can own and operate key aspects of the overseas supply chain process,
such as warehousing and trucking operations. Conversely, importers can
contract with logistical service providers, such as freight
consolidators and nonvessel operating common carriers.[Footnote 4] In
addition, importers must choose which modes of transportation to use,
such as rail, truck or barge, to move containers from the
manufacturer's warehouse to the seaport of lading. According to this
Volpe study, importers who own and operate the entire supply chain
route from start to finish suffer the least amount of security breaches
because they have greater control over their supply chains. Figure 1
depicts basic characteristics of the overseas portion of the supply
chain and some areas of vulnerability to terrorists intent on placing a
WMD in a container.
Figure 1: Steps in Supply Chain and Some Points of Potential
Vulnerability:
[See PDF for image]
[End of figure]
A report prepared by the National Defense University's Center for
Technology and National Security Policy states that an ocean container
itself is ideally suited to deliver a WMD.[Footnote 5] The likelihood
that a terrorist will use a container to deliver a WMD depends on the
type of WMD and the likelihood an ocean container would be used as the
means of delivery. These researchers believe that it is feasible for a
terrorist group to make a radiological "dirty bomb" which uses standard
explosives to disperse radiological material, and that the ocean
container would provide an ideal mode of transportation. On the other
hand, these researchers have concluded, a terrorist attack using a
nuclear WMD has a much lower feasibility because it is deemed less
probable that terrorists have the resources and technical ability to
build or obtain a workable nuclear weapon at this time and the nuclear
WMD might be too valuable an asset to relinquish control by shipping it
in a container. But some experts agree that the possibility of
terrorists smuggling a nuclear WMD by ocean containers merits attention
because the consequences would be much more severe than those of other
types of WMDs. While there have been no known incidents of containers
being used to transport WMDs, criminals have exploited containers for
other illegal purposes, such as smuggling weapons, people, and illicit
substances. Such activities demonstrate the vulnerability of the
freight transportation industry and suggest opportunities for further
exploitation of containers by criminals, including terrorist groups.
Various experts have estimated that the cost to the U.S. economy of
port closures due to the discovery or detonation of WMDs could be
significant. For example, in May 2002, the Brookings Institution
estimated that costs associated with U.S. port closures resulting from
a detonated WMD could amount to $1 trillion.[Footnote 6] Estimating the
cost of discovering an undetonated WMD at a U.S. seaport, Booz, Allen
and Hamilton reported in October 2002 that a 12-day closure would cost
approximately $58 billion.[Footnote 7]
Key Customs Programs Developed to Address Container Security:
Customs developed CSI to detect and deter acts of container-related
terrorism at the earliest point feasible along the supply chain, and it
developed C-TPAT to address concerns about supply chain
vulnerabilities. CSI placed Customs officials in key foreign ports to
detect WMDs in containers prior to their arrival to the United States
and to deter terrorists from using containers to deliver a
WMD.[Footnote 8] C-TPAT established a partnership between the private
sector and Customs to improve the overall security of international
supply chains, offering participating companies the incentive that
their containers will have a lower chance of being inspected for WMDs.
For fiscal year 2003, CSI's budget is about $28 million, and C-TPAT's
budget is about $9 million. Customs has proposed budget increases,
combined total of $73 million, for fiscal year 2004 to support the
programs' expansion plans.
CSI Placed Customs Officials Overseas to Screen Containers:
Announced in January 2002, CSI allows Customs to screen for high-risk,
U.S.-bound containers at key foreign ports,[Footnote 9] a task
previously carried out only at U.S. seaports. To do this, Customs
negotiates and enters into bilateral arrangements with foreign
governments. These arrangements contain common language that specifies
the placement of Customs officials, on a pilot basis, at foreign ports
and the exchange of information between U.S. Customs and foreign
customs administrations. Customs first targeted for CSI the 20 foreign
ports that shipped the highest volume of ocean containers to the United
States. These top 20 ports are located in 14 nations and shipped a
total of 66 percent of all containers that arrived in U.S. seaports in
2001. Customs also plans to expand CSI to an additional 20 to 25
strategic ports that ship a significant volume of containers to the
United States and are considered to be strategic locations. According
to Customs, these strategic ports must meet minimum requirements such
as having nonintrusive inspection equipment and having customs
officials capable of conducting inspections to support the CSI program.
Customs proposed to increase CSI's budget from $28.4 million in fiscal
year 2003 to $61.2 million in fiscal year 2004.
CSI Operations:
To prepare a CSI team for deployment overseas, Customs sends an
assessment team to the CSI port to collect information about the port's
physical and informational infrastructure and the host country's
customs operations. Customs then deploys a CSI team of approximately
four to five Customs officials to work with the host country's customs
administration to identify high-risk containers departing from these
ports for the United States.[Footnote 10] Containers targeted for CSI
inspection arrive at CSI ports by land, rail, or sea en route to the
United States. The CSI team uses Customs' Automated Targeting System to
screen container data and identify high-risk containers for
inspection.[Footnote 11] This system evaluates U.S.-bound cargo
manifest data electronically and determines a container's risk
level.[Footnote 12] To improve its screening capabilities, the CSI team
further analyzes U.S.-bound containers by means of data provided by
host countries' customs administration. Host countries' customs
officials then inspect containers that both U.S. and host customs
officials identify as high risk. Although the arrangements do not
specify that U.S. Customs officials must be able to observe
inspections, Customs officials told us that a central tenet of the CSI
concept is that U.S. Customs inspectors be able to observe and verify
the inspections and that all partner Customs administrations accept
this tenet.
According to Customs officials, the most important benefits of CSI
derive from the collocation of U.S. Customs officials with foreign
customs officials. Prior to the implementation of CSI, Customs
officials in U.S. ports screened container data using the Automated
Targeting System and inspected high-risk containers on their arrival in
the United States. With the placement of officials overseas, Customs
expects that the added value of real-time information sharing will
improve Customs' ability to target high-risk containers. For example,
using the Automated Targeting System, U.S. Customs officials may
identify unfamiliar consignees that have been flagged as high risk but
are later determined not to be high risk based on the host customs'
knowledge and experiences. Customs' presence overseas is intended to
help ensure that containers identified as high risk are inspected prior
to arrival in the United States. In addition, Customs officials hope
that the collocation of its officials with foreign customs officials
will result in relationships that enhance cooperation and intelligence
sharing.
Customs officials believe that CSI should facilitate the flow of trade
to the United States and could reduce the processing time for certain
shipments, because the screening at CSI ports will in most cases take
place during "down time" while containers wait at the port terminal
prior to being loaded onto vessels. In addition, CSI eliminates the
necessity of inspecting containers for security purposes, absent
additional information affecting their risk analyses, when they reach
the United States. CSI also offers benefits to foreign ports that
participate in the program, including deterrence of terrorists that may
target their ports and a shorter time frame to resume operations in the
event of a catastrophic incident.
CSI Staffing:
Customs created an intra-agency task force to manage and operate the
program, headed by Customs' Office of International Affairs and staffed
with representatives from different offices within Customs.[Footnote
13] In addition, the assessment teams that travel to CSI ports to
survey the operational needs comprise members from these various
offices. Customs officials state that Customs relies on its overseas
attachés to facilitate CSI negotiations with foreign governments,
oversee CSI operations at one or more CSI ports,[Footnote 14] and
report CSI operations to the task force, in addition to their existing
Customs duties.
Each CSI team deployed at a foreign port consists of four to five team
members: two to three inspectors from Customs' Office of Field
Operations, one intelligence research analyst, and one agent serving as
a CSI team leader representing the Office of Investigations. (See fig.
2.) According to Customs officials, while Customs inspectors review
container data using the Automated Targeting System and seek assistance
from local customs to screen containers, the intelligence analyst
conducts further analyses using additional research tools and real-time
information sharing with local customs' intelligence analysts. The team
leader serves as a liaison between the CSI team and the foreign customs
administration and reports to the Customs Attaché regarding CSI
operations. Currently, each CSI team is assigned to a foreign port
under a temporary duty assignment and is replaced by other Customs
personnel after a 120-day period. However, Customs officials told us
that they are currently seeking to convert these temporary positions to
permanent CSI staff positions at foreign ports.
Figure 2: CSI Task Force Organization Chart, March 2003:
[See PDF for image]
[End of figure]
CSI Funding:
The budget for the CSI program is expected to grow as the program
expands, as shown in table 3. In fiscal year 2002, Customs spent about
$3.3 million, using emergency supplemental no-year funds to support
preliminary CSI needs.[Footnote 15] These funds were budgeted for such
needs as travel to promote the program to foreign customs, the purchase
of computer equipment for CSI ports, and the maintenance of a CSI team
in Rotterdam. Customs' fiscal year 2003 budget is approximately $28.4
million to support CSI operations in an anticipated 21 foreign ports
and conduct assessments of 6 additional ports. As of March 2003,
Customs had spent $3.4 million of fiscal year 2003 funds to support
operations in 9 ports. As part of the new DHS budget, Customs requested
$61.2 million to support anticipated CSI operations in 30 foreign ports
in fiscal year 2004.
Table 3: CSI Budget Plans and Obligations, Fiscal Years 2002-2004:
Fiscal year: 2002; CSI budget plan: Operate in 1 port and conduct
assessments in additional ports.[A]; Budget amount: $4.3 million;
Obligations: $3.3 million[B].
Fiscal year: 2003; CSI budget plan: Operate in 21 ports and conduct
assessments in 6 additional ports.; Budget amount: $28.4 million;
Obligations: $3.4 million (as of 3/14/03).
Fiscal year: 2004; CSI budget plan: Operate in 30 ports.; Budget
amount: $61.2 million proposed; Obligations: Not applicable.
Source: GAO analysis of Customs information.
[A] The budget plan for FY 2002 does not include funds for CSI
operations in the 3 Canadian ports because these were funded separately
until fiscal 2003, when they were combined into the overall CSI
program.
[B] These funds were expended.
[End of table]
C-TPAT Works with Private Sector to Improve Supply Chain Security:
Announced in November 2001, C-TPAT is a voluntary partnership program
between the business community and Customs, designed to enhance the
security of international supply chains and thus reduce the number of
containers that otherwise might be screened for WMDs because of risk
considerations. Customs plans to achieve these objectives by
encouraging importers, freight forwarders, carriers, and other
logistics service providers to improve security practices and to
persuade their service providers along their supply chain to do the
same. Customs accomplishes this through partnership agreements and by
reviewing and following-up on company supply chain security profiles.
In return, Customs offers a number of incentives, including the key
benefit of a reduced likelihood of inspection for WMDs.[Footnote 16]
Customs is still developing critical aspects of the program intended to
ensure that member companies respond to C-TPAT recommendations for
improving and maintaining supply chain security practices. Like CSI,
the budget for C-TPAT is expected to increase as the program expands.
