U.S. GOVERNMENT PRINTING OFFICE

70–547 DTP WASHINGTON : 2001

OVERSIGHT OF MANAGEMENT CHALLENGES AT

THE U.S. CUSTOMS SERVICE

HEARING

BEFORE THE

SUBCOMMITTEE ON GOVERNMENT MANAGEMENT,

INFORMATION, AND TECHNOLOGY

OF THE

COMMITTEE ON

GOVERNMENT REFORM

HOUSE OF REPRESENTATIVES

ONE HUNDRED SIXTH CONGRESS

SECOND SESSION

APRIL 20, 2000

Serial No. 106–196

Printed for the use of the Committee on Government Reform

(

Available via the World Wide Web: http://www.gpo.gov/congress/house

http://www.house.gov/reform

For sale by the Superintendent of Documents, U.S. Government Printing Office

Internet: bookstore.gpo.gov Phone: (202) 512–1800 Fax: (202) 512–2250

Mail: Stop SSOP, Washington, DC 20402–0001

(II)

COMMITTEE ON GOVERNMENT REFORM

DAN BURTON, Indiana, Chairman

BENJAMIN A. GILMAN, New York

CONSTANCE A. MORELLA, Maryland

CHRISTOPHER SHAYS, Connecticut

ILEANA ROS-LEHTINEN, Florida

JOHN M. MCHUGH, New York

STEPHEN HORN, California

JOHN L. MICA, Florida

THOMAS M. DAVIS, Virginia

DAVID M. MCINTOSH, Indiana

MARK E. SOUDER, Indiana

JOE SCARBOROUGH, Florida

STEVEN C. LATOURETTE, Ohio

MARSHALL ‘‘MARK’’ SANFORD, South

Carolina

BOB BARR, Georgia

DAN MILLER, Florida

ASA HUTCHINSON, Arkansas

LEE TERRY, Nebraska

JUDY BIGGERT, Illinois

GREG WALDEN, Oregon

DOUG OSE, California

PAUL RYAN, Wisconsin

HELEN CHENOWETH-HAGE, Idaho

DAVID VITTER, Louisiana

HENRY A. WAXMAN, California

TOM LANTOS, California

ROBERT E. WISE, JR., West Virginia

MAJOR R. OWENS, New York

EDOLPHUS TOWNS, New York

PAUL E. KANJORSKI, Pennsylvania

PATSY T. MINK, Hawaii

CAROLYN B. MALONEY, New York

ELEANOR HOLMES NORTON, Washington,

DC

CHAKA FATTAH, Pennsylvania

ELIJAH E. CUMMINGS, Maryland

DENNIS J. KUCINICH, Ohio

ROD R. BLAGOJEVICH, Illinois

DANNY K. DAVIS, Illinois

JOHN F. TIERNEY, Massachusetts

JIM TURNER, Texas

THOMAS H. ALLEN, Maine

HAROLD E. FORD, JR., Tennessee

JANICE D. SCHAKOWSKY, Illinois

———

BERNARD SANDERS, Vermont

(Independent)

KEVIN BINGER, Staff Director

DANIEL R. MOLL, Deputy Staff Director

DAVID A. KASS, Deputy Counsel and Parliamentarian

LISA SMITH ARAFUNE, Chief Clerk

PHIL SCHILIRO, Minority Staff Director

SUBCOMMITTEE ON GOVERNMENT MANAGEMENT, INFORMATION, AND TECHNOLOGY

STEPHEN HORN, California, Chairman

JUDY BIGGERT, Illinois

THOMAS M. DAVIS, Virginia

GREG WALDEN, Oregon

DOUG OSE, California

PAUL RYAN, Wisconsin

JIM TURNER, Texas

PAUL E. KANJORSKI, Pennsylvania

MAJOR R. OWENS, New York

PATSY T. MINK, Hawaii

CAROLYN B. MALONEY, New York

EX OFFICIO

DAN BURTON, Indiana HENRY A. WAXMAN, California

J. RUSSELL GEORGE, Staff Director and Chief Counsel

RANDY KAPLAN, Counsel

BRYAN SISK, Clerk

(III)

C O N T E N T S

Page

Hearing held on April 20, 2000 .............................................................................. 1

Statement of:

Avila, Yvonne, president, the Foreign Trade Association of Southern California and director of communications, Port of Long Beach; Maurine

Cecil, president, the Los Angeles Customs Brokers and Freight Forwarders Association, Inc.; Judy Grimsman, chairman of the board,

the L.A. Customs Brokers and Freight Forwarders Association, Inc.;

and J. Richard Williams, Ph.D., P.E., professor of mechanical and aerospace engineering, California State University, Long Beach .................... 70

Ekstrand, Laurie E., Director, Administration of Justice Issues, U.S.

General Accounting Office; Charles Winwood, Acting Deputy Commissioner, U.S. Customs Service; Peter Gordon, Assistant Regional Director for Inspections, Immigration and Naturalization Service, Western

Region; Colleen M. Kelley, national president, National Treasury Employees Union ................................................................................................ 6

Letters, statements, etc., submitted for the record by:

Avila, Yvonne, president, the Foreign Trade Association of Southern California and director of communications, Port of Long Beach, prepared

statement of ................................................................................................... 73

Cecil, Maurine, president, the Los Angeles Customs Brokers and Freight

Forwarders Association, Inc., prepared statement of ................................ 85

Ekstrand, Laurie E., Director, Administration of Justice Issues, U.S.

General Accounting Office, prepared statement of .................................... 9

Horn, Hon. Stephen, a Representative in Congress from the State of

California, prepared statement of ................................................................ 4

Kelley, Colleen M., national president, National Treasury Employees

Union, prepared statement of ...................................................................... 34

Williams, J. Richard, Ph.D., P.E., professor of mechanical and aerospace

engineering, California State University, Long Beach, prepared statement of ........................................................................................................... 93

Winwood, Charles, Acting Deputy Commissioner, U.S. Customs Service,

prepared statement of ................................................................................... 25

(1)

OVERSIGHT OF MANAGEMENT CHALLENGES

AT THE U.S. CUSTOMS SERVICE

THURSDAY, APRIL 20, 2000

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON GOVERNMENT MANAGEMENT, INFORMATION, AND TECHNOLOGY, COMMITTEE ON GOVERNMENT REFORM

Long Beach, CA.

The subcommittee met, pursuant to notice, at 10 a.m., in the

Board Room, Port of Long Beach Administrative Building, 6th

Floor, 925 Harbor Plaza, Long Beach, CA, Hon. Stephen Horn

(chairman of the subcommittee) presiding.

Present: Representatives Horn and Becerra.

Staff present: J. Russell George, staff director and chief counsel;

Randy Kaplan, counsel; Bryan Sisk, clerk; Ryan McKee, staff assistant; Bonnie Heald, communications director; Connie Szeibel,

district staff director; and Devin Storey, intern.

Mr. HORN. A quorum being present, the Subcommittee on Government Management, Information, and Technology will come to

order.

The purpose of today’s hearing is to examine a variety of challenges facing the U.S. Customs Service. The Customs Service has

a wide-ranging mission to ensure that all imports and exports comply with U.S. laws and regulations. Originating in 1789, the year

of the first Congress in New York City, it is the oldest Federal

agency within the executive branch of our government. In fact,

until the income tax was implemented during the First World War,

our government was funded entirely by Customs’ duties.

This year, it is estimated that $2.6 trillion in merchandise will

be imported into and exported from the more than 300 ports in the

United States. In addition, close to half a billion people will enter

the country through U.S. border crossings this year.

The Customs Service is responsible for processing those people,

their baggage, and all cargo and mail that crosses the Nation’s borders. Customs collects the appropriate duties, excise taxes, and fees

on all merchandise entering the country. Next to the Internal Revenue Service, Customs is the second largest revenue-producing

agency in the Federal Government, returning more than $22 billion

each year to the U.S. Treasury.

Customs also has a major enforcement role. The staggering

growth in world trade over recent years has been accompanied by

an equally dramatic increase in the smuggling of illegal drugs,

weapons, printed, intellectual or pirated intellectual property, and

in some instances, human cargo. Each region of our country faces

2

unique threats based upon the nature, volume, and origin of the

cargo it receives.

Customs employs nearly 20,000 people to process and inspect the

cargo of more than 300 ports around the country. However, as this

subcommittee has learned during previous hearings, the Customs

Service does not have a system to determine how to match its staffing resources with its enforcement and inspection responsibilities.

In September 1998, Customs contracted with a private consultant to develop a resource allocation model. This model would serve

as a tool to assist management in making staffing decisions and

preparing budget requests. The resource allocation model was delivered to Customs over 1 year ago. We are all interested in learning what staffing levels the model predicted would be appropriate,

and how Customs intends to use this information.

In addition to the three source allocation model, Customs is delivering and developing a new import processing system called the

Automated Commercial Environment [ACE] system. It is no secret

that Customs needs to modernize the way it processes trade. The

agency’s current approach to enforcing trade laws and regulations,

and assessing and collecting import duties is outdated. It is neither

responsive to the needs of Customs nor the needs of its commercial

clients. The present system, developed more than 16 years ago, has

experienced frequent breakdowns and have delayed the flow of

data and cargo entering the country. The Automated Commercial

Environment, ACE system will streamline the commercial import

process and increase the quality of service to its customers—the

trade community. We are interested in learning how well Customs

is managing the acquisition and development of this multi-billiondollar system.

In its enforcement role, Customs is currently using some advanced technology, including x-rays and hand-held sensors to detect illegal smuggling. Nevertheless, illegal smuggling remains a

significant problem. Today, we will hear about a new project that

could enhance this enforcement effort for Customs and its partner,

the Immigration and Naturalization Service, and could expedite

the processing of people and cargo entering the country.

I would like to thank the Port of Long Beach for hosting us today

and for their help with the preparations for the hearing. I also welcome Representative Doug Ose who represents the Sacramento

area and north of it, who is also a very distinguished member of

this subcommittee and we appreciate him joining us here. He’s

done a great job on many of the hearings that we’ve had in Washington, and we’re delighted to see him in southern California. And

Representative Xavier Becerra, who is well known to those from

this area, without objection will be sitting with this panel and have

all the rights and responsibilities of a member of this investigating

committee. I ask unanimous consent that he be permitted to join

the subcommittee for today’s hearing. Without objection, it is so ordered, and we welcome our witnesses, and we look forward to your

testimony.

Your full statement goes in the record, please don’t read your full

statement. We’ve all read it. What we are interested in is dialog

with the witnesses and in others on the panel, too. So, we would

3

welcome your summary, and do it from the heart and look us in

the eye, and we’d appreciate it.

Now, we are going to swear in the witnesses, since that’s our tradition in Government Reform, and if you have staff backing you up

that might speak behind you, you should stand also when we swear

you in, and the clerk will note who has been sworn in for the testimony and put it into the record at that point.

So, first, before going to the witnesses, I want to ask Mr. Becerra

if he has an opening statement that he’d like to make.

[The prepared statement of Hon. Stephen Horn follows:]

4

5

6

Mr. BECERRA. Mr. Chairman, let me first thank you for allowing

me to sit with the Government Management, Information, and

Technology Subcommittee of the Committee of Government Reform

and join you and Congressman Ose today, I thank you for that opportunity.

As a member of the Ways and Means Committee, with jurisdiction over Treasury, Customs, and the issues of trade, obviously,

this is of great concern to me, and I’m pleased that you are holding

this hearing.

I do have a statement. I can submit it for the record, and rather

than make further remarks I’d like to hear the testimony of the

witnesses.

Again, I thank you for the opportunity to be here and I congratulate you on the work that you’ve done on these particular issues

with regards to Customs.

Mr. HORN. Well, I thank the gentleman.

Does the gentleman from California, northern California, want to

say anything at this point?

Mr. OSE. Speak less, say more.

Mr. HORN. OK. Fine. Mr. Ose is going to do most of the questioning.

So, let me, if you would, stand, raise your right hands, and if

there’s any support staff behind you, have them stand. Yes, we

have quite a few today.

The clerk will note that the five witnesses and the, it looks like

eight helpers, and we’re delighted to have all of you, have taken

the oath.

So, we will now begin with the first witness. The first witness,

which is usual for these hearings, is a key member of the U.S. General Accounting Office, otherwise known as GAO, and that is part

of the legislative branch with the authority of Congress to look at

both fiscal matters and programmatic matters, and we have as the

principal witness on panel one Laurie E. Ekstrand, Director, Administration of Justice Issues, U.S. General Accounting Office.

STATEMENTS OF LAURIE E. EKSTRAND, DIRECTOR, ADMINISTRATION OF JUSTICE ISSUES, U.S. GENERAL ACCOUNTING

OFFICE; CHARLES WINWOOD, ACTING DEPUTY COMMISSIONER, U.S. CUSTOMS SERVICE; PETER GORDON, ASSISTANT REGIONAL DIRECTOR FOR INSPECTIONS, IMMIGRATION AND NATURALIZATION SERVICE, WESTERN REGION;

COLLEEN M. KELLEY, NATIONAL PRESIDENT, NATIONAL

TREASURY EMPLOYEES UNION

Ms. EKSTRAND. Thank you very much, Chairman Horn. I’m

pleased to be here today with Randy Hite, from our Accounting and

Information Management Division, to discuss three issues that are

of really great importance to the efficient and effective operations

of the Customs Service.

The needs for Customs to develop a Resource Allocation Model,

called the RAM, and the development of an Automated Commercial

Environment [ACE], have been the subject of a number of prior

GAO reports and testimonies. And, as you know, our report on

Customs’ airline passenger personal searches was released 10 days

7

ago. Let me address each one of these issues in turn, and first start

with the Resource Allocation Model.

In 1998, we recommended that Customs establish a process to

determine the needs for inspectional personnel across all ports.

Customs subsequently contracted with PriceWaterhouseCoopers

[PWC] to develop a Resource Allocation Model. The model was intended to predict staffing levels needed agency-wide and locally by

occupation, such as inspectors, and canine enforcement officers,

and by core functions, such as passenger processing.

PWC developed a model based on 1998 baseline data using two

different methodologies. One was a regression analysis and the

other an activity analysis. The regression analysis, which uses a

variety of counts of workloads as input, yielded some very illogical

results, and also failed to account for a variety of infrastructure differences between ports. These differences include elements such as

facilities at the port, the extent of automation, and the extent of

threat.

PWC also produced an Activity Analysis Model. This approach

basically involves multiplying the units of work by the time it takes

to do each unit and then dividing by staff years.

Our concern with the RAM centers on data reliability. In a previous report, we noted that source data for the amount of time Customs personnel spent on air and sea passenger processing activities

is neither well documented, nor consistently collected from port to

port. We also found, and PWC noted as well, that there are inconsistencies across source databases where there should be none. And

finally we observed that there is considerable variation in activity

times across ports, and we are unsure of the reasons for these variations.

The bottom line on the RAM is that it could be a functional tool

as input for resource allocation decisionmaking, but data reliability

issues will have to be resolved. Customs is taking some steps to improve some reliability of source data, and this could change the picture.

