Supply Chain Security: Feasibility and Cost-Benefit Analysis Would Assist DHS and Congress in Assessing and Implementing the Requirement to Scan 100 Percent of U.S.-Bound Containers
Published: 2009-10-30T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: U.S. Customs and Border Protection (CBP), within the Department of Homeland Security (DHS) is responsible for, among other things, the security of cargo containers shipped to the United States. In fiscal year 2008, 611 ports shipped a total of 9.8 million containers to the country. The 9/11 Commission Act (9/11 Act) requires 100 percent of U.S.-bound cargo containers to be scanned by 2012, and CBP has begun implementing the Secure Freight Initiative (SFI) to address this requirement. GAO was requested to assess CBP's efforts to implement the 9/11 Act requirement. This report addresses (1) CBP's progress at the initial ports participating in the SFI program, (2) CBP plans to implement SFI, (3) the extent to which CBP has estimated costs and conducted a cost-benefit analysis of 100 percent scanning, and (4) any challenges to integrating 100 percent scanning with existing container security programs. GAO reviewed operating procedures for the SFI ports and analyzed cost data. GAO also visited six of the seven original SFI ports and spoke to officials from CBP, foreign governments, and private industry.
section_title: What GAO Found
paragraphs: CBP has made limited progress in scanning containers at the initial ports participating in the SFI program, leaving the feasibility of 100 percent scanning largely unproven. Since the inception of the SFI program, CBP has not been able to achieve 100 percent scanning at any participating port. While CBP has been able to scan a majority of the U.S.-bound cargo containers at the comparatively low volume ports, it has not achieved sustained scanning rates above five percent at the comparatively larger ports. CBP has not developed a plan to scan 100 percent of U.S.-bound container cargo by 2012, but has a strategy to expand SFI to select ports where it will mitigate the greatest risk of WMD entering the United States. CBP does not have a plan to scan cargo containers at all ports because, according to agency officials, challenges encountered thus far in implementing SFI indicate that doing so worldwide will be difficult to achieve. However, CBP has not conducted a feasibility analysis of expanding 100 percent scanning, as required by the SAFE Port Act. Such an analysis could help both CBP and Congress determine the most effective way forward to enhance container security. Recognizing that its strategy will not meet the requirement to scan all U.S.-bound cargo containers, DHS plans to issue a blanket extension to all foreign ports by July 2012 to be in compliance with the 9/11 Act. DHS officials acknowledged that they may revisit this plan before the July 2012 deadline. CBP, while identifying some SFI program costs, has not developed a complete estimate of U.S. program costs because of the lack of a decision on a clear path forward. CBP has also not conducted any cost-benefit analysis which would include other economic costs, including those borne outside the United States, which would be important to any analysis of alternatives to achieving the 100 percent scanning requirement. While uncertainties exist, a cost estimate and cost-benefit analysis, consistent with federal best practices, could assist DHS and CBP in better communicating the magnitude of the costs and benefits to Congress and in designing a clear path forward for enhancing cargo container security. CPB faces a number of potential challenges in integrating the 100 percent scanning requirement into its existing container security programs. The 100 percent scanning requirement is a departure from existing container security programs in that it requires that all containers be scanned before CBP determines their potential risk level. Senior CBP officials and international trading partners say this change differs from CBP's current risk-based approach based on international supply chain security standards. Our work also indicates that the 100 percent scanning requirement could present challenges to the continued operation of existing container security programs--depending upon how the SFI program is implemented and 100 percent scanning is achieved. Some foreign governments have stated they may adopt a reciprocal requirement that all U.S. origin containers be scanned, which would present additional challenges at domestic U.S. ports.

section_title: Letter
paragraphs: Concerns about the ability of terrorists to smuggle weapons of mass  destruction (WMD) inside cargo containers bound for the United States  have heightened since the terrorist attacks of September 11, 2001.  Oceangoing cargo containers play a vital role in the movement of cargo  between global trading partners. In fiscal year 2008, 611 foreign ports  shipped a total of 9.8 million cargo containers to the United States.  Balancing security concerns with the need to facilitate the free flow of  commerce remains an ongoing challenge for the public and private sectors  alike. While U.S. Customs and Border Protection (CBP), within the  Department of Homeland Security (DHS), has maintained that the  likelihood of terrorists smuggling WMD into the United States in cargo  containers is relatively low, the consequence of such an action could be  devastating. For example, studies have estimated costs of a WMD attack at  a U.S. port to range from $58 billion to as high as $1 trillion.
In the federal government, CBP is responsible for overseeing oceangoing  container security and reducing the vulnerabilities associated with the  supply chain—the flow of goods from manufacturers to retailers. As CBP  performs this mission, it maintains two overarching and sometimes  conflicting goals—increasing security while efficiently facilitating  legitimate trade and commerce. CBP has developed a layered security  strategy to address container security concerns. Core components of the  layered security strategy include analyzing information to identify  containers that may be at high-risk of transporting WMD, working with  host governments to examine high-risk containers at foreign ports, and  providing benefits to companies that comply with predetermined security  measures. In addition to CBP’s layered programs, the Department of  Energy (DOE) provides radiation detection equipment to foreign  governments to prevent terrorists from smuggling WMD in cargo  containers through foreign seaports. Related to these U.S. container  security programs, CBP has worked through the World Customs  Organization (WCO) to develop and promote implementation of the SAFE  Framework of Standards for supply chain security, which as of June 2009,  157 countries have agreed to implement.
To further address container security concerns, Congress passed, and the  President signed, the Security and Accountability for Every (SAFE) Port  Act in 2006. The SAFE Port Act requires that pilot projects be established  at three ports to test the feasibility of scanning 100 percent of U.S.-bound  containers at foreign ports. To fulfill this requirement and determine the  overall feasibility and efficacy of 100 percent scanning, in December 2007,  DHS, the Department of State, and DOE jointly announced the formation  of the Secure Freight Initiative (SFI) pilot program. In August 2007, 2  months before the SFI pilot began operations, the Implementing  Recommendations of the 9/11 Commission Act of 2007 (9/11 Act) was  enacted, which requires, among other things, that by July 2012, 100  percent of all U.S.-bound cargo containers be scanned before being placed  on a vessel at a foreign port, with possible extensions for ports at which  certain conditions exist. While foreign ports are not required to  participate, the 9/11 Act scanning requirement provides that cargo  containers loaded on a vessel in a foreign port that have not been scanned  are not to be allowed into the United States. This replaced a similar  provision in the SAFE Port Act that called for 100 percent scanning but did  not have a deadline for full implementation of the scanning requirement.  The 9/11 Act did not, however, specify who is to conduct the container  scans or who is to pay for scanning equipment or operations and  maintenance. According to CBP officials, with the passage of the 9/11 Act,  efforts to implement 100 percent scanning at participating ports changed  from a pilot test of the operational feasibility of scanning 100 percent of  U.S.-bound containers to an initial phasing in of the 100 percent scanning  requirement.
Both DHS and CBP, as well as foreign governments and customs  organizations, have expressed serious concerns regarding the feasibility  and efficacy of the 100 percent scanning requirement. In April 2009, the  Acting Commissioner for CBP testified that much had been done to  enhance the security of cargo containers relative to other modes of  transportation, and added that the area of maritime security should not be  overemphasized to the detriment of other transportation modes. He also  emphasized that the threat of a significant nuclear weapon in a container  remains remote and requested that the scanning requirement be  thoughtfully reconsidered by Congress. In January 2009, the Secretary of  the Department of Homeland Security also stated that any requirement  regarding container scanning from Congress must be achievable and  affordable and noted that the July 2012 deadline for 100 percent container  scanning appeared to be unattainable. In April 2009, the Secretary  determined that CBP would focus deployment of the SFI program to  foreign locations of strategic importance in a way that will maximize  security benefits given its limited resources. In addition to DHS’ concerns  that the requirement to scan all U.S.-bound cargo containers cannot be  met, foreign governments and customs organizations have expressed their  opposition to the requirement. For example, in June 2008, members of the  WCO unanimously endorsed a resolution expressing concern that  implementation of 100 percent scanning would be detrimental to world  trade and could result in unreasonable delays, port congestion, and  international trading difficulties. Similarly, in May 2008, the European  Parliament issued a resolution calling for the United States to repeal the  100 percent scanning requirement.