C-TPAT Operations:
Prior to recruiting C-TPAT members, Customs worked with industry
leaders to develop a set of recommendations intended to improve the
security practices for specific segments of the supply chain (e.g.,
air/sea/land carriers, customs brokers, importers, manufacturers,
warehouses, freight forwarders, and domestic ports). The C-TPAT
security recommendations are meant to serve as a guide for members to
follow and are not mandatory. For example, a common C-TPAT
recommendation encourages carriers, warehouses, importers, and
manufacturers to affix, replace, record, track, and verify seals on
containers, but its implementation is not obligatory.
As a first step in C-TPAT membership, a company must sign an agreement
with Customs signifying its commitment to enhance its supply chain
security by embracing C-TPAT security recommendations and to work with
its service providers throughout its supply chain to enhance security
processes. At this point, the company becomes a C-TPAT member, and its
risk score is partially reduced.[Footnote 17] After signing the
agreement, the company is required to self-assess its supply chain
security practices, using the C-TPAT industry security recommendations
as a guideline, and document its observations in a security profile.
The security profile is intended to be an executive summary of the
company's current and future supply chain security practices and
vulnerabilities, as well as an indication of how these recommendations
were communicated to its business partners overseas.
Using a checklist based on the C-TPAT recommendations, C-TPAT officials
review the security profile to understand the company's security
practices and decide whether to further reduce the company's risk
score. To help complete their assessments of companies, C-TPAT
officials also seek information from other Customs offices on the
company's historic relationship with Customs, such as the results of
trade compliance examinations or any past criminal investigations. Once
any concerns that C-TPAT officials may have raised are resolved,
Customs will further reduce the company's risk score. Through standard
feedback letters, Customs notifies companies of the results of the
review process and requests additional information on security
practices.
According to Customs, C-TPAT participants are never rejected from the
program because of an inadequate security profile or for adverse
information discovered during the review process. On the contrary,
Customs officials say that they are committed to working with these
companies, even if there are serious security or trade compliance
weaknesses. However, Customs may, under certain circumstances, withhold
or reduce C-TPAT benefits. Furthermore, Customs officials stated that
they may remove a company from C-TPAT membership if they determine that
its commitment is not serious or that it has intentionally misled
Customs.
Other program elements are intended to ensure that member companies
have taken action to improve and maintain supply chain security
practices. Customs intends to use validations to establish
accountability by verifying that information on a company's security
profile is accurate and complete. Customs intends to use action plans
to communicate the weaknesses it identifies and outline the steps that
companies need to take to strengthen their supply chains. Customs also
plans to use annual assessments, or questionnaires, to follow up on a
variety of open-ended security issues.
C-TPAT Staffing:
Customs created a C-TPAT management team to oversee and implement the
program. Currently, C-TPAT staff includes a director, four program
managers, and five program officers, working at Customs' headquarters
and organized by trade sectors that cover all aspects of C-TPAT
membership (see fig. 3). According to C-TPAT officials, program
managers provide overall program direction and guidance, as well as
program promotion within trade sectors. Program officers, with help
from program managers, provide guidance to companies on how to complete
their security profiles as well as review security profiles and prepare
feedback letters. In addition to C-TPAT staff, account managers who are
located at Customs sites across the country and manage a portfolio of
companies on trade compliance matters, also assist with the C-TPAT
program.[Footnote 18] Over 300 account managers promote the program and
serve as points of contact for many companies seeking information about
C-TPAT.
Figure 3: C-TPAT Organizational Structure, May 2003:
[See PDF for image]
[End of figure]
C-TPAT Funding:
The budget for C-TPAT is expected to increase as the program expands.
Funding for C-TPAT began in April 2002, with emergency supplemental no-
year funds totaling $8.3 million.[Footnote 19] According to Customs, it
carried over unexpended funds to support a C-TPAT budget of $8.8
million for operations in fiscal year 2003. Customs' proposed C-TPAT
budget for fiscal year 2004 is $12.1 million and includes a request for
157 security specialist positions.[Footnote 20] Table 4 depicts budget
plans and obligations for fiscal years 2002 to 2004.
Table 4: C-TPAT Budget Plans and Obligations, Fiscal Years 2002-2004:
Fiscal year: 2002; C-TPAT budget plan: Program promotion, equipment,
personnel, and other expenses.; Budget amount: $8.3 million;
Obligations: $184,694.
Fiscal year: 2003; C-TPAT budget plan: Program promotion, equipment,
personnel, and other expenses.; Budget amount: $8.8 million;
Obligations: $4.7 million (as of 3/31/03).
Fiscal year: 2004; C-TPAT budget plan: Program promotion, equipment,
personnel, and other expenses.; Budget amount: $12.1 million
(proposed); Obligations: Not applicable.
Source: GAO analysis of Customs information.
[End of table]
Customs Quickly Rolled Out CSI and C-TPAT, Adapting Programs to Meet
Challenges:
Responding to concerns about container security, Customs quickly rolled
out CSI and C-TPAT, adjusting its implementation of the programs to
meet challenges. Early on, the programs enlisted the participation of
many countries and companies, respectively. By January 2003, Customs
had entered into bilateral arrangements with foreign governments to
place Customs officials at 24 ports and soon deployed CSI teams to 5 of
them. Similarly, by the end of C-TPAT's first year, Customs had
recruited approximately 1,700 companies to become C-TPAT members,
received security profiles from about half of these companies, and sent
feedback letters to half of the companies submitting security profiles.
As CSI and C-TPAT evolved, Customs adapted its implementation of the
programs as it encountered challenges. For example, experiences at one
of the first CSI ports of deployment showed Customs that it needed to
change the way it collected the manifest data necessary for targeting
high-risk containers and the way it selected staff for CSI assessment
teams. Similarly, as Customs realized that its account managers, who
were on the "front lines," were not prepared to provide companies the
level of assistance they required, Customs developed a new supply chain
specialist position to assist with key program elements and limited the
role of account managers to promoting the program. These supply chain
specialists will play a key role in ensuring that member companies are
improving and maintaining supply chain security practices.
Many Countries Agreed to Join CSI; Program Modifications Made in
Response to Early Challenges:
In CSI's early stage of implementation, Customs entered into numerous
bilateral arrangements with foreign governments to place Customs
officials at CSI ports and soon deployed several CSI teams; however, at
the port of Rotterdam, Customs found that logistical and legal
challenges limited the CSI team's ability to obtain manifest data
essential to screen high-risk containers. To ensure that it would
obtain complete and timely manifest data, Customs implemented the 24-
Hour Rule, which allows Customs to directly receive from carriers
information necessary for screening containers overseas. In addition,
after realizing that the early composition of CSI assessment teams and
the survey instrument used by the teams were inadequate, Customs
modified the teams by building in additional expertise and developed
comprehensive and standardized port surveys.
Most Target Governments Agreed to CSI in First Year, Some CSI Teams
Deployed:
During CSI's first year of implementation, Customs completed
arrangements with 15 governments to place officials at 24 seaports.
First, Canada agreed to the placement of U.S. Customs personnel at 3
seaports under the Smart Border Declaration, which preceded the
announcement of CSI.[Footnote 21] Then, between January 2002 and
January 2003, Customs concluded bilateral arrangements with 12
governments covering 18 of the 20 seaports that ship the highest volume
of containers to the United States, as well as 2 other governments
representing 3 strategic ports.
During the program's initial year, Customs deployed CSI teams to 5
ports, a few months after the arrangements were signed. As of May 2003,
Customs had placed CSI teams at 7 additional ports. The number of CSI
deployments as of May 2003 represented about half of the 21 anticipated
CSI ports outlined in the CSI budget for fiscal year 2003. Deployments
are sometimes delayed, according to Customs officials, for reasons such
as the logistics of placing Customs staff overseas and the readiness of
the foreign ports. (See table 5 for list of CSI arrangements and
deployments.):
Table 5: Dates of CSI Bilateral Arrangements and Deployments by
Targeted Ports, May 2003:
Country: Smart border accord:
Country: Canada; Port: Smart border accord: Halifax; Date arrangement
signed: Smart border accord: December 2001; CSI team deployments in
first year: Smart border accord: March 2002; CSI team deployments:
after first year: Smart border accord: [Empty].
Port: Smart border accord: Country: Montreal; Date arrangement signed:
Smart border accord: Country: December 2001; CSI team deployments in
first year: Smart border accord: Country: March 2002; CSI team
deployments: after first year: Smart border accord: Country: [Empty].
Port: Smart border accord: CountryTop 20 ports: Vancouver; Date
arrangement signed: Smart border accord: CountryTop 20 ports: December
2001; CSI team deployments in first year: Smart border accord:
CountryTop 20 ports: March 2002; CSI team deployments: after first
year: Smart border accord: CountryTop 20 ports: [Empty].
Country: Top 20 ports:
Country: Belgium; Port: Smart border accord: Antwerp; Date arrangement
signed: Smart border accord: June 2002; CSI team deployments in first
year: Smart border accord: [Empty]; CSI team deployments: after first
year: Smart border accord: February 2003.
Country: China; Port: Smart border accord: Shanghai; Date arrangement
signed: Smart border accord: October 2002[A]; CSI team deployments in
first year: Smart border accord: [Empty]; CSI team deployments: after
first year: Smart border accord: [Empty].
Port: Yantian; Date arrangement
signed: Smart border accord: CountryFrance: October 2002[A]; CSI team
deployments in first year: Smart border accord: CountryFrance: [Empty];
CSI team deployments: after first year: Smart border accord:
CountryFrance: [Empty].
Country: France; Port: Smart border accord: Le Havre; Date arrangement
signed: Smart border accord: June 2002; CSI team deployments in first
year: Smart border accord: December 2002; CSI team deployments: after
first year: Smart border accord: [Empty].
Country: Germany; Port: Smart border accord: Bremerhaven; Date
arrangement signed: Smart border accord: August 2002; CSI team
deployments in first year: Smart border accord: [Empty]; CSI team
deployments: after first year: Smart border accord: February 2003.
Port: Hamburg; Date arrangement
signed: Smart border accord: CountryHong Kong: August 2002; CSI team
deployments in first year: Smart border accord: CountryHong Kong:
[Empty]; CSI team deployments: after first year: Smart border accord:
CountryHong Kong: February 2003.
Country: Hong Kong; Port: Smart border accord: Hong Kong; Date
arrangement signed: Smart border accord: September 2002; CSI team
deployments in first year: Smart border accord: [Empty]; CSI team
deployments: after first year: Smart border accord: May 2003.
Country: Italy; Port: Smart border accord: Genoa; Date arrangement
signed: Smart border accord: November 2002; CSI team deployments in
first year: Smart border accord: [Empty]; CSI team deployments: after
first year: Smart border accord: [Empty].