Now, let me turn to ACE. We have long held that the need to

leverage information technology to modernize Customs approach to

import processing is both urgent and undeniable. The outdated import processes currently in use are transaction-based, paper laden,

and time consuming, and they are out of step with the just-in-time

inventory practices of the trades. It is, thus, absolutely critical that

Customs’ ACE project be successful, and to be successful Customs

must do the right things the right way. To be right, Customs must,

as we have recommended: No. 1, invest in and build systems within the context of an enterprise architecture. No. 2, make informed

data-driven decisions about investment options, based on reliable

analysis of business value for system increments, and No. 3, build

system increments using mature software processes.

Our work on other challenged modernization efforts has shown

that to do less increases the risk of systems falling short of expectations, which is not in the best interest of either the trades or the

government. To Customs’ credit, it has already taken significant action to implement some of our recommendations. It has also made

clear commitments to seeing that fundamental acquisition and investment management capabilities that our remaining recVerDate 11-MAY-2000 08:19 Apr 06, 2001 Jkt 000000 PO 00000 Frm 00011 Fmt 6633 Sfmt 6633 C:\DOCS\70547.TXT HGOVREF1 PsN: HGOVREF1
8

ommendations call for are firmly in place before they invest huge

sums of money in ACE.

Nevertheless, much remains to be accomplished before: No. 1,

Customs is fully positioned to begin building large, expensive, software intensive increments of ACE, and No. 2, either the trade or

the government will begin to see promised returns on hundreds of

millions of dollars to be invested.

As a result, we will continue to categorize ACE as a high-risk endeavor and plan to monitor it closely.

Finally, let me turn to Customs personnel searches. A recent

GAO report was released that focused on who Customs selects for

personal searches, and of those searched who was found to be carrying contraband. Our analysis utilized data from 1997 and 1998

for those passengers who were subject to some sort of personal

search. Most were subject to frisks or pat-downs, 4 percent were

subject to strip searches, and 1 percent were subject to x-ray examination.

Our analysis centered on the latter two groups, that is, those

who were strip searched and those who were x-rayed, and the frequency with which contraband was found in those types of

searches. Gender, race, citizenship, and year, that is, 1997 and

1998, were the variables in our analysis.

The analysis showed that searched passengers of certain races

and genders were more likely to be subject to strip search and xrays than other groups, and were less likely to be carrying contraband. Specifically, white men and women and Black women were

more likely than Black men and Hispanic men and women to be

strip searched, rather than just frisked, but were less likely to be

found carrying contraband. The most pronounced difference occurred with Black women who were U.S. citizens. They were nine

times more likely than white women to be x-rayed, but less than

half as likely to be found carrying contraband.

During the course of our review, Customs was developing some

new policies and procedures for personal searches. They included

both new requirements for supervisory review prior to searches,

and additional training for inspectors. Customs also started collecting more complete data on the characteristics of passengers selected for intrusive searches and search results. Analysis of these

data could result in better targeting and, thus, more productive

searches.

This concludes my oral statement, and, of course, Mr. Hite and

I will be happy to answer any questions you might have.

[The prepared statement of Ms. Ekstrand follows:]

9

10

11

12

13

14

15

16

17

18

19

20

21

Mr. HORN. Well, we thank you for that statement, and our rule

is sort of just to have all the presenters of the panel and then we’ll

go to questions.

We’re delighted to have the Acting Deputy Commissioner of the

Customs Service here today, that’s the ranking career servant in

the system. He’s spent at least three decades, I believe, working his

way up, Mr. Charles Winwood. We appreciate you being here yesterday and showing us and Chairman Colby’s Appropriations Subcommittee the workings with your people in the ports of Los Angeles and Long Beach.

So, Mr. Winwood, it’s all your’s.

Mr. WINWOOD. Thank you, Mr. Chairman, and thank you for the

opportunity to testify today. But before I begin, Commissioner

Kelly has asked me that I thank you for your efforts on Customs’ behalf to find a solution to our facility problem at Terminal Island.

Your letters and discussions with GSA were instrumental in helping to expedite the process. We appear to be on track now to relocate those Customs employees to facilities that are safer and closer

to the majority of our work, and we very much appreciate it.

Customs is currently faced with two major challenges; processing

the expediential growth in legitimate trade and combating an array

of threats to our national security.

With regard to trade, in the last 5 years the number of commercial Customs declarations ‘‘entries’’ processed by the agency grew

from 13 million to 18.4 million; that’s an increase of 41 percent. And the value of these entries now approaches $1 trillion, on which

we collect over $22 billion in duty. Given the robust world trade environment, we anticipate another 43 percent increase in entries

and a doubling in their value; to almost $2 trillion—by the year

2005.

Regarding national security, Customs is at the forefront of efforts

to protect the United States from: terrorism, the drug trade, the

trafficking of strategic materials, weapons of mass destruction,

adulterated food, and unregulated pharmaceuticals; and economic

crimes including intellectual piracy and commodity dumping,

among other things. In fact, the Customs Service enforces over 400

statutes for more than 40 different agencies.

To accomplish this broad mission, Customs requires the people

and technology necessary to stand as America’s Front Line, keeping the threat in check and legitimate trade moving.

Mr. Chairman, as you are aware, in the past the Customs Service has been criticized for being less than systematic in the allocation of our limited resources. The GAO, as they just testified, and

others have suggested that we need to develop methods to better

calculate our workload and determine the most effective deployment of staff and equipment. To address these legitimate concerns,

the Customs Service contracted with PriceWaterhouseCoopers to

develop a Resource Allocation Model [RAM]. Constructed using

quantitative analysis, the RAM, as far as we are aware, represents

the first time ever an entire Federal agency’s resource requirements have been modeled and then projected using workload and

threat indicators.

The RAM is currently under review by the Treasury Department

and the Office of Management and Budget. Because we are awaitVerDate 11-MAY-2000 08:19 Apr 06, 2001 Jkt 000000 PO 00000 Frm 00025 Fmt 6633 Sfmt 6633 C:\DOCS\70547.TXT HGOVREF1 PsN: HGOVREF1
22

ing their release of the document, I am limited in what I can say

today about specific findings calculated using the model.

However, it should be understood that Customs sees the RAM as

an allocation tool, not a reallocation tool. Moreover, the RAM is not

the final determinant of future resource decisions; rather it is intended to help management develop a comprehensive staffing strategy year to year. Nonetheless, the RAM’s prescriptions should be

received with three significant caveats.

First, beginning as it does with a 1998 baseline, which is the last

full fiscal year for which data was available during RAM development, the RAM does not account for further operational efficiencies

from applied technology in this version, but should naturally reflect

these in successive data iterations.

Second, the successful future implementation of ACE, which I

will discuss in a moment, will itself introduce major efficiencies in

the way both Customs inspectors and the trade address the arrival

of merchandise.

Third, the part of the RAM related to ‘‘threat’’ will always involve a complex relationship between total threat and interdiction

measures, where an increase in interdiction may herald a growing

supply of contraband or success in preventing its introduction.

The RAM relies on the best available workload, staffing, cost,

and performance data. As accuracy is critical to the success of the

model, Customs has undertaken a yearly risk assessment, annual

data validation, and dedicated personnel to oversee data integrity

efforts.

We appreciate GAO’s concerns regarding the reliability of the

RAM data, and would further stress that RAM is a tool with excellent potential, which makes up one of several significant factors in

Customs’ decisions on managing limited appropriated resources.

Properly allocating our employees is obviously critical to meeting

the challenge of the future. But, in this day and age, equipping our

work force with the most up-to-date computer technology is equally

important. To do so the Customs Service must replace our antiquated Automated Commercial System [ACS] as you mentioned,

with the proposed state-of-the-art Automated Commercial Environment [ACE].

ACS, our present trade processing computer system, is now 16

years old. Mr. Chairman, I ask you what private-sector company

earning $22 billion a year, the amount of revenue collected by Customs in 1999, operates an obsolete central computer system. The

answer, to the best of my knowledge, is none. ACS has become increasingly inadequate to meet the growth and demands of the expanding international trade environment. A trade process that relies more and more on paperless transactions overwhelms the system. To make matters worse, the system is subject to temporary

service disruptions, which we refer to as brownouts.

Implementation of ACE will provide significant benefits to Customs field operations personnel, the importing community, and

most importantly, the U.S. economy. This will occur through uniformed and streamlined cargo entry processes and just-in-time reporting capabilities, more efficient and accurate revenue collection,

and enhanced targeting and analytical capabilities aimed at comVerDate 11-MAY-2000 08:19 Apr 06, 2001 Jkt 000000 PO 00000 Frm 00026 Fmt 6633 Sfmt 6633 C:\DOCS\70547.TXT HGOVREF1 PsN: HGOVREF1
23

bating violations of U.S. import and export trade laws, drug smuggling, money laundering, and terrorism.

Initially there was some concerns with how Customs was proceeding with the ACE project, but we believe, and others including

the GAO agree, that we have addressed these problems. Customs

created a program office to manage computer modernization activities and have contracted with the MITRE Corp., a company with

expertise in supporting large government projects, to help us manage ACE construction.

For fiscal year 2001, we are requesting $338.4 million. This funding request is based on a detailed cost-benefit study conducted by

an outside expert and has been validated by two other independent

parties. Our request includes $210 million for ACE software development and infrastructure, as well as $123 million for maintaining

ACS and continuing Customs automation operations and an additional $5.4 million for the International Trade Data System. Customs modernization requires predictable and adequate funding. We

need and hope for your continued support.

On the matter of personal search, GAO’s report on Customs personal search was welcomed by the Customs Service, and the findings in this instance were also welcomed, because it proved and

validated our concerns identified 18 months ago regarding the

manner in which the agency conducts and supervises personal

searches.

In 1998, Commissioner Kelly began a thorough review of Customs personal search practices. This led to numerous reforms. Customs lawyers are now on call 24 hours a day to advise Customs officers during the search process. Customs supervisors must now approve all pat-down searches, and Customs Port Directors must approve all searches that involve moving a person to a medical facility for a medical examination. A revised manual and new training

was provided to all Customs officers involved in conducting personal searches. We have instituted far more comprehensive data

collection on all those who undergo a Customs’ search. We have

purchased body scan technology, giving people the option to be

scanned for external contraband rather than patted down.

These are just some of the changes we have made to the personal

search program, and they have made a difference. Our number of

searches has gone down by 75 percent in the first 6 months of fiscal year 2000, as compared to the same period last year, while our

seizure rate has remained basically the same. And, with your permission, Mr. Chairman, I’d like to enter into the record these handouts which further clarify the changes we have made and the successes we are having.

Mr. HORN. Without objection, they will be inserted at this point

in the record.

Mr. WINWOOD. Customs’ border search authority is critical to

perform our mission, but if its use is not carefully monitored, it can

be abused. Under the strong leadership of Commissioner Kelly we

are resolute to not let that happen.

24

Mr. Chairman, this concludes my statement for the record, and

I appreciate the opportunity to appear before you today and at the

conclusion of testimony stand ready to answer any questions you

might have.

[The prepared statement of Mr. Winwood follows:]

25

26

27

28

29

Mr. HORN. Well, we thank you very much for that statement on

behalf of the Commissioner and yourself.

Our next witness in this panel is Peter Gordon, the Assistant Regional Director for Inspections of the U.S. Immigration and Naturalization Service. He represents the Western Region.

We’re glad to have you here, Mr. Gordon.

Mr. GORDON. Thank you. Good morning, Mr. Chairman, Congressman Becerra, and distinguished members of the subcommittee. I appreciate this opportunity to speak with you about the crucial role that the Immigration and Naturalization Service [INS],

plays in our land, air, and sea ports of entry in southern California,

particularly, the sea and air ports of entry in the Los Angeles/Long

Beach area.

We work closely and cooperatively with other Federal partners at

ports of entry, particularly, the U.S. Customs Service. As you

know, the INS is responsible for ensuring that individuals who

seek to enter the United States at those ports are eligible to do so

under U.S. immigration law. Individuals seeking entry into this

country are inspected at ports of entry by Immigration Inspectors

who determine their admissibility. This is accomplished at over 300

air, land and sea ports of entry throughout the United States, including nine major ports of entry here in southern California.

Currently, there are over 5,000 Immigration Inspectors staffing

our ports of entry nationwide. Of these inspectors, 292 are deployed

to ports of entry in the Los Angeles area, specifically, to Los Angeles International Airport [LAX], and the Port of Long Beach.

In fiscal year 1999, our Immigration Inspectors nationwide handled more than 525 million applicants for entry into the United

States. While the total number of applicants for entry has risen approximately 9 percent over the last 5 fiscal years, the amount of

document fraud encountered in the course of those inspections has

risen 20 percent. Enforcement actions, such as vehicle forfeitures,

have doubled, while alien smuggling apprehensions at the ports of

entry have risen nearly 120 percent.

We have experienced similar increases here in the Los Angeles

area as well. In the last 12 months, our inspectors at LAX have

intercepted more than 1,600 fraudulent documents, a nearly twofold increase compared to fiscal year 1998. One of the most significant patterns we have witnessed here in the Los Angeles area has

been the increasing incidence of alien smuggling through LAX. We

measure this by applicants who arrive at LAX with either fraudulent documents or without a passport. On application for admission, they admit they were coached by a smuggler in this method

of travel to the United States. They then proceed to claim credible

fear—asylum—of returning to their country of origin. Already this

fiscal year, our inspectors at LAX have encountered nearly 900

aliens expressing a claim of credible fear. That is almost as many

credible fear cases as we’ve handled in all of fiscal year 1999.

While LAX continues to be the focus of the majority of smuggling

activity at airports in southern California, in recent months we

have witnessed a new and troubling trend, the growing use of hard

and soft-top cargo containers for human smuggling. Just last week,

two groups of 15 smuggled aliens were intercepted at two local seaports within 48 hours of one another. In both cases, the aliens had

30

stowed away inside hard-top cargo containers outfitted with escape

hatches and sophisticated ventilation systems.

Since December, more than 80 smuggled aliens have been intercepted at Los Angeles area ports in connection with container

smuggling incidents. These migrants, not only stand to lose tens of

thousands of dollars, the smuggling fees can run as high as $60,000

a piece, but they also risk their lives.

In January of this year, three smuggled aliens who stowed away

inside a soft-top container perished, after becoming violently seasick during the 2-week voyage from Hong Kong to Seattle.

INS is looking at ways to enhance its enforcement efforts to combat this problem. We are seeking to identify methods to better

manage the risks in the seaport environment. The development of

intelligence is critical to achieving our enforcement goals. By automating the collection of data on vessels and those on board, we will

be able to apply analytical techniques to identify and intercept

smuggling operations and other illegal immigration activities in the

seaport environment.

We are also working closely with other enforcement agencies,

both domestically and abroad, including the U.S. Customs Service

and the U.S. Coast Guard, who have an interest in this issue. Our

efforts along these lines are consistent with information shared in

public hearings by the Interagency Commission on Crime and Security in U.S. seaports, and regionally we have established a working group to deal exclusively with Chinese smuggling. That group,

which includes representatives from a number of Federal agencies,

including the U.S. Coast Guard and U.S. Customs, provides a

mechanism for us to share intelligence information and identify

interdiction opportunities.

