Homeland Security: Key Cargo Security Programs Can Be Improved
Published: 2005-05-26T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: U.S. Customs and Border Protection (CBP) has in place two programs to help address the threat posed by terrorists smuggling weapons of mass destruction (WMD) into the United States: the Customs-Trade Partnership Against Terrorism (C-TPAT) and the Container Security Initiative (CSI). In July 2003, GAO reported that these programs had management challenges that limited their effectiveness. Given plans to expand both programs, in two recently issued reports GAO examined selected aspects of both programs' operations. This statement is a summary of those publicly available reports.
section_title: What GAO Found
paragraphs: In return for committing to making improvements to the security of their shipments, C-TPAT members receive a range of benefits that may change the risk characterization of their shipments, thereby reducing the probability of extensive inspection. Before providing benefits, CBP reviews the self-reported information contained in applicants' membership agreements and security profiles. Also, CBP assesses the compliance history of importers before granting them benefits. However, CBP grants benefits before members undergo the validation process, which is CBP's method to verify that their security measures are reliable, accurate, and effective. Although CBP's goal was to validate members within 3 years, to date it has validated 11 percent of them. Further, the validation process is not rigorous, as the objectives, scope, and methodology of validations are jointly agreed upon with the member, and CBP has no written guidelines to indicate what scope of effort is adequate for the validation. Also, although CBP has recently moved to a risk-based approach to selecting members for validation, it has not determined the number and types of validations that are needed to manage security risks or the CBP staff required to complete them. Further, CBP has not developed a comprehensive set of performance measures for the program, and key program decisions are not always documented and programmatic information is not updated regularly or accurately. The CSI program is designed to target and inspect high-risk cargo containers at foreign ports before they leave for the United States. It has resulted in improved information sharing between U.S. and foreign customs operations and a heightened level of international awareness regarding securing the global shipping system. Yet, several factors limit CBP's ability to successfully target containers to determine if they are high-risk. One factor is staffing imbalances, caused by political and practical considerations, which impede CBP's targeting efforts at CSI ports. As a result, 35 percent of U.S.-bound shipments from CSI ports were not targeted and not subject to inspection overseas--the key goal of the CSI program. In addition, as of September 11, 2004, 28 percent of the containers referred to host governments for inspection were not inspected overseas for various reasons such as operational limitations. One percent of these referrals were denied by host government officials, generally because they believed the referrals were based on factors not related to security threats. For the 72 percent of referred containers that were inspected overseas, CBP officials told us that no WMD were discovered. However, the nonintrusive inspection equipment used at CSI ports varies in detection capability, and there are no minimum technical requirements for equipment used as part of CSI. As a result, CBP has limited assurance that inspections conducted under CSI are effective at detecting and identifying terrorist WMD in containers. Finally, CBP continues to make refinements to the strategic plan and performance measures needed to help manage the program and achieve program goals. Until these refinements are completed, it will be difficult to assess progress made in CSI operations.

section_title: Letter
paragraphs: I appreciate the opportunity to be here today to provide a summary of our  recent reports for you on the Department of Homeland Security’s (DHS)  programs to improve the security of the international supply chain, as well  as target oceangoing cargo containers for inspection at foreign seaports  before they arrive at destinations in the United States.
In the aftermath of the terrorist attacks of September 11, 2001, there is  heightened concern that terrorists may try to smuggle weapons of mass  destruction (WMD) into the United States, specifically by using one of the  millions of cargo containers that arrive at our nation’s seaports each year.  If terrorists did so and detonated such a weapon (e.g., a radiological  explosive device) at a seaport, the incident could cause widespread death  and damage to the immediate area, perhaps shut down seaports  nationwide, cost the U.S. economy billions of dollars, and seriously  hamper international trade.
DHS and its U.S. Customs and Border Protection (CBP) are responsible  for addressing the threat posed by terrorists smuggling weapons into the  United States. To carry out this responsibility, CBP has in place programs  known as the Customs-Trade Partnership Against Terrorism (C-TPAT) and  the Container Security Initiative (CSI). The C-TPAT program attempts to  improve the security of the international supply chain (flow of goods from  manufacturer to retailer). It is a cooperative program between CBP and  members of the international trade community in which private companies  agree to improve the security of their supply chains in return for a reduced  likelihood that their containers will be inspected. C-TPAT membership is  open to U.S.- and foreign-based companies whose goods are shipped to the  United States via air, rail, ocean, and truck carriers. The CSI program  specifically addresses the security of oceangoing cargo containers. Under  the program, CBP places staff at foreign seaports to work with foreign  counterparts to use risk assessment information to select, or target, those  containers at risk of containing WMD and inspect them before they are  shipped to the United States.
This statement presents a summary of our latest efforts in a series of GAO  reports that evaluate CBP’s response to the terrorist threat. As requested,  my testimony will focus on our assessment of CBP’s efforts under both C- TPAT and CSI. Regarding C-TPAT, I will address the following issues:    What benefits does CBP provide to C-TPAT members?
Before providing benefits, what approach does CBP take to determine  C-TPAT members’ eligibility for them?