Port: La Spezia; Date arrangement
signed: Smart border accord: CountryJapan: November 2002; CSI team
deployments in first year: Smart border accord: CountryJapan: [Empty];
CSI team deployments: after first year: Smart border accord:
CountryJapan: [Empty].
Country: Japan; Port: Smart border accord: Tokyo; Date arrangement
signed: Smart border accord: September 2002; CSI team deployments in
first year: Smart border accord: [Empty]; CSI team deployments: after
first year: Smart border accord: [Empty].
Port: Nagoya; Date arrangement signed:
Smart border accord: Country: September 2002; CSI team deployments in
first year: Smart border accord: Country: [Empty]; CSI team
deployments: after first year: Smart border accord: Country: [Empty].
Port: Kobe; Date arrangement signed:
Smart border accord: Country: September 2002; CSI team deployments in
first year: Smart border accord: Country: [Empty]; CSI team
deployments: after first year: Smart border accord: Country: [Empty].
Port: Yokohama; Date
arrangement signed: Smart border accord: CountryThe Netherlands:
September 2002; CSI team deployments in first year: Smart border
accord: CountryThe Netherlands: [Empty]; CSI team deployments: after
first year: Smart border accord: CountryThe Netherlands: March 2003.
Country: The Netherlands; Port: Smart border accord: Rotterdam; Date
arrangement signed: Smart border accord: June 2002; CSI team
deployments in first year: Smart border accord: August 2002; CSI team
deployments: after first year: Smart border accord: [Empty].
Country: Singapore; Port: Smart border accord: Singapore; Date
arrangement signed: Smart border accord: September 2002; CSI team
deployments in first year: Smart border accord: [Empty]; CSI team
deployments: after first year: Smart border accord: March 2003.
Country: South Korea; Port: Smart border accord: Pusan; Date
arrangement signed: Smart border accord: January 2003; CSI team
deployments in first year: Smart border accord: [Empty]; CSI team
deployments: after first year: Smart border accord: [Empty].
Country: Spain; Port: Smart border accord: Algeciras; Date arrangement
signed: Smart border accord: January 2003; CSI team deployments in
first year: Smart border accord: [Empty]; CSI team deployments: after
first year: Smart border accord: [Empty].
Country: Taiwan; Port: Smart border accord: Kaohsiung; Date arrangement
signed: Smart border accord: [Empty]; CSI team deployments in first
year: Smart border accord: [Empty]; CSI team deployments: after first
year: Smart border accord: [Empty].
Country: Thailand; Port: Smart border accord: Laem Chabang; Date
arrangement signed: Smart border accord: [Empty]; CSI team deployments
in first year: Smart border accord: [Empty]; CSI team deployments:
after first year: Smart border accord: [Empty].
Country: United Kingdom; Port: Smart border accord: Felixstowe; Date
arrangement signed: Smart border accord: December 2002; CSI team
deployments in first year: Smart border accord: [Empty]; CSI team
deployments: after first year: Smart border accord: [Empty].
Country: CSI strategic ports.
Country: Malaysia; Port: Smart border accord: Klang; Date arrangement
signed: Smart border accord: January 2003; CSI team deployments in
first year: Smart border accord: [Empty]; CSI team deployments: after
first year: Smart border accord: [Empty].
Port: Tanjung Pelepas; Date
arrangement signed: Smart border accord: CountrySweden: January 2003;
CSI team deployments in first year: Smart border accord: CountrySweden:
[Empty]; CSI team deployments: after first year: Smart border accord:
CountrySweden: [Empty].
Country: Sweden; Port: Smart border accord: Gothenburg; Date
arrangement signed: Smart border accord: January 2003; CSI team
deployments in first year: Smart border accord: [Empty]; CSI team
deployments: after first year: Smart border accord: May 2003.
Source: GAO analysis of Customs data.
[A] China has "agreed in principle" to join CSI but has not signed a
CSI bilateral arrangement.
[End of table]
According to Customs, between the time of the initial deployments for
the first five CSI ports and May 2003, the CSI teams screened manifest
data for more than 606,000 containers, looking for high-risk cargo.
Their screening efforts identified a total of 2,091 containers they
considered to be high risk that were then inspected by host customs
administrations. Officials from the three foreign customs
administrations we visited told us that, so far, the CSI requests for
inspection had not been a burden, and that they had often invited the
CSI teams to observe inspections. At the three CSI ports in Canada,
around 343,000 containers were screened, and 2,022 containers were
inspected between the time of the CSI deployments in March 2002 and May
2003. At the port of Rotterdam, the CSI team screened more than 203,000
containers, and Dutch customs inspected 54 containers between September
2002 and May 2003. At the port of Le Havre, the CSI team screened more
than 59,000 containers, and French customs inspected 15 containers
between December 2002 and May 2003. A Customs official informed us that
these inspections did not reveal any WMDs.
Program Operations Evolved as CSI Team in First Port Faced Challenges:
As the first CSI team arrived in Rotterdam, Customs encountered data
limitations that required revising its approach to obtaining needed
information for screening containers. CSI operations overseas involve
the utilization of complete, accurate, and timely manifest data to
target high-risk containers bound for the United States. However, the
manifest information in Customs' Automated Targeting System was
insufficient, because carriers did not always submit manifest data to
U.S. Customs electronically, completely, and prior to the containers'
departure from foreign ports to the United States. Therefore, Customs
planned to supplement its own manifest database with manifest data
provided by foreign customs administrations at CSI ports.
Soon after deploying CSI teams at the first European CSI port of
Rotterdam, Customs realized that its ability to effectively screen
containers was limited by the host customs administration's lack of
sufficient export manifest data for container traffic leaving Rotterdam
and headed for U.S. seaports. According to U.S. Customs officials, like
most customs administrations, Dutch customs does not completely track
export data. Although the CSI team was provided manifest data on U.S.-
bound containers by the host customs, this information generally was
limited to containers transferred from one vessel to another at
Rotterdam, and even then, the data sometimes arrived after the vessel's
departure. In addition, the CSI team did not have information for
containers remaining on board a vessel that was destined for the United
States but that stopped at the port of Rotterdam. Furthermore, the CSI
team did not have manifest data for containers leaving Rotterdam after
arriving via truck, train, or barge from other countries.
Customs also learned soon after the CSI team's arrival in Rotterdam
that the physical layout of the port and the sovereign laws of the
Netherlands posed other challenges to the CSI team's receipt of needed
manifest information. For example, the CSI team discovered that in the
port of Rotterdam there were 40 different physical locations where
Dutch Customs received paper manifests. In addition, the CSI team
learned that under Dutch law, paper manifests could not be removed from
certain locations. Given the logistical challenges of compiling
information from the 40 locations, as well the limitations posed by
existing Dutch law, the two customs administrations realized that
providing the CSI team with this information would not be feasible.
Customs officials told us that without complete and accessible manifest
data, the CSI team could not achieve its goal of screening containers
at foreign ports.
On the basis of its experiences in Rotterdam, Customs took steps to
modify its approach. First, Customs expedited the development and
finalization of its 24-Hour Rule, which established new requirements
that carriers present complete vessel cargo declarations to Customs 24
hours before loading cargo aboard a vessel at foreign ports, regardless
of whether these ports are CSI or non-CSI ports, for transport to the
United States.[Footnote 22] This amendment allowed Customs to overcome
the obstacle of obtaining manifest data on containerized exports bound
for the United States at foreign ports--a critical element in the
process of screening containers overseas. Instead, the CSI teams would
now have direct access to the needed manifest data, thus lessening
their dependence on foreign customs to provide it.
Customs also modified the composition and procedures of CSI assessment
teams in order to gather all information needed for a full
understanding of port operations prior to the CSI team's arrival.
Customs officials stated that the insufficiency of information
collected by the assessment teams at Rotterdam delayed Customs'
discovery that the port's manifest data for U.S.-bound containers was
incomplete. The inadequacy of the information collected by the team
resulted, in large part, from the team's lack of subject matter
expertise and a tool to standardize the collection of relevant
information at CSI ports. Customs officials told us that they have
since identified the required skills and have incorporated staff with
significant expertise from various offices within Customs to properly
survey foreign ports. In addition, Customs developed a standardized
survey questionnaire to obtain information about a host nation's port,
such as the physical infrastructure and the availability of manifest
and cargo information. Furthermore, Customs now collects the same
information from foreign customs administrations in advance in an
effort to inform the assessment teams prior to their visits.
Many Companies Enrolled in C-TPAT, Program Evolving Over Time:
Customs quickly designed C-TPAT and rolled-out some key program
elements, adjusting its implementation over time. Since the beginning
of the program, Customs enrolled a large number of companies across the
United States, receiving security profiles from half of those companies
and providing feedback letters to half of the companies that submitted
security profiles. More recently, Customs began pretesting another
program element, validations, with a few companies. Initially, Customs
expected that its account managers, who had experience working with the
trade community, could promote the program and help companies develop
action plans. However, Customs soon realized that it needed staff with
a different skill set, supply chain security expertise, to help with
future program elements, including validations and action plans. In
response, Customs created a new supply chain specialist position, which
was finalized in May 2003. Customs will continue to modify the program
as it becomes aware of needed changes and implements other key program
elements.
Numerous Companies Enrolled in C-TPAT Program:
In December 2001, the first charter members, seven importers, signed
agreements and enrolled in C-TPAT.[Footnote 23] Beginning in February
2002, C-TPAT invited importers that were already participating in
Customs' Low-Risk Importer Initiative to join C-TPAT.[Footnote 24] Open
enrollment for all other importers began in April 2002, and enrollment
for other trade sectors opened thereafter. Customs' outreach targeted
large to medium-sized companies in order to immediately cover a large
percentage of the trade entering the United States. C-TPAT, in
consultation with private-sector partners, plans to expand the program
to foreign warehouse operators and manufacturers. Figure 4 depicts C-
TPAT enrollment time line by type of industry.
Figure 4: Time line of C-TPAT Enrollment Opportunities:
[See PDF for image]
[End of figure]
According to C-TPAT officials, in January 2003, approximately 1,700
companies had signed C-TPAT agreements, becoming C-TPAT members and
receiving the benefit of a partially reduced risk score. During the
first year of the program, more than 800 of these companies had
completed the next step in the program and submitted security profiles
to Customs. Customs sent feedback letters to 429 companies, granting
416 of them full program benefits, including a further reduction in
their company risk scores. The remaining 13 companies received feedback
letters from Customs informing them that their profiles were
insufficient for the companies to be granted full benefits. Table 6
provides information on the status of the C-TPAT program membership by
type of industry sector and status of key program elements.
By May 2003, the number of agreements signed nearly doubled to 3,355.