In response to your request, we are providing you with information on  CBP’s efforts to implement the SAFE Port and 9/11 Acts.  This report  addresses the following questions:     What progress has CBP made toward implementing 100 percent  scanning at the initial ports participating in the SFI program?
What planning efforts has CBP made to address the requirement to  scan all U.S.-bound cargo containers by July 2012?
What are the estimated costs to date of the SFI program, and to what  extent have future implementation costs been estimated?
What challenges, if any, does CBP face in integrating the 100 percent  scanning requirement with its existing container security programs?
To address these questions, we compared data on the volume of U.S.- bound cargo containers and the number of containers scanned at SFI ports  to the scanning requirement set forth in the 9/11 Act. After speaking with  CBP officials to resolve inconsistencies with the scanning data, we  determined that the data provided were sufficiently reliable for our  purposes. We reviewed available CBP documentation on expanding the  SFI program, including the SFI program management plan and  implementation strategy, and assessed it against A Guide to the Project  Management Body of Knowledge. We obtained available data on costs for  operating the SFI program as reported by CBP and DOE, which we  determined to be sufficiently reliable after assessing how CBP and DOE  collect and manage cost data. We assessed CBP’s cost estimates for  further implementation of the SFI program using the GAO Cost  Estimating and Assessment Guide. We reviewed the need to do a cost- benefit analysis using criteria in DHS’ Cost-Benefit Analysis Guidebook  and Office of Management and Budget (OMB) Circulars. We reviewed  bilateral and multilateral efforts to enhance container security, such as the  WCO SAFE Framework of Standards. We conducted site visits at six of the  seven foreign ports that have been involved in the SFI program, and spoke  with foreign government, CBP, and terminal operator officials during these  visits. While the results of these site visits and interviews cannot be  generalized across all ports that ship cargo containers to the United States,  by observing operations at six of the seven ports involved with the SFI  program to date—Busan, South Korea; Puerto Cortes, Honduras; Salalah,  Oman; Southampton, United Kingdom; Hong Kong; and Singapore—we  gained an understanding of the factors and challenges associated with  implementing SFI at foreign ports. In addition, we met with CBP, DOE,  and State Department officials who have program responsibilities for SFI  and other programs that are part of the U.S. government’s layered  maritime cargo container security strategy. Further, we met with  representatives from the WCO and European Commission, and officials  from seven foreign governments, five of which contain an SFI pilot port, to  discuss multilateral and bilateral efforts to promote supply chain security.  We also spoke with six members of CBP’s Customs Trade Partnership  against Terrorism (C-TPAT) program. Our interviews with these trade  industry representatives were based on a nonprobability sample, so while  they are not generalizable to the entire maritime trade industry, they  provide insight into the relationship between the SFI and C-TPAT  programs. We met with CBP officials at domestic ports, as well as  domestic port authorities to understand the impact of a reciprocal  scanning requirement. As appropriate, we also relied on our prior body of  work on container security conducted over the last several years (see list  of Related GAO Products at the end of this report).
We conducted this performance audit from August 2008 through October  2009 in accordance with generally accepted government auditing  standards. Those standards require that we plan and perform the audit to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  that the evidence obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives. A detailed discussion of  our scope and methodology is contained in appendix I.
subsections: section_title: Background
subsections: section_title: Vulnerabilities of Containers in the International Supply Chain
paragraphs: Ports are critical gateways for the movement of commerce through the  international supply chain. The facilities, vessels, and infrastructure within  ports, and the cargo containers passing through them, all have  vulnerabilities that terrorists could exploit. Containers carrying goods that  are shipped in oceangoing vessels are of particular concern because they  can be filled overseas at many different locations and are transported  through complex logistics networks before reaching U.S. ports. In  addition, transporting a shipping container from its international point of  origin to its final destination involves many different participants and  many points of transfer. The container, or material in it, can be affected  not only by the manufacturer or supplier of the material being shipped, but  also by carriers who are responsible for getting the material to a port, as  well as by personnel who load containers onto the ships. Others who  interact with the cargo or have access to the records of the goods being  shipped include exporters who make arrangements for shipping and  loading, freight consolidators who package disparate cargo into  containers, and forwarders who manage and process the information  about what is being loaded onto the ship. Figure 1 illustrates many of the  key participants and points of transfer involved from the time that a  container is loaded for shipping to its arrival at the destination port and  ultimately the importer.
Several studies of maritime security conducted by federal, academic,  nonprofit, and business organizations have concluded that the movement  of oceangoing cargo in containers is vulnerable to some form of terrorist  action. Every time responsibility for cargo in containers changes hands  along the supply chain there is the potential for a security breach. As a  result, vulnerabilities exist that terrorists could take advantage of by, for  example, placing a WMD into a container for shipment to the United States  or elsewhere. U.S. government officials believe that the likelihood of  terrorists smuggling WMD into the United States in cargo containers is  relatively low. While there have been no known incidents of containers  being used to transport WMD, criminals have exploited containers for  other illegal purposes, such as smuggling weapons, people, and illicit  substances.
section_title: The U.S. Government Is Engaged in Efforts to Secure Containers in the International Supply Chain
paragraphs: In the federal government, CBP is responsible for overseeing oceangoing  container security and reducing the vulnerabilities associated with the  supply chain. While CBP officials at domestic ports continue efforts to  identify and examine imports arriving in containers that may pose a risk  for terrorism, CBP’s post-9/11 strategy also involves focusing security  efforts beyond U.S. borders to target and examine cargo that may pose a  risk for terrorism before it enters U.S. ports. CBP’s strategy is based on a  layered approach of related initiatives that attempt to focus limited  resources on potentially risky cargo shipped in containers bound for the  United States while allowing other containers carrying cargo to proceed  without unduly disrupting commerce. CBP’s layered strategy to address  container security is complimented by DOE’s efforts to prevent the  proliferation of nuclear materials. DOE has led U.S. efforts to detect  radioactive material in cargo containers originating at foreign ports. A  brief description of CBP and DOE initiatives is provided in table 1.
section_title: CBP Has Taken Steps to Promote Customs Security Standards Internationally
paragraphs: CBP has taken a lead role in working with foreign customs administrations  on approaches to standardize supply chain security worldwide. In 2004,  CBP, along with 11 other member customs administrations of the WCO,  formed the High Level Strategic Group to develop international standards  for customs security practices. The group developed the WCO Framework  of Standards to Secure and Facilitate Global Trade (commonly referred to  as the SAFE Framework), the core concepts of which are based on  components in CBP’s CSI and C-TPAT programs. For example, just as in  the CSI program, the SAFE Framework states that members should use a  risk-management system to target and identify cargo that may pose a risk  for terrorism. Similar to C-TPAT, the SAFE Framework incorporates the  concept of the Authorized Economic Operator (AEO) and provides  technical guidance for customs administrations to develop an AEO  program that offers incentives to companies that comply with  predetermined minimum supply chain security standards. According to  data from the WCO, as of July 2009, about 70 countries, including the 27  members states of the European Union, have implemented or have begun  developing AEO programs. In the United States, C-TPAT is the designated  AEO program and businesses participating in the program are Authorized  Economic Operators. In June 2005, the 173-member customs  administrations of the WCO adopted the SAFE Framework. Further, as of  June 2009, 157 WCO members, including the United States, had signed  letters of intent to implement the SAFE Framework (see fig. 2).