After providing benefits, how does CBP verify that members have  implemented their security measures?
To what extent has CBP developed strategies and related management  tools for achieving the program’s goals?
Regarding CSI, I will address the following issues:    What factors affect CBP’s ability to target shipments at overseas  seaports?
Under CSI, to what extent have high-risk containers been inspected  overseas prior to their arrival at U.S. destinations?
To what extent has CBP developed strategies and related management  tools for achieving the program’s goals?
My statement today represents a summary of two unrestricted reports we  have provided to Congress on these programs—that is, our March 2005  report on C-TPAT and our April 2005 report on CSI.
subsections: section_title: Background
paragraphs: CBP maintains two overarching goals: (1) increasing security and   (2) facilitating legitimate trade and travel. Disruptions to the supply chain  could have immediate and significant economic impacts. For example, in  terms of containers, CBP data indicates that in 2003 about 90 percent of  the world’s cargo moved by container. In the United States, almost half of  all incoming trade (by value) arrived by containers on board ships.  Additionally, containers arrive via truck and rail. Both admitting  dangerous cargo into the country and delaying the movement of cargo  containers through ports of entry could negatively affect the national  economy. Therefore, CBP believes it is vital to try to strike a balance  between its antiterrorism efforts and facilitating the flow of legitimate  international trade and travel.
subsections: section_title: Vulnerability of the Supply Chain
paragraphs: The terrorist events of September 11, 2001, raised concerns about  company supply chains, particularly oceangoing cargo containers,  potentially being used to move WMD to the United States. An extensive  body of work on this subject by the Federal Bureau of Investigation and  academic, think tank, and business organizations concluded that while the  likelihood of such use of containers is considered low, the movement of  oceangoing containerized cargo is vulnerable to some form of terrorist  action. Such action, including attempts to smuggle either fully assembled  WMD or their individual components, could lead to widespread death and  damage.
The supply chain is particularly vulnerable to potential terrorists because  of the number of individual companies handling and moving cargo through  it. To move a container from production facilities overseas to distribution  points in the United States, an importer has multiple options regarding the  logistical process, such as routes and the selection of freight carriers. For  example, some importers might own and operate key aspects of the  overseas supply chain process, such as warehousing and trucking  operations. Alternatively, importers might contract with logistical service  providers, including freight consolidators and nonvessel-operating  common carriers. In addition, importers must choose among various  modes of transportation to use, such as rail, truck, or barge, to move  containers from the manufacturer’s warehouse to the port of lading.
section_title: C-TPAT Is Part of CBP’s Layered Enforcement Strategy
paragraphs: CBP has implemented a layered enforcement strategy to prevent terrorists  and WMD from entering the United States through the supply chain. One  key element of this strategy is the C-TPAT program. Initiated in November  2001, C-TPAT is a voluntary program designed to improve the security of  the international supply chain while maintaining an efficient flow of goods.  Under C-TPAT, CBP officials work in partnership with private companies  to review their supply chain security plans to improve members’ overall  security. In return for committing to making improvements to the security  of their shipments by joining the program, C-TPAT members may receive  benefits that result in reduced scrutiny of their shipments (e.g., reduced  number of inspections or shorter border wait times for their shipments).  C-TPAT membership is open to U.S.-based companies in the trade  community, including (1) air/rail/sea carriers, (2) border highway carriers,  (3) importers, (4) licensed customs brokers, (5) air freight consolidators  and ocean transportation intermediaries and nonvessel-operating common  carriers, and (6) port authorities or terminal operators. Of these  companies, CBP grants importers key program benefits. According to  CBP, program membership has grown rapidly, and continued growth is  expected, especially as member importers are requiring their suppliers to  become C-TPAT members. For example, as of January 2003 approximately  1,700 companies had become C-TPAT members. By May 2003, the number  had nearly doubled to 3,355. According to CBP officials, as of April 2005,  the C-TPAT program had over 9,000 members. For fiscal year 2005, the C- TPAT budget request was about $38 million, with a requested budget for  fiscal year 2006 of about $54 million for program expansion efforts. As of  August 2004, CBP had hired 40 supply chain specialists, who are dedicated  to serve as the principal advisers and primary points of contact for C-TPAT  members. The specialists are located in Washington, D.C., Miami, Florida,  Los Angeles, California, and New York, New York.
CBP has a multistep review process for the C-TPAT program. Applicants  first submit signed C-TPAT agreements affirming their desire to participate  in the voluntary program. Applicants must also submit security profiles— executive summaries of their company’s existing supply chain security  procedures—that follow guidelines jointly developed by CBP and the trade  community. These security profiles are to summarize the applicant’s  current security procedures in areas such as physical security, personnel  security, and education and training awareness. Next, CBP established a  certification process in which it reviews the applications and profiles by  comparing their contents with the security guidelines jointly developed by  CBP and the industry, looking for any weaknesses or gaps in the  descriptions of security procedures. Once any issues are resolved to CBP’s  satisfaction, CBP signs the agreement and the company is considered to be  certified C-TPAT member, eligible for program benefits. However,  members that are importers must first complete another review, as  described below, before benefits can begin. CBP encourages all members  to conduct self-assessments of their security profiles each year to  determine any significant changes and to notify CBP. For example,  members may be using new suppliers or new trucking companies and  would need to update their security profiles to reflect these changes.