According to C-TPAT officials, the 10 program staff were able to review
all 1,837 security profiles and prepare all 1,105 feedback letters in a
timely manner. Customs officials told us that they had not removed any
companies from C-TPAT membership due to the determination that a member
company's commitment is not serious or that a member company had
intentionally misled Customs or for other matters. As of the end of May
2003, Customs had not fully implemented other critical program
elements, such as validations, company action plans, and annual
assessments, designed to ensure that companies have taken action to
improve and maintain supply chain security practices. A few validations
had been completed, as the concept was being pretested. No action plans
or annual assessments had been prepared.
Table 6: Status of C-TPAT Membership by Industry Sector and Key Program
Elements, January 2003 and May 2003:
Key program elements: Agreements signed; Importers: Jan:
1,106; Importers: May: 2,119; Carriers: Jan: 134; Carriers:
May: 410; Brokers, freight forwarders, nonvessel operating
common carriers: Jan: 466; Brokers, freight forwarders, nonvessel
operating common carriers: May: 806; Domestic port authorities
and terminal operators: Jan: 0; Domestic port authorities and terminal
operators: May: 20; Total: Jan: 1,706; Total: May: 3,355.
Key program elements: Security profiles submitted to Customs;
Importers: Jan: 517; Importers: May: 1,088; Carriers: Jan:
88; Carriers: May: 242; Brokers, freight forwarders, nonvessel
operating common carriers: Jan: 254; Brokers, freight forwarders,
nonvessel operating common carriers: May: 499; Domestic port
authorities and terminal operators: Jan: 0; Domestic port authorities
and terminal operators: May: 8; Total: Jan: 859; Total: May:
1,837.
Key program elements: Feedback letters sent by Customs;
Importers: Jan: 306; Importers: May: 623; Carriers: Jan: 37;
Carriers: May: 163; Brokers, freight forwarders, nonvessel
operating common carriers: Jan: 86; Brokers, freight forwarders,
nonvessel operating common carriers: May: 312; Domestic port
authorities and terminal operators: Jan: 0; Domestic port authorities
and terminal operators: May: 7; Total: Jan: 429; Total: May:
1,105.
Key program elements: Validations (pretested); Importers:
Jan: 0; Importers: May: 15; Carriers: Jan: 0; Carriers: May:
0; Brokers, freight forwarders, nonvessel operating common
carriers: Jan: 0; Brokers, freight forwarders, nonvessel operating
common carriers: May: 0; Domestic port authorities and
terminal operators: Jan: 0; Domestic port authorities and terminal
operators: May: 0; Total: Jan: 0; Total: May: 15.
Key program elements: Action plans; Importers: Jan: 0;
Importers: May: 0; Carriers: Jan: 0; Carriers: May: 0;
Brokers, freight forwarders, nonvessel operating common
carriers: Jan: 0; Brokers, freight forwarders, nonvessel operating
common carriers: May: 0; Domestic port authorities and
terminal operators: Jan: 0; Domestic port authorities and terminal
operators: May: 0; Total: Jan: 0; Total: May: 0.
Key program elements: Annual assessments; Importers: Jan: 0;
Importers: May: 0; Carriers: Jan: 0; Carriers: May: 0;
Brokers, freight forwarders, nonvessel operating common
carriers: Jan: 0; Brokers, freight forwarders, nonvessel operating
common carriers: May: 0; Domestic port authorities and
terminal operators: Jan: 0; Domestic port authorities and terminal
operators: May: 0; Total: Jan: 0; Total: May: 0.
Source: Customs.
[End of table]
C-TPAT Program Operations Are Evolving Over Time:
Customs has adjusted elements of C-TPAT operations since the program's
inception and plans to continue doing so as it gains experience and
begins implementing other program elements. Initially, Customs expected
to use account managers to recruit companies and field general
questions about the application process. Customs also expected that
account managers would help companies develop action plans in response
to Customs assessments of supply chain security practices. However, C-
TPAT officials later realized that account managers lacked the skill
set necessary to provide more than basic program information to
companies. In response, Customs took action to hire supply chain
specialists to provide the requisite skill set needed to implement
various C-TPAT program elements and limited the role of account
managers to promoting the program. Account managers were instructed to
refer any technical inquiries from applicants about completing their
security profiles to the four C-TPAT program managers.
In October 2002, Customs began the process of developing a new position
description for supply chain specialists and obtaining authorization to
hire more than 150 such specialists. In May 2003, the specialist
position was announced. C-TPAT officials plan to hire 40 specialists by
the end of fiscal year 2003. According to C-TPAT officials and program
documents, specialists will be used to guide companies in the
development of their security profiles, conduct validations, develop
action plans, and facilitate annual assessments. However, given the
need to complete over 3,000 validations and establish accountability,
the C-TPAT officials most recently told us that the specialists would
focus on conducting validations and action plans.
Early implementation of the program focused on recruiting companies and
collecting information on companies' security practices. So far,
companies have only had to report on their existing and planned
security practices. As the program evolves, validation and action plans
will be used by Customs to advise C-TPAT members to adopt new security
measures that could impose increased costs if adopted. According to C-
TPAT officials, supply chain specialists will play a critical role in
implementing the next C-TPAT program elements while balancing the dual
goals of improving security with facilitating trade. The supply chain
specialists, according to C-TPAT officials, will increase the program's
creditability by bringing on experts who can make feasible and
meaningful recommendations that will compel companies to change their
security practices. C-TPAT officials told us the program will continue
to evolve as the other program elements such as the company action
plans and annual assessments are developed and implemented and lessons
are learned.
Customs Has Not Adequately Incorporated Factors Critical to Programs'
Success and Accountability:
Although CSI and C-TPAT are evolving into major tools in the U.S. war
against terrorism, in implementing the programs, Customs has not taken
adequate steps to incorporate human capital planning, develop
performance measures, and plan strategically--factors essential to the
programs' long-term success and accountability.[Footnote 25] While
Customs was able to meet the programs' initial staffing needs, it has
not devised a systematic plan to recruit, train, and retain the
expected fivefold increase in CSI overseas staff by fiscal year 2004.
In addition, Customs lacks a plan for increasing the number of C-TPAT
staff almost 15-fold, from 10 to more than 160, while it rolls out new
program elements. Although Customs had created some performance
measures, such as tallying the number of countries and companies that
have enrolled in the CSI and C-TPAT, respectively, it has not developed
measures that establish accountability and measure program
achievements. For example, Customs lacks measures that assess the
impact of CSI and C-TPAT on improving targeting and security practices,
respectively--the programs' fundamental goals. In its effort to rapidly
implement the programs and enroll participants, Customs focused on
short-term operational planning. As a result, Customs lacks the
elements of strategic planning that would allow it to establish program
accountability for approximately $73 million in funds budgeted for
fiscal year 2004.
CSI and C-TPAT at Critical Point:
Customs has come to a critical point in its management of CSI and C-
TPAT, as they transition from start-up programs to mature global
programs on the front lines of the U.S. effort to address container
security and protect global commerce. Whereas Customs quickly launched
the programs in response to homeland security concerns, the programs
have now reached the stage where Customs projects a rapid expansion to
additional countries and companies, as well as additional C-TPAT
program elements, such as validations. Furthermore, Customs has
proposed to commit significantly more resources to both of these
programs. (See fig. 5.) For example, the CSI budget will increase from
$4.3 million in the first year to more than $61 million proposed for
fiscal year 2004, and C-TPAT staff levels will jump from approximately
10 to more than 160 by the end of fiscal year 2004.
Figure 5: Budgets and Anticipated Growth for CSI Ports and C-TPAT
Staff, Fiscal Years 2002 and 2004:
[See PDF for image]
[End of figure]
Customs Has Not Created Human Capital Plans for CSI and C-TPAT:
Over 1 year into the implementation of CSI and C-TPAT, Customs has not
developed a human capital plan that systematically addresses long-term
staffing needs such as recruiting, training, and retaining personnel
for these programs. A key element of human capital planning includes
thinking strategically about how to put the right people in the right
jobs at the right time. By the end of fiscal year 2004, Customs will
need to attract at least 120 CSI employees with the skills to identify
high-risk containers at 30 ports and who are willing to live in
challenging environments. Ultimately, Customs envisions maintaining
CSI teams at 43 or more ports. C-TPAT intends to hire and train more
than 150 supply chain specialists within the next few years to review
company security profiles for weaknesses, identify solutions, and
maintain company relations to ensure that voluntary improvements are
made. While short-term human capital decision making was necessary in
the programs' first year to address the challenge of a rapid start-up,
Customs is now required, as a result of its transfer to DHS, to face
these and other important human capital questions to ensure CSI's and
C-TPAT's long-term success.[Footnote 26]
Deploying Customs staff to overseas CSI ports will be a complex,
multiyear task. Customs seeks CSI candidates with targeting,
diplomatic, and language skills. Customs officials stated that they did
not experience significant difficulties in finding qualified staff to
fill its short-term human capital needs from among the pool of existing
Customs employees, such as inspectors from the Office of Field
Operations. However, Customs anticipates creating 2-to 3-year permanent
assignments to replace its current 120-day temporary duty assignments,
which could strain existing resources. In spite of the potential
challenges Customs could face, CSI officials said that they had not
documented a human capital plan and would instead, in the near term,
rely exclusively upon other Customs offices such as the Office of Field
Operations to use their own standards to screen and make final
selections of CSI staff for placement at CSI ports overseas.
Customs faces a daunting task as it prepares for its future human
capital needs at key CSI ports overseas, including strategic ports in
countries where it may be difficult to attract U.S. personnel.
Specifically, Customs' port status planning document projects the
deployments of CSI teams in fiscal year 2004 to seven countries
(Brazil, China, Greece, Sri Lanka, Thailand, Turkey and the United Arab
Emirates) for which the Department of State requires pay compensation
to U.S. government officials for hardships they may encounter while
working in these locations.[Footnote 27] As an example of how
challenging it can be to place staff overseas, we found that the
Department of State, whose staff routinely serves overseas, had
difficulty filling positions in hardship postsand that, as a
consequence, the affected embassies were hampered in their ability to
effectively carry out U.S. foreign policy objectives. The difficulties
faced by the Department of State demonstrate that staffing posts abroad
with appropriately skilled personnel is a challenge even for agencies
with a long history of recruiting and placing staff overseas. Without a
human capital plan that includes recruiting and training strategies,
Customs may be unable to identify and develop the human resources
necessary to handle the staffing for the expanded number of CSI ports.
As with CSI, Customs plans to expand C-TPAT by hiring over 150
additional staff that will help implement new program elements such as
validations and actions plans. The duties of these new staff, or supply
chain specialists, are to identify, recommend, and negotiate with
member companies to undertake corrective actions to improve supply
chain security, as well as to guide companies through the C-TPAT
process. Customs officials said that they expect to hire 40 supply
chain specialists in fiscal year 2003 and the remaining number after
that. However, although Customs acknowledged the importance of human
capital planning for C-TPAT, Customs officials indicated that they have
been unable to devote resources to developing a human capital plan that
outlines how C-TPAT will increase its staff 15-fold and implement new
program elements that will require training.
