United States General Accounting Office

GAO Testimony

Before the Subcommittee on Government Management,

Information and Technology, Committee on Government

Reform and Oversight, House of Representatives

For Release on Delivery

Expected at

10:00 a.m., PDT

on October 16, 1997

CUSTOMS SERVICE

Comments on Strategic Plan

and Resource Allocation

Process

Statement of Norman J. Rabkin

Director, Administration of Justice Issues

General Government Division

GAO/T-GGD-98-15

Summary 

Customs Service: Comments on Strategic

Plan and Resource Allocation Process

Under the Government Performance and Results Act of 1993, executive

agencies are to develop strategic plans in which they define their missions,

establish results-oriented goals, and identify strategies they will use to

achieve those goals for the period covering at least 1997 through 2002. The

Act specifies that strategic plans should contain (1) a mission statement;

(2) agencywide long-term goals and objectives; (3) approaches (or

strategies) and the various resources needed to achieve the goals and

objectives; (4) a description of the relationship between the long-term

goals/ objectives and the annual performance plans; (5) an identification of

key external factors; and (6) a description of how program evaluations

were used to establish and revise strategic goals.

The Customs Service’s plan addresses the required elements. It also

contains a discussion of management challenges but, in GAO’s opinion,

does not adequately recognize Customs’ need to improve its financial

management and internal control systems, its controls over seized assets,

its plans to alleviate year 2000 problems, and its plans to improve

computer security.

Regarding its resource allocation process, Customs officials told GAO that

they were not aware of any formal agency-wide efforts prior to 1995 to

determine the need for additional cargo and passenger inspectional

personnel for its 301 ports. However, Customs officials told GAO that in

June 1995, in preparation for its fiscal year 1997 budget request and a new

drug enforcement operation (Hard Line), Customs conducted a formal

needs assessment using factors such as the need to (1) fully staff

inspectional booths and (2) balance enforcement efforts with the need to

quickly move complying cargo and passengers through the ports.

Page 1 GAO/T-GGD-98-15
Statement 

Customs Service: Comments on Strategic

Plan and Resource Allocation Process

Mr. Chairman and Members of the Committee:

I am pleased to be here today to discuss our observations on the Customs

Service’s strategic plan and its allocation of inspectional resources. My

statement is based on our review of Customs’ September 30, 1997, plan

and extensive work we have performed at the Customs Service over the

past few years. It is also based on the limited amount of work we have

done reviewing its system for allocating inspectional resources to its cargo

ports of entry along the Southwest border.

The Customs Service’s

Strategic Plan

The Government Performance and Results Act of 1993 (the Results Act)

seeks to shift the focus of federal management and decisionmaking away

from a preoccupation with staffing, activity levels, and tasks completed to

a focus on results—that is, the real difference that federal programs make

in people’s lives. Under the Results Act, executive agencies were to

develop by September 30, 1997, strategic plans in which they defined their

missions, established results-oriented goals, and identified strategies that

they will use to achieve those goals for the period covering at least 1997

through 2002. These plans are to be updated at least every 3 years.

The Act specifies that all agencies’ strategic plans should have six critical

components: (1) a comprehensive agency mission statement;

(2) agencywide long-term goals and objectives for all major functions and

operations; (3) approaches (or strategies) to achieve the goals and

objectives and the various resources needed to do so; (4) a description of

the relationship between the long-term goals/objectives and the annual

performance plans required by the Act; (5) an identification of key factors,

external to the agency and beyond its control, that could significantly

affect achievement of the strategic goals; and (6) a description of how

program evaluations were used to establish and revise strategic goals and

a schedule for future program evaluations.

The plan developed by the Customs Service addresses the six

requirements of the Results Act.1

 However, its discussion of the

management challenges it faces does not adequately recognize the

agency’s need to improve its financial management and internal control

systems, its controls over seized assets, its plans to alleviate year 2000

problems, and its plans to improve computer security.

1

The Customs Service is not a separate executive branch agency and therefore is not required under

the Results Act to develop its own strategic plan.

Page 2 GAO/T-GGD-98-15
Statement 

Customs Service: Comments on Strategic

Plan and Resource Allocation Process

Concerning the elements required by the Results Act, Customs’ mission

statement is results oriented and covers its principal statutory

mission—“ensuring that all goods and persons entering and exiting the

United States do so in compliance with all United States laws and

regulations.” This covers Customs’ responsibilities to collect revenues and

prevent smuggling.

Second, the plan’s goals and objectives cover Customs’ major

functions—processing cargo and passengers entering the U.S. and cargo

leaving the U.S. In addition, Customs has developed goals and objectives

for two chronic problem areas—narcotics smuggling and money

laundering—as well as for three mission support functions—information

and technology, finance, and human resources management. These goals

and objectives are generally results-oriented and appear to be measurable.