While CBP has developed cooperative relationships with foreign  governments to enhance the security of U.S.-bound cargo containers  before they are placed on a vessel, several factors at foreign ports that  impact the security of cargo are beyond CBP’s control. For example, while  CBP has developed specific standards for the inspection equipment used  to scan cargo containers at domestic ports, CBP has potentially limited  assurance that this inspection equipment is capable of detecting and  identifying potential WMD at foreign ports. Additionally, while CBP can  issue a “do not load” order so that a specific cargo container would not be  allowed on a U.S.-bound vessel, it has no authority to compel host  governments to participate in security programs or to scan cargo  containers that it has determined may pose some risk. For example, when  CBP determines that cargo in a particular container at a CSI or SFI port  poses some risk, it must request that the host government’s customs  service conduct a physical examination of the container since CBP has no  authority to do so itself. Similarly, unlike domestic ports, CBP cannot  compel private sector entities operating at foreign ports to participate in  security initiatives. For example, at one port, for a period of approximately  2 months, the terminal operator ceased to provide CBP information on  which containers leaving the port were bound for the United States. As a  result, CBP had greater difficulty determining which containers were U.S.- bound and, therefore, should be scanned with imaging equipment. Under  these circumstances, CBP would still have the option of preventing the  cargo containers from being loaded onto U.S. bound vessels, or flagging  the containers for further inspection once they arrive in the United States.
section_title: Equipment Used to Conduct Examinations of Cargo Containers
paragraphs: There are generally two types of cargo container examinations—scanning  equipment and physical searches—used as part of the SFI and CSI  programs. There are two basic types of scanning equipment currently used  to examine cargo containers that do not require the container to be  opened: (1) radiation detection equipment, including radiation portal  monitors, and (2) non-intrusive imaging equipment (NII), which may use  X-rays or gamma rays. Radiation detection equipment, such as radiation  portal monitors (RPM) and radiation isotope identification devices (RIID)  detect the presence of radioactive material that may be in a container.  RIIDs and certain types of RPMs can identify the type of material emitting  the radiation and whether the material poses a threat or is a naturally  occurring radioactive material, such as that found in certain ceramic tiles.  We observed at domestic and foreign ports that if radioactive emissions  were detected from a cargo container, customs officials used a handheld  RIID to determine whether the radiation being emitted posed a threat. The  second type of equipment, referred to as NII, uses X-rays or gamma rays to  scan a container and create images of the container’s contents without  opening it. Examples of a RPM, handheld RIID, and NII are depicted in  figure 3.
CBP officials, along with host government officials, review the images  produced with the NII to detect anomalies or shielding that could indicate  the presence of WMD. The 100 percent scanning provision of the 9/11 Act  requires containers to be scanned with both radiation detection and NII  equipment; doing so may identify WMD material that is successfully  shielded from detection by RPM. The average time at which a container is  processed through the scanning system is 3 to 5 minutes. If the use of the  RIID is necessary, the average time increases another 5 to 10 minutes.
section_title: Secure Freight Initiative (SFI)
paragraphs: In response to the SAFE Port Act requirement to implement a pilot  program to determine the feasibility of scanning 100 percent of U.S.-bound  containers with both RPM and NII equipment, CBP, the State Department,  and DOE jointly announced the formation of SFI in December 2006 as an  effort to build upon existing container security measures by enhancing the  U.S. government’s ability to ensure containers are scanned for nuclear and  radiological material overseas and better assess the risk of inbound  containers. In essence, SFI builds upon the CSI and Megaports programs  by combining each program’s scanning technology equipment. To  accomplish this, CBP met with terminal operators to identify foreign ports  for inclusion in the pilot program to scan 100 percent of U.S.-bound  containers. Based on discussions with terminal operators and subsequent  discussions with host government officials, three ports were selected to  implement the SAFE Port Act pilot program: Qasim, Pakistan; Puerto  Cortes, Honduras; and Southampton, United Kingdom. According to CBP  officials, while initiating the SFI program at these ports satisfied the SAFE  Port Act requirement to implement the program at three ports, CBP also  selected the ports of Hong Kong; Busan, South Korea; and Salalah, Oman  to more fully demonstrate the capability of the integrated scanning system  at larger, more complex ports with higher percentages of transshipment  container cargo—cargo containers from one port that are taken off a  vessel at another port to be placed on another vessel bound for the United  States. For example, port officials told us that at the Ports of Hong Kong,  Singapore, and Salalah, transshipment cargo constitutes about 50 percent,  87 percent, and 99 percent of U.S.-bound containers, respectively. CBP  officials also stated that with the passage of the 9/11 Act, the focus of the  SFI program shifted from determining the feasibility of 100 percent  scanning to becoming the first phase of CBP’s phased-in approach to  implementing the 100 percent scanning requirement.
section_title: CBP’s Progress with SFI Implementation and Operation to Date Has Been Limited, Leaving the Feasibility of 100 Percent Scanning Largely Unproven
paragraphs: While CBP and DOE have made progress in integrating new technologies  as part of the SFI program, progress in implementing and expanding the  scanning of U.S.-bound cargo containers at participating ports has been  limited. Some ports that initially agreed to participate in the SFI program  did so for a limited time, or on a limited basis. Logistical, technological,  and other problems at participating ports, as well as concerns regarding  the safety of the NII equipment used for the SFI program, have prevented  any of the participating ports from achieving 100 percent scanning, as  ultimately required by the 9/11 Act, leaving the feasibility and efficacy of  100 percent scanning largely unproven. Moreover, attempts to implement  100 percent scanning at these foreign ports have confirmed challenges  previously identified by CBP and GAO.
subsections: section_title: CBP and DOE Have Made Progress in Integrating and Modifying Scanning Equipment
paragraphs: CBP has been successful in integrating outputs from the various types of  scanning equipment used to scan cargo containers at foreign ports  participating in the SFI program. CBP and DOE were able to integrate the  outputs from RPM and NII equipment with the Automated Targeting  System (ATS) so a CBP officer can review all the data and information  associated with a container on a single screen. CBP officers can also  access scanning information remotely and do not need to be present at an  SFI port to analyze the RPM results and NII images of containers. For  example, at the National Targeting Center-Cargo (NTCC), we observed  that outputs from RPM and NII equipment located at Port Qasim in  Pakistan were accessible to CBP officers located in the United States.  These officers could observe the scanning equipment outputs in  combination with information from ATS to make determinations as to  whether to request that the cargo container being scanned be more closely  examined by host government personnel. CBP officers could also observe  scans of cargo containers being conducted at the port in real time via  cameras that can be operated remotely from the United States. Examples  of scanning outputs and equipment used at an SFI port are shown in   figure 4.
This integration of technologies has also allowed CBP to transfer targeting  efforts involving the Port of Southampton, United Kingdom, to domestic  ports. Currently, CBP officers in Newark, Baltimore, Savannah, and other  domestic port locations have been trained to incorporate the scanned data  from the Port of Southampton into their targeting methodology and  coordinate secondary examinations with the SFI team at the port.  Similarly, at Puerto Cortes in Honduras, we observed that scan data from  imaging and RPM equipment were available for review by CBP and  Honduran Customs officials almost instantly after the images were  generated by the inspection equipment. Honduran Customs officials stated  that, in addition to CBP’s interest in detecting WMD, having this  information available greatly assisted in their efforts to detect and identify  contraband, such as narcotics, being shipped in cargo containers through  the port.