For certified importers, CBP has an additional review called the vetting  process in which CBP reviews information about an importer’s  compliance with customs laws and regulations and violation history.  Conducted concurrently with the certification process, CBP requires the  vetting process for certified importers as a condition of granting them key  program benefits. As part of the vetting process, CBP obtains trade  compliance and intelligence information on certified importers from  several data sources. If CBP gives the importer a favorable review under  both the vetting process and the certification process, benefits are to begin  within a few weeks. If not, benefits are not to be granted until successful  completion of the validation process, as described below.
The final step in the review process is validation. CBP’s stated purpose for  validations is to ensure that the security measures outlined in certified  members’ security profiles and periodic self-assessments are reliable,  accurate, and effective. In the validation process, CBP staff meet with  company representatives to verify the supply chain security measures  contained in the company’s security profile. The validation process is  designed to include visits to the company’s domestic and, potentially,  foreign sites. The member and CBP jointly determine which elements of  the member’s supply chain measures will be validated, as well as which  locations will be visited. Upon completion of the validation process, CBP  prepares a final validation report it presents to the company that identifies  any areas that need improvement and suggested corrective actions, as well  as a determination if program benefits are still warranted for the member.
section_title: CSI Is Another Layer of CBP’s Enforcement Strategy
paragraphs: Announced in January 2002, the CSI program was implemented to allow  CBP officials to target containers at foreign seaports so that any high-risk  containers may be inspected prior to their departure for U.S. destinations.  Strategic objectives for the CSI program include (1) pushing the United  States’ zone of security beyond its physical borders to deter and combat  the threat of terrorism; (2) targeting shipments for potential terrorists and  terrorist weapons, through advanced and enhanced information and  intelligence collection and analysis, and preventing those shipments from  entering the United States; (3) enhancing homeland and border security  while facilitating growth and economic development within the  international trade community; and (4) utilizing available technologies to  leverage resources and to conduct examinations of all containers posing a  high risk for terrorist-related activity.
To participate in the CSI program, a host nation must utilize (1) a seaport  that has regular, direct, and substantial container traffic to ports in the  United States; (2) customs staff with the authority and capability to  inspect cargo originating in or transiting through its country; and (3)  nonintrusive inspection equipment. In addition, a host nation must meet  several operational criteria, including a commitment to establishing an  automated risk management system. To implement the CSI program, CBP  negotiates and enters into bilateral arrangements with foreign  governments, specifying the placement of CBP officials at foreign ports  and the exchange of information between CBP and foreign customs  administrations. CBP first solicited the participation of the 20 foreign ports  that shipped the highest volume of ocean containers to the United States.  These top 20 ports are located in 14 countries and regions and shipped a  total of 66 percent of all containers that arrived in U.S. seaports in 2001.  CBP has since expanded CSI to strategic ports, which may ship lesser  amounts of cargo to the United States but may also have terrorism or  geographical concerns. As shown in table 1, as of February 2005, CSI was  operational at 34 ports, located in 17 countries or regions. For fiscal year  2005, the CSI budget was about $126 million, with a budget of about $139  million requested in fiscal year 2006.
CBP then deploys a CSI team, which generally consists of three types of  officials—targeters, intelligence analysts, and special agents. These  officials come from either CBP or U.S. Immigration and Customs  Enforcement (ICE). The team leader is a CBP officer or targeter who is  assigned to serve as the immediate supervisor for all CSI team members  and is responsible for coordinating with host government counterparts in  the day-to-day operations. The targeters are team members responsible for  targeting shipments and referring those shipments they determine are  high-risk to host government officials for inspection. The targeter may also  observe inspections of containers. The intelligence analyst is responsible  for gathering information to support targeters in their efforts to target  containers. In addition, the special agents are to coordinate all  investigative activity resulting from CSI-related actions, as well as act as  liaison with all appropriate U.S. embassy attachés. Under the CSI program,  the targeting of cargo is largely dependent on CBP targeters’ review of  information contained within CBP’s Automated Targeting System (ATS) in  conjunction with other sources to determine the risk characterization of a  container.