A human capital plan that emphasizes recruitment, retention, and
training is particularly important given the unique operating
environments and personnel requirements of the two programs. According
to Customs officials, the professional and personal relationships that
CSI team members and C-TPAT supply chain specialists build with their
clients over time will be critical to the long-term success of both
programs. For example, Customs has indicated that a key benefit of CSI
is the ability of Customs officials to work with their foreign
counterparts to obtain sensitive information that enhances its
targeting of high-risk containers at the foreign ports. If Customs
fails to establish these good working relationships, the added value of
targeting from foreign ports is called into question. Similarly,
Customs officials indicated that C-TPAT's success at improving supply
chain security will depend, in large part, on supply chain specialists'
ability to persuade companies to voluntarily adopt C-TPAT
recommendations. Given the reliance of CSI and C-TPAT staff on
relationships and persuasion rather than authority, a human capital
plan that regularly places personnel with language skills and the
ability to work effectively in these environments will maximize the
programs' performance. In the absence of a human capital plan, Customs
may be unable to anticipate potential obstacles to placing the right
people in the right jobs at the right time.
Customs Developed Limited Performance Measures:
Customs has attempted to create some performance measures for CSI and
C-TPAT, but neither program has developed measures that reflect
progress in achieving program goals. Organizations use performance
measures to help demonstrate the level of progress in achieving
results, to inform decision making, and to hold managers accountable.
To better articulate a results-orientation, organizations create a set
of performance goals and measures that addresses important dimensions
of program performance. Using intermediate goals and measures, such as
outputs or intermediate outcomes, would allow Customs to measure
progress toward enhancing the security of U.S.-bound ocean container
trade, the primary goal of these programs.[Footnote 28] As other
programs are proposed to address homeland security needs, DHS and the
Congress must have access to credible performance information that
allows them to make resource allocation decisions across programs and
hold managers accountable.
Customs officials had developed some measures for CSI and C-TPAT that
simply quantify program results like operational activities and
efforts. For example, Customs tracks the number of CSI teams operating
in foreign ports and the number of countries that have signed up to
participate in CSI, as well as the number of CSI inspections.
Similarly, for C-TPAT, Customs tracks results like the number of
companies from different industrial sectors that participate in the
program and the percentage value of cargo imported by C-TPAT companies.
These measures have served as useful indicators of operational results.
However, Customs had not developed measures to help assess how CSI's
presence overseas helps improve targeting of high-risk containers
beyond Customs' existing capabilities. As previously discussed, Customs
officials stated that the most important benefit derives from the
collocation of U.S. and foreign customs officials, which provides them
with additional information that should enhance Customs' targeting
abilities. However, Customs does not analyze statistics to ascertain
the nature and extent of the contributions made by foreign customs
administrations in determining whether a particular container should be
targeted or inspected. Customs officials told us that they had not had
the opportunity to prepare performance measures that will help evaluate
CSI's outcomes. In the absence of performance indicators that provide a
measure of the program's success, the benefits of placing personnel
overseas are unclear.
On the other hand, Customs developed a performance measure to indicate
whether C-TPAT has resulted in improved security practices, using the
results of trade compliance audits as a proxy. This indicator uses
select data elements derived from trade compliance audits, such as
whether the container seals indicated possible tampering and whether
the manifest contained data discrepancies (e.g., whether cargo weight
significantly changed between export and arrival). While this is a
useful first step, its effectiveness is limited by the fact that it
compares two different populations, contrasting the behavior of C-TPAT
members with that of non-C-TPAT members. A more reliable measure of
program impact would compare companies' trade compliance before and
after they enroll in C-TPAT. As of May 2003, Customs had not developed
any other indicators to ascertain whether C-TPAT has had an impact on
the members' supply chain security practices. Recent efforts to
validate the C-TPAT security profiles provide Customs with an
opportunity to establish baseline data to later determine whether
members' security practices improve over time. The validations also
provide Customs an opportunity to authenticate the information
contained in security profiles and determine whether the company merits
a continued reduction in its risk score.
Customs Planning Efforts Do Not Reflect Strategic Approach:
Customs does not have a strategic plan that describes how it intends to
achieve CSI and C-TPAT goals and objectives and that makes full
accountability possible. According to Customs, the short-term
requirements of implementing the programs quickly and encouraging
program participation by countries and companies impeded Customs'
ability to systematically carry out strategic planning. Strategic
planning helps organizations manage their programs more effectively by
requiring that they clearly establish mission goals and objectives and,
after assessing their environment and involving stakeholders, describe
how program activities serve program goals. In addition, strategic
plans can provide a basis for communication and mutual understanding
between stakeholders and contribute to program accountability.
Although Customs has taken some steps that demonstrate operational
planning for CSI implementation in key ports throughout the world, its
efforts do not reflect a strategic approach to planning. While Customs
intends to continue deploying CSI teams to the 20 top ports and to 20
to 25 strategic ports, it has not prepared strategic plans that show
how it will accomplish this enormous task. Whereas Customs told us that
it intends to develop strategic plans, so far, the only available
record regarding its expansion plans is a table outlining when Customs
expects to deploy CSI teams to foreign ports for fiscal years 2003 and
2004.
Without the benefit of strategic planning, Customs quickly rolled out
CSI in France but failed to involve primary stakeholders in making key
decisions. Although Customs officials pointed to their collaboration
with the French government as a model of cooperation in setting up this
port, a lack of communication between the partner countries caused
French customs officials to impose unnecessary demands on private
industry shipping out of Le Havre to provide the CSI team with complete
manifest information needed for effective targeting. Customs had failed
to inform the French that it was implementing the 24-Hour Rule, which
essentially negated the need for the French effort. When we met with
French government officials, they expressed frustration that they had
not been kept informed. Poor communication, as evidenced by this
experience, can lead to a lack of cooperation between the two partners
and make attainment of CSI goals more difficult. Good communication is
essential for a program like CSI, which relies on the exchange of
information between the U.S. and foreign customs administrations to
improve the targeting of high-risk containers.
Customs' experience in rolling out C-TPAT similarly demonstrates a lack
of strategic planning. This is particularly true with regard to
Custom's communicating how it plans to implement critical C-TPAT
program elements--validations, action plans, and annual assessments--
designed to verify that companies have security measures in place and
follow through with recommended changes. Customs does not have a
planning document that describes the operational objectives for each
element, how those objectives support C-TPAT's overall goals, and how
they intend to meet those objectives. Although Customs recently pilot-
tested the validation process with 15 companies, they have yet to
incorporate results and lessons learned into a planning document to
guide the validation process for the more than 3,300 companies
currently receiving C-TPAT's key benefit of reduced risk scores.
Customs lacks a strategic plan that describes how Customs intends to
achieve its programs' goals and establish program accountability for
approximately $73 million in funds budgeted for fiscal year 2004.
Furthermore, Customs does not have strategic planning documents that
establish measurable objectives, detailed implementation strategies,
resource needs, and project time frames for CSI and C-TPAT. The
effective implementation of CSI and C-TPAT programs depends, in part,
on rigorous strategic planning. Without strategic plans, Customs may
discover that CSI cannot place CSI teams in strategic ports in a timely
fashion, or that they place the teams but do not achieve any
improvement in security. Similarly, Customs may find that the security
of C-TPAT companies' supply chains is not improved and that, as a
result, reductions in risk scores are granted to undeserving companies.
Conclusions:
Customs quickly launched CSI and C-TPAT to secure ocean containers
bound for U.S. seaports. However, accomplishing the desired outcome of
securing containers bound for the United States and achieving the long-
term effectiveness of both programs would be aided by human capital
planning, the development of performance measures, and strategic
planning, elements that Customs has not fully incorporated into the
programs. As CSI and C-TPAT make the transition from early
implementation to full-scale operations, Customs' management of these
programs has not evolved from its short-term focus to a long-term
strategic approach. Customs faces unprecedented demands as it expands
CSI to other countries and C-TPAT begins rolling out the critical
validation phase of the program. Planning and measuring program
performance to determine if goals and objectives are being met play an
important role in the management of Customs operations and enable
internal and external decision makers to assess the programs'
effectiveness, make resource allocation decisions, and hold managers
accountable.
Recommendations for Executive Action:
To help ensure that CSI and C-TPAT achieve their objectives as they
transition from smaller start-up programs to larger programs with an
increasingly larger share of the Department of Homeland Security's
budget, we recommend that the Secretary of Homeland Security, working
with the Commissioner of Customs and Border Protection and the CSI and
C-TPAT program directors, takes the following steps:
Develops human capital plans that clearly describe how CSI and C-TPAT
will recruit, train, and retain staff to meet their growing demands as
they expand to other countries and implement new program elements.
These plans should include up-to-date information on CSI and C-TPAT
staffing and training requirements and should be regularly used by
managers to identify areas for further human capital planning,
including opportunities for improving program results.
Expands efforts already initiated to develop performance measures for
CSI and C-TPAT that include outcome-oriented indicators. These measures
should be tangible, measurable conditions that cover key aspects of
performance and should enable agencies to assess accomplishments, make
decisions, realign processes, and assign accountability. Furthermore,
the measures should be used to determine the future direction of these
Customs programs.
Develops strategic plans that clearly lay out CSI and C-TPAT goals,
objectives, and detailed implementation strategies. These plans should
not only address how the strategies and related resources, both
financial and human, will enable Customs to secure ocean containers
bound for the United States, but should also reinforce the connections
between these programs' objectives and both Customs' and the Department
of Homeland Security's long-term goals.
Agency Comments and Our Evaluation:
Customs provided written comments on a draft of our report. Customs
agreed with our recommendations and overall observations that it needs
to take adequate steps to incorporate human capital planning, expand
efforts to develop performance measures and develop strategic plans--
factors necessary for the long-term success and accountability of CSI
and C-TPAT. Customs reported that is has already taken some steps and
will continue to take prudent steps to address these factors. Customs,
however, raised concerns about the draft report's characterization of
some information. Customs also provided technical comments, which we
incorporated as appropriate. The following summarizes their general
comments and our responses. Customs' comments, along with our responses
to specific points, are contained in appendix II.
We made changes to our report to address Customs' concerns that we
overlooked CSI's central tenet--U.S. Customs inspectors must be able to
observe the inspections conducted by host customs officials--which,
according to Customs, is accepted by all partner Customs
administrations. We revised the report to note CSI's central tenet and
its acceptance by all partners, but we also noted that the bilateral
arrangements do not specify that U.S. inspectors must be able to
observe inspections conducted by host customs officials. Although
Customs requested, we did not drop our statement that CSI teams are
often invited to attend inspections because this is what officials from
three foreign customs administrations told us.