Ports participating in the SFI program have also been able to serve as a  testing ground for new inspection technologies. For example, at the Port  of Salalah in Oman, we observed the testing of mobile platforms to carry  large format radiation detection equipment, known as Mobile Radiation  Detection Identification Systems (MRDIS) that Pacific Northwest National  Laboratory, in conjunction with DOE, has developed (see fig. 4). The  MRDIS units were built to more effectively capture transshipment cargo  (cargo taken off of one vessel to be placed on a U.S.-bound vessel) as it is  being unloaded from a vessel without creating congestion. However, the  effectiveness of the MRDIS, and its impact on the flow of containers, has  not been fully tested because the SFI program is not yet operational at the  Port of Oman.
section_title: Foreign Port Participation in the SFI Program Has Been Limited
paragraphs: CBP reached arrangements with foreign governments to implement the  SFI program at seven foreign ports. As of June 2009, SFI operations have  been conducted at five ports, but in some cases for a limited time or on a  limited basis. In addition, one port has withdrawn and another has yet to  begin scanning operations.
As shown in table 2, the SFI program has operated continuously since  October 2007 at Port Qasim, Pakistan; Puerto Cortes, Honduras; and the  Port of Southampton, United Kingdom and the majority of U.S.-bound  cargo containers from these ports have been scanned. Host government  officials at Puerto Cortes have expressed a desire to continue with the SFI  program and have allocated personnel to support program operations. At  the Port of Southampton, the host government has allowed SFI operations  to continue, but withdrew customs personnel originally allocated to  support program operations after the 6-month arrangement it had with  CBP to participate in the SFI program came to an end. Customs officials in  the United Kingdom stated that the costs associated with assigning  personnel to assist CBP with SFI program operations were preventing  these officials from fulfilling their domestic responsibilities, such as  detecting drugs. As a result, the SFI program at the Port of Southampton is  now solely supported by CBP officers working directly with the terminal  operator.
Among ports that participated in the SFI program, the largest port in terms  of container volume shipped to the United States, the Port of Hong Kong,  participated in the program for about 16 months—scanning containers at  one of the nine terminals on a voluntary basis. The program ended as  scheduled in April 2009 and was not renewed at the mutual decision of the  Hong Kong government and DHS. Discussing their decision not to extend  SFI, Hong Kong port officials observed that CBP-provided statistics  showed no trade facilitation benefits for containers passing through SFI  scanning and noted CBP’s efforts to focus container scanning at those  ports where there was greater risk. They also stated that they saw no  benefit to participation in the program in terms of their own port security  and expressed concerns that equipment and infrastructure costs, as well  as costs to port efficiency, would make full implementation of the SFI  program at all of its terminals unfeasible.
Similarly, according to CBP officials, the government of South Korea  agreed to allow the Port of Busan to participate in the SFI program for 6  months at one terminal at the port. CBP officials stated that the South  Korean government has agreed to extend the program for another 6  months, but no permanent arrangement has been reached.
In addition, two ports that had initially agreed to participate in the  program have since withdrawn or postponed their operations. DHS and  the government of Singapore mutually agreed to suspend the SFI program  at the Port of Singapore before the program began scanning operations,  noting concerns about the potential adverse impact on port efficiencies  due to the large volume and complexity of operations at the port. In this  instance, both DHS and Singapore agreed that the benefits of initiating the  program with existing technology were outweighed by the potential  impact the operations could have on trade flow through the port. Also,  according to CBP officials, Port Salalah in Oman had initially agreed to  participate in the SFI program for 6 months. However, according to U.S.- government officials, implementation of the SFI program at Port Salalah  has been postponed due to port management concerns regarding the  scope, time line, and criteria for success for the program. The officials said  that U.S. government personnel are working with Omani Customs to find a  path forward, but no firm plans or time line yet exist for initiating SFI  operations at the Port of Salalah.
Government officials we spoke with in Asia and Europe generally stated  that they viewed the implementation and operation of the SFI program to  be a pilot—with a definite start and end date—to determine the feasibility  and usefulness of further implementation. As such, they stated that they  do not view the SFI program as being permanent.
section_title: Scanning Rates at Larger SFI Ports Have Been Far Short of 100 Percent
paragraphs: While CBP has been able to scan a majority of U.S.-bound cargo  containers from three comparatively low-volume ports participating in the  SFI program, at two higher volume ports—which constitute approximately  17 percent of containers arriving in the United States—it has been able to  scan no more than 5 percent of U.S.-bound cargo containers, on average,  most of which were scanned after they were determined to be high risk by  CBP officers as part of the CSI program, according to CBP officials. As  shown in table 3, at Port Qasim, Puerto Cortes, and the Port of  Southampton—which together account for 2.4 percent of U.S.-bound  cargo containers with little or no transshipment cargo containers—CBP  has been able to scan, on average, 54 percent to 86 percent of the U.S.- bound cargo containers. In contrast, at the Ports of Hong Kong and  Busan—which together account for 16.6 percent of U.S.-bound cargo  containers and have larger percentages of transshipped cargo—CBP has  been able to scan, on average, 3 to 5 percent of the U.S.-bound cargo  containers. CBP officials stated that while scanning percentages are low,  operations at these ports have been limited to a single terminal or to an  area within a single terminal. They added that these larger ports would  only agree to participate in the program if SFI operations were limited in  scope, and the agency has worked with host governments to expand  operations. However, as of yet, CBP has not made arrangements to expand  operations at these ports.
section_title: The Feasibility of 100 Percent Scanning Remains Largely Unproven as Efforts to Implement and Operate the SFI Program at Participating Ports Have Confirmed Previously Identified Challenges
paragraphs: To date, attempts to implement 100 percent scanning at foreign ports have  confirmed challenges, some of which we and CBP have previously  reported. For example, challenges associated with the perceived safety of  the NII scanning equipment, scanning cargo containers arriving at a port  by rail, or scanning transshipment cargo containers, among other things,  have prevented CBP from achieving 100 percent scanning at participating  ports. Specifically:    Safety Concerns: Port officials at five of the seven ports that initially  agreed to participate in the SFI program expressed concerns regarding  the safety of drivers and port operators who work near NII scanning  equipment, which generates radiation in order to generate an image of  a container’s contents. CBP provided information or conducted town  hall meetings on the safety of the equipment to officials and workers at  participating ports. However, to address these concerns and allow for  the equipment to be used, port officials required that passage through  the NII equipment at the ports of Hong Kong and Busan be voluntary,  thus limiting efforts to test the feasibility of using the NII equipment, as  well as the SFI program’s overall effectiveness.
Logistics: Logistics issues and costs associated with moving cargo  containers to scanning areas at the Port of Southampton resulted in  the cessation of scans of cargo containers arriving by rail. Initially,  CBP and the terminal operator agreed that the terminal operator  would absorb the costs to place cargo containers arriving by rail onto  trucks so that those containers could pass through SFI scanning  systems, at a cost of approximately $60 per container, but this  arrangement ended in April 2008.
Transshipment: Transshipment cargo containers—those taken off of  one vessel to be placed on a U.S.-bound vessel—present significant  challenges to scanning because of logistical difficulties associated with  transporting these containers. Transshipment cargo containers are  only available for scanning for a comparatively short period of time  and may be difficult to access. For example, UK customs officials  stated that it was not possible to route transshipment containers that  arrived by sea through the SFI equipment. As a consequence, the  scanning of transshipment containers was delayed at the Port of  Southampton, United Kingdom. Further, in April 2009, the Acting  Commissioner of CBP testified that there is no proven technology that  can scan these containers.
Equipment Breakdowns: Scanning and communication equipment  breakdowns have occurred at several ports. For example, two of the  three seaports fully participating in the SFI pilot program experienced  weather-related mechanical breakdowns of scanning equipment.  Specifically, at the Port of Southampton, a piece of radiation scanning  equipment failed because of rainy conditions and had to be replaced,  resulting in 2 weeks of diminished scanning capabilities. Additionally,  Port Qasim in Pakistan has experienced difficulties with scanning  equipment because of the extreme heat. Because of the range of  climates at the more than 600 foreign ports that ship cargo to the  United States, these types of technological challenges could be  experienced elsewhere.