CSI teams refer any containers they characterize as high-risk to host  government officials for concurrence to inspect. If host government  officials, on the basis of their review, agree that the shipment is high-risk,  they will proceed with an inspection using nonintrusive inspection  equipment (that is, X-ray) and physical examinations, if warranted. If the  host government officials determine, on the basis of their review, that a  shipment is not high-risk, they will deny inspection of the shipment. For  any high-risk shipment for which an inspection is not conducted, CSI  teams are to place a domestic hold on the shipment, so that it will be  inspected upon arrival at its U.S. destination.
section_title: Prior GAO Work Disclosed Challenges
paragraphs: We have conducted previous reviews of the C-TPAT and CSI programs and  CBP’s targeting and inspection strategy. In July 2003, we reported that  CBP’s management of C-TPAT and CSI had not evolved from a short-term  focus to a long-term strategic approach. We recommended that the  Secretary of Homeland Security work with the CBP Commissioner to  develop for both programs (1) strategic plans that clearly lay out the  program’s goals, objectives, and detailed implementation strategies; (2)  performance measures that include outcome-oriented indicators; and (3)  human capital plans that clearly describe how the programs will recruit,  train, and retain new staff to meet the program’s growing demands as CBP  implements new program elements. In March 2004, we testified that CBP’s  targeting system does not incorporate all key elements of a risk  management framework and recognized modeling practices in assessing  the risks posed by oceangoing cargo containers.
section_title: C-TPAT Grants Importers Reduced Scrutiny with Limited Assurance of Improved Security
paragraphs: My statement will now focus on the results of our work on the C-TPAT  program.
subsections: section_title: C-TPAT Benefits Reduce Scrutiny of Shipments
paragraphs: In our C-TPAT report we noted that the C-TPAT program offers numerous  benefits to C-TPAT members. As table 2 shows, these benefits may reduce  the scrutiny of members’ shipments. These benefits are emphasized to the  trade community through direct marketing in presentations and via CBP’s  Web site. Although these benefits potentially reduce the likelihood of  inspection of members’ shipments, CBP officials noted that all shipments  entering the United States are subject to random inspections by CBP  officials or inspections by other agencies.
section_title: CBP Grants Benefits before Verification of Security Procedures
paragraphs: We also reported that CBP does not grant program benefits until it has  reviewed and certified applicants’ security profiles and, for importers,  completed an additional review called the vetting process. According to  CBP, approximately 23 percent of the security profiles it received  contained shortcomings that prevented the companies from being certified  and eligible for program benefits. However, CBP has stated that a  company will not be rejected from participating in C-TPAT if there are  problems with its security profile. Instead, CBP says it will work with  companies to try to resolve and overcome any deficiencies with the profile  itself. Regarding the vetting process, we reported that according to CBP, to  date most members who have been vetted have proven to have favorable  or neutral importing histories. CBP officials told us that not many  members have been denied benefits as a result of the vetting process.
Although CBP does not grant program benefits until it has certified and  vetted members, we reported that neither the certification nor the vetting  process provides an actual verification that the supply chain security  measures contained in the C-TPAT member’s security profile are accurate  and are being followed before CBP grants the member benefits. A direct  examination of selected members’ security procedures is conducted later  as part of CBP’s validation process, as discussed below.
section_title: Weaknesses Exist in Process for Verifying Security Procedures
paragraphs: As we reported, we found weaknesses in the validation process that limit  CBP’s ability to ensure that the C-TPAT program supports the prevention  of terrorists and terrorist weapons from entering the United States. First,  we reported that CBP’s validation process is not rigorous enough to  achieve its stated purpose, which is to ensure that the security procedures  outlined in members’ security profiles are reliable, accurate, and effective.  CBP officials told us that validations are not considered independent  audits, and the objectives, scope, and methodology of validations are  jointly agreed upon with the member representatives. In addition, CBP has  indicated that it does not intend for the validation process to be an  exhaustive review of every security measure at each originating location;  rather, it selects specific facets of the members’ security profiles to review  for their reliability, accuracy, and effectiveness. For example, the guidance  to ocean carriers for preparing a security profile directs the carriers to  address, at a minimum, three broad areas (security program, personnel  security, and service provider requirements), which contain several more  specific security measures, such as facilities security and pre-employment  screening. According to CBP officials, as well as our review of selected  case files, validations examine only a few facets of members’ security  profiles. CBP supply chain specialists, who are responsible for conducting  most of the validations, are supposed to individually determine which  segments of a company’s supply chain security will be suggested to the  member for validation. To assist in this decision, supply chain specialists  are supposed to compare a company’s security profile, as well as any self- assessments or other company materials or information retrievable in  national databases, against the C-TPAT security guidelines to determine  which elements of the profile will be validated. Once the supply chain  specialist determines the level and focus of the validation, the specialist is  supposed to contact the member company with a potential agenda for the  validation. The two parties then jointly reach agreement on which security  elements will be reviewed and which locations will be visited.
Moreover, as we reported, CBP has no written guidelines for its supply  chain specialist to indicate what scope of effort is adequate for the  validation to ensure that the member’s security measures are reliable,  accurate, and effective, in part because it seeks to emphasize the  partnership nature of the program. Importantly, CBP has no baseline  standard for what minimally constitutes a validation. CBP discourages  supply chain specialists from developing a set checklist of items to  address during the validation, as CBP does not want to give the  appearance of conducting an audit. In addition, as discussed below, the  validation reports we reviewed did not consistently document how the  elements of members’ security profiles were selected for validation.