That is a brief overview of some of the major issues and initiatives the INS Inspections Program is involved with in southern

California. Our mission is to safeguard the borders and boundaries

of the United States against illegal entries, while facilitating the

flow of legal traffic. In a diverse and prosperous State like California, the challenges inherent in achieving that goal are considerable, but we are determined to succeed.

Following the conclusion of testimony, I’d be happy to answer

any questions you may have.

Mr. HORN. Thank you very much.

One fact I just want to get on the record, you said there were

5,000 personnel, of which 292 were at the Los Angeles International Airport and the Port of Long Beach, what about the Port

of Los Angeles?

Mr. GORDON. The staffing, that 292 includes the Port of Los Angeles and Long Beach.

Mr. HORN. OK, I just wanted to clarify that, because it wasn’t

mentioned.

We now have the next witness, Colleen M. Kelley, who is president of the National Treasury Employees Union. We appreciate you

coming out here for this testimony.

Ms. KELLEY. Thank you, Mr. Chairman, Mr. Ose, and Mr. Becerra, on behalf of the 13,000 Customs employees represented by the

National Treasury Employees Union I want to specifically thank all

31

of you, and you, particularly, Mr. Chairman, for holding this hearing today on resource allocation and for inviting NTEU to testify.

This is an appropriate site for a discussion of staffing shortages

in the Customs Service, because the inadequate staffing levels in

southern California have impacts on morale, enforcement, efficiency, and progress. This geographic area includes NTEU Chapter

103, Los Angeles/Long Beach Seaport, Chapter 111, Los Angeles

International Airport [LAX], Chapter 105, San Diego Port of Entry,

and Chapter 123, Calexico Port of Entry.

NTEU elected officials from these four chapters have accompanied me here today as part of their ongoing and tireless efforts

to increase staffing at their respective sites. They know that staffing levels here have not kept pace with the dramatic increases in

trade volume, drug smuggling, and public travel, and they are as

concerned as I am and you are about the health and the welfare

of the employees they represent, as well as the successful accomplishment of the Customs’ mission.

While the Resource Allocation Model is being revised and finalized, staffing levels cannot be allowed to continue to decrease in

the U.S. Customs Service. The Port of Los Angeles/Long Beach is

the No. 3 container port in the world and the largest in the United

States. Although over 6,000 containers arrive here for processing

each day, only 30 of them will be examined due to the staffing levels. Inadequate staffing at our Nation’s seaports leads to the risk

of inadequate security, safety, and efficiency. Many Customs operations are covered with minimal staffing. For example, there are

just six inspectors assigned to clear the almost 900,000 passengers

and crews who arrive at these ports each year.

Customs’ outbound enforcement program at the seaport is designed to thwart illegal exports, including currency, technology,

narcotic transshipments, and weapons. The staffing levels simply

do not allow, however, for adequate staffing for these and for many

other endeavors.

Inspectors are also assigned to examine all imports for possible

enforcement violations. Their progress in following up on potential

violations of Federal law are considerably hampered by the lack of

staffing assigned to this volume of work.

On the commercial side of the operations, the same lack of staffing exists. Import Specialists struggle to keep up with the volume

of entries and trade. Ideally, a few import specialists should be able

to concentrate their time on creating computer programs and

scripts to respond to the workload and to be more efficient. Formal

computer training would greatly enhance the operations, but there

simply is not enough time to give people training, so operations remain static and the workload increases daily.

Currently, there are only six associates working on the Import

Specialist Enforcement Team [ISET], which processes violations of

trade and tariff laws. Their caseload has increased from 322 cases

in fiscal year 1998 to 428 cases in just the first 7 months of fiscal

year 2000.

The production and morale of Customs employees assigned to

Terminal Island facilities has hit rock bottom. Chairman Horn, you

have been instrumental in attempting to give the employees the relief from the hazardous health conditions at Terminal Island, and

32

we thank you very much for your efforts, but there is more that

can and must be done for the 260 employees who continue to remain at that facility and working as we speak. They should all be

temporarily moved, pending the permanent move of the operations,

and I implore this Congress to assist us in this effort.

Mr. HORN. Thank you very much, and you can be assured a lot

of us from southern California will be pushing for this.

Ms. KELLEY. I know I can count on them, Mr. Chairman, thank

you very much. I actually visited the Customhouse on Terminal Island yesterday. After only 1 hour in the facility, I could feel the effects of the air in that building, with itchy eyes and scratchy

throat, and the building also has an asbestos debris problem, as

you know.

Since 1999, in September, 236 employees working in that facility

have filed Worker’s Compensation claims, and the numbers continue to rise every day of those claims.

As we are told today, the process to relocate these employees permanently will take up to 3 years. We need help, which we know

we can count on from southern California, and we look to the rest

of Congress and to GSA to provide relief as soon as possible, so

that no Customs employee is working in that facility.

At the Customs Port of Los Angeles International Airport [LAX],

the enforcement efforts suffer from the lack of staff, just as they

do at the L.A. seaport. There is inadequate staff to service the passenger, trade and outbound anti-smuggling operations and to cover

the threats posed by 50,000 flights and 7.4 million passengers that

arrive at LAX each year. Staffing is the No. 1 issue identified by

employees at all levels of the Customs Service at LAX, and the

agency has responded to trade volume increases, not by adding

staff, but by planning to modernize its computers. And, while the

computers definitely need to be modernized, computer modernization efforts have not and will not solve the problems of inadequate

staff levels. The failure to keep the staffing levels for Import Specialists remotely alive with the increased volume in trade has

slowed trade facilitation and curtailed much of the enforcement efforts that need to be done commercially.

In the San Diego/San Ysidro and Calexico ports of entry, the horrendous staffing shortages that they are experiencing have impacted morale and jeopardized the health of employees to the point

that local NTEU officials have made this effort to increase staffing

their No. 1 priority. Not only has the welfare of employees been impacted, but clearly, the ability to provide services to the public and

to the trade community has been adversely affected. In these ports,

the overtime system is not used to augment enforcement efforts

and to meet demands of after-hour traffic, but its purpose is to ensure that the agency meets minimum levels of coverage.

As of today, the port of San Diego operates with 60 fewer Inspector positions and six fewer Canine Officers than it did in 1998. Employees are being forced to work to the point of exhaustion. Customs’ own statistics show that during one pay period between 20

and 25 Inspectors from Calexico will be required to work 12 to 15

hour shifts up to 3 days in a row. That is about one fifth of the

Inspector ranks at Calexico who will suffer from sleep deprivation

while doing their best to protect our borders.

33

I have letters here, Mr. Chairman, from five Inspectors in

Calexico that were sent to me urging that the inadequate staffing

situation be rectified. According to them, morale is the lowest it

has been in decades, and I would ask that these letters be included

in the hearing record.

Mr. HORN. Without objection, they’ll be put in the record at this

point.

Ms. KELLEY. Thank you, Mr. Chairman.

I would invite each of you to tour the southern California ports

and to hear from the dedicated front line employees working there.

The resources have not been provided to them adequately to do

their jobs, to maintain their family, and their private lives. I urge

Congress to appropriate more funding to increase the staffing level

in Customs and to provide them the resources that they need to do

the jobs they want to do and the jobs that America needs them to

do.

Thank you again for the opportunity to be here today on behalf

of the Customs Service employees to discuss these very important

issues.

[The prepared statement of Ms. Kelley follows:]

34

35

36

37

38

39

40

41

42

43

44

45

46

Mr. HORN. Thank you very much.

We’ll now start with the questioning of this panel, and we’re

going to alternate 5 minutes on this side of the aisle and 5 minutes

on this side of the aisle, and we’ll keep going until we are through

all the questions.

I will first yield 5 minutes to my colleague, Mr. Ose.

Mr. OSE. Thank you, Mr. Chairman.

If I may, Mr. Winwood, I’m curious, in terms of the $22 million

that the Customs Service collects on an annual basis, how much is

generated here in the Port of Long Beach or across the way at the

Port of Los Angeles?

Mr. WINWOOD. I don’t know the exact figure, Mr. Congressman,

but it’s quite a large sum. This is a very large seaport.

Mr. OSE. I understand, hundreds of millions?

Mr. WINWOOD. Yes.

Mr. OSE. My followup question is I’m trying to find out how

much is generated here versus how much is spent here, for instance, addressing some of the things pointed out by Ms. Ekstrand,

and Ms. Kelley, and Mr. Gordon. There’s got to be a connection,

and I’m trying to get to it.

Mr. WINWOOD. Well, I don’t have the exact figures on what is actually generated here as far as revenue, as far as duties collected

for Long Beach, but we can get that for the record. But, there is

no correlation between the money collected and the appropriations

for staffing. As you know, the money collected from duties goes into

the General Fund of the U.S. Government, and our appropriations

for staffing and for distribution of resources and technology come

through our yearly budget cycle appropriations. There is generally

no connection between money collected and appropriations.

Mr. OSE. Maybe we’re trying to rationalize a little bit. If you

could get that information, I would appreciate it, and I want to, at

least for my own edification, understand how much is being generated versus how much is being spent here in Long Beach and Los

Angeles.

If I may, I want to particularly highlight something that is of

great concern to me.

Ms. Ekstrand, in your testimony on page 6, you talk about the

accuracy and reliability of the data.

Ms. EKSTRAND. Yes.

Mr. OSE. We’ve got a half million dollar contract with

PriceWaterhouse to basically structure the Resource Allocation

Model, but I’m new enough to this to know that if we put bad data

in we’re going to get bad analysis out.

You stated that even a small amount of imprecision in the data

can have enormous impact on the model’s results. Can you kind of

expand on that, as to what transpires?

Ms. EKSTRAND. Certainly.

The activity analysis part of the model involves multiplying how

much time it takes to do one unit of activity by the number of

times that activity occurs. So, if an estimate is made of how much

time it takes to process just one passenger, and just hypothetically

maybe it’s 2 minutes, and that gets multiplied by a million passengers, but that’s off by 15 seconds, that 15 second error is multiplied by a million, and it can become a very large number. So a

47

very small amount of error in activity time calculation can result

in a very big difference in terms of how much time is spent, or how

much staff years are needed to do that activity at that particular

port.

Mr. OSE. Does the Customs Service have a staffing standard, or

is that what you are trying to establish?

Ms. EKSTRAND. Well, the staffing standard, in the way these

models are constructed, is basically the 1998 level of service.

Mr. OSE. The baseline.

Ms. EKSTRAND. This model is not designed to improve the level

of service at any location. It basically perpetuates how long it took

to do something in 1998 for the out years.

Mr. OSE. It’s simply a data collection model?

Ms. EKSTRAND. Well, it can predict how much staff you need,

based on the predictions you put in the model of how much additional passengers there will be, how many additional containers at

the port, etc., but in the model the time it takes to process these

things, at least in the way the model is presented now, stays constant.

Mr. OSE. How does Congress make intelligent decisions, for instance, on annual appropriations for Mr. Winwood if we can’t get

the base data correct?

Ms. EKSTRAND. Well, I think a lot of work needs to be done to

make sure that the data that goes into the model is much more reliable than it is now. They have taken some steps in that direction,

but we have not yet analyzed these steps to make us feel comfortable that the data next year will be more reliable than it is this

year.

Mr. OSE. Mr. Chairman, I’ll come back.

Mr. HORN. Thank you.

Let me ask you at this point, do you feel that this model is reliable to generate what staffing is needed, and then I want to ask

the Deputy Commissioner, have you used that model, and did you

recommend to the President for the budget for this particular year

any new resources? And, if so, did you send them to the Office of

Management and Budget, which speaks to the President unless you

appeal it, or did they just throw it away? So, can you tell me that

model is reliable at least to project staffing when they go into the

battles of the budget frenzies in the executive branch?

Ms. EKSTRAND. Conceptually, the model is a reasonable way to

go about this kind of workload analysis, but because the data that

is used to go into it seems to be quite flawed, the output is going

to bear the same flaws that the input had in it to start with.

So, you know, this can provide some information, but, you know,

this certainly shouldn’t be the sole basis for decisionmaking at this

point.

I believe Mr. Winwood would agree that this is too early in development, and that more data reliability issues need to be resolved

before it can be considered solid.

Mr. HORN. Well, the question really is, if you were an administrator in the Bureau of Customs, would you be able to count on this

as the evidence that they need more resources?

Ms. EKSTRAND. I wouldn’t count on this as evidence at this time.

I would think the——

48

Mr. HORN. OK, so you are saying it’s an unsatisfactory model?

Ms. EKSTRAND [continuing]. Given the input to the model at this

point, I would have to say it’s an unsatisfactory model.

Mr. HORN. OK.

Commissioner, how do you feel about it? Do you use that for the

basis for staffing in the current budget of the President, and what

was the increase Customs received in the President’s budget?

Mr. WINWOOD. Well, first of all, Mr. Chairman, we did not, and

have not yet, used the model for any official purposes, and we did

not use the model for any determinations of budget requests for the

2001 budget.

As has been pointed out, it’s still being further developed. We are

looking at some of the data challenges we have, it’s under review

by the Office of Management and Budget, and by our parent organization, Treasury, to take a look at the model itself and to take

a look at some of the concerns we’ve identified.

But, I would like to say one more time for the record, Mr. Chairman, to the best of our knowledge it’s the first time ever that a

Federal agency has attempted to model their entire agency to come

up with a systematic, analytical, data-driven approach to determining the best allocation of future resources.

Now, we do have PriceWaterhouseCoopers taking a look at some

of the additional challenges. If you remember my statement, I said

there were three basic caveats, and one of them, in addition to the

time to perform tasks, is building in for the future how technology

and other issues affect that time. I don’t think anybody disputes

the workload numbers that we put into the data, the concern is a

better way to determine how much time it takes to do each one of

those workload units, taking into account the variances that occur

because of infrastructure, multiple facilities, and more sophisticated automation versus less sophisticated automation. At one port

it might take 15 minutes to do a function, at another port it might

take a little bit longer, a little bit less, based on the technologies

available to them. That’s the challenge we’d like to continue to address. We have further engaged PriceWaterhouseCoopers to take

on these issues. We are further developing the model, and like I

said, it’s the first time ever that an agency, an entire agency is attempting to do it scientifically, to do it based on data, and to do

it uniformly, so that we all can have some dependable outcomes

that we can look at.

The last point I would make, as was pointed out, it is a tool, and

it’s an opportunity, but you also have to take into consideration

other factors in addition to that tool.

Mr. HORN. Well, let’s get in the record, for the year 2000, which

ends on September 30, 2000, and for the 2001 budget that begins

October 1, could you give me the figures that the Commissioner

and you recommended to the President as to what this number of

positions that the Customs Service needs, what was the number?

Mr. WINWOOD. I don’t have the number for 2001. Mr. Chairman,

I just want to reiterate that we did not use the model for either

of those years.