For example, Customs’ overall goal for its processing of arriving

international passengers is that the passengers it admits into the country

will be in compliance with applicable laws and regulations. This goal is

results oriented because it focuses on the outcomes Customs is mandated

to achieve—compliance with applicable laws and regulations. In this case,

Customs plans to gauge its success by measuring the extent to which it

identifies and denies entry to noncompliant passengers.

Third, the plan discusses the strategies by which Customs hopes to

achieve its goals. Customs’ overall strategy is two-pronged: it plans to

maximize compliance by (1) informing the trade and traveling community

of applicable laws and regulations and (2) taking enforcement activities

against noncompliant exporters, importers, and travelers. Its specific

strategies are logically linked to the goals. For example, among its

strategies for maximizing trade compliance are to (1) detect areas of

noncompliance and, through informed compliance and targeted

enforcement actions, raise compliance levels; and (2) “investigate and

prosecute willfully noncompliant importers, exporters, and brokers,

wherever detected, and provide a highly visible deterrent factor.”

Fourth, the strategic plan discusses in very general terms how it relates to

annual performance plans. In addition, for each goal, Customs provides

specific targets it hopes to achieve during fiscal years 1997 through 2000.

For example, among Customs’ strategies for facilitating exports while

achieving compliance with applicable laws and regulations is to redesign

its outbound process “so that it is clear, consistent, and understandable to

all customers and stakeholders of the process.” Customs’ targets for fiscal

years 1997 and 1998 are to “continue to implement the uniform policies”

Page 3 GAO/T-GGD-98-15
Statement 

Customs Service: Comments on Strategic

Plan and Resource Allocation Process

and “implement performance measures.” For fiscal years 1999 through

2002, Customs’ targets are to “implement the redesigned process” and

“determine the resources needed to optimally implement the redesigned”

process. However, these targets are more process oriented than results

oriented; targets more closely related to the strategy, such as the extent of

positive results from a customer survey and eventually higher compliance

rates, might give Customs a better idea of whether its strategy is working.

Fifth, the plan discusses some key factors, external to Customs and

beyond its control, that could significantly affect achievement of the

strategic goals. These factors range from the level of cooperation of other

countries in reducing the supply of narcotics to the level of support from

what Customs refers to as its “customers”—the trade community and the

traveling public.

Finally, Customs’ strategic plan contains a listing of program evaluations

used to prepare the plan and provides a schedule of evaluations to be

conducted in each of the functional areas. For example, in developing its

narcotics strategy, the plan states that Customs used the 1996 and 1997

National Drug Control Strategy prepared by the Office of National Drug

Control Policy. Similarly, in developing strategies for its mission support

processes, the plan states that Customs used one of our reports.2

In addition to the six elements required by the Results Act, there are

several other areas where agencies’ strategic plans can provide Congress

and other stakeholders important insights into whether the agency will be

able to achieve its goals. First, there is the recognition of how the agency

will work with other federal agencies to achieve common goals. Customs’

plan recognizes that the agency shares responsibilities for carrying out

many of its core functions with other agencies. For example, Customs is

one of over 50 federal agencies involved in drug control activities.

Customs’ plan acknowledges the relationships the agency has with the

Departments of Justice, State, and Defense and discusses how it plans to

work with these agencies to achieve its narcotics smuggling goals.

Customs’ plan also recognizes some of the management challenges that

the agency faces in carrying out its core functions but does not, in our

opinion, cover some important management challenges it will face in

successfully carrying out the plan. The plan discusses three

functions—information and technology, finance, and human resources

2

Improving Mission Performance Through Strategic Information Management and

Technology—Learning From Leading Organizations (GAO/AIMD-94-115, May 1994).

Page 4 GAO/T-GGD-98-15
Statement 

Customs Service: Comments on Strategic

Plan and Resource Allocation Process

management. In a broad sense, the plan references the problems that we

and others have identified regarding Customs’ automated systems

modernization efforts and its need to improve its financial management

and internal control systems.3

However, the plan does not provide the detail necessary to determine how

Customs plans to address such challenges so that they do not continue to

hamper its ability to meet stated goals and objectives. For example, we

have reported that Customs’ financial management problems have

hindered its ability to reasonably ensure that (1) duties, taxes, and fees on

imports are properly assessed and collected; (2) sensitive data maintained

in its automated systems, such as information used to monitor its law

enforcement operations, are adequately protected from unlawful access

and modification; and (3) core financial systems capture all activity that

occurred during the year and provide reliable information for management

to use in controlling operations.

The Treasury Department’s Inspector General (IG) issued an unqualified

opinion on Customs’ fiscal year 1996 financial statements. However, the IG

also reported that Customs had significant internal control weaknesses

and that the financial management systems may not be able to provide

reliable information in a timely manner. Further, the IG’s report disclosed

that extensive manual procedures and analyses were required to process

certain routine transactions and to prepare financial statements at fiscal

year-end. This lack of readily accessible, quality data raises questions

about Customs’ capacity to track and measure its performance. Customs’

strategic plan would be more helpful to decisionmakers if it more clearly

addressed how Customs intends to correct these data reliability problems.