Second, we also reported that CBP has not determined the extent to which  it must conduct validations of members’ security profiles to ensure that  the operation of C-TPAT is consistent with its overall approach to  managing risk. In 3 years of C-TPAT operation, CBP has validated about   11 percent of its certified members. CBP’s original goal was to validate all  certified members within 3 years of certification. However, CBP officials  told us that because of rapid growth in program membership and its  staffing constraints, it would not be possible to meet this goal. In February  2004, CBP indicated that approximately 5,700 companies had submitted  signed agreements to participate in the program. As shown in figure 2, by  April 2005, the number of members had grown to over 9,000, about 4,800  of which had been certified and were thus eligible for validation.  According to CBP, as of April 2005, CBP staff had completed validations of  550 companies, including 174 importers.
In our C-TPAT report we noted that CBP has made efforts to hire  additional supply chain specialists to handle validations for the growing  membership. As of August 2004, CBP had hired a total of 40 supply chain  specialists to conduct validations, with 24 field office managers also  available to conduct validations. CBP officials told us the bureau is  currently conducting as many validations as its resources allow. However,  CBP has not determined the number of supply chain specialists it needs or  the extent to which validations are needed to provide reasonable  assurance that the program is consistent with a sound risk management  approach to securing U.S.-bound goods.
Finally, we reported that it would not be possible for CBP to meet its goal  of validating every member within 3 years of certification. Instead, CBP  told us it is using a risk-based approach, which considers a variety of  factors to prioritize which members should be validated as resources  allow. CBP has an internal selection process it is supposed to apply to all  certified members. Under this process CBP officials are supposed to  prioritize members for validation based on established criteria but may  also consider other factors. For example, recent seizures involving C- TPAT members can affect validation priorities. If a member is involved in  a seizure, CBP officials noted that the member is supposed to lose  program benefits and be given top priority for a validation. In addition,  CBP officials told us that an importer that failed CBP’s vetting process  would also be given top priority for a validation. CBP officials have taken  this approach because any importer that fails the vetting process is not  supposed to receive program benefits until after successful completion of  the validation process.
section_title: Incomplete Progress Made in Addressing Management Weaknesses
paragraphs: As we reported, CBP continues to expand the C-TPAT program without  addressing management weaknesses that could hinder the bureau from  achieving the program’s dual goals of securing the flow of goods bound for  the United States and facilitating the flow of trade. First, we reported that  CBP is still developing an implementation plan to address the strategies  for carrying out the program’s goals and those elements required in a  human capital plan. For example, CBP said it has developed new  positions, training programs and materials, and a staffing plan. Further,  CBP said it will continue to refine all aspects of the C-TPAT human capital  plan to include headquarters personnel, additional training requirements,  budget, and future personnel profiles.
Second, we reported that CBP continues developing a comprehensive set  of performance measures and indicators for C-TPAT. According to CBP,  developing these measures for C-TPAT, as well as other programs in the  bureau, has been difficult because CBP lacks data necessary to exhibit  whether a program has prevented or deterred terrorist activity. For  example, as noted in the C-TPAT strategic plan, it is difficult to measure  program effectiveness in terms of deterrence because generally the direct  impact on unlawful activity is unknown. The plan also notes that while  traditional workload measures are a valuable indicator, they do not  necessarily reflect the success or failure of the bureau’s efforts. CBP is  working to collect more substantive information—related to C-TPAT  activities (i.e., current workflow process)—to develop its performance  measures. In commenting on a draft of our report, CBP indicated it has  developed initial measures for the program but will continue to develop  and refine these measures to ensure program success.
Third, we reported that CBP’s record keeping for the program is  incomplete, as key decisions are not always documented and  programmatic information is not updated regularly or accurately. Federal  regulations require that bureau record-keeping procedures provide  documentation to facilitate review by Congress and other authorized  agencies of government. Further, standards for internal control in the  federal government require that all transactions be clearly documented in  a manner that is complete, accurate, and useful to managers and others  involved in evaluating operations. During our review of six company files  for which validations had been completed, it was not always clear what  facet of the security profile was being validated and why a particular site  was selected at which to conduct the validation because there was not  always documentation of the decision-making process. The aspects of the  security profiles covered and sites visited did not always appear to be the  most relevant. For example, one validation report we reviewed for a major  retailer—one that imports the vast majority of its goods from Asia— indicated that the validation team reviewed facilities in Central America.  CBP officials noted that it recently revised its validation report format to  better capture any justification for report recommendations and best  practices identified. After reviewing eight of the more recent validation  reports, we noted that there appeared to be a greater discussion related to  the rationale for validating specific aspects of the security profiles.  However, the related company files did not consistently contain other  documentation of members’ application, certification, vetting, receipt of  benefits, or validation. While files contained some of these elements, they  were generally not complete. In fact, most files did not usually contain  anything other than copies of the member’s C-TPAT agreement, security  profiles, and validation report.