Additionally, while cargo containers may be scanned at SFI ports, the  images obtained through these scans may not always be sufficiently clear  to determine the potential presence of WMD. For example, we observed  that some trucks carrying cargo containers at the Port of Hong Kong  passed through imaging equipment too quickly to obtain a clear enough  image to verify the contents of the container. This problem is not isolated  to scans that were taken at the Port of Hong Kong, as CBP officials at the  Port of Long Beach also showed us images taken at other SFI ports that  were not clear enough to read because the driver drove through the NII  equipment too quickly. The CBP officials also showed us an image in  which one-third of the container was not captured. The CBP officials  further explained that if the container was determined to pose a risk for  terrorism by CBP through targeting activities, it would need to be  examined again with imaging equipment upon arrival in the United States  because of the inadequacy of the image scan at the SFI port.
section_title: CBP Plans to Improve Container Security Through Two Initiatives, but These Plans Will Not Achieve 100 Percent Scanning and Will Require a Process to Grant Extensions to Noncompliant Ports
paragraphs: CBP plans to implement SFI at select ports it believes would help mitigate  the greatest risk. CBP officials maintain that this strategy, combined with a  plan to gather additional cargo container information, would enhance  container security. However, DHS and CBP acknowledge that not all  foreign ports will be in a position to scan 100 percent of U.S.-bound cargo  containers by July 2012. While CBP has expressed concerns about the  feasibility of scanning 100 percent of U.S.-bound cargo containers, it has  not conducted a feasibility analysis of expanding 100 percent scanning to  nonpilot ports, as required by the SAFE Port Act. Also, because of  concerns about the feasibility of the scanning requirement, DHS plans to  issue a blanket extension for all ports pursuant to the extension provisions  of the 9/11 Act.
subsections: section_title: DHS Plans to Improve Container Security by Expanding SFI to Strategic Corridors and Gathering Additional Data for Assessing Risks
subsections: section_title: DHS Plans to Improve Security by Expanding SFI to Strategic Trade Corridors
paragraphs: In April 2009, the Secretary of DHS endorsed the strategic trade corridor  strategy as the path forward for implementing the SFI program. The  Secretary was presented with three options ranging from implementing  SFI at 70 ports that account for shipping over 90 percent of U.S.-bound  containers to seeking repeal of the 100 percent scanning requirement. The  strategic trade corridor strategy selected by the Secretary focuses cargo  container scanning efforts on a limited number of ports where CBP has  determined SFI will help mitigate the greatest risk of potential WMD from  entering the United States. CBP determined which ports were strategic  by working with DOE to develop a joint analysis of the potential risk of  cargo containers from all foreign seaports that ship directly and indirectly  to the United States. This analysis focused on issues such as known  smuggling routes, volume of container traffic, proximity to special nuclear  material sources, and known presence of terrorist cells operating in the  country and according to CBP, had been validated by the intelligence  community. DHS has endorsed the strategic trade corridor concept,  recognizing DHS will fund the majority of costs if not all, but has not yet  finalized decisions regarding the specific number of strategic ports to be  included or developed a time frame for implementation. However, it is  unclear whether DHS intends for the strategic trade corridor strategy to be  implemented in lieu of the 100 percent scanning requirement or whether it  is an initial step towards full implementation at all ports. While DHS is still  developing specific details, CBP is working on expanding the SFI program  to strategic ports.
section_title: CBP Plans to Improve Security by Gathering Additional Data through its 10+2 Program for Assessing Risks
paragraphs: CBP officials stated that the strategic trade corridor strategy, combined  with additional information on U.S.-bound cargo containers it receives  through the recently implemented “10+2” program, will enhance container  security. The Importer Security Filing and Additional Carrier  Requirements (also known as “10+2”) is a regulation issued pursuant to  the SAFE Port Act that requires importers and vessel carriers to provide  additional data elements for U.S.-bound cargo containers to CBP. As of  January 2009, the importer is responsible for supplying CBP with 10  shipping data elements, including shippers’ addresses and cargo  destinations, 24 hours prior to lading. Additionally, the vessel carrier is  required to provide 2 data elements, the vessel stow plan, which is used to  identify the location of containers onboard a vessel, and container status  messages, which are used to track the movement of containers through  the supply chain. The data supplements the advanced cargo data CBP  receives through the 24-hour rule. CBP believes the additional data  provided through 10+2 will enhance security by improving the targeting  process used to identify containers that may pose a risk for terrorism.
section_title: While DHS and CBP Question Ability to Achieve 100 Percent Scanning, They Have Not Conducted a Feasibility Analysis
paragraphs: While security may be enhanced through the strategic trade corridor  strategy and 10+2 program, these efforts will not achieve the 9/11 Act  requirement to scan 100 percent of U.S.-bound cargo containers by July  2012. Furthermore, DHS and CBP do not have a plan on how they will  work with foreign ports to ensure that 100 percent of U.S.-bound cargo  containers are scanned by July 2012 to meet the requirements set forth in  the 9/11 Act. According to DHS and CBP officials, they have not developed  a plan to achieve 100 percent scanning by July 2012 because challenges  encountered thus far in implementing the SFI program indicate that  implementation of 100 percent scanning worldwide by the 2012 deadline  will be difficult to achieve. While both DHS and CBP question the security  value and feasibility of achieving 100 percent scanning by 2012, they have  yet to conduct an analysis of the feasibility of scanning all U.S.-bound  containers to demonstrate whether the 9/11 Act requirement can be met.  The SAFE Port Act requires an analysis of the feasibility of expanding  scanning to other foreign ports participating in the Container Security  Initiative.  Furthermore, standard practices for project management call  for the feasibility of programs to be considered early on, which can be  done through evaluating alternatives. CBP should determine whether 100  percent scanning is feasible and if so what is the best way to achieve it, or  if it is not feasible, what are the other alternatives. The analysis should  consider the scope, objectives, time line, and resources needed to achieve  100 percent scanning or the alternatives, if appropriate. Such an analysis  would ensure that a complete assessment of feasibility is conducted and  the results are communicated so that DHS and Congress could determine  key challenges, ways they can be addressed, and potential courses of  action for enhancing container security.
section_title: DHS Plans to Grant Blanket Extensions to Ports Unable to Meet the 2012 Deadline
paragraphs: DHS acknowledged it will not be able to meet the July 2012 deadline for  full-scale implementation of the 9/11 Act’s scanning requirement and will  need to grant extensions to those foreign ports unable to meet the  scanning deadline in order to maintain the flow of trade and comply with  the 9/11 Act prohibition on allowing containers that have not been scanned  to enter the United States. To grant an extension, the 9/11Act requires DHS  to certify that at least two of six conditions exist. The act also requires  DHS to report to Congress 60 days before any extension takes effect on  the container traffic affected by the extension, the evidence supporting the  extension, and the measures DHS is taking to ensure that scanning can be  implemented as early as possible at the ports covered by the extension.  DHS has the authority to grant extensions to any number of foreign ports  for which at least two of the six conditions exist, which could mean  granting a blanket extension to all ports where such conditions exist or on  a port-by-port basis. Granting extensions on a port-by-port basis could,  according to international organizations we spoke with, potentially give a  competitive advantage to some ports and lead to trade disruptions. They  cited a possible example where one port that invests in scanning  equipment would be able to meet the scanning requirement, but another  port that does not invest in scanning equipment could not meet the  requirement. If the latter port gets an extension, it could have a temporary  competitive advantage over the former port because its costs of operations  do not include the costs of investments in scanning equipment. Similarly,  officials from Industrial Economics, Inc.—a firm contracted by CBP to  assess the economic impact of 100 percent scanning—told us that if  multiple ports in an area are accessible and one port does not have a  scanning system but is temporarily exempt from the 100 percent  requirement, it may get a competitive advantage in the region because the  private industry would likely choose to ship containers from ports where it  believes it will experience the fewest delays.