Mr. HORN. Well, what did you, I mean, I don’t care if you used

a Ouija Board.

49

Mr. WINWOOD. Right, well, hopefully, we were a little more sophisticated than that, but we did—— Mr. HORN. Oh, I don’t know, I’ve been in administrations and,

believe me, my favorite being the Pentagon, I might add.

Mr. WINWOOD. For 2001, there’s approximately 100 Customs inspectors and approximately 214 criminal investigators, as far as official FTE. There’s also some additional positions being looked at

because of a special amendment, under the Kyl amendment, which

is for 1 year funding, but those are the basic numbers for 2001.

Mr. HORN. So, you are saying 1,000 inspectors?

Mr. WINWOOD. No, sir, I said approximately 100 inspectors for

2001 budget.

Mr. HORN. OK.

Mr. WINWOOD. In 2001, approximately 100 additional inspectors

for the 2001 budget, and approximately 214 criminal investigators

in the 2001 budget request.

Mr. HORN. OK, so 100 inspectors, 214 criminal investigators, is

that it? Anything else?

Mr. WINWOOD. Yes. I can supply the rest of the numbers for the

record.

Mr. HORN. Yes, well, without objection we’ll put them in the

record at this point, but I just wanted to know, one, this is what

you recommended and the Secretary of the Treasury did approve

it?

Mr. WINWOOD. This is the proposal sent forward in the President’s budget, Mr. Chairman.

Mr. HORN. This is the President’s budget now for what year?

Mr. WINWOOD. 2001.

Mr. HORN. 2001, in other words, it’s going into the shop right

now, I would think.

Mr. WINWOOD. Yes, sir.

Mr. HORN. So then, we don’t know what OMB is going to do to

it?

Mr. WINWOOD. Well, that is the proposal for 2001, that’s the

approved——

Mr. HORN. And, that’s already cleared the Office of Management

and Budget?

Mr. WINWOOD. Yes, sir.

Mr. HORN. OK.

So, conceivably then, that is what everybody is talking from the

same hymnal to congressional committees in the Senate and the

House, and I’m glad that an authorizing committee member is with

us today. I knew there was a reason I did this. He will go in there

and squeeze it out of the Ways and Means Committee, right?

Mr. BECERRA. No pressure.

Mr. HORN. Yeah, that’s right, and I’m now delighted to yield to

my friend from East Los Angeles, West Los Angeles, North, and

South Los Angeles, Mr. Becerra. So, feel free to occupy us with

questions.

Mr. BECERRA. Thank you, Mr. Chairman.

Let me see if I can followup with the line of questioning that the

chairman just undertook. Commissioner Winwood, of those 100

new positions for inspectors and 214 for criminal investigators that

you are requesting, have you determined where they would go?

50

Mr. WINWOOD. No, sir. We will make a further determination

when the budget is passed based on what our allocated appropriation is, and then we will look at the proper allocation of those resources based on the most current information we have as to threat

and need by geography.

Mr. BECERRA. Was there a determination made about where

those positions should be located when you initially submitted the

recommendation?

Mr. WINWOOD. To the best of my knowledge, just general broad

categories, Mr. Congressman, no specific city or no specific port was

identified.

Mr. BECERRA. Then how did you come up with the precise numbers of new need?

Mr. WINWOOD. Basically, looking at large geographic areas and,

if I can use an example, our export threat, as has been mentioned

here, they would be used for further enforcement of exports for

technology, money, etc.

Mr. BECERRA. So, you do have some sense about where you

would place those new positions?

Mr. WINWOOD. Geographically, right, for instance——

Mr. BECERRA. OK, so give us the breakdown geographically

where you would place these 100 new inspectors if Congress were

to appropriate money for them.

Mr. WINWOOD. I don’t have that information today, but I can

supply it to you when it’s available.

Mr. BECERRA. If you could supply that, and supply the information about where geographically, and as precise as you can geographically where you would try to locate these new positions if

you received funding for them.

Mr. WINWOOD. We will do that.

Mr. BECERRA. Thank you, for all the various new positions,

whether inspector, criminal investigator, or any other positions, if

you would do that for us.

Mr. WINWOOD. When it is available, we’ll be glad to.

Mr. BECERRA. And, if you could keep in mind, I suspect that all

of us here would probably say to you that we’ll be keeping an eye

on where you would place those people, given that, as Ms. Kelley

testified, and others would indicate to you, that there is a vast

shortage here in the western States for Customs inspectors, investigators, and any type of personnel.

Let me ask you about the RAM, the Resource Allocation Model.

When will Customs or Treasury conclude its review of the RAM?

Mr. WINWOOD. I can’t predict that, Mr. Congressman. We’re hoping, we’ve asked them to as expeditiously as possible, to take a look

at what we have so far, look at where we are going with it, and

we’re just waiting for their——

Mr. BECERRA. When was the last time you had a conversation

with someone in Treasury who was reviewing the RAM?

Mr. WINWOOD. I can’t say for sure, I haven’t had any conversations this week. I’ve been on the road all week, but there have been

ongoing conversations since it was submitted to them for their review.

Mr. BECERRA. Who at Treasury is reviewing the RAM document?

51

Mr. WINWOOD. I can’t say specifically who, but I will tell you it

has to be the Office of the Undersecretary for Enforcement and the

Office of Management, within the Treasury Department.

Mr. BECERRA. That modeling by PriceWaterhouse was completed

in 1998, correct?

Mr. WINWOOD. A first iteration was 1998, but there have been

some other iterations and modifications. This is really a working

model, Mr. Congressman, there’s been a lot of continuing work, and

as I mentioned earlier we are continuing to do work on it to further

refine and, to further take into account some of the issues we identified as you start putting information in and looking at information that comes out, to further improve it. And, for instance, some

of the issues that have been brought up by GAO, such as coming

up with a better way to determine the actual time it takes to do

some of the functions that were put in as actual workload totals.

Mr. BECERRA. But the concerns that Ms. Ekstrand and the GAO

raised continue today. Have you made any dramatic changes in the

way you allocate staff or resources within Customs geographically

in the last 2 or 3 years?

Mr. WINWOOD. No, we’ve been doing the best we can with the information we have, doing proper allocations based on what’s appropriate.

Mr. BECERRA. So, the criticisms leveled by GAO remain outstanding?

Mr. WINWOOD. I would suppose so, that’s why, Mr. Congressman,

the whole idea of the RAM is to give us a more scientific, analytical, statistical approach to be able to better allocate those resources.

Mr. BECERRA. I think we all agree. So let me ask you again, do

you have any sense of when you will complete your review of RAM?

Mr. WINWOOD. I do not because it’s in the hands of the Treasury

Department and the Office of Management and Budget right now.

Mr. BECERRA. Give us the name of the person at Treasury or

Customs who you believe best can give us a sense of when Treasury or Customs will complete its review of RAM and disclose what

its recommendations will be.

Mr. WINWOOD. Well, I don’t have the name for you today, Mr.

Congressman, but would be glad to find out who that might be.

Mr. BECERRA. You can’t give us the name of someone right now

who you think is most responsible for that?

Mr. WINWOOD. Well, I can just tell you, Mr. Congressman, it’s in

the hands of the Undersecretary of the Treasury and the Assistant

Secretary for Management. They have the staff over there to look

at this, who is actually looking at it right now I can’t tell you.

Mr. BECERRA. What’s the name of the Undersecretary?

Mr. WINWOOD. The Undersecretary for Enforcement is Mr.

James Johnson.

Mr. BECERRA. James Johnson.

Mr. WINWOOD. But, I’m not saying, in any way, that he is the

one physically looking at it right now.

Mr. BECERRA. Mr. Chairman, and I know this is not my committee, but I would—everything I say, I hope that whatever is being

provided will also be provided to those of us who sit on the Ways

52

and Means Committee. We do have jurisdiction over authorization

of resources to the Customs and Treasury Departments.

I’d be very interested in finding out who it is we contact to find

out what the status of RAM is, because it’s been 2 or 3 years GAO,

no one is saying from Customs that GAO was incorrect or it was

misdirected in its findings, and if you’ve been working on RAM it

would be very helpful for those of us who have to allocate dollars

to make decisions to have some sense about where you are going

to head, because it’s tough for us to feel comfortable giving you dollars if we are not sure it’s going to be used wisely, and second, if

it’s not going to be appropriated fairly. So, it would be very helpful

if you could get that information to us, or give us the name of

someone to contact.

Mr. Chairman, if I may go on, I still have a couple more questions.

ACE, can you tell us where you are with ACE, in replacing the

ASE system?

Mr. WINWOOD. Well right now we are in the process of preparing

and finding additional money so that we can put out the request

for bids for the prime contractor.

Mr. BECERRA. Where are you going to get the money?

Mr. WINWOOD. Pardon me?

Mr. BECERRA. Where are you going to get the money?

Mr. WINWOOD. Well, the money right now, as we have identified,

there’s a $12 million need, we have identified, approximately, I believe, $7 million of it, and looking for Treasury to help us with the

other $5, so we can get the bid out on the street, the solicitation.

We’ve also found some additional money from what we call ACS

life support, there’s an ongoing repair, maintenance, and upgrades

to keep ACS as viable as possible while we are going through this

transition. We hope to have all that money found the remainder of

this year so we can get the bid out.

Once the bid is out, then the challenge is, as I mentioned, our

2001 budget request, we requested approximately $338 million in

our budget request, $210 million of that would be for the beginning

development and building of the ACE program, starting in 2001.

Our hope would be, if we have continual predictable funding, using

a prime contractor and paying for the MITRE services also to make

sure we have an outsider overseeing the development of this

project, our hope would be that we’d have a 4-year developmental

cycle, so we’d have it in 4 years.

Mr. BECERRA. So, you have internal moneys to begin the bidding

process.

Mr. WINWOOD. Right now we’ve identified a good portion of that,

we’re still looking for the rest of it so we can get the RFP out on

the street.

Mr. BECERRA. How much do you need?

Mr. WINWOOD. $5 million.

Mr. BECERRA. Additional?

Mr. WINWOOD. Yes. We’ve found $7, we’re looking for the additional $5 million within our budget for 2000.

Mr. BECERRA. Within your budget, you are not asking Congress

for that additional money?

53

Mr. WINWOOD. No, sir, between the Treasury Department and

the U.S. Customs Service, we are looking for moneys from the unobligated funds, etc., from 1999 and 2000 to be able to have the

proper funding to get the RFP out.

Mr. BECERRA. So, Congress need not concern itself about whether

you could begin the bidding process, you are saying that internally

you’ll find the moneys to begin that process?

Mr. WINWOOD. Yes, sir, to get the bid out on the street. The bigger issue is getting the appropriations so we can start the construction, because once you put it out—— Mr. BECERRA. That’s what I wanted to get to.

Mr. WINWOOD [continuing]. You get a prime contractor to bid,

and then you’ll need the funds to be able to start that process in

2001.

Mr. BECERRA. Let me ask you a question on that then. Of the $1.2 billion or so that it’s estimated that this new system will cost, you are requesting, what was it, $380?

Mr. WINWOOD. $338.4 million in 2001.

Mr. BECERRA. How much of that takes the form of new fees?

Mr. WINWOOD. New fees?

Mr. BECERRA. That you are requesting that Congress allow you

to charge?

Mr. WINWOOD. One of the proposals by the administration is that the $210 million for ACE development for the first year, 2001, is

a user fee to get that money into the General Fund.

Mr. BECERRA. That’s on top of any existing user fees?

Mr. WINWOOD. I believe so, yes.

Mr. BECERRA. OK, and the remainder, is that an appropriation?

Mr. WINWOOD. Yes, sir.

Mr. BECERRA. I think it becomes fairly clear to the Customs

agency and to Treasury that a user fee is almost a non-starter, at

least in this Congress, and it has been in the previous Congress,

and I suspect will be a non-starter in the succeeding Congress. If

that’s the case, and I don’t think my colleagues will disagree with

me, that’s probably the case, how are we going to fund a system

that you yourself admit you vitally need, but don’t have the money

for and every time you have an administration that requests a new

fee that will never get passed, you’re going to end up with nothing,

except a study or a bid that you can’t put out?

Mr. WINWOOD. It’s an interesting challenge. I can only tell you

our need. I’m here to represent to you that what we are proposing,

and the amount of money it takes——

Mr. BECERRA. Can you tell us if there’s been any change in

thought by the administration about the use or the recommendation of a new user fee for the payment of ACE?

Mr. WINWOOD. I cannot tell you that, I don’t know what the

thinking is. I just know that’s the proposal right now from the administration, and that’s the best I can do. I know that we were

with Kolbe the past several days, and he has some very strong

views from his committee as to how it should be funded, and he

has proposed that he will work very hard to help find money to

help us build the program.

Mr. BECERRA. Have you all considered coming to us and making

the case that you are entitled to receive more of an appropriation,

54

straight dollar appropriation from us, because you already have a

merchandising fee that collects close to $1 trillion, and it could be

used for that very purpose?

Mr. WINWOOD. There have been numerous proposals and ideas,

like I said, but not coming from the administration. It’s an interesting challenge. I can only speak to what we need. I will tell you the

administration’s position, and that’s the only thing I can repeat

today. It’s an interesting challenge, and we know what the funding

costs are. I think we’ve done a great deal of work to lay out the

best way to do it. We’ve gone with a prime contractor. We’ve gone

with an outside overseer, MITRE, who has a great reputation. I

think we’ve documented well the architecture necessary, and as the

GAO has pointed out we’ve been doing some tremendous——

Mr. BECERRA. That’s all pipe dreams unless you come up with

the money.

Mr. WINWOOD. Correct.

Mr. BECERRA. And, you would have, rather than brownouts, you

would have blackouts, and we all pay the price, and when we all

start clamoring because those imported goods cost us more, simply

because we don’t have a system that can help us transport those

goods inside this country, then we’ll do something, but it will be

too late.

Mr. Chairman, I still have several questions, but I’ll stop because

I know we want to keep to our time. We’ll go another round.

Mr. HORN. Well, yeah, we’ll have another round, but let me pursue this with Ms. Ekstrand, on behalf of the General Accounting

Office.

In the last few years sitting on the Transportation Committee,

as well as Government Reform, I have found two great computer

boondoggles. One is the IRS, where they reviewed this, and I remember that very clearly, and another was the Federal Aviation

Administration. I remember as a freshman Mr. Oberstar, the

Ranking Democrat with Aviation, took two of us that were particularly feisty, out to look at the FAA. And you walked into the room

and you knew right there they don’t know what they are doing.

And, there was no management, no anything, no go, and they eventually ran it up to $4 billion. And, they were looking at $4 million,

then $40 million, and then they didn’t pull the plug, and at $400

million they didn’t pull the plug, but when they hit the $4 billion

they finally realized, gee, if we don’t pull the plug this thing is

going to go to $40 billion, so they pulled the plug.

So, my question to you is, did you have anything to analyze in

either of those situations, IRS, FAA, and is this the third one to

grow, and what’s your estimate of where they are on this?