Further, we reported that CBP does not update programmatic information  regularly or accurately. In particular, the reliability of CBP’s database to  track member status using key dates in the application through validation  processes is questionable. The database, which is primarily used for  documentation management and workflow tracking, is not updated on a  regular basis. In addition, C-TPAT management told us that earlier data  entered into the database may not be accurate, and CBP has taken no  systematic look at the reliability of the database. CBP officials also told us  that there are no written guidelines for who should enter information into  the database or how frequently the database should be updated. We made  several requests over a period of weeks to review the contents of the  database to analyze workload factors, including the amount of time that  each step in the C-TPAT application and review process was taking. The  database information that CBP ultimately provided to us was incomplete,  as many of the data fields were missing or inaccurate. For example, more  than 33 percent of the entries for validation date were incomplete. In  addition, data on the status of companies undergoing the validation  process was provided in hard copy only and included no date information.  CBP officials told us that they are currently exploring other data  management systems, working to develop a new, single database that  would capture pertinent data, as well as developing a paperless  environment for the program.
section_title: GAO Recommendations and CBP Response
paragraphs: Our C-TPAT report recommended that the Secretary of Homeland Security  direct the Commissioner of U.S. Customs and Border Protection to take  the following five actions:    strengthen the validation process by providing appropriate guidance to  specialists conducting validations, including what level of review is  adequate to determine whether member security practices are reliable,  accurate, and effective;    determine the extent (in terms of numbers or percentage) to which  members should be validated in lieu of the original goal to validate all  members within 3 years of certification;   complete the development of performance measures, to include  outcome-based measures and performance targets, to track the  program’s status in meeting its strategic goals;   complete a human capital plan that clearly describes how the C-TPAT  program will recruit, train, and retain sufficient staff to successfully  conduct the work of the program, including reviewing security profiles,  vetting, and conducting validations to mitigate program risk; and  implement a records management system that accurately and timely  documents key decisions and significant operational events, including  a reliable system for (1) documenting and maintaining records of all  decisions in the application through validation processes, including but  not limited to documentation of the objectives, scope, methodologies,  and limitations of validations, and (2) tracking member status.
In commenting on a draft of the report, CBP generally agreed with our  recommendations and outlined actions it either had taken or was planning  to take to implement them.
After our work was completed, CBP issued new security criteria for C- TPAT importers. Although we have not assessed the new criteria in detail,  the new criteria appear to better define the minimum security  expectations of importers participating in the C-TPAT program than the  prior security guidelines. For example, under the prior security guidelines,  all importers were to secure containers’ internal and external  compartments and panels. Under the new security criteria, importers are  to explicitly require all containers bound for the United States to have  high-security seals affixed to them. In addition, the new criteria appear to  place a greater emphasis on security procedures throughout importers’  supply chains than the prior guidelines. Specifically, the new criteria state  that importers must have written and verifiable processes for the selection  of business partners, as well as documentation of whether these business  partners are either C-TPAT certified or meet the C-TPAT security  criteria—requirements not found in the prior security guidelines.  However, the new security criteria do not address our recommendations  for improving the program and may place an even greater emphasis on the  need to strengthen the validation process. According to the new criteria,  importers wishing to join the C-TPAT program must submit security  profiles that address the new criteria as part of the certification process.  But importers who are already C-TPAT members are not required to  provide any written certification that they meet the new security criteria  and will not have to resubmit their security profiles. Instead, CBP will use  validations to gauge whether or not these members have adopted the new  security criteria. This places a greater emphasis on the need for CBP to  establish guidelines for what constitutes a validation and the extent to  which it must conduct validations to ensure that the C-TPAT program is  consistent with its overall approach to managing risk.
section_title: Improvements Needed in CSI Targeting, Inspection and Management Efforts
paragraphs: My statement will now focus on the results of our work on the CSI  program.
subsections: section_title: Limitations Exist in Ability to Target Containers Overseas
paragraphs: In our CSI report, we noted that CBP officials told us the CSI program has  produced factors that contribute to CBP’s ability to target shipments at  overseas seaports, including improved information sharing between the  CSI teams and host government officials regarding U.S.-bound shipments  and a heightened level of bilateral cooperation on and international  awareness of the need for securing the global shipping system. However,  we found factors that may limit the program’s effectiveness at some ports,  including (1) staffing imbalances at CSI ports and (2) weaknesses in one  source of data CBP relies upon to target shipments.
As we reported, one factor negatively affecting CBP’s ability to target  containers is staffing imbalances across ports. Although CBP’s goal is to  target all U.S.-bound containers at CSI ports before they depart for the  United States, it has not been able to place enough staff at some CSI ports  to do so. As a result of these imbalances, 35 percent of U.S.-bound  shipments from CSI ports were not targeted and were therefore not  subject to inspection overseas—the key goal of the CSI program. CBP has  been unable to staff the CSI teams at the levels called for in the CSI  staffing model because of diplomatic and practical considerations.  However, CBP’s staffing model for CSI does not consider whether some of  the targeting functions could be performed in the United States. For  example, the model does not consider what minimum number of targeters  need to be physically located at CSI ports to carry out duties that require  an overseas presence (such as coordinating with host government  officials) as opposed to other duties that could be performed in the United  States (such as reviewing manifests and databases). CBP has placed  targeters at its National Targeting Center to assist CSI teams in targeting  containers for inspection, which demonstrates that CBP does not have to  rely exclusively on overseas targeters as called for in its staffing model.