During the course of our review, DHS was developing its approach for  granting extensions. CBP program officials told us that DHS had been  considering granting extensions on port-by-port basis, which they stated  would be a lengthy process. According to these officials, site surveys  would be needed to assess each of the ports that ship containers directly  to the United States to determine the feasibility of establishing a scanning  system. CBP program officials estimated each site survey would take  approximately 2 weeks to complete, plus the additional time needed to  draft the report to Congress justifying the extension. In September 2009,  DHS officials told us that the department had determined that port-by-port  site visits were not required to invoke a condition to claim an extension.  According to DHS officials, at least some of the conditions listed in the  9/11 Act as a basis for granting extensions can be applied systemically to  all ports rather than on a port-by-port basis. At a minimum, DHS believes  the last two conditions—use of the equipment to scan all U.S.-bound  containers would significantly impact trade capacity and the flow of cargo,  and scanning equipment does not adequately provide automatic  notification of an anomaly in a container—could apply to all foreign ports  and, thus, may warrant the use of a blanket extension. DHS officials  acknowledged that their current position could change if there are  significant changes (e.g., advancements in scanning technology) before the  July 2012 deadline.
section_title: CBP Has Not Identified Total Program Costs of SFI Implementation or Conducted a Cost- Benefit Analysis to Assist in Evaluating Alternatives to Achieving the 100 Percent Scanning Requirement
paragraphs: CBP and DOE have identified costs borne by the U.S. government for  implementing SFI—about $100 million to date—but CBP has not  developed a cost estimate for future U.S. program costs, or conducted a  cost-benefit analysis that compares the costs of the scanning requirement  with other alternatives, such as the strategic trade corridor strategy. In  addition, CBP has not estimated costs to stakeholders, such as foreign  governments and terminal operators; or nonfinancial costs, such as trade  disruptions, which could be greater than operating and maintaining the  scanning systems.
subsections: section_title: 9/11 Act Does Not Specify Funding Responsibilities, but the United States Has Paid Most SFI Costs to Date
subsections: section_title: CBP and DOE Have Funded Much of the Costs at SFI Ports
paragraphs: The SAFE Port Act requires CBP to report on U.S. government costs of  deploying integrated scanning equipment at foreign ports as part of the SFI  program, and CBP and DOE have identified costs borne by the United  States of about $100 million for implementing and operating the SFI  program at six participating ports through June 2009. While CBP and DOE  have purchased cargo container scanning equipment thus far for foreign  ports that have participated in the SFI program, it is unclear who will pay  for additional resources—including increased staff, equipment, and  infrastructure to continue the program—or who will be responsible for  operating and maintaining the equipment used for the 100 percent  scanning statutory requirement. While DHS has the authority to provide  nonintrusive inspection and radiation detection equipment to foreign  ports, neither the SAFE Port Act nor the 9/11 Act specifies who is to pay  for the scanning of U.S.-bound cargo containers at foreign ports. While  the Congressional Budget Office assumed that foreign ports would pay for  installing and maintaining the systems at their ports as a means for  continuing trade with the United States, the U.S. government has borne a  majority of the SFI program costs to date. DHS officials stated that they  anticipate that the U.S. government will continue to pay the majority of the  costs for implementing the SFI program. Table 4 provides additional  details on SFI costs by port and department.
Government officials from Europe, Asia, and the Middle East that we  spoke with have stated that the SFI program and 100 percent scanning are  primarily for the security benefit of the United States and, as such, they  are unwilling to pay for this security initiative. However, while the U.S.  government has paid a majority of the costs for implementing the SFI  program at participating ports, foreign governments have incurred  personnel, infrastructure, and other costs to implement the program. For  example, the Customs service in the United Kingdom dedicated 12 officers  to work on the SFI program for 6 months, and the Hong Kong Customs  service dedicated a team of 18 officers to work on the SFI program and  pulled officers from other teams, as necessary, to conduct more thorough  examinations of container cargo using equipment to determine whether  radiation being emitted from a container is dangerous. Terminal operators  have also incurred costs for implementing the SFI program. For example,  one terminal operator at the Port of Hong Kong set up a control room and  an information technology infrastructure to support the SFI program at a  cost of approximately $260,000. Additionally, the terminal operator at the  Port of Southampton paid approximately $60 per container to move cargo  containers arriving by rail to the scanning facility. Further, European  customs officials stated that to fully implement the 100 percent scanning  requirement at large ports with complex operations would likely result in  the need for a fundamental redesign of several ports, entailing substantial  costs to terminal users.
section_title: Terminal Operators Propose a Separate Model to Purchase, Operate, and Maintain Scanning Equipment at SFI Ports
paragraphs: In January 2009, a consortium of four international terminal operators  formed the Terminal Operator Security Study Group to examine the 100  percent scanning requirement and outline potential collaborative  approaches to expand the SFI program in partnership with the U.S.  government. The group proposed, among other things, that the U.S.  government reach out to host governments to determine the extent to  which terminal operators could be involved in running portions of the SFI  program in foreign countries. According to an official from the group, if  foreign governments do not want to conduct scans of U.S.-bound  containers, terminal operators would purchase, operate, and maintain the  SFI equipment for scanning cargo containers entering the port on trucks.  Transshipment cargo containers would not be included in the program,  however, since no technical solution currently exists for scanning these  containers. The terminal operators would also be responsible for  adjudicating scanning equipment alarms with local government officials.  Terminal operators would recoup their costs for purchasing, operating,  and maintaining the equipment by charging a fee to users of the terminals.  An official from the consortium stated that at ports where the volume of  cargo containers is such that fees would not cover the cost of purchasing,  operating, and maintaining the scanning equipment, the U.S. government  would be responsible for covering the cost of SFI program operations. In  addition, the U.S. government would be responsible for purchasing and  operating equipment to conduct secondary inspections—more involved  inspections of cargo containers determined to pose a risk—as well as be  responsible for providing personnel to review scanned images of the cargo  containers. According to the terminal operators’ representative, this model  would lessen the financial burden on the U.S. government and allow for  scanning equipment to be deployed to the terminals where these terminal  operators are located in about 18 months.
DHS has indicated that it is open to the possibility of working with  terminal operators to receive scan data; however, CBP officials stated that  they do not approve of the plan proposed by the Terminal Operator  Security Study Group because terminal operators have an incentive to  move cargo containers through their facilities quickly and there is little  assurance that they will adequately review scanning equipment outputs.  The officials also stated that this proposal is not consistent with CBP’s  strategic trade corridor strategy—which aims to focus scanning efforts at  those ports where doing so would provide the greatest benefit—because it  includes ports outside the proposed corridor.
section_title: CBP Has Not Developed an Estimate of Complete U.S. Program Costs or Performed a Cost-Benefit Analysis that Includes Other Economic Costs
paragraphs: While CBP has reported costs of the SFI program to date, it has not  developed a comprehensive life-cycle cost estimate for full  implementation of 100 percent scanning of U.S.-bound cargo containers.  CBP reported in December 2008 that establishing a single scanning lane  costs approximately $9.7 million for infrastructure, construction, and  equipment and roughly 2,100 scanning lanes would be needed at foreign  ports to fully implement the program at all ports that ship cargo to the  United States. CBP acknowledged that this $20 billion estimate of program  implementation costs was rough and based on the costs of implementing  SFI thus far. CBP officials also developed rough implementation cost  estimates for potential deployment options for SFI consistent with its  secure trade corridor strategy. These estimates range from $500 million  (with most SFI costs paid by the trade community or foreign governments)  to $1.6 billion (with SFI costs at 70 ports paid by DHS). However, the  officials acknowledged that none of these estimates were developed in a  manner consistent with the DHS cost estimation guidelines. CBP officials  stated that they have not developed a more comprehensive cost estimate  because DHS has not specified a clear path forward for the program. CBP  officials added, though, that it is difficult to estimate the cost for  implementing SFI at a single port without conducting a thorough  assessment of the port and obtaining the input of local government  officials. Given the agency’s limited resources they stated that they cannot  conduct these types of detailed assessments at all ports that ship cargo  containers to the United States. These officials added that any estimates of  costs for full implementation would be of limited use given the complexity  and variability of operations at individual ports. Additionally, officials from  Industrial Economics, Inc. concurred that cost estimating would be  difficult because of the different factors beyond CBP’s control that would  need to be considered, including whether the port was publicly or  privately held, whether port operations are centralized or spread out over  a large geographic area, the willingness of the host government to  accommodate the scanning program, and whether and to what extent the  port had communications and information technology infrastructure  available.