Customs raised concerns about our characterization of the expected role
of account managers in C-TPAT. In its general comments, Customs noted
that account managers were never expected to help companies develop
action plans. This statement directly contradicts previous statements
by Customs officials as well as an early program document. Therefore,
we maintain that Customs account managers were initially expected to
help companies develop action plans.
Customs noted that its policy is not to reject companies because of an
inadequate security profile or for adverse information discovered
during the review process. However, Customs provided further
clarification that it may, under certain circumstances, withhold or
reduce C-TPAT benefits. Furthermore, Customs stated that it may remove
a company from C-TPAT membership if it determines that its commitment
is not serious or that it has intentionally misled Customs. We
incorporated changes in our report to reflect these clarifications.
We are sending copies of this report to other interested members of
Congress, the Secretary of the Department of Homeland Security, and the
Commissioner of Customs. We also will make copies available to others
upon request. In addition, the report will be available at no charge on
the GAO Web site at http://www.gao.gov.
Signed by:
If you or your staff have any questions about this report, please
contact me on (202) 512-4347. Other GAO contacts and staff
acknowledgments are listed in appendix III.
Loren Yager Director, International Affairs and Trade:
Signed by Loren Yager:
[End of section]
Appendixes:
Appendix I: Scope and Methodology:
To describe the Container Security Initiative (CSI) and the Customs-
Trade Partnership Against Terrorism (C-TPAT), we met with U.S. Customs
officials in Washington, D.C. with program responsibilities for CSI and
C-TPAT. Specifically, we met with officials in the Office of
International Affairs to discuss the planning and start-up of the CSI
program. In examining the CSI program, we limited the scope of our work
to two of the CSI program's four elements--(1) identifying "high-risk"
containers and (2) screening the "high-risk" containers at the foreign
CSI ports before they are shipped to U.S. ports. Our examination of
those two elements focused on the planning and management issues
specific to the rollout of this program abroad in the program's first
year. We did not examine the adequacy of Customs-wide tools and
technology, such as the Automated Targeting System, for successfully
targeting high-risk ocean containers. We reviewed documents on CSI
including testimony and speeches by Customs officials, as well as
information on the Customs Web site, which outlined CSI goals,
implementation strategies, and operations plans. In addition, we
reviewed Customs documentation, to understand CSI procedures including
agreements with the foreign countries to set up CSI at designated
ports, CSI assessment teams' survey questionnaire at ports, and CSI
budget and staffing data. We visited the ports of New York-New Jersey,
Los Angeles, and Long Beach to familiarize ourselves with Customs'
standard operating procedures in a seaport environment. At the ports,
we interviewed Customs officials and observed operations, with
particular emphasis on Customs cargo container targeting units charged
with using the Automated Targeting System to screen cargo containers
entering U.S. ports.
We also met with C-TPAT officials from the Office of Field Operations
to discuss program goals, implementation strategies, and plans. We
reviewed C-TPAT program documents outlining the early planning efforts
for the program. We also met with private companies and industry
associations in the United States to obtain their views on C-TPAT,
supply chain vulnerabilities and corroborate information provided by
Customs. We attended conferences in Phoenix and Chicago that included
remarks by Customs officials and private sector representatives on the
start-up of C-TPAT, including the process for application for
membership. We met with officials from both the Office of Naval
Intelligence and the National Defense University to understand threats
and vulnerabilities associated with the overseas container supply
chain.
To examine Customs' implementation of CSI and C-TPAT during the first
year, we interviewed Customs officials at the Washington, D.C.,
headquarters as discussed earlier. For CSI, we reviewed Customs press
releases to learn the status of CSI bilateral arrangements with various
countries and the deployment of CSI staff at foreign ports. We also
reviewed and analyzed Customs documentation, including arrangements
with the foreign countries to set up CSI at designated ports, trip
reports to prospective CSI ports, port assessments, plans for CSI
operations at the port of Rotterdam, and statistics on the number of
containers screened by CSI teams and the number of containers inspected
by local customs at CSI ports to date. For the C-TPAT program, in
Washington, D.C., we reviewed and analyzed C-TPAT paperwork for
selected member companies, including partnership agreements, company
profiles of their supply chains, and security measures taken to secure
their supply chains, as well as C-TPAT's feedback letters welcoming
companies as certified members and recommending improvements to their
supply chains. We discussed with representatives of U.S. companies
their experiences in becoming members of C-TPAT and their efforts to
improve the security of their supply chains, particularly those parts
of the supply chain controlled by their foreign suppliers.
As part of our examination of the first year of implementation of CSI
and C-TPAT, we also visited four countries--Canada, the Netherlands,
France, and Germany. In Canada, the Netherlands, and France, we met
with U.S. Embassy officials, particularly the U.S. Customs attachés
responsible for managing CSI implementation in the ports of Vancouver,
Rotterdam, and Le Havre. We discussed the issues that came up during
the CSI negotiations and the substance of the final arrangements
between the U.S. and host governments. We also discussed the start-up
of the CSI program, as well as any issues that had arisen during
implementation in each country. We interviewed CSI team members at each
port to obtain detailed explanations of CSI operations there and any
available related documentation. At the ports of Vancouver and Le
Havre, we were able to observe customs operations and the interaction
of the CSI team with its host country officials. We were not able to
observe CSI operations at the port of Rotterdam, owing to a decision by
the Dutch government to restrict the number of foreign delegations that
could access customs operations at Rotterdam. However, in the
Netherlands, as well as in France and Canada, we were able to interview
foreign government officials about the negotiations to start up CSI in
their ports, issues and problems related to the start-up of the
program, and their views regarding the future of the CSI program in
their ports. For the C-TPAT program, we interviewed trade associations,
port authorities, suppliers, and supply chain service providers during
our visits to Canada, Germany, France, and the Netherlands. With trade
associations, we discussed their impressions of C-TPAT, and the
potential impact that C-TPAT security expectations could have on
members' operations. With port authorities, suppliers, and supply chain
service providers, we observed their operations and discussed the
potential impact that implementing C-TPAT security recommendations
could have on their operations and the vulnerabilities that they faced.
To assess the extent to which Customs has focused on factors critical
to the long-term success of the programs, we first reviewed a broad
range of GAO reports examining management factors that were necessary
components for the successful management of cabinet departments,
agencies, and, by extension, individual programs. As the result of our
review of GAO's work on best management practices, we chose to focus
this analysis on three management factors--human capital planning, the
development of performance measures, and strategic planning --because
of their general importance in the literature. (In particular, a recent
GAO report identified critical factors, including the three listed
above, that the new Department of Homeland Security would need to
incorporate for the successful long-term management of the new
department.[Footnote 29]) In addition to interviewing Customs officials
in Washington, as described above, we examined available budgetary and
other documentation to ascertain management plans for the expansion of
CSI and C-TPAT. We assessed the extent to which Customs expansion plans
incorporated human capital planning, the development of performance
measures, and strategic planning.
We performed our work from April 2002 to June 2003 in accordance with
generally accepted government auditing standards.
[End of section]
Appendix II: Comments from the Bureau of Customs and Border
Protection:
U.S. CUSTOMS AND BORDER PROTECTION Department of Homeland Security:
1300 Pennsylvania Avenue, N.W., Washington, D. C. 20229:
Commissioner of Customs:
July 16, 2003:
Mr. Loren Yager:
Director, International Affairs and Trade General Accounting Office:
441 G Street, N.W. Washington, D.C. 20548:
Dear Mr. Yager:
On behalf of the Secretary of Homeland Security, I would like to thank
you for providing us with a copy of your draft report entitled
"Container Security: Expansion of Key Customs Programs Will Require
Greater Attention to Critical Success Factors," and the opportunity to
discuss the issues in this report.
We agree with the General Accounting Office's (GAO) overall
observations that the Bureau of Customs and Border Protection (CBP)
needs to take adequate steps to incorporate factors necessary for
Container Security Initiative (CSI) and Customs Trade Partnership
Against Terrorist (C-TPAT) long-term success and accountability. We
have taken, and will continue to take, prudent steps to address these
factors. Enclosed are comments specific to the recommendations, as well
as general and technical comments that relate to statements that need
to be clarified prior to finalization of this report.
I appreciate your interest in Customs and Border Protection. If we may
offer further assistance, please contact me or have a member of your
staff contact Ms. Cecelia Neglia, Office of Policy and Planning, at
(202) 927-9369.
Yours truly,
Robert C. Bonner
Commissioner:
Signed by Robert C. Bonner:
Enclosure:
Response to Audit Recommendations GAO Draft Report on CSI and C-TPAT:
What GAO Recommends:
To ensure that CSI and C-TPAT achieve their long-term objectives, GAO
recommends that the Commissioner of Customs and Border Protection (CBP)
and the managers for both programs:
* Develop human capital plans that clearly describe how the programs
will recruit, train, and retain staff;
* Expand efforts to develop performance measures that include outcome-
oriented indicators; and:
* Develop strategic plans that clearly lay out the programs' goals,
objectives, and implementation strategies.
Response:
The CBP agrees with the recommendations and will take the appropriate
steps needed to implement all three recommendations for both CSI and C-
TPAT. Key actions are listed below for both programs:
CSI:
The Office of International Affairs has initiated action on a human
capital plan by coordinating with the Offices of Field Operations,
Human Resources Management, and Training and Development to develop a
program to recruit, train and retain the staff necessary to effectively
and efficiently carry out the mission of the CSI.
* The task force operating the CSI program has been in place less than a
year and was drawn from several different offices in CBP. It has
perforce been operating without the usual support and development
branch that is an integral part of a division that would normally be
developing performance measures. Having said that, we appreciate the
acknowledgement of our efforts already underway to develop performance
measures and work is proceeding apace.
* The strategic vision for CSI was described in an address before the
Center for Strategic and International Study (CSIS), on January 17,
2002. As an extension of this vision, Customs determined that the
initial strategic goal of the CSI to place CSI teams in the top 20
foreign ports responsible for about 70 percent of all maritime
containers shipped to the United States-an unprecedented undertaking.
Once this phase was underway it was quickly followed by Phase II,
which:
expands CSI to other large and strategically, significance ports. While
the strategy is simple and the mission has been clearly articulated-
targeting and examining high-risk containers before they are loaded on
vessels bound for the U.S. - we agree with the need for a more detailed
strategic plan to support the operation. Work is underway on a
strategic plan that will clearly outline the goals, objectives and
detailed implementation strategies.
C-TPAT:
* The Office of Field Operations is aware of the need to effectively
deploy its human capital resources to continue the progress of C-TPAT.
A comprehensive plan is being developed in coordination with the Office
of Training and Development to engage leading universities in creating
a college-level curriculum to train the Supply Chain Specialists who
will be the front line personnel for the C-TPAT program. The curriculum
will constitute a multi-disciplinary approach to logistics management
and supply chain security and will incorporate continuing education.