Further, we reported the existence of limitations in one data source CSI  teams use for targeting high-risk containers. For CSI, CBP uses manifest  information as one data source to help characterize the risk level of U.S.- bound shipments, information that may be unreliable and incomplete.  Although CBP officials told us that the quality of the manifest data has  improved, there is no method to routinely verify whether the manifest data  accurately reflect the contents within the cargo container.
section_title: Some Containers Were Not Inspected for a Variety of Reasons
paragraphs: As we reported, since the implementation of CSI through September 11,  2004, 28 percent (4,013) of containers referred to host government officials  for inspection were not inspected for a variety of reasons including  operational limitations that prevented the containers from being inspected  before they left the port. In 1 percent of these cases, host government  officials denied inspections, generally because inspection requests were  based on factors not related to security threats, such as drug smuggling.  Containers referred to host governments for inspection by CSI teams that  are not inspected overseas are supposed to be referred for inspection  upon arrival at the U.S. destination port. CBP officials noted that between  July 2004 and September 2004, about 93 percent of shipments referred for  domestic inspection were inspected at a U.S. port. CBP officials explained  that some of these shipments were not inspected domestically because  inspectors at U.S. ports received additional information or entry  information that lowered the risk characterization of the shipments or  because the shipments remained aboard the carrier and were never  offloaded at a U.S. port.
Further, we reported that for the 72 percent (10,343) of containers that  were inspected overseas, CBP officials told us there were some anomalies  that led to law enforcement actions but that no WMD were discovered.  There are two types of radiation detection devices used at CSI ports to  inspect cargo containers—radiation isotope identifier devices and  radiation portal monitors—as well as various types of X-ray and gamma- ray imaging machines used at CSI ports to inspect cargo containers, each  with different detection and identification capabilities. However, the  inspection equipment used at CSI ports varies in detection capability, and  there are no minimum requirements for the detection capability of  equipment used for CSI. In addition, technologies to detect other WMD  have limitations. As a result, CBP has no absolute assurance that  inspections conducted under CSI are effective at detecting and identifying  WMD. According to CBP officials, the bureau has not established  minimum technical requirements for the nonintrusive inspection  equipment or radiation detection equipment that can be used as part of  CSI because of sovereignty issues, as well as restrictions that prevent CBP  from endorsing a particular brand of equipment. Although CBP cannot  endorse a particular brand of equipment, the bureau could still establish  general technical capability requirements for any equipment used under  CSI similar to other general requirements CBP has for the program, such  as the country committing to establishing an automated risk management  system. Because the CSI inspection could be the only inspection of a  container before it enters the interior of the United States, it is important  that the nonintrusive inspection and radiation detection equipment used as  part of CSI provides some level of assurance of the likelihood that the  equipment could detect the presence of WMD.
section_title: CBP Has Made Progress Developing a Strategic Plan and Performance Measures for CSI, but Further Refinements Are Needed
paragraphs: As we reported, CBP has made some improvements in the management of  CSI, but further refinements to the bureau’s management tools are needed  to help achieve program goals. Regarding a strategic plan for CSI, CBP  developed a strategic plan in February 2004 that contained three of the six  key elements the Government Performance and Results Act (GPRA)  required for executive agency strategic plans but lacked (1) a description  of how performance goals and measures are related to the general goals  and objectives of the program, (2) an identification of key factors external  to the agency and beyond its control that could affect the achievement of  general goals and objectives, and (3) a description of program evaluations.  We also reported that CBP told us it was revising the CSI strategic plan to  address the elements we raised in the report. We noted that it appeared  that the bureau’s initial efforts in this area met the intent of our prior  recommendation to develop a strategic plan for CSI, but we could not  determine the effectiveness of further revisions to the plan without first  reviewing and evaluating them.
Further, we recommended in our July 2003 report that CBP expand efforts  already initiated to develop performance measures for CSI that include  outcome-oriented indicators. Until recently, CBP based the performance  of CSI on program outputs such as (1) the number and percentage of bills  of lading reviewed, further researched, referred for inspection, and  actually inspected, and (2) the number of countries and ports participating  in CSI. CBP has developed 11 performance indicators for CSI, 2 of which it  identified as outcome-oriented: (1) the number of foreign mitigated  examinations and (2) the percentage of worldwide U.S.-destined  containers processed through CSI ports. However, CSI lacks performance  goals and measures for other program objectives. In commenting on a  draft of our April 2005 report, DHS noted that CBP is continuing to refine  existing performance measures and develop new performance measures  for its program goals. For example, CBP was developing a cost efficiency  measure to measure the cost of work at a port and to contribute to staffing  decisions.
section_title: GAO Recommendations and CBP Response
paragraphs: Our CSI report recommended that the Secretary of Homeland Security  direct the Commissioner of U.S. Customs and Border Protection to take  the following three actions:  revise the CSI staffing model to consider (1) what functions need to be  performed at CSI ports and what functions can be performed in the  United States, (2) the optimum levels of staff needed at CSI ports to  maximize the benefits of targeting and inspection activities in  conjunction with host nation customs officials, and (3) the cost of  locating targeters overseas at CSI ports instead of in the United States;   establish minimum technical requirements for the capabilities of  nonintrusive inspection equipment at CSI ports, to include imaging and  radiation detection devices, that help ensure that all equipment used  can detect WMD, while considering the need not to endorse certain  companies and sovereignty issues with participating countries; and   develop performance measures that include outcome-based measures  and performance targets (or proxies as appropriate) to track the  program’s progress in meeting all of its objectives.