Ms. EKSTRAND. This is really Mr. Hite’s forte, so let me have him

answer for GAO.

Mr. HORN. OK, Mr. Hite, the ball is passed to you. Good luck.

Mr. HITE. Mr. Chairman, interestingly enough, I led GAO’s work

on FAA’s Air Traffic Control Modernization and problems we found

there. I currently lead the work on the IRS modernization.

Mr. OSE. You’re the guy.

Ms. EKSTRAND. He’s the good guy.

Mr. HITE. And, there’s a number of——

55

Mr. HORN. I should say, Mr. Hite’s title here is Associate Director, Government wide Defense Information Systems Issue. That’s a

wonderful gobbledy-gook out of GAO, you know, our own branch

would not do crazy things like that. But, go ahead.

Mr. HITE. There are a number of parallels among these major

modernization programs, and we have long held that the key to

success on these modernization programs is instilling rigorous and

disciplined management controls around them. These controls take

the form of things like an enterprise architecture, investment management controls, and software engineering process controls.

When we first looked at the ACE program, we generally found

a wholesale absence of these things, and we made a series of recommendations along those lines, and I have to say that Customs

has been very responsive. The new Commissioner came in shortly

after that. He embraced the recommendations and said this is a

priority, and they have made progress. On some fronts, they have

completely implemented our recommendations, on other fronts they

haven’t. But in order to complete the recommendations, in part

they need funds in order to bring on the prime contractor, because

the prime contractor is going to help them in these endeavors.

So, while I would say that they are positioning themselves to

begin building ACE, they are not there yet, but they are positioned

to begin the ACE program, and to bring on the prime to help them

with their initial task orders. These task orders don’t get into

building systems yet, they don’t get into detailed system design,

they don’t get into software development. You bring in the contractor, one of the first things you have to do when the contractor

comes in is, have to set up a program office. One doesn’t exist with

that contractor, whomever it may be right now, so that takes some

time. Another thing they want to do initially is refine and validate

the requirements for ACE, because time has passed since those requirements were defined and technology has changed, and the contractor is going to come in and propose its own system solutions.

So, that’s going to take some time to do.

In the interim, until they get to that point where they are ready

to begin building the system, that’s the time that they are going

to take to institute these rigorous investment management and acquisition management controls. And they have plans in place to do

that, but they are not there yet. But, everything is getting lined up

for this to be successful. Now, that’s not a guarantee of success.

We can talk about IRS. IRS 9 months ago put forth an expenditure plan that was a good plan. We commented, it was a good plan,

a good first step, but the key was implementation. And as part of

our testimony about a week ago before your committee, part of the

point was IRS fell short in the implementation of that plan. So, it’s

not a guarantee, but at this point in time Customs is doing the

right things to position itself for ACE to be successful.

Mr. HORN. As I understand it, the ACE, the Automated Commercial Environment, is the successor of ACS, the Automated Commercial Systems, and we’re still using ACS, I believe, and it’s 17 years

old, and COBOL is the program language, and it’s a little back in

the 1930’s almost, or the 1960’s in the case of COBOL when that

popped around. So, you are saying you are confident that this parVerDate 11-MAY-2000 08:19 Apr 06, 2001 Jkt 000000 PO 00000 Frm 00059 Fmt 6633 Sfmt 6633 C:\DOCS\70547.TXT HGOVREF1 PsN: HGOVREF1
56

ticular process and model, you don’t see going down to the $4 billion bit in more rat holes than we could imagine?

Mr. HITE. Well, one predictor of success on a large-scale modernization program is the management structure and process and

controls that you wrap around the program to ensure that that

doesn’t happen. In this case, what we see is that level of management capability could be put in place. And, again, I’ll mention it’s

not a guarantee of success. Using a prime integration contractor acquiring the system is not a panacea, you have to be an effective applier in order for that to happen.

Another parallel between Customs and IRS, because traditionally

both organizations were system developers. They developed the

systems in-house using their own people. Now they are going to a

new model, that’s one of acquiring systems. It requires a different

set of management discipline and control in order to do that effectively.

Mr. HORN. So, are you familiar with the GAO recommendations

on the Automated Commercial Environment system, and has Customs implemented them?

Mr. HITE. Yes, sir, I am. As a matter of fact, I crafted every one

of those recommendations, every word in them.

Mr. HORN. OK.

Mr. HITE. And, they have, in fact, fully implemented some of the

recommendations concerning the definition of an enterprise architecture and managing ACE within that context, recommendations

concerning ITDS, which was the Integrated Trade Data System

that Treasury was developing, which was at odds with ACE, and

involved some duplication and incompatibility. They have since

merged the two programs, so they have, in fact, acted on a number

of the recommendations.

There are some that are still outstanding, in fact, they need

funding in order to complete those.

Mr. HORN. Yes, that funding the Deputy Commissioner says will

be found within Treasury, and in brief it will be reprogrammed

money, is that not correct?

Mr. WINWOOD. We have found the money internally through Customs, Mr. Chairman, for preparing to put a solicitation out on the

street and the funds necessary to get the solicitation out. We do

have the funding to do some of the other things that he is mentioning right now.

Mr. HORN. What’s your estimate of what’s going to go out on the

street?

Mr. WINWOOD. Basically, the $12 million will help set up and pay

for and fund an internal management structure, which is one of the

recommendations they had, and to get the solicitation out on the

street, and all the time, and money and energy and staff hours it

takes to review that solicitation. That’s what the $12 million is

going to do, get the management office set up, get the solicitation

out on the street, do all the necessary reviews, and then determine

which is the best bidder and the most appropriate person.

Mr. HORN. OK, at this point, how much have you spent on this

system? Do you know, Mr. Hite?

Mr. HITE. I know what they spent on the prototype of this system, which is roughly $68 million.

57

Mr. HORN. So, we’ve got $68 million in the prototype, and that

led to the current system?

Mr. HITE. That led to our review and our set of recommendations, and with the current system—— Mr. HORN. How much maintenance is going on to the current system, besides the $68?

Mr. HITE. That’s a different system, that’s the Automated Commercial System [ACS], and I believe Mr. Woodwin mentioned the

amount that was being requested in 2001 for maintenance of that,

I think it was—— Mr. WINWOOD. $123 million.

Mr. HITE [continuing]. $123 million, when you are confronted

with a system that’s venerable and antiquated like this, you are

going to pay for maintenance on something like that. There is proprietary middleware associated with this system, and there is an

antiquated data management system associated with this. So, you

are going to pay to keep ACS going; it’s going to be expensive. But

there’s no alternative to that in the interim until—— Mr. HORN. This is the 17-year old system using COBOL?

Mr. HITE. Yes.

Mr. HORN. Does that make sense to you?

Mr. HITE. We’re on record as saying we need to replace that with

a modernized system, not just because it’s that age.

Mr. HORN. When you look at major corporations in this country,

in terms of how they analyze their personnel needs, wouldn’t it

make more sense to simply say, let’s get a new slate here, and not

trying to pick the pieces of the COBOL program stuff that’s in

here, which you’ve already spent $68 million on to patch it up.

Mr. HITE. Correct, and that’s, in fact, what Customs is doing

here. ACS, as a legacy system, is going to be maintained until ACE

is developed and brought on board, and they are two different programs. You maintain the current system that works to support ongoing operations, but then you have a separate program designed

to bring in the new technology in order to support a new way of

doing business.

Mr. HORN. Now, Mr. Hite, I believe our staff’s analysis of the

GAO report is that you said the model predicts a fiscal year 2000

level for inspection personnel of 166 at Los Angeles/Long Beach,

and 442 inspectors for New York/Newark. Now, that’s out of this

particular program, right?

Mr. HITE. No, sir, that’s a different system used for a different

purpose, and that’s what Ms. Ekstrand was speaking about.

Mr. HORN. Well, which are they using to recommend personnel?

Ms. EKSTRAND. That’s the RAM, sir.

Mr. HORN. OK. So you are saying, can you tell me that this isn’t

going to go the way of the Department of Defense, the FAA, the

IRS, and all the rest of them that fool around with computer contracts?

Ms. EKSTRAND. Well, the computer contract business is this ACE

system. This RAM model, of course, uses computer technology to do

the work, to run the model, but this is a, you know, comparatively

low priced computer programming operation compared to this

major, major ACE effort. I mean, the ACE system is involved with

processing all of the incoming Customs merchandise, all the imVerDate 11-MAY-2000 08:19 Apr 06, 2001 Jkt 000000 PO 00000 Frm 00061 Fmt 6633 Sfmt 6633 C:\DOCS\70547.TXT HGOVREF1 PsN: HGOVREF1
58

ports. You know, the RAM system is related to how many staff you

are going to have to do that work.

Mr. HORN. Yes, that’s the Resource Allocation Model. Now, how

old is that?

Ms. EKSTRAND. This is what has been developed by

PriceWaterhouseCoopers in the last 2 years. This is something new

for the Customs Service, and as we just said a little bit earlier, not

quite ready for prime time yet.

Mr. HORN. Well, can we get a realistic dollar figure that they will

need to upgrade this or what? What are we getting out of this?

Ms. EKSTRAND. To work on the RAM?

Mr. HORN. $68 million was used on the ACS and we’ve got $123

somewhere else, so what is it that you think they could use on the

Resource Allocation system?

Ms. EKSTRAND. Maybe Mr. Winwood might know what the contracts are currently with PriceWaterhouseCoopers.

Mr. WINWOOD. If I may, Mr. Chairman, I think we are mixing

two different products.

Mr. HORN. Right, and I want to separate them out.

Mr. WINWOOD. Yes, we need to separate them out.

Mr. HORN. Yes.

Mr. WINWOOD. The figures on the $68 million for the NCAP prototype, that is automation, that was our first test for how ACE

would work in a real world environment; that’s the money was

spent to develop and maintain, to run it over the last several years.

The $123 million we talked about is money in the 2001 budget for

the purposes of making what we call ACS life support and further

maintenance and development to keep us operating as efficiently as

we can while ACE is being developed. The $210 million is additional money requested in 2001 for the beginnings, to pay for the

prime contractor and to start the process of validating user requirements and start establishing the necessary controls that Mr. Hite

was pointing out for the new ACE environment.

I would leave RAM out of that for a second. The RAM, the Resource Allocation Model, is not associated with the development of

ACE, it’s completely separate. The RAM, and those figures, is a relatively very inexpensive software application being developed by

PriceWaterhouseCoopers; they spent approximately $500,000 to develop over the last 18 months, the iteration is being reviewed. We

are going to invest a couple hundred thousand more to take into

account the issues that were brought out by GAO and others about

having the proper data, the proper data analysis, the proper controls over data to make that model very viable. So, that’s very

small, that’s an aside; that RAM is not associated with the development of ACE.

Mr. HORN. Well, if the RAM produced 166 for L.A./Long Beach,

versus 442 inspectors for New York and Newark, do you think that

makes sense when you look at the volume going here versus the

volume in New York? Granted they’ve got drugs, granted they’ve

got corruption, the mafia, and all the rest, all the containers out

of the Port of New York and Newark, but does that make sense for

166 here versus 442 in New York?

Mr. WINWOOD. The one reason we have not yet used that model,

is that we’ve only run some test data. What you see in front of you,

59

Mr. Chairman, is probably something that GAO used when they

ran the first test of the RAM, to get an indication of what the outputs were. We haven’t used those numbers, those numbers are not

official numbers. We have not released any numbers, and those

numbers were, at least I think, based on an analysis that GAO was

doing when they were running the data that we had available to

us to see what the outputs would be.

I cannot tell you that those numbers are good or bad until that

RAM is completely reviewed and adjustments are made, and we

run it officially for the first time, which we haven’t done yet.

Mr. HORN. Yes, Ms. Ekstrand.

Ms. EKSTRAND. We received these numbers from the Customs

Service. This was output from the model that they provided us.

Mr. WINWOOD. A test run, which was not meant to be indicative

of the actual staffing requests. Those numbers were not used for

any staffing requests. Those numbers did not appear in any budget

requests through our process yet, and we’ve not yet used the model

for official purposes.

Mr. HORN. Well, what you are saying is that GAO looked at the

model, they decided to test it and see what the outcome would be,

and this is the figure, is that not correct?

Ms. EKSTRAND. Well, we didn’t actually do the data analysis. We

received this from the Customs Service and

PriceWaterhouseCoopers as the output from this model. And our

understanding is, as Mr. Winwood said, that this has not been used

for any official purposes yet, but this output, plus output that we

did not see for year 2001 and 2002, is under review at Treasury

now.

But, we were given this year as what came out of their analysis,

PriceWaterhouseCoopers and Customs. We did not do any analysis

of our own.

Mr. HORN. Well, it sounds like we’ve got a system that doesn’t

work and we’re putting more money in it.

Ms. EKSTRAND. Well, again, this system will only be as good as

the numbers that go into it. So, as long as there are data reliability

problems, the system will not be reliable.

Mr. HORN. The gentleman from California.

Mr. OSE. Thank you, Mr. Chairman.

Unfortunately, Mr. Chairman, I look at the clock and I need to

leave probably in another 15 or 20 minutes, for which I apologize,

and I apologize because as I prepared for this hearing the information as to the importance of the Long Beach and Los Angeles Ports,

not only to this immediate area, but to the State as a whole, and

basically the southwestern region of the United States, becomes

abundantly clear.

Now, what we see is Congress having made a commitment, the

State having made a commitment, the community having made a

commitment to making Long Beach/Los Angeles extremely competitive. We’ve invested in the trench. We have doubled our track lines.

We are trying to address any number of issues.

Mr. HORN. Translating to Alameda.

Mr. OSE. Correct, but I keep coming back to this question, and

many people have accused me of being a business person, and I

60

plead guilty to that. In a very real sense I get pretty boring when

I get focused on that, but I want to come back to a couple points.

First, I want to followup on Congressman Becerra’s question having to do with the 100 Customs inspectors and the 214 criminal investigators. I think Mr. Winwood’s comment was that there had

been no determination where they would go, but the numbers were

arrived at by a basis of somebody’s judgment about broad categorical evaluations having been made for the need for these numbers.

What I’m trying to get to is, this area, in particular, it’s anticipated that trade through this port for the next 3 or 4 years is going

to increase by around 40 or 45 percent. And, I am somewhat

stunned when you confront that, recognizing that we have staffing

shortages here now, how we are unable to say how many, if any,

of these 100 Customs inspectors, or 214 criminal investigators,

being added to the work force will come here. We can’t say that

with any specificity, and we can’t even get a date as to when we

might be able to get that information.

So, Mr. Winwood, I want to come back to that question. This is

critically important, as I’m sure you know, to this region, to this

city, to the State, however you want to craft it, to this country,

however you want to craft it. Could we have a date certain by

which time you will tell us how many of these added people will

be coming to this port to handle the trade requirement, the processing requirement that we have here?

Mr. WINWOOD. I guess the best way to answer that, Mr. Congressman, is when the budget is passed. That is a proposal for

2001, that’s the administration’s submission to the Congress, we

are waiting for the approval of the budget. When the appropriations occur we’ll be able to give you a more firm, definitive answer.