* We are in the process of evaluating current trade compliance
measurement indicators to incorporate specific discrepancies that may
serve as "red flags" that highlight potential security problems for C-
TPAT participants. Measurement of manifest discrepancies, tariff
heading shifts and misdeliveries will be reviewed as potentially
relevant indicators of supply chain control. Additionally, findings and
feedback from C-TPAT participants during the validation process will be
reviewed as possible bases for measurement.
While the C-TPAT program will review different avenues for program
measurement, it must also be noted that the key program indicator for
C-TPAT is the absence of concealment of terrorist weapons in cargo
shipments or access to such shipments by terrorist groups. The purpose
of a security program in this regard is to prevent the introduction of
potentially destructive material into cargo shipments.
* Customs has established clear plans and objectives for C-TPAT from the
program's inception. Before launching C-TPAT, Customs met exclusively
with the trade community to establish agreed upon standards and best
practices for improving supply chain security. Customs targeted "low
risk" importers for enrollment in the program - the vast majority of
whom signed onto the program. Customs next targeted the other key links
in the supply chain - carriers, brokers, freight forwarders, and
maritime port authorities and terminal operators. Representative groups
were brought in to meet with Customs and devise approaches that were
logical and effective to
increase supply chain security and reduce potential exploitation by
terrorists. An extremely successful enrollment process ensued. Over
3,500 companies have signed up to participate in C-TPAT to date.
To provide critical program oversight and ensure the effectiveness of
security practices, the C-TPAT validation process was developed and
implemented. Training on supply chain security and supply chain
management was provided to the first group of CBP employees performing
the validations, and as of this writing over 50 validations have been
initiated.
Currently, work is underway to develop a formal strategic plan that
clearly outlines C-TPAT program goals, objectives, and implementation
strategies.
General Comments GAO Draft Report on CSI and C-TPAT:
Many of the estimated budget figures and container data given to the
GAO in the Fall of 2002 have changed in the past nine months have been
improved through more accurate data sources. In any event, the numbers
represent a snapshot at a particular stage and may well be different
today. However, this does not change the thrust of the picture
presented. Since the budget numbers were provided, CBP has received
additional funding from the FY 2003 Wartime Supplemental and other
congressional add-ons.
Page 7, 2nD para: "Customs initially expected that its account managers
... would recruit new C-TPAT members and assist companies with the
development of their action plans." Account managers were tasked with
communicating C-TPAT program specifics to their accounts, most notably
to companies that had attained "low risk" status for commercial
compliance. Account Managers were highly successful in this endeavor.
The C-TPAT staff explored a number of options, including the
possibility of using account managers to handle certain aspects of C-
TPAT, but at no time was it certain or probable that the account
managers would become involved beyond the communication function.
Page 14, 1sT para: "U.S. Customs may attend inspections, but this is
left to the discretion of local customs." In fact, U.S. Customs
inspectors must be able to observe the inspections. It is a central
tenet of the CSI concept that U.S. Customs inspectors be able to
observe and verify the inspections. This is accepted by all partner
Customs administrations before we implement CSI in a foreign port.
Likewise, on page 24 the sentence that states "Officials from the three
foreign customs administrations visited told us that, so far, the CSI
requests for inspections had not been a burden and that they had often
invited the CSI teams to observe inspections" leaves the false
impression that U.S. presence at inspections at CSI ports is at the
option of the host customs administration. We request that the sentence
end after the word "burden.":
Page 19, 1sT para: "C-TPAT participants are never rejected from the
program because of an inadequate security profile or for adverse
information discovered during the review process. On the contrary,
Customs officials say that they are committed to working with these
companies, even if there are serious security or trade compliance
weaknesses." Current policy is that Customs does not reject companies
that have signed agreements to work with us in C-TPAT. The nature and
objective of the C-TPAT program requires Customs and the trade to stay
engaged and avoid the kinds of confrontations that do not serve to
increase the security of the international supply chain. Customs does,
however, withhold benefits when warranted by adverse information or
identified security weaknesses. Additionally, Customs can reduce
benefits for less serious matters to encourage the company to rectify a
security gap or problem. It must also be clearly understood that C-TPAT
participants are not exempt from Customs trade compliance and
enforcement activities; in fact many of the systemically controlled
criteria "override" C-TPAT participation when the issues are serious
enough to warrant physical examination of cargo or documents reviews.
Lastly, it must also be noted that Customs has made it clear that if at
any point during a company's membership we determine (e.g., during the
validation process) that their commitment is not serious, or
intentionally misleading, Customs will remove that company from C-TPAT
membership.
Page 21, 1 1STpara: "...as Customs realized that its account managers,
who were on the "front lines" were not prepared to provide companies
the level of assistance they required, Customs developed a new supply
chain specialist position to assist with key program elements." As
noted earlier, account managers were tasked with communicating with
their accounts about C-TPAT and they successfully carried out this
function. Additionally, Customs did not "expect" that account managers
would provide detailed levels of assistance beyond communicating
program basics.
Experience gained during the review and evaluation of security profiles
submitted by C-TPAT participants indicated that a specialized skill set
would be required to further implement and expand C-TPAT in the future.
Customs therefore developed the new supply chain specialist position to
assist with key program elements.
Page 22, 1ST para: This paragraph appears to tie the 24-Hour Rule to
the CSI in a way that may be misleading. Certainly the 24-Hour Rule is
a critical element to the success of CSI. However, the rule was
developed concurrently with CSI to enhance our ability to target both
abroad and upon arrival in the U.S.
Page 26, 3RD para: "Initially, Customs expected that is account managers
... could promote the program and help companies develop action plans."
Once again, account managers were tasked with communicating with their
accounts on C-TPAT. Account manager involvement was one of many options
explored for the further implementation of C-TPAT - as noted earlier it
was neither certain nor probable that account managers would shoulder
primary responsibility.
Page 29, 2nD para: "However, given the need to complete over a thousand
validations and establish accountability, the C-TPAT officials most
recently told us, the specialists would focus on conducting
validations, making other program elements a lower priority." The
validation process will in fact encompass the key program elements and
priorities of C-TPAT, such as the development of action plans and
assessment of security improvements. The primary priority of C-TPAT is
a secure supply chain and the validation process is designed to ensure
that priority is met.
Page 35, 2nD para: The second full paragraph appears to be a repeat of
the first paragraph. Notwithstanding the assertion is made that Customs
does not track the contributions made by foreign customs
administrations in determining whether a particular container should be
targeted or inspected. This is not accurate. Our weekly statistics
report gathers data regarding the containers targeted by Automated
Targeting System (ATS) but that were not inspected because of
information received from the host customs administration. We recognize
that the system we use for tracking this information is not as robust
as we would like, and we are modifying ATS and Automated Manifest
System (AMS) to better capture that information.
Page 37, 1 1STpara: The lead paragraph about our lack of strategic
planning leaves the impression that U.S. Customs imposed unnecessary
demands on private industry in France that was negated by the
implementation of the 24-Hour Rule. This is false. With the advent of
CSI in Le Havre, in November 2002 French Customs updated an existing
program and required 36 data elements to be electronically filed 24
hours before the goods arrive at the port. These data elements are
collected from carriers, exporters, brokers and freight forwarders and
create a "Declaration de Surete (DS) on the goods for French Customs.
This is an enhancement to a system that the French had been operating
in Le Havre for a number of years. By contrast the U.S 24-Hour Rule
requires only 15 data elements, and only from carriers, prior to
loading for export (which is after arrival of the goods at the port).
The two systems complement and validate each other to the extent that
goods arriving in the port are destined to leave for the U.S. This
proactive security measure imposed by the French actually allows our
CSI team to have information about U.S.-bound goods up to 72 hours
prior to lading for departure, a significant benefit not realized in
any other port. In addition, this situation has allowed us to accept
the French intelligence service provider, Soget, as the first foreign
AMS service provider. Soget will receive carrier, broker, importer and
freight forwarder data and transmit it to the appropriate French or
U.S. Customs administration to meet the DS or 24-Hour Rule
requirements. This also has paved the way for several providers to
Customs in other countries to also accept and meet our AMS:
requirements for service providers. It is true that all this was not
envisioned in strategic planning before we implemented CSI in Le Havre.
Nevertheless, the net result is a benefit for the program, multiple CSI
partners, and our strategic vision. We do not agree that this "...
caused French customs officials to impose unnecessary demands on
private industry shipping out of Le Havre..." We propose that the
paragraph be revised or deleted.
The following are GAO's comments on the letter from the Bureau of
Customs and Border Protection, dated July 16, 2003.[Footnote 30]
GAO Comments:
1. Customs agreed with our findings that human capital planning is
needed, and Customs indicated that it is developing a comprehensive
training plan for Customs-Trade Partnership Against Terrorism (C-TPAT).
However, while training is an important aspect of human capital
planning, our report shows that human capital plans should also
systematically address other long-term staffing needs, such as
recruitment and retention for the more than 150 supply chain
specialists Customs plans to hire.
2. Customs commented that it is making progress in developing further
performance measures that are based on trade compliance data. As our
report states, to ensure that C-TPAT performance indicators are
reliable, the measures should compare trade compliance data for
companies before and after they enroll in the program. Customs also
indicated that it intends to review the results of the validation
process in order to develop possible baselines for measurements. These
efforts are responsive to the recommendation in our report.
3. Customs noted that more accurate budget data are available. Between
the fall 2002 and June 2003, we requested clarification and updated
budget information for our report. Our report presents the budget data
that Customs provided us. Furthermore, we did not use the fall 2002
container data in our report; our report presents the number of ocean
containers inspected under the Container Security Initative (CSI)
program through May 2003, which was provided by Customs officials in
June 2003.
4. Customs raised several concerns about our characterization of the
expected role of account managers in C-TPAT. Customs indicated that "at
no time was it certain or probable that account managers would become
involved beyond the communication function." This statement contradicts
previous statements by Customs officials and an early C-TPAT program
document that account managers would be involved in developing action
plans. Therefore, we maintain that Customs account managers were
initially expected to help companies develop action plans.
5. Regarding Customs' assertion that U.S. Customs inspectors must be
able to observe inspections at CSI ports, we do not question the need
for Customs inspectors to make such observations. However, our analysis
of the bilateral arrangements show that the arrangements do not specify
that U.S. Customs must be able to inspect containers or observe
inspections. In addition, our analysis of Customs' documents and our
discussions with Customs officials reveal that bilateral arrangements
with foreign governments are not legally binding documents. We will not
revise the sentence that states "Officials from the three foreign
customs administrations visited told us that, so far, the CSI requests
for inspections had not been a burden and that they had often invited
the CSI teams to observe inspections" because this is what foreign
customs officials told us. However, we will revise the report to
clarify that the ability of the U.S. Customs officials to observe and
verify inspections is a central tenet of the CSI concept and, according
to U.S. Customs officials, all partner Customs administrations accept
this tenet.