Our report on high-risk issues within the information technology area

cited information security and the year 2000 problem as two issues

requiring agency-specific actions.4

 Customs’ plan contains some

discussion of the importance of information security but does not address

the Year 2000 problem. Specifically, regarding information security, the

plan briefly mentions that the agency will follow applicable

security-related directives and policies while providing a secure global

3

We have included Customs’ financial management and its handling of seized assets on our list of

high-risk areas. In 1990 we began a special effort to review and report on the federal program areas our

work had identified as high risk because of vulnerabilities to waste, fraud, abuse, and mismanagement.

Our third series of reports, issued in February 1997, provides the current status of designated high-risk

areas. See High-Risk Series, (GAO/HR-97-20 SET, Feb. 1997), and High-Risk Program: Information on

Selected High-Risk Areas, (GAO/HR-97-30, May 1997).

4

GAO High-Risk Series, Information Management and Technology (GAO/HR-97-9, Feb. 1997).

Page 5 GAO/T-GGD-98-15
Statement 

Customs Service: Comments on Strategic

Plan and Resource Allocation Process

network. Also, the plan mentions the need for secure technology in the

context of improving certain information systems. However, the plan does

not describe information security-related strategies or measures and there

is no comprehensive discussion about the need to focus on information

security issues such as Customs attempts to move to an environment

where the agency increasingly relies on automation and technology to

perform its mission.

With the year 2000 less than 3 years away, federal agencies including

Customs must act quickly to ensure that systems are year 2000 compliant.

Necessary steps include identifying and analyzing mission-critical

computer systems, developing date conversion strategies and plans, and

dedicating sufficient resources convert the computer systems by early

1999 to allow 1 year for testing and error correction. However, the

Customs strategic plan, while identifying information and technology as a

key mission support process, does not recognize the year 2000 problem.

There is no discussion of the strategies or activities to address the year

2000 problem and the plan does not identify risks associated with the year

2000 problem as factors that could hinder accomplishment of the plan.

Customs’ Resource

Allocation Process

We have not completely reviewed the processes by which the Customs

Service determines its operational resource needs and allocates available

resources to ports of entry. We are currently reviewing those processes for

cargo inspections; this work has been requested by Senator Feinstein. We

expect to report our results in the Spring of 1998. However, I can comment

on some of the work we have completed so far.

Officials in Customs’ Office of Field Operations told us that they were not

aware of any formal needs assessments used to determine the number of

cargo and passenger inspectional personnel to be assigned to each of its

301 ports, prior to 1995. Beginning in 1995, for the fiscal year 1997

appropriations cycle, Customs requested additional inspectors to help

implement Operation Hard Line.5

 To determine how many more inspectors

it needed and where it needed them, Customs asked its field managers—at

the then district (and subsequently at the Customs Management Center6

)

level—to assess their resource needs on the basis of a variety of factors,

such as the need to (1) fully staff primary cargo and passenger lanes and

5

Operation Hard Line is Customs’ effort to address border violence and drug smuggling through

intensified inspections, improved facilities, and advances in technology.

6

On October 1, 1995, Customs closed its 7 regional and 42 district offices and replaced them with 20

Customs Management Centers.

Page 6 GAO/T-GGD-98-15
Statement 

Customs Service: Comments on Strategic

Plan and Resource Allocation Process

inspection facilities, (2) respond to staffing agreements with INS,7

(3) provide canine enforcement to cargo and passenger processing

operations, and (4) balance enforcement efforts with the need to quickly

move complying cargo and passengers through the ports. As a result of

this needs assessment and the ensuing appropriations process, Congress

provided Customs with authority to hire an additional 657 inspectors and

other staff in fiscal year 1997.

During preparation of its fiscal year 1998 budget request, Customs

headquarters conducted another needs assessment for inspectors. The

Customs’ official who conducted the assessment told us that it was

influenced by the number of drug seizures at ports, the increased

smuggling threat through railway ports of entry, and the threat of internal

conspiracies at certain ports.

We are currently reviewing the documentation for these needs

assessments, as well as the process by which Customs officials

determined the actual number of new inspectors to be assigned to each

Customs Management Center and port.

At the request of this Subcommittee, we have obtained data from Customs

on the total number of inspectors assigned to its major cargo and

passenger ports, as well as on the latest workloads at those ports.

However, Customs did not provide these data in time for us to complete

our analysis and include our results in this statement. We are working with

the data and hope to have the results for you soon.

Mr. Chairman, this concludes my prepared statement. I will be pleased to

answer any questions.

(264440)

7

Both Customs and INS inspect incoming passengers at ports of entry.

Page 7 GAO/T-GGD-98-15
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