That is a number that is yet to be finalized and appropriated.

Mr. OSE. OK.

In the President’s deliberations on the 100 added Customs inspectors and the 214 added criminal investigators, how many of

those 100, or how many of those 214 were identified for this particular marketplace?

Mr. WINWOOD. I don’t have that answer today.

Mr. OSE. When can we get that answer?

Mr. WINWOOD. Again, it would only be a speculative answer, as

you understand, because, again, we don’t have the appropriation,

we do not have that money. And I think the best thing we are trying to do is that, based on when the appropriations are available

to us, we have to reevaluate the issues that we have to face as far

as the threat, and the workload.

Mr. OSE. I’m not asking you for input as to after the fact congressional resolution issue, what I’m asking for is in the President’s deliberations, this 100 and 214 evolve from something, and did that

discussion of the 110 and 214 say we need three there, two there,

five there, and four here, and when we got around to those numbers how many were designated for Long Beach and Los Angeles,

within the President’s deliberations?

Mr. WINWOOD. Well, let me make two statements for you, if I

may. As I mentioned earlier, we don’t have the specific number

that’s in the budget. I used that 100 as a relative number; that’s

pretty close, but I don’t know the exact figure.

61

Mr. OSE. But 214 is not very much of a round number.

Mr. WINWOOD. Well, I’m just saying that the number could be

224. I will put the specific number in the record; the 100 may be

99 or 98 for inspectors, the 200 might be 214 or 225. I will put the

actual number into the record.

I will also say to you that the 98 or 100 inspectors, at the time

the submission went in, were for special programs, for outbound

enforcement, for money laundering, for issues associated with State

find licensing, munitions for outbound; so a lot of those numbers

are looking at areas in which we have to beef up our export and

our outbound enforcement for law enforcement purposes.

So, when we talk about the number specifically for Long Beach

and L.A. seaport, I don’t have a specific number there, but the deliberations revolved around those types of activities.

Mr. OSE. Is that number available? Does somebody have it somewhere?

Mr. WINWOOD. For outbound purposes, and for the—— Mr. OSE. Generically for Long Beach and Los Angeles Port, the

outbound or inbound.

Mr. WINWOOD. It will be a small number, I don’t know the exact

number today, I will just tell you that that 98 represents the needs

that the administration put forward for the entire Customs Service.

Mr. OSE. Mr. Chairman, if I may, I apologize for going over.

What I’d like to do is, I’m hopeful that you’ll leave the record open

so that—I don’t mean to be presumptuous, I mean, I don’t live in

the Long Beach/Los Angeles area, but I would like to submit a

question for the record.

Mr. HORN. You are doing great, we’ll make you an honorary

member.

Mr. OSE. To actually get a definitive answer.

Mr. HORN. You’ll have to ask the mayor and future mayors.

Mr. OSE. I’m just trying to get to that, because, I mean, asking

Congress for money for basically 314 people, I’d like to know where

that number comes from. I mean, somewhere, somehow, the component parts of that sum total were developed. So, with your permission, I will submit a question for the record, that can be answered

for the record, as to how many will be coming to Long Beach and

Los Angeles Port.

Mr. HORN. Without objection, that will be put at this point in the

record.

Mr. OSE. OK.

Now, I want to go back, we’ve kind of spent a lot of time over

here on this side, I want to talk to Mr. Gordon and Ms. Kelley a

little bit.

I noticed on page 7 of Ms. Ekstrand’s testimony the comment

about activities in different locations basically consuming a varing

portion of time, in other words, processing a passenger in one location might not take the same amount of time in another or processing cargo in one location might be a different time allocation in another. And, I keep coming back to this data, and the Resource Allocation Model, how do we get accurate data so we can have accurate

analyses, so we can make accurate decisions?

Ms. KELLEY. I wish I could give you a better answer to that question, because what I have to tell you is that in spite of repeated

62

requests NTEU has not yet had access to any of the information

that went into or out of the Resource Allocation Model. We have

been requesting and have scheduled briefings on this that have

been canceled. NTEU and Front Line employees had no direct

input or involvement into the calculations of those things, so I can’t

even tell you what was used, if there are inconsistencies, if there

is a standard way to measure.

I think the employees who do those jobs would be the people who

could answer those questions, and there has been no formal involvement at all with NTEU or those who are represented on that

issue. So, I really couldn’t even speak to the inconsistencies. I wish

I could, because we would very much like to see the model and

what went in and what came out.

Mr. OSE. Mr. Gordon, is it accurate, is Ms. Ekstrand’s comment

accurate in terms of different localities having different efficiencies

or inefficiencies in processing passengers or cargo?

Mr. GORDON. Well, from the INS perspective, I can’t speak for

Customs, as far as processing passengers, yes, there are differences

in the length of time. It has to do with facilities. For example, at

LAX we have to process passengers arriving at five different terminals. We base our operation at Tom Bradley International, but we

have to staff five different areas in various conditions of configuration for moving passengers through rapidly.

Mr. OSE. Well, Mr. Chairman, my time is way over, I apologize

for that fact, this must be quite a conundrum?

Mr. WINWOOD. Can I give you an example, if I may, for different

processing times?

Mr. OSE. Yes.

Mr. WINWOOD. One of the technologies that we are expanding as

fast as we can, and have found very successful, particularly on our

border locations, doesn’t relate to Long Beach/L.A. because it is

about cars.

Mr. OSE. Pictures.

Mr. WINWOOD. For instance, processing of a vehicle, one of the

first requirements an officer must do is to query the license plate.

One of the pieces of technology is an automated license plate reader. So rather than the officer having to take his attention away

from the car, query the license plate number, read the screen and

then look at the car, the license plate reader is reading the car

that’s next in line, so it’s automatically doing the query for him.

Mr. OSE. You are taking that bar code technology, for instance,

that the railroads have developed and being able to translate license plate numbers into a visual——

Mr. WINWOOD. Right into the automated system.

Mr. OSE. Right.

Mr. WINWOOD. And, it does the query versus the key stroking.

So when you take into account the processing of a vehicle in a

place that has a license plate reader, versus one that doesn’t,

there’s a time variation. You multiply that over hundreds and hundreds of events, it’s going to change the amount of time it takes one

location to work versus the other location.

Mr. OSE. Well, let me go right to that. Clearly, you’ve got different locations around the country, ports of entries and the like,

where you’ve developed prototypical processing facilities.

63

Mr. WINWOOD. Yes, sir.

Mr. OSE. Which might serve as a model as to, if you will, the

best practices that you might be able to implement.

Mr. WINWOOD. Yes.

Mr. OSE. Is the PriceWaterhouse study looking at that relative

to, for instance, locations like Long Beach/Los Angeles that have a

high volume capacity needs and whether that technology is

transferrable, and what the consequence would be?

Mr. WINWOOD. That’s one of the caveats in my testimony that I

brought out. That’s the next phase that has to be done, because

that has to be done, and that’s one of the next stages that need to

be looked at for the future development of a more sophisticated

model, as we have more and more information available to us.

The other thing we are looking at is coming up with what a

model port would look like, a combination of the right staff, and the

right technology, and the right equipment, and we haven’t done

that work yet.

Mr. OSE. Does your $5 to $12 million number, I’m trying to recall

correctly, on the Resource Allocation Model do that?

Mr. WINWOOD. May I stop you there for a second?

Mr. OSE. Yes.

Mr. WINWOOD. That $12 million has nothing to do with the RAM.

Mr. OSE. All right, let me rephrase it. What is it that you are

looking at to follow on the PriceWaterhouse study that would give

Congress the information that I’m trying to get, in terms of prototype versus specific location?

Mr. WINWOOD. Right, the next phase of the further development

of the RAM, is contracted through an ongoing contract with

PriceWaterhouse to take into consideration the very things we are

talking about; to take into consideration what the GAO found as

far as the accuracy of data, the time it takes to do the functions

that are put in as raw data. We’ve asked PriceWaterhouse to look

at that. We’ve also asked them to start considering things such as

technology and automation that would take into account reduced

processing times versus manual processing times. So that’s the

next phase. We are asking them to further refine the model they

built for us, while the existing model is being reviewed for what it

looks like today.

Mr. OSE. Mr. Chairman, I thank you for your generous use of

time.

Mr. HORN. Thank you.

The gentleman from southern California, Mr. Becerra.

Mr. BECERRA. Thank you, Mr. Chairman, and I’m going to try to

keep my questions short and see if I can get the answers to be

short, because I know we are running late. And, Mr. Chairman, unfortunately, I, too, will have to leave shortly before 12, and I think

we are going to miss the second panel. I apologize to those witnesses in the second panel, because I did wish to hear their testimony as well.

Very quickly, let me ask Mr. Hite, you touched on this and it’s

starting to concern me the more I think about this, the longer we

take to implement ACE don’t we run the risk that ACE will become

obsolete for the purpose that it’s intended, unless we spend more

money to update it, as you say, that already is occurring, because

64

this was a program that was devised a few years ago now? And,

as we know, with anything in technology, like a computer, in these

days 2 or 3 years makes that product obsolete.

Mr. HITE. Today’s approach to designing large-scale computer

systems takes into account what you need to do in order to introduce technology enrichment.

Mr. BECERRA. Into a system.

Mr. HITE. Into a system and to be able to upgrade it and scale

it to do more things. So, you build it with that in mind in today’s

environment. So, you bring on a world class systems integrator,

they bring that to the table in terms of their solution, and it’s part

of the expectations that the government then will levy on the contract to ensure that that, in fact, occurs.

Mr. BECERRA. So, we don’t run the risk that ACE will also become obsolete before it is ever implemented?

Mr. HITE. I’m not saying we don’t run the risk, I’m saying it’s

probably a minimum risk given the state of systems engineering

among big-time contractors.

Mr. BECERRA. By the way, Mr. Winwood, I just want to make

sure this is very clear, you happen to be the representative for Customs and the Department of Treasury, so many of the questions

that you get, obviously, will be tough, and I respect your attempts

to try to answer. I appreciate that sometimes you have to deal

within the confines of what you’ve been given to work with, and I

know often times the answers are more appropriately given by

OMB, the Office of Management and Budget, when we are talking

about budgets and so forth. So, please understand that. Nonetheless, we do have to ask some pointed questions.

Mr. WINWOOD. Yes, sir.

Mr. BECERRA. Ms. Kelley said something disturbing, that NTEU

had no involvement or input in the formulation of RAM, is that

true?

Mr. WINWOOD. Why, I think what she said as an organization,

may be true. Again, that’s best answered by PriceWaterhouse, and

who they surveyed, and where they got their information. I will say

that a lot of the information gathered for developing the RAM by

the contractor was using existing data sources that were already

available to us.

Mr. BECERRA. But let me ask this.

Mr. WINWOOD. Yes, sir.

Mr. BECERRA. As you continue in the process of reviewing——

Mr. WINWOOD. Yes.

Mr. BECERRA [continuing]. RAM, what was delivered to you by

PriceWaterhouseCoopers, do you think it would be smart to include

NTEU in that ongoing review?

Mr. WINWOOD. I think the idea is that once we get a workable

model that we can all sit down and analyze, I think it’s going to

be incumbent upon us to have as many people as possible within

the organization take a look at what went in and what comes on,

and what the rationale and the reason was behind this. I agree

with that.

Mr. BECERRA. I am going to get you to give me an answer that

fits in really snug parameters, OK, so what I hear you say is, no,

65

not until after we’re done will we show it to them, is that what you

are saying?

Mr. WINWOOD. I’m saying that not until Treasury and OMB approve what we’ve done so far can we let it out to anybody. That’s

all I’m saying.

Mr. BECERRA. And, when you show it to them, the NTEU, will

it be, this is it, take a look, or this is it, copy it, so we can, perhaps,

tweak it again?

Mr. WINWOOD. I would say no, because this is a model that has

to constantly evolve, and we will constantly need to modify and

change it, because our environment is going to change around us.

So, we have to build a very flexible model that’s going to take into

account the ability to bring new ideas and new input all the time.

Mr. BECERRA. So, that was a no, we won’t exclude them, or no

we will exclude them?

Mr. WINWOOD. No, we will not exclude them, and the reason is

it’s an environment that’s changing constantly. We will need constant review.

Mr. BECERRA. So, let me make sure on the record we have a clear

answer. Are you representing that Customs will allow NTEU to

participate in what will become the final product of RAM?

Mr. WINWOOD. I’m saying they will have an opportunity to see

it when it is available to us for release. That’s the best I can say.

Mr. BECERRA. So, you can’t say at this stage that they’ll have any

chance to provide input into the final product of RAM?

Mr. WINWOOD. As a representative of employees, I can say, yes,

they will, but I will tell you, it depends upon when it is released

and whether or not it’s a model we can use.

Mr. BECERRA. OK, you are confusing me. Let me try again. And

as I say, I appreciate your constraints, but I think the committee

has to know, because when you come before us and tell us RAM

is where we are going, we need this, we have to do that, we are

going to continue staffing levels as they are in New York and

Miami versus L.A., we’re going to want to know how you came

about that decision.

Mr. WINWOOD. I understand.

Mr. BECERRA. And, if NTEU comes and testifies and says, we

could have told you that this was not going to work, then we’re

going to ask them, what role did they play, and if they tell us they

played no role, and they can come up with some good information,

we’re going to sit you all down and ask you again why you didn’t

allow them to participate.

Mr. WINWOOD. Right.

Mr. BECERRA. So, let me see if I can get it again, an answer that

fits that parameter. Up to the point where OMB, Customs, and

Treasury finish their review, I understand you are saying that no

one other than those representatives within Customs, Treasury and

OMB will review the RAM document? Until you’ve finished your

review, your department level review, only department authorized

personnel will provide input?

Mr. WINWOOD. Until that department level review is completed,

the answer is yes.

Mr. BECERRA. OK.

66

After that department level review is completed, will that document be a final document?

Mr. WINWOOD. The best way I can answer that is to say no, because we’ve already contracted with PriceWaterhouseCoopers to

make modifications and adjustments based on some of the recommendations that have been made by GAO and others as to how

to incorporate better data.

Mr. BECERRA. So, the next question is, does that mean that document released after the Department’s final review can be amended?

Mr. WINWOOD. Yes, it can be.

Mr. BECERRA. And, within that process of potential amendments,

will NTEU be allowed to participate and provide input in potential

changes to that document?

Mr. WINWOOD. I believe so. I’m just trying to keep my answers

nice and short, but that——

Mr. BECERRA. No, that’s a good answer, I like that. My sense is

what you are saying is that they will have some input at the later

stages before you make final pronouncements. So, you said ‘‘I believe so,‘‘ why complicate it more with further questions. A good attorney knows when to stop.

Let me move on. Ms. Kelley, you mentioned that only 30 of 6,000

containers in the L.A./Long Beach Ports are inspected every day.

What happens to the other 5,970?

Ms. KELLEY. They just proceed without inspection.