6. Customs stated that company participants are not rejected from the
program and are instead engaged by C-TPAT to increase the security of
the international supply chain. This statement is consistent with
information in our report. Customs also noted that it withholds
benefits when this action is warranted by adverse information or
identified security weaknesses and that it can reduce benefits, for
less serious reasons, to encourage a company to rectify a security gap
or problem. We revised the report to clarify these two points. We also
added a footnote to capture Customs' comments that C-TPAT participants
are not exempt from Customs trade compliance and enforcement
activities. We further revised the report to clarify that Customs can
remove a company from C-TPAT membership if it determines that the
company has not made a serious commitment or has intentionally misled
Customs. To date, Customs reported that it has not removed a company
from C-TPAT membership.
7. Customs noted the evolution of the supply chain specialist position.
This is consistent with our report.
8. We believe that our portrayal of the relationship between the 24-
Hour Rule and CSI is accurate. Our report states that the 24-Hour Rule
was implemented to ensure that Customs would obtain complete and timely
manifest data. This is based on specific evidence found in our
examination of the 24-Hour Rule, as published in the Federal Register.
The 24-Hour Rule, as found in the Federal Register, specifically
states, under the heading Necessity for Advance Presentation of Vessel
Cargo Manifest to Customs, that "CSI is already operational in Canada
and the Netherlands—.Given this explosive growth, it is critical that
the information necessary to implement CSI fully be provided to Customs
in the near term. For this reason, Customs proposed this rulemaking on
August 8, 2002.":
9. Customs noted that the development of action plans and assessment of
security improvements are part of the validation process. In earlier
interviews with Customs officials, we were told that supply chain
specialists would focus on validating the company security profiles,
because Customs needed to validate the large number of security
profiles that they had received. We revised the report to eliminate the
statement that other program elements would be a lower priority and
clarified that supply chain specialists would focus on validations and
action plans. We also added that supply chain security specialists
would help facilitate the annual assessments.
10. We have deleted the second paragraph.
11. Customs noted that the statement in our report that Customs does
not track the contributions made by foreign customs administrations in
determining whether a particular container should be targeted or
inspected is inaccurate. We revised the report to reflect that Customs
does not analyze statistics to ascertain the nature and extent of the
contributions made by foreign customs administrations in determining
whether a particular container should be targeted or inspected.
12. We disagree with Customs' assertion that our report implied that
U.S. Customs imposed unnecessary demands on private industry. To the
contrary, our report states that French Customs imposed demands on
private industry that proved unnecessary. However, our central point
still stands. French Customs officials told us that they updated their
manifest system in anticipation of the implementation of CSI in the
port of Le Havre, but without knowledge of the imminent implementation
of the 24-Hour Rule. In our interviews with French Customs officials,
they expressed dissatisfaction with the confusion surrounding the
implementation of the 24-Hour Rule. That benefits derived from French
Customs' efforts to update the manifest system is beside our point that
good communication is vital between CSI partners.
[End of section]
Appendix III: GAO Contact and Staff Acknowledgments:
GAO Contact:
Christine Broderick (415) 904-2000:
Staff Acknowledgments:
In addition to the individual named above, Patricia Cazares-Chao,
Richard Boudreau, Hector Wong, Victoria Lin, Jill Johnson, and Reid
Lowe made key contributions to this report.
(320106):
:
FOOTNOTES
[1] On March 1, 2003, the U.S. Customs Service was transferred to the
new Department of Homeland Security. The border inspection functions of
the Customs Service, along with other U.S. government agencies with
border protection responsibilities, were organized into the Bureau of
Customs and Border Protection. Throughout this report, we will use the
term "Customs" to refer to both the Customs Service and the Bureau of
Customs and Border Protection.
[2] The United States and Canada do not have a CSI arrangement covering
three of these five ports because the Smart Border Accord, which was
signed in December 2001, governs the placement of Customs personnel at
three Canadian seaports, and preceded the announcement of CSI. However,
Customs refers to these seaports as CSI ports.
[3] DOT Volpe National Transportation Systems Center, Intermodal Cargo
Transportation: Industry Best Security Practices (Cambridge,
Massachusetts: June 2002).
[4] A freight consolidator is a firm that accepts partial container
shipments from individual shippers and combines the shipments into a
single container for delivery to the carrier. A nonvessel operating
common carrier is a company that buys shipping space, through a special
arrangement with an ocean carrier, and resells the space to individual
shippers, instead of receiving a commission.
[5] National Defense University, The Virtual Border: Reducing the Risk
of Seaborne Container Terrorism (Washington, D.C: August 2002).
[6] Brookings Institution, Protecting the American Homeland: A
Preliminary Analysis, Michael O'Hanlon, et al. (Washington, D.C:
2002).
[7] Mark Gerencser, Jim Weinberg, and Don Vincent, Port Security War
Games: Implications for U.S. Supply Chains, (Booz, Allen and Hamilton,
2002).
[8] CSI has two other program components: the use of detection
technology to inspect high-risk containers and the use of technology to
secure containers. However, these components were outside the scope of
our review. We have conducted previous work in the area of inspection
technology. See U.S. General Accounting Office, Homeland Security,
Title III of the Homeland Security Act of 2002: Addendum, GAO-02-930T
(Washington D.C: July 9, 2002). In a separate effort, an interagency
Container Working Group, co-chaired by Department of Transportation and
Customs, is currently working on improving the physical security of the
container.
[9] The CSI ports are generally the last foreign ports of lading before
vessels arrive into U.S. seaports.
[10] The CSI program includes a reciprocity option for partner
governments that allows foreign customs administrations to station
officers at U.S. seaports. As of May 2003, two countries have placed
customs officers at U.S. seaports: Canada and Japan.
[11] In a separate review, GAO is currently assessing Customs'
Automated Targeting System and its overall ability to identify and
process cargo containers considered to be "high risk" for terrorism.
[12] A manifest is a document that lists in detail the total cargo of a
vessel and is issued by a carrier or its agent or master for a specific
voyage. Examples of data elements in a manifest include shipper,
consignee, point and country of origin of goods, export carrier, port
of lading, port of discharge, description of packages and goods, and
date of lading.
[13] The CSI Task Force consists of individuals from Customs offices,
such as the Offices of International Affairs, Field Operations,
Intelligence, Information and Technology, and Training and Development.
[14] For example, the Attaché in France is responsible for Customs
operations in Belgium, France, and Spain.
[15] Emergency supplemental funds were provided to Customs under
P.L.107-117. The fiscal year 2002 amounts do not include the costs of
operating in three Canadian ports, which were funded separately by
Office of Field Operations.
[16] C-TPAT member companies are not exempt from Customs trade
compliance and enforcement activities.
[17] Specifically, Customs reduces a company's overall risk score in
Custom's Automated Targeting System. A lower score indicates lower risk
and a decreased likelihood of being inspected for a WMD.
[18] Under the Office of Field Operations' Trade Compliance and
Facilitation, account managers work with selected companies to help
increase their level of trade compliance through one-on-one
interaction. For companies that do not have an account manager, being
designated an account and assigned an account manager is considered a
benefit of joining C-TPAT.
[19] Emergency supplemental funds were provided to Customs under P.L.
107-117.
[20] Beginning in fiscal year 2004, C-TPAT is assuming greater level of
responsibility for funding all of Customs industry partnership
programs, such as the Business Anti-Smuggling Coalition and the Carrier
Initiative Program.
[21] U.S. Customs officials at Canadian seaports monitor containers
shipped from Canada to the United States, as well as containers shipped
from other foreign ports, off-loaded at Canadian ports, then
transported to the United States by land.
[22] The 24-Hour Rule is Customs' rule on the "Presentation of Vessel
Cargo Declaration to Customs Before Cargo Is Laden Aboard Vessel at
Foreign Port for Transport to the United States," implemented in
December 2002. For example, according to Customs officials, for a U.S.-
bound container initially loaded onto a vessel in St. Petersburg,
Russia that then stops at the port of Rotterdam before arriving at a
U.S. port, the carrier must submit a manifest to U.S. Customs 24 hours
before the container is loaded onto the vessel in St. Petersburg. For a
container that is transported to the port of Rotterdam by train then
loaded onto a vessel to be shipped to the United States, the carrier
must submit a manifest 24 hours before the container is loaded onto a
vessel in Rotterdam.
[23] The seven charter members included British Petroleum,
DaimlerChrysler, Ford Motor Company, General Motors Corporation,
Motorola, Sarah Lee Corporation, and Target Corporation.
[24] The Low-Risk Importer Initiative is a trade compliance program
designed to significantly reduce Customs examinations for high
compliant importers. The low-risk designation means that Customs has
conducted a review of the importer's compliance assessments, targeted
cargo exams and document reviews, account manager evaluations,
compliance measurement, enforcement results, and financial health.
[25] In a report on the formation of DHS, we identified from our body
of work the major success factors that DHS officials will need to
consider to successfully manage the new department. Drawing on that
list, we identified three factors critical to the management of CSI and
C-TPAT. Human capital planning includes thinking strategically about
how to put people with the right set of skills, in the right jobs at
the right time. Performance measures help demonstrate an organization's
level of progress in achieving results and inform decision making.
Strategic planning includes involvement of stakeholders; assessment of
environments; and the alignment of activities, core processes, and
resources to support mission objectives. See U.S. General Accounting
Office, Major Management Challenges and Program Risks: Department of
Homeland Security, GAO-03-102 (Washington, D.C: January 2003).
[26] P.L. 107-296, Nov. 25, 2002, established the new department. The
legislation requires all agencies moving into DHS, such as Customs, to
appoint chief human capital officers and include human capital planning
in performance plans and performance reports. See U.S. General
Accounting Office, Homeland Security: Management Challenges Facing
Federal Leadership, GAO-03-260 (Washington, D.C: Dec. 20, 2002).
[27] As of May 2003, Customs had not reached agreements with six of
these countries, but had reached "agreement in principle" with China.
[28] U.S. General Accounting Office, Agency Performance Plans: Examples
of Practices That Can Improve Usefulness to Decisionmakers, GAO/GGD/
AIMD-99-69 (Washington, D.C: Feb. 26, 1999).
[29] U.S. General Accounting Office, Major Management Challenges and
Program Risks: Department of Homeland Security, GAO-03-102 (Washington,
D.C: January 2003).
[30] On March 1, 2003, the U.S. Customs Service was transferred to the
new Department of Homeland Security. The border inspection functions of
the Customs Service, along with other U.S. government agencies with
border protection responsibilities, were organized into the Bureau of
Customs and Border Protection. Throughout this report, we used the term
"Customs" to refer to both the Customs Service and the Bureau of
Customs and Border Protection.
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