While U.S. program cost of implementing the SFI program at individual  ports will likely vary based on factors beyond CBP’s control,  commonalities exist among ports that allow for assumptions to be made  regarding costs for program implementation. Examples of such  commonalities include the need for inspection equipment at foreign ports  participating in the program—which has generally been paid for by the  U.S. government—and the need for personnel to review images produced  by imaging equipment. DHS’s guidance on cost estimation states that  program managers need to keep analysis of costs moving forward, even in  periods of ambiguous, partial, or even missing information, and that this is  best managed by making assumptions to resolve uncertainty and allow  analysis to continue. Further, as we have previously reported, having a  realistic cost estimate makes for effective resource allocation and  increases the probability of a program’s success. Additionally, a cost  estimate can serve as a basis for establishing and defending budgets and  driving affordability analyses. A cost estimate also helps agencies  determine whether a program is feasible and the resources needed to  support it. While we recognize that CBP may have difficulty developing  cost estimates because of the uncertainties and assumptions that will have  to be made, having a more comprehensive cost estimate could provide  CBP with valid cost information to share with Congress to allow it to make  sound and prudent decisions regarding SFI program implementation, and  could better position CBP and Congress to evaluate alternatives for SFI  program configuration and implementation.
In addition to not identifying estimates of U.S. program costs, CBP has not  developed estimates of economic costs to other stakeholders such as costs  that would result from lowering terminal efficiency. For example,  Industrial Economics, Inc. concluded that 100 percent scanning will likely  reduce port and terminal efficiency as well as increase costs. Officials  from Industrial Economics, Inc. stated that these increased costs would be  due to costs to accommodate scanning—additional land, labor, and  equipment—as well as to delays caused by 100 percent scanning. These  officials also stated that while the precise degree to which costs may  increase is uncertain, some costs could be substantial, particularly for  larger volume ports or ports with significant amounts of transshipment  cargo containers as operations at these ports would need to be more  significantly altered to accommodate 100 percent scanning. Further,  officials from the World Bank and the WCO with whom we spoke stated  that implementing 100 percent scanning would likely create additional  shipping costs in certain parts of the world because of changes in trade  routes that would be necessary. In particular, the officials stated that U.S.- bound cargo containers may have to be funneled through hub ports that  could accommodate and operate the scanning equipment before the  containers are then shipped to the United States. They noted that these  additional logistics costs would have a disproportionately negative  economic impact on developing economies and countries with  comparatively small ports.
Furthermore, CBP has not performed a cost-benefit analysis to assess  alternatives to achieving 100 percent scanning, such as its proposed  strategic trade corridor strategy and, as appropriate, other alternatives for  enhancing container security. According to CBP officials, they have not  performed this type of analysis because it is not legally required since the  100 percent scanning requirement was mandated and not initiated by CBP.  Although we recognize the 100 percent scanning requirement was  mandated by law, development of a systematic cost-benefit analysis,  which incorporates more comprehensive cost estimates, could better  inform CBP and Congress of the relative costs and benefits of different  alternatives for achieving 100 percent scanning of U.S.-bound goods from  all ports that ship directly to the United States as well as alternatives for a  path forward to enhance container security. This type of analysis could, in  turn, help DHS and Congress identify whether and to what extent other  viable options exist to implementing the 100 percent scanning  requirement.
The Office of Management and Budget states that any cost-benefit analysis  that serves as a basis for evaluating government programs or policies  should identify and measure overall societal costs and benefits, not solely  costs and benefits to the federal government. For example, as discussed  later in this report, the implementation of the 100 percent scanning  requirement could potentially create challenges to the continued operation  of CBP’s existing layered security programs and hinder their  implementation by reducing the willingness of foreign countries and  industry to participate. If participation is diminished, this could constitute  a cost (e.g., reduced implementation and effectiveness of other programs),  which would be one element to consider in any cost-benefit analysis. As  noted earlier, other costs beyond the federal government are those  incurred by foreign governments, the shipping industry, and consumers.
Further, OMB cites as a key element of cost-benefit analysis the  consideration of alternative means of achieving program objectives by  examining different program methods of provision and different degrees  of government involvement. Additionally, DHS’s Cost-Benefit Analysis  Guidebook states that cost-benefit analysis is designed to identify the  superior financial solution amongst competing alternatives, and that it is a  proven management tool to support planning and managing costs and  risks. By utilizing cost-benefit analysis to compare the current  implementation requirements of SFI with other alternatives, which might  include its proposed strategic trade corridor strategy or CBP’s existing  layered strategy, CBP could more fully ensure that it is efficiently  allocating and prioritizing its limited resources, as well as those of  individual ports, in a way that maximizes the effectiveness of its cargo  container security efforts. This analysis could also provide information on  other potential alternatives for achieving the 100 percent scanning  requirement.
section_title: Requirement for 100 Percent Scanning Creates Potential Challenges for CBP that May Hinder the Continued Operation of Existing Container Security Programs and Raises Concerns with International Partners
paragraphs: The 100 percent scanning requirement is a departure from several existing  container security programs, which creates potential challenges for CBP  as it may hinder the programs’ continued operation. The scanning  requirement differs from existing container security programs because it  requires CBP to scan all containers before performing analysis to  determine their potential risk level. Our work also indicates that the 100  percent scanning requirement could hinder implementation of some  existing container security programs by reducing the willingness of some  foreign governments to work with CBP to identify and examine containers  at their ports, and the willingness of some private companies to partner  with CBP to improve their internal security programs. Some foreign  governments have expressed concern that the 100 percent scanning  requirement is being put forth solely by the United States, in contrast to  existing container security programs that were negotiated multilaterally or  bilaterally with willing partners. In addition, some foreign governments  have expressed the possibility of imposing a reciprocal scanning  requirement on the United States.
subsections: section_title: The 100 Percent Scanning Requirement May Hinder the Continued Operation of CBP’s Existing Container Security Programs
paragraphs: Our work has indicated that the 100 percent scanning requirement is a  departure from existing container security programs built on bilateral  partnerships with foreign governments and the private sector. This  situation may hinder continued operation of these existing programs,  depending on how the SFI program is expanded and how the 100 percent  scanning requirement is implemented.
subsections: section_title: Automated Targeting System (ATS)
paragraphs: The 100 percent scanning requirement is a departure from CBP’s use of  ATS and the 24-hour rule to first determine risk before scanning  containers. Through ATS and the 24-hour rule, CBP gathers advanced  information on U.S.-bound cargo containers provided by carriers and  importers and makes determinations as to the risk level associated with  the cargo containers before using imaging equipment to examine  containers’ contents. At CSI ports, when it is determined through  advanced information that a U.S.-bound container poses some potential  risk of WMD, CBP typically requests that the host government scan the  container with radiation detection and NII equipment. If these scans  indicate the potential presence of WMD, CBP requests that the host  government conduct physical examination of the container, which could  involve physically removing the container’s contents for inspection. If the  host government declines a request to give the container additional  scrutiny, CBP can issue a “do not load” order for the container—so it is  refused entry onto the vessel—or flag the container for further inspection  upon arrival at a domestic port. In contrast, under the 100 percent  scanning concept required by the 9/11 Act, all U.S.-bound containers are  required to be scanned with radiation detection and NII equipment before  any analysis of risk. At the three operational SFI pilot ports we visited, we  observed CBP officers reviewing scanning equipment outputs without the  use of ATS targeting information. Information is generally not available in  ATS at the time of scanning since containers are being scanned upon  arrival at the foreign port before the container’s information is received by  CBP under the 24-hour rule. Thus, depending on how SFI and the 100  percent scanning requirement are implemented, CBP may face challenges  in integrating the scans into its existing ATS program to identify high risk  containers.