Mr. BECERRA. So, whatever may be in those containers goes right

through, cocaine, contraband, whatever it might be, it just goes

right through.

Ms. KELLEY. There is no additional process that I’m aware of

that provides for any other inspection.

Mr. BECERRA. Is there any chance that the inspectors could actually examine more of those containers on a daily basis?

Ms. KELLEY. If there were more inspectors, yes. With current

staffing, no.

Mr. BECERRA. So, with current staffing the inspectors are performing at what’s considered optimal levels?

Ms. KELLEY. Yes.

Mr. BECERRA. Mr. Winwood, would you disagree with anything

she said?

Mr. WINWOOD. I won’t disagree, but I will say I will not necessarily agree with the number 30. I don’t know that to be a factual number. I’ll just take it for what it is today. But I will say

this, that we do agree that we need more technology, we do need,

because of the workload growth, additional resources to address the

issue.

Mr. BECERRA. Let’s assume, and again this is only an assumption, so I won’t keep you to it if to the numbers are incorrect, but

assuming that there are 6,000 containers that come into Los Angeles and Long Beach Ports every day, and assuming that what Ms.

Kelley has represented is accurate, that the inspectors that they

have working at optimal levels can inspect 30 of those 6,000 containers on a daily basis, does it concern you that 5,970 other containers move through the port never having been inspected?

Mr. WINWOOD. Yes.

67

Mr. BECERRA. Do you think that the response then to that would

be that you would try to increase the staffing levels in the Los Angeles/Long Beach Port area?

Mr. WINWOOD. We’d love to increase the staffing of the Customs

Service, and to include the Port of Long Beach/Los Angeles.

Mr. BECERRA. No, no. Not enough. Let’s talk about what you can

do. Would you be recommending that you increase the staffing levels in the Long Beach/Los Angeles Port area?

Mr. WINWOOD. Again, Congressman, I can only do it based on appropriations and the money available to us to do that.

Mr. BECERRA. OK, well, let’s move on, and that’s a fair answer.

As I say, I know some of these it’s tough to be responsive.

Ms. Kelley mentioned that there are some 900,000 passengers

that come through every year, and there are six inspectors to inspect all those people coming through, is that correct?

Ms. KELLEY. For the seaport, yes.

Mr. BECERRA. I did some quick math, if I didn’t forget how to do

this manually, that means for six inspectors, 900,000 people, that’s

150,000 people that each inspector is, on the average, responsible

for on a year, in any given year. If you break it down by a month,

that’s 12,500 people that are passengers that are inspected by one

individual each month. On a daily basis, that’s 625 people that

must be inspected by one inspector, and on an hourly basis that’s

78 people, and if you want to bring it down to the minute, a little

bit more than one person per minute that an inspector has to examine as those people are attempting to depart.

Commissioner Winwood, is that enough time to adequately examine people who are entering this country, and maybe doing so for

the wrong reasons?

Mr. WINWOOD. If it was absolutely necessary to examine every

person, the answer is no. But I will tell you, while I’m not agreeing

that six is enough, and I’m not agreeing that that workload is the

right workload, that you also have to take into consideration that

there is a lot of honest, legitimate travelers we deal with. Our goal

and the way we operate is that we don’t examine or question every

person that arrives on those cruise vessels. And, even if you add

additional staff, if we were to get additional staff, we would probably put them somewhere else, rather than on that function.

So, based on your math, those numbers are accurate, but my answer is it is necessary to actually spend that much time with every

cruise vessel passenger that arrives here, would be no.

Mr. BECERRA. But, we do need more inspectors?

Mr. WINWOOD. The answer is yes.

Mr. BECERRA. How do those numbers that you just heard for Los

Angeles compare to other ports, New York, Miami, for example?

Mr. WINWOOD. I don’t have the exact figure in my head for

Miami, but I will say that although 900,000, is a lot of cruise ship

passengers into a place such as Long Beach/L.A., in Miami there’s

millions.

Mr. BECERRA. Let me ask Ms. Kelley, do you happen to know the

numbers in Miami?

Ms. KELLEY. I do not know, but I will be glad to get them for

you.

Mr. BECERRA. If you could provide those to us.

68

Ms. KELLEY. I’ll be glad to.

Mr. BECERRA. If you could do it for the major ports of entry in

this country, Miami, New York and others.

Mr. HORN. Without objection, they’ll be put in the record at this

point.

Mr. BECERRA. Thank you, Mr. Chairman.

I just have a few more questions.

Commissioner Winwood, first let me make sure I acknowledge

the work that the chairman has done on the whole issue of the Terminal Island facility and thank him for moving forward so aggressively in trying to address the needs of the employees on that.

My understanding is that Customs, and which is the other department that’s been working on this?

Mr. HORN. You mean the General Service——

Mr. BECERRA. General Service, GSA. There’s been an agreement

now that you will relocate all the workers that are on Terminal Island?

Mr. WINWOOD. I believe so. We’ve already located the temporary

space. I believe the number is approximately 100 to 150 people

from Terminal Island into temporary office space off the island,

and we put our space needs plan to GSA in the early part of April

to temporarily move the remaining employees. They are looking for

permanent office space and permanent work space, so we can permanently relocate everybody into one location that’s convenient for

the employees, homogenous, and also convenient to the work site.

Mr. BECERRA. Tell me the last date that there will be a Customs

employee on Terminal Island.

Mr. WINWOOD. I can’t answer that.

Mr. BECERRA. How long do you think it will take before you are

able to remove all the employees from Terminal Island?

Mr. WINWOOD. In all fairness, I think that question is best asked

of GSA. We are pushing them as hard as we can. They are the ones

that find the space, they are the ones that help us move. I cannot

answer that.

Mr. BECERRA. I’ve got to tell you that those are all disturbing responses, but——

Mr. WINWOOD. If I add for the record, though, Mr. Congressman,

it’s disturbing to us, too.

Mr. BECERRA [continuing]. Does that include the chemical laboratory within there, will that be moved out also?

Mr. WINWOOD. That’s the second phase. Our first priority are the

people within what we call the Customshouse. That’s our first priority. The lab facility is relatively new, built within the last——

Mr. BECERRA. Yes, but the people are affected.

Mr. WINWOOD [continuing]. That’s the second phase.

Mr. BECERRA. But, you shouldn’t be leaving people with asbestos

in the building.

Mr. WINWOOD. Right, they are in a separate new building, the

lab. So, we are looking at that as an eventual move for the second

phase. Our first priority are the people within the old Customshouse, the old building. It’s been there for 35–36 years; we’re looking to move everybody there as quickly as we can, to get them out

of that building and get them into more appropriate workspace.

69

Mr. BECERRA. I urge you to move quickly. The cost of litigation

and liability probably exceeds the cost of finding a different location, even though temporary, and, you know, we always talk in

terms of monetary costs, do you want to have your lungs filled with

this stuff?

Mr. WINWOOD. Mr. Congressman, I totally agree with you. Commissioner Kelly is pushing as hard as he can. He’s put every energy into this to get this—— Mr. BECERRA. I would say that’s where government looks so bad

in the eyes of the public, is when we come up with answers that

say we don’t know. And I would really urge you to have Commissioner Kelley, who is a phenomenal individual, and Secretary Sumner, come back and give us some concrete numbers and dates, because these people deserve nothing less than that. They are working for us.

Mr. WINWOOD. We agree, we totally agree.

Mr. BECERRA. But, let’s get something concrete, because they’ve

been saying this for the longest time, now we all agree they have

to leave, but let’s quit having them hang out there wondering when

they are finally going to get to leave. It’s ridiculous.

One last question, Mr. Chairman.

Commissioner, with regard to the issue of personal searches, you

mentioned that there have been some policy changes and you are

going to try to do a better job of tracking some of this. What are

you doing in terms of enforcement and discipline? Once you find

that there’s someone who doesn’t abide by the new changes, and

you find that there are still inappropriate searches occurring, are

you doing anything with regards to enforcement or discipline?

Mr. WINWOOD. Yes, we will when it occurs, but I must tell you,

Mr. Becerra, the Customs employees and Customs officers take

their job very seriously. We have not seen any indication of that.

There has been no indication of wrongdoing on the part of employees, and if it would happen, of course, we would take the appropriate action, but I don’t believe it’s going to happen.

Mr. BECERRA. And, I’m not implying that there has been, I’m just

saying that it always helps when people know there’s severe punishment at the end of the day if they do the wrong thing.

Mr. WINWOOD. Well, we make sure that our officers understand,

Mr. Becerra, that we have policies and procedures. They’ve been

trained, they’ve been given the proper documentation, and we have

all the faith and all the knowledge that they will continue to work

diligently. They have, and they continue to do so, and you can see

it in the results.

Mr. BECERRA. Mr. Chairman, the witnesses have been more than

gracious with their time. I appreciate the extension of time to ask

questions, Mr. Chairman. Thank you.

Mr. HORN. Well, I thank you, and all of you on this panel. It’s

been very helpful information.

We are now going to go to panel two. We are going to take a 4-

minute recess, and then we will start in with panel two and give

the clerk time to—— [Recess.]

Mr. HORN. And any assistants of your’s, we’d like them to also

stand and take the oath if they are going to talk and you are going

70

to yield to them. So, if you’ll stand and take the oath, we’d appreciate it, raise your right hands.

The clerk will note that the four witnesses have all affirmed the

oath, and we are delighted to start with Yvonne Avila, the president of the Foreign Trade Association of southern California and

director of communications for the Port of Long Beach.

STATEMENTS OF YVONNE AVILA, PRESIDENT, THE FOREIGN

TRADE ASSOCIATION OF SOUTHERN CALIFORNIA AND DIRECTOR OF COMMUNICATIONS, PORT OF LONG BEACH;

MAURINE CECIL, PRESIDENT, THE LOS ANGELES CUSTOMS

BROKERS AND FREIGHT FORWARDERS ASSOCIATION, INC.;

JUDY GRIMSMAN, CHAIRMAN OF THE BOARD, THE L.A. CUSTOMS BROKERS AND FREIGHT FORWARDERS ASSOCIATION,

INC.; AND J. RICHARD WILLIAMS, Ph.D., P.E., PROFESSOR OF

MECHANICAL AND AEROSPACE ENGINEERING, CALIFORNIA

STATE UNIVERSITY, LONG BEACH

Ms. AVILA. Good morning, Congressman Horn.

As stated, I am Yvonne Avila, director of communications for the

Port of Long Beach. Today, I am speaking as the president of the

Foreign Trade Association of southern California. I am accompanied by Marian Duntley and Dennis Heck, who serve on the Foreign Trade Association Board of Directors with me.

The FTA of southern California is the oldest and most prestigious trade association, representing more than 400 importers,

exporters, manufacturers, retailers, and financial institutions involved in international trade. An adequately staffed U.S. Customs

system is important to all of our members.

Before we address our concerns about the Customs system, however, I think it is important to take a look at the growth that is

occurring at our southern California seaports, which represent the

two largest seaports in the United States and the third largest port

complex in the world. During the last 10 years, the volume of cargo

containers passing through our southern California ports has

grown by 122 percent.

A recently completed cargo forecast indicates that the growth we

have experienced since 1990 will continue well into the next two

decades. The ports of Long Beach and Los Angeles handled a combined total of 8.2 million container units in 1999. The most recent

cargo forecast predicted the two ports will handle 9 million containers in the year 2005. Realistically, we will achieve those volumes

this year, 5 years ahead of question.

Projections also show that the two ports will handle a combined

total of 12 million containers by 2010, 17 million units by 2015, 24

million units by 2020. Facing projections such as these, you can understand why the FTA is concerned about the adequacy of Customs

staffing in southern California.

We believe that Customs must be adequately staffed for some obvious reasons: to collect tax revenue, to detect drugs and illegal imports, to prevent illegal exports, to enforce U.S. intellectual property, to protect U.S. consumers from tainted goods, to provide security at our Nation’s ports, and to collect accurate trade statistics for

use in trade negotiations.

71

We also believe that if additional resources are deployed they

should be used for purposes directly related to one of the core duties of the Customs Service and in accordance with an objective

risk management strategy agreed to by Congress.

Customs resources should be used effectively and not as a club

intended to cost importers time and money and as a means of getting your attention. We also believe that Customs must constantly

identify ways to balance its staffing and its other resources between enforcement and commercial purposes.

Customs staffing must be spread equitably between all U.S. ports

of entry, because under staffing in one particular area means less

enforcement and less revenue collected in that area. Under staffing

caused by imbalance means some ports are receiving more security

at the expense of others. Under staffed ports could be targeted by

unscrupulous traders and drug traffickers.

Finally, we believe that the Automated Commercial Environment

system must be funded immediately and from the General Fund.

We believe this because the existing ACS hardware and software

are antiquated and operating at near capacity at all times. We are

throwing good money after bad in maintaining the old system. The

existing system uses COBOL language, and programmers familiar

with this language are increasingly scarce as the technology moves

toward internet-based applications. In fact, I think it’s probably

easier to find someone who speaks Latin.

There are other reasons why we support funding from ACE from

the General Fund. The longer it takes ACE to be implemented the

more it will cost. ACE would give Customs better tools and increase its efficiency. The Nation’s importers are already paying

$900 million annually in user fees. No new fees are needed to fund

ACE. Other U.S. Government computer systems, as well as the

Customs budget, is paid for via the General Fund, why should ACE

be different?

I’d like to leave you with a final, yet rather grim message. If the

current Customs computer system were to experience an extended

brownout, and if cargo could not being cleared through our seaports

and airports, this Nation’s economy would grind to a halt. Three

years ago, southern California seaports were severely impacted by

a shortage of rail cars and equipment following the merger of two

major railroads. As a result, cargo containers were stacked four

high inside our terminals. Labor that should have been used to unload ships was used instead to stack and unstack cargo. Ships sat

idle for 5 or 6 days, rather than departing after a day or two. Other

ships sat at anchor, waiting for space in overcrowded berths, and

importers, exporters, manufacturers, farmers, and retailers

throughout this Nation were left without critical links to overseas

markets.

What happened in 1997 would pale in comparison to what could

happen in if the Customs computer system were to fail. If that happens, it will affect far more ports than those in southern California.

It will impact every seaport and every international airport in our

Nation. Cargo will not flow and both imports and exports will sit

idle without reaching their destinations.

72

Our Nation cannot afford such an event. The members of the

Foreign Trade Association believe that funding for ACE from the

General Treasury is one of the best investments you can make in

our Nation’s economy.

Thank you for giving me an opportunity to address you today.

[The prepared statement of Ms. Avila follows:]

73

74

75

76

77

78

79

80

81

82

Mr. HORN. Thank you very much. We appreciate it.

Now Maurine Cecil is president of the Los Angeles Customs Brokers and Freight Forwarders Association, and she’s accompanied

by Judy Grimsman, the chairman of the Board, the Los Angeles

Customs Broker and Trade Forwarders Association. So, please proceed.