In commenting on a draft of the report, DHS generally agreed with our  recommendations and outlined actions CBP either had taken or was  planning to take to implement them.
This concludes my statement. I would now be happy to answer any  questions for the subcommittee.
section_title: GAO Contacts and Staff Acknowledgments
paragraphs: For further information about this testimony, please contact me at (202)  512-8816. Stephen L. Caldwell, Deena D. Richart, and Kathryn E. Godfrey  also made key contributions to this statement.
section_title: Related GAO Products
paragraphs: Maritime Security: Enhancements Made, But Implementation and  Sustainability Remain Key Challenges. GAO-05-448T (Washington, D.C.:  May 17, 2005).
Container Security: A Flexible Staffing Model and Minimum Equipment  Requirements Would Improve Overseas Targeting and Inspection  Efforts. GAO-05-557 (Washington, D.C.: April 26, 2005).
Maritime Security: New Structures Have Improved Information  Sharing, but Security Clearance Processing Requires Further Attention.  GAO-05-394 (Washington, D.C.: April 15, 2005).
Preventing Nuclear Smuggling: DOE Has Made Limited Progress in  Installing Radiation Detection Equipment at Highest Priority Foreign  Seaports. GAO-05-375 (Washington, D.C.: March 31, 2005).
Cargo Security: Partnership Program Grants Importers Reduced  Scrutiny with Limited Assurance of Improved Security. GAO-05-404  (Washington, D.C.: March 11, 2005).
Homeland Security: Process for Reporting Lessons Learned from Seaport  Exercises Needs Further Attention. GAO-05-170 (Washington, D.C.:  January 14, 2005).
Port Security: Planning Needed to Develop and Operate Maritime Worker  Identification Card Program. GAO-05-106 (Washington, D.C.: December  10, 2004).
Maritime Security: Better Planning Needed to Help Ensure an Effective  Port Security Assessment Program. GAO-04-1062 (Washington, D.C.:  September 30, 2004).
Maritime Security: Substantial Work Remains to Translate New  Planning Requirements into Effective Port Security. GAO-04-838  (Washington, D.C.: June 30, 2004).
Border Security: Agencies Need to Better Coordinate Their Strategies  and Operations on Federal Lands. GAO-04-590 (Washington, D.C.: June  16, 2004).
Homeland Security: Summary of Challenges Faced in Targeting  Oceangoing Cargo Containers for Inspection. GAO-04-557T (Washington,  D.C.: March 31, 2004).
Rail Security: Some Actions Taken to Enhance Passenger and Freight  Rail Security, but Significant Challenges Remain. GAO-04-598T  (Washington, D.C.: March 23, 2004).
Department of Homeland Security, Bureau of Customs and Border  Protection: Required Advance Electronic Presentation of Cargo  Information. GAO-04-319R (Washington, D.C.: December 18, 2003).
Homeland Security: Preliminary Observations on Efforts to Target  Security Inspections of Cargo Containers. GAO-04-325T (Washington,  D.C.: December 16, 2003).
Posthearing Questions Related to Aviation and Port Security.   GAO-04-315R (Washington, D.C.: December 12, 2003).
Homeland Security: Risks Facing Key Border and Transportation  Security Program Need to Be Addressed. GAO-03-1083 (Washington, D.C.:  September 19, 2003).
Maritime Security: Progress Made in Implementing Maritime  Transportation Security Act, but Concerns Remain. GAO-03-1155T  (Washington, D.C.: September 9, 2003).
Container Security: Expansion of Key Customs Programs Will Require  Greater Attention to Critical Success Factors. GAO-03-770 (Washington,  D.C.: July 25, 2003).
Homeland Security: Challenges Facing the Department of Homeland  Security in Balancing Its Border Security and Trade Facilitation  Missions. GAO-03-902T (Washington, D.C.: June 16, 2003).
Transportation Security: Federal Action Needed to Help Address  Security Challenges. GAO-03-843 (Washington, D.C.: June 30, 2003).
Transportation Security: Post-September 11th Initiatives and Long- Term Challenges. GAO-03-616T (Washington, D.C.: April 1, 2003).
Border Security: Challenges in Implementing Border Technology.   GAO-03-546T (Washington, D.C.: March 12, 2003).
Customs Service: Acquisition and Deployment of Radiation Detection  Equipment. GAO-03-235T (Washington, D.C.: October 17, 2002).
Port Security: Nation Faces Formidable Challenges in Making New  Initiatives Successful. GAO-02-993T (Washington, D.C.: August 5, 2002).
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