Ms. CECIL. Thank you. Thank you for the opportunity to testify

today on behalf of the Los Angeles Customs Brokers and Freight

Forwarders Association. The Association is honored to have the opportunity to address the subcommittee. Completion of the automated process, as expressed in our prior testimony in 1997, is essential to the expeditious processing of shipments imported and exported. We thank you for allowing us the opportunity to return

today to express our concerns.

We are directly and daily involved with Customs and much of its

core business, especially cargo review, release, and duty collections.

Our membership is integral to the processing by Customs of both

imports and exports, as we are the conduit between Customs and

the shipping and importing public. Most importantly, we think

Customs must develop a realistic strategic plan addressing its future needs and increases in both the real and electronic worlds.

In the past, we have seen too many different pilot programs

started without being permanently adopted. Customs has allocated

too great a portion of its resources in pursuit of too many initiatives, often all at the same time and competing for the same resources, resulting in an inability to direct sufficient resources to its

core business.

Customs must be willing to take one step at a time in a wellthought-out strategic plan. It should also complete the basic automation process before diverting resources to other new programs.

The overall mission of Customs sometimes seems to suffer if such

short-sighted planning is allowed to overwhelm the agency, which

is what sometimes seems to be the case from the outside looking

in. We have seen too many programs that Customs has failed to

complete, due to unreliable funding, forcing the trade to operate

with only partial systems available, creating delays and tremendous additional work.

We think Customs would be better served to defer implementation of programs such as AES, Automated Export System, until

they have additional funding available. Customs needs to expand

its use of technology in the inspection of cargo, such as increased

use of non-intrusive technologies such as x-ray units, allowing more

efficient and timely examination of legitimate cargo. It is our understanding that 8 to 12 containers can be processed within an

hour using the x-ray technology available. I have been told we will

be getting one x-ray unit in September.

Importers are already paying and continuing to pay large sums

of money for examinations being handled by private companies contracted by U.S. Customs. We support the allocation of money from

the General Fund toward the ACE concept, as long as the trade

continues to have input into the design of its programs and resulting products meet the needs of Customs’ mission. Funds are needed

for detection and enforcement, but Customs must also offer support

of a realistic understanding of world commerce.

83

The Association firmly believes that funding for the new ACE

must come from the current user fees already being collected by

Customs. This fee is currently being sent to the General Fund and

is of such a size that it can easily cover the needed appropriations.

The current user fees are generally approximately $800 million

yearly. The original intent of that user fee was supposed to be to

reimburse Customs for the cost of commercial operations, including

automation.

We should also keep in mind the concept of ITDS, which was

only recently transferred to Customs for completion. ITDS must not

be an obstacle to other programs currently being developed under

the ACE umbrella. These programs limit the number of data elements needed for release to those necessary to make an admissibility determination. The majority of data needs by Customs and most

other government agencies can be provided post entry. The goal of

ITDS should be to consolidate the gathering of data, primarily in

a post-entry mode, and compliment, not complicate, the single release process already laid out in the early ACE prototypes. Lack of

support of automation funding will cause port backlogs, and possible brownouts such as the recent 5-hour outage in Buffalo which

would cripple our port and shut down the flow of cargo.

The MOD Act empowered each of the 301 Customs ports, and in

many cases the empowerment has created different local interpretations of rules and regulations for entry processing, and headquarters seems unwilling or unable to intercede. Automation

should eliminate the need for different local port procedures, which

necessarily complicate the release process and add nothing substantive to the process.

The reorganization of Customs has also resulted in a loss of expertise within the agency. As a result of reorganization, the personnel directly involved in entry processing are being reduced. In addition, many of the most experienced Customs personnel have left

the agency to join private industry. Customs has not replaced this

expertise.

One of the goals of the Customs reorganization and the MOD Act

was to discourage port shopping, or the selection of disqualification

of a port based on the way in which Customs processes shipments

at specific locations. The numbers of entries filed at the Customs

port in southern California have continued to grow at amazing

rates. The responsibility for the review of this data for admissibility evaluating classification, whether filed electronically or on actual paper, still falls on the shoulders of Customs personnel. Commodity specialists, in addition to their current workload, have been

given the task of being port and national account managers, and

they are also the main point of interest with primary focus industries.

These people are already overworked, and are now being asked

to head up most outreach programs with the trade. They are also

often asked to be instructors for Customs for training programs, internal and external. These additional tasks interfere with their primary responsibility of dealing with data review and transaction

processing. We believe that the proportion of the number of entries

filed at the ports of southern California to the number of import

specialists is very high compared to the other ports, notably, New

84

York, New Jersey. We subscribe to the theory that effective enforcement makes for effective facilitation.

We feel there should also be an equivalent of an ABI representative to coordinate with the trade when they bring on the new ACE

program. They should have direct line authority to headquarters,

rather than to a local authority, so that there will be a smooth

transition and continuity when the system is in place. Customs will

also need this sort of expertise internally to help all personnel

make a smooth transition.

Until all aspects of trade are totally automated, the location of

the local Customs office is critical for timely review of entry paperwork for Customs, brokers, carriers, truckers, importers and individuals. The temporary and/or permanent relocation of Customs

should be in a central and strategic area to which the trade has

fast and convenient access.

In closing, we’d like to affirm that the Customs Service officials

and personnel at the Port of Los Angeles/Long Beach, and Los Angeles International Airport, have always been open, accessible and

responsive to the concerns of the Association and its membership.

We look forward to the continuation of that open dialog.

I want to thank you also for allowing us to have this opportunity

to speak in front of you.

[The prepared statement of Ms. Cecil follows:]

85

86

87

88

89

90

Mr. HORN. Thank you very much.

Ms. Grimsman, the chairman of the Board of the Los Angeles

Customs Brokers and Freight Forwarders Association.

Ms. GRIMSMAN. Well, I didn’t have a prepared statement today.

Mr. HORN. Well, just what you’d like.

Ms. GRIMSMAN. OK.

One thing I would like, from what I thought I heard the first

panel, that the ACS, life support fund not be diverted to the ACE

RFP, and they were talking about $12 million, they had $7 and

there was $5 that they needed, and I’m not sure if I heard that

that’s where they were going to look, because it was going back and

forth somewhat.

Mr. HORN. Well, they were going to look, basically, at funds within the Treasury or within Customs; what we call reprogramming.

When you are at the end of the fiscal year there’s always millions

of dollars that you haven’t quite applied to existing programs, and

if you can get a sign off from the Secretary of the Treasury and

the ranking and chair of the appropriate committees on the Hill,

you are home free. So, that’s good, the way we solved the Y2K

thing years ago, Director Rains agreed with me on reprogramming,

otherwise you waste a year going through the Presidential and congressional budget process. So, that’s, basically, looking for money

that you can apply to something, but you’ve got to get a sign off.

Ms. GRIMSMAN. Because keeping that system alive, while we are

developing the new system, is absolutely critical, and I think you’ve

heard from all of us that if it goes down for a couple hours, it’s a

serious problem.

Mr. HORN. Well, Doctor Williams, distinguished professor and expert on all sorts of things. He’s now a professor of mechanical and

aerospace engineering at California State University, Long Beach.

Glad to have you here.

Mr. WILLIAMS. Mr. Chairman, thank you for the opportunity to

address new and emerging technologies for Customs processing enhancement. Advanced sensing technologies are becoming available

for automated container inspection that will enable INS and Customs to more accurately assess container content, location, and improved targeting of selected containers for manual inspection.

For example, new x-ray devices have been developed that can

provide detailed information on container content with the total xray dosage much, much less than that of a conventional medical xray. A variety of other advanced sensing systems that are safe and

effective are also becoming available.

Appropriate new technology sensors as part of an integrated

automated system for container inspection can be deployed to facilitate effective interdiction of illegal or inappropriate imports by containerized freight. Detection of human beings attempting to illegally enter the United States by container will be enhanced. As a

result, the unscrupulous practice of profiting from the inhumane

and illegal smuggling of persons by shipping containers, that has

resulted in the tragic and unnecessary loss of human life, will be

reduced and curtailed.

INS and Customs are currently pursuing a number of technology

initiatives to improve their inspection and processing capabilities,

including automated license plate readers, and as you’ve heard earVerDate 11-MAY-2000 08:19 Apr 06, 2001 Jkt 000000 PO 00000 Frm 00094 Fmt 6633 Sfmt 6633 C:\DOCS\70547.TXT HGOVREF1 PsN: HGOVREF1
91

lier, the sentry systems that use technology to identify enrolled vehicles, people, and display information to the inspector. The vehicle

and cargo inspection system, which uses gamma ray images to detect contraband within vehicles and cargo containers, is not only

non-intrusive, it can be disassembled, moved and reassembled at

another location the same day.

INS and Customs are also developing and deploying a variety of

non-intrusive technologies that lessen the physical invasiveness of

searches for drugs and other contraband, as well as saving time,

money and reducing the tensions of the search. Large x-ray scanners examine entire railroad cars as they cross the border, permitting much more rapid inspection than manual searches.

Big site cargo search x-ray systems, which are currently being

deployed, scan the contents of a tractor trailer in minutes, using

a pencil sized beam of x-rays that produce detailed transmission

and backscattered x-ray images, providing an excellent view of the

contents. A person would have to pass through the system 100

times to receive the same exposure as the typical medical x-ray.

This non-intrusive search technology is safe to operate and quickly

pinpoints concealed contraband.

INS and Customs are deploying a wide variety of hand-operated

technologies to examine commercial conveyances which include detection devices, fiberoptic scopes, vapor particle detectors and laser

range finders. Broadband encrypted communication systems and

computers that can filter data, noting which vehicles need special

attention, are also being deployed.

Classification technologies, such as weigh in motion and automated vehicle identification systems, are used in concert with bypass lanes to help border crossings pursue the dual goals of efficient and effective operation. The Transportation Automated Measuring System, or TrAMS, developed and demonstrated at Ft. Bragg

by the California State University, Long Beach, Center for the

Commercial Deployment of Transportation Technologies, is an example of the new classification technology that can have broad implications for ports and border crossings, particularly, when deployed with additional sensors. Future classification technologies

integrated with historical databases may greatly improve the selection mechanism to recognize carriers that are habitual or potential

border crossing problems.

New electronic tags, seals, and transponders can be used to allow

containers and vehicles inspected at the points of origin to bypass

further inspections.

In support of INS and Customs efforts to enhance their inspection capabilities, our university, in collaboration with the Port of

Long Beach, the Port of Los Angeles, and the Alameda Corridor

Transportation Authority, has proposed a national demonstration

project known as the CSULB, INS, and Customs Inspection Technology Infrastructure Project. This demonstration project would include the installation and evaluation of existing and new technologies described previously and the development and evaluation

of advanced technology prototypes in the Port of Long Beach, Port

of L.A., the Alameda Corridor, and LAX. This project could be crucial to the dissemination of enhanced inspection technologies, ultiVerDate 11-MAY-2000 08:19 Apr 06, 2001 Jkt 000000 PO 00000 Frm 00095 Fmt 6633 Sfmt 6633 C:\DOCS\70547.TXT HGOVREF1 PsN: HGOVREF1
92

mately, throughout the United States, as new technology prototypes are proven.

Mr. Chairman, with your permission, I would like to introduce

for the record letters of support for this project from Larry Keller,

executive director of the Port of Los Angeles, from Richard Steinke,

executive director of the Port of Long Beach, from James Hankla,

chief executive officer of the Alameda Corridor Transportation Authority, and from Doctor Robert Maxson, president of California

State University/Long Beach.

Mr. HORN. Without objection, the letters the gentleman has cited

will be put at this point in the record.

Mr. WILLIAMS. The CSULB, INS, and Customs Inspection Technology Infrastructure Project would be a 3-year program specifically designed to expedite the flow and throughput of people and

goods at border crossings, and air and seaports throughout the

United States eventually. This project would employ advanced

technologies to identify people illegally trying to enter the United

States, and also expedite the processing of personnel at INS border

stations. It would provide an increased ability to identify containers

entering and exiting ports, utilizing advanced sensing technologies

for automated container inspection that would enable inspectors to

assess the content, including human cargo, and improve targeting

of selected containers.

It is important that funding for this project clearly be in addition

to the existing budget proposals, and not a redirection of funds

from some other critical need. INS and Customs are two of America’s oldest Federal law enforcement agencies and have been protecting our borders for over 200 years. To perform their missions,

they must keep on the cutting edge of technology applications. The

same technologies that are available to the government are increasingly available to well-financed criminal and terrorist organizations. It is imperative that Congress provide the funding that INS

and Customs need to counter these threats.

Thank you, Mr. Chairman.

[The prepared statement of Mr. Williams follows:]

93

94

95

96

97

98

Mr. HORN. We thank you very much for that very thorough and

accurate—of the Customs Service, and since the Deputy Commissioner has had to catch a plane, why, if there are any comments

you’d like to make, particularly, on Doctor Williams’ presentation

on the technical aspects, as to whether that would be helpful to the

Customs Service.

Ms. JANKOV. Yes, I believe I would like to make just one comment. I have very, very little information about this new project

that Doctor Williams is talking about, but I certainly think that

there is a role for Customs to play with the other participants of

the group, with the Port of Long Beach, with the Port of Los Angeles, and with the members of the Alameda Corridor. And, I would

very much like to participate or have Customs represented on that

group, because I think it is a group that looks at the Customs

needs and requirements, as well as those of the trade.

Mr. HORN. OK, any other reaction to the other witnesses?

Ms. JANKOV. I believe that they’ve made the case.

Mr. HORN. OK.

I think the gentleman from the Immigration Service had to

leave, I don’t know if there was a Deputy under him, but if so we’d

be glad to have your comments on anything that you have heard

here on the technical aspects. Since you are representing the clients, I’d be interested to know what your reaction was to Doctor

Williams.

Ms. AVILA. Congressman Horn, the Port of Long Beach is working with U.S. Customs now to identify a location for that noninvasive gamma ray x-ray system, and we do hope to identify that

location in order to implement that very shortly. That’s referred to

as a docking system, and I am sure that we will be able to install

such a system within our seaports.

Mr. HORN. Very good.

Well, if there aren’t any other questions, we will thank the staff

that set up this hearing, and J. Russell George, the staff director

for the Subcommittee on Government Management, Information,

and Technology, and Mr. Kaplan, the counsel to my left and your

right, is the one that put a lot of this hearing together, Bonnie

Heald, the director of communications, is also here, and Brian Sisk

is the clerk to make sure that everything functions along with

Ryan McKee. I want to thank, in particular, the district director for

our office, Connie Martinez Sziebel, and her staff, which is located

in Lakewood, CA, who serve the 38th Congressional District, we

thank her and the intern, Devin Storey, we particularly like his

help because he got to get up bright and early this morning to

bring Mr. Ose down here.

Port of Long Beach people that have been especially helpful are

Steve Sakora, the graphic artist, Arturo Garcia, graphic artist, and

Cathleen Stephens is our court reporter.

So, we thank you all for what’s made this a successful day, so

thank you very much. We are adjourned.

[Whereupon, the subcommittee was adjourned.]

[Additional information submitted for the hearing record follows:]

99

100

101

102

103

104

105

106

107

108

109

110

Æ