section_title: Container Security Initiative (CSI)
paragraphs: Depending on how it is implemented, SFI or other efforts to achieve 100  percent scanning may potentially replace the CSI program at foreign ports.  CBP built the CSI program on bilateral partnerships with foreign  governments that allow CBP to place its staff at 58 foreign ports to work  with host country customs officials to identify and scan high-risk cargo  before it is shipped to the United States. CSI allows for a reciprocal  arrangement in which foreign governments may also place staff at U.S.  ports. According to CBP, the strength of the CSI program is the  information gained from host government officials that CBP would  otherwise not have access to. We have also previously reported instances  where the CSI program establishes trust and collegiality, leading to  increased information sharing, as well as more effective targeting and  examination of high-risk cargo containers. For example, CBP officers  noted instances in which host government customs officials would notify  them of cargo containers they thought could be high risk so that CBP  could take a closer look at the information available in ATS related to the  containers. However, our work at three of the four operational pilot ports  indicates that implementing the SFI program at foreign ports could result  in reduced collaboration between CBP and host government customs  officials or the end of the CSI program. For example, at the Port of  Southampton, United Kingdom, customs officials previously worked side  by side to share information with CBP officers as part of the CSI program  and during the initial transition from CSI to SFI. However, United Kingdom  customs officials no longer participate in SFI, as they withdrew their  support for the program after the first 6 months of operation, which was  the agreed-upon time frame for their participation. CBP officials stationed  at the Port of Southampton stated that it has been more difficult to have  containers they determine may pose some risk physically inspected by  their British counterparts because of this reduced interaction caused by  the transition from CSI to SFI. This reduced interaction and challenges in  having U.S.-bound containers physically inspected may be because the  port’s participation in the program was viewed by the British government  as a pilot and would not necessarily occur when implementing SFI or  another form of 100 percent scanning on a more permanent basis. If the  SFI program is implemented in such a way that CBP officials are stationed  overseas, and if host nation officials work with them to jointly research  shipping data on containers, then this type of information sharing could  continue under the 100 percent scanning requirement. However, foreign  government officials from Singapore and South Korea we spoke with said  that given the many security programs the United States has adopted, the  United States should choose whether it wants to continue CSI or  implement SFI, but that it cannot do both.
section_title: C-TPAT and AEO Programs
paragraphs: The willingness of private companies to voluntarily enhance their security  practices to join C-TPAT may be diminished if a key benefit of  membership is reduced by 100 percent scanning. Through the C-TPAT  program, members of the trade community (e.g., importers, vessel  carriers, and others) voluntarily enter into an agreement with CBP to  improve their security programs in return for various trade-related  benefits, such as reduced scrutiny of their cargo containers upon arrival in  the United States.  As part of this voluntary agreement, C-TPAT  participants share sensitive, corporate security plans with CBP and  provide CBP with access to their facilities. This level of information  sharing would otherwise not be available to CBP for companies that are  not C-TPAT members.
According to a survey conducted in 2007 by the University of Virginia, the  most important motivation for businesses joining C-TPAT was reducing  the time and cost of getting cargo released by CBP.  However, this benefit  could be diminished by the 100 percent scanning requirement since, under  such a requirement all cargo is to be scanned regardless of membership in  C-TPAT. While the six C-TPAT members we interviewed generally  expressed their intent to remain in the program, three stated that there  would be less incentive to maintain membership, or for other companies  to join C-TPAT if the 100 percent scanning requirement is fully  implemented. If companies drop out of or do not join C-TPAT, it could be  difficult for CBP to determine what, if any, security initiatives have been  undertaken by the companies, unless other programs or methods were  developed to do so. CBP officials have stated that they do not believe 100  percent scanning will affect membership in the C-TPAT program, and that  the C-TPAT program has some benefits that will continue to exist  regardless of container scanning. For example, they note that C-TPAT  members that transfer cargo by truck to the United States from Canada or  Mexico will not be affected by the requirement. However, given that other  companies who use maritime shipping may lose an incentive for joining    C-TPAT or maintaining membership, the potential security benefit  associated with the program could be diminished to the extent that              C-TPAT membership does not grow or decreases.
AEO programs—programs similar to C-TPAT run by other countries—may  be hindered by 100 percent scanning because it may be viewed as a  deterrent to private companies to join AEO programs. A core concept of  the SAFE Framework is a system of mutual recognition, whereby two  nations’ AEO programs are mutually recognized by the respective customs  administrations. Mutual recognition of AEO programs occurs when  customs administrations agree to recognize one another’s AEO programs  and security features and to provide comparable benefits to members of  the respective programs. As of June 2009, CBP had signed mutual  recognition arrangements with New Zealand, Canada, Jordan, and Japan.  Furthermore, the United States is discussing entering into a nonbinding  arrangement with the European Union. According to data from the WCO,  as of July 2009, about 70 countries had implemented or had begun  developing their own national AEO programs. Foreign government, World  Bank, and WCO officials we interviewed expressed concern that  implementation of SFI or other efforts to achieve 100 percent scanning  may hinder mutual recognition efforts because, under such a program, if  all U.S.-bound cargo is to be scanned, there is little incentive for  companies to join such partnerships, or governments to develop these  partnership programs, without one of the common benefits—reduced  scrutiny of cargo containers.
section_title: The 100 Percent Scanning Requirement Is a Departure from Multilateral Partnerships, Raising Concerns with Key Trading Partners and Leading to Calls for Reciprocal Scanning Requirements
paragraphs: CBP has traditionally worked with its international partners to enhance  the security of the supply chain. The International Outreach and  Coordination Strategy, one of eight supporting plans for The National  Strategy for Maritime Security, establishes the goal of developing a  coordinated policy for U.S. government maritime security activities with  foreign governments, international and regional organizations, and the  private sector. According to the strategy, the United States must forge  cooperative partnerships and alliances with other nations, as well as with  public and private stakeholders in the international community, to achieve  effective maritime security. As CBP has recognized in security matters, the  United States is not self-contained, either in its problems or in its  solutions. The growing interdependence of countries requires policy  makers to recognize the need to work in partnerships across international  boundaries to achieve vital national goals. As such, CBP has taken a lead  role in working with the WCO and foreign customs administrations to  establish and implement international customs security standards that  benefit all participants. For example, CBP was a principal author of the  multilateral SAFE Framework of Standards—based on CBP’s existing  layered security strategy—unanimously adopted by the members of the  WCO, and CBP officials have stated that its existing layered strategy  constitutes U.S. efforts to implement the elements of the SAFE  Framework.
However, the 100 percent scanning requirement is a departure from these  existing efforts to enhance cargo container security through partnerships.  Existing CBP efforts to enhance cargo container security, such as  collaboration with the WCO to develop the SAFE Framework, have been  based on a bilateral and multilateral approach meant to enhance security  for all participants. Foreign government and international organization  officials with whom we met have also expressed concern that the 100  percent scanning requirement is inconsistent with multilaterally adopted  customs security standards, may negatively impact trade, and could  diminish container security. For example, customs and other officials from  foreign governments, including the European Union, South Korea, Hong  Kong, and Singapore, as well as international organizations, including the  WCO, have expressed their belief that scanning 100 percent of U.S-bound  containers is inconsistent with the risk-based strategy agreed to in the  SAFE Framework because it treats all containers as having the same risk  level before any analysis of the risks they may pose is performed. Foreign  government and international organization officials we spoke with added  that, given limited resources, 100 percent scanning could provide a lower  level of security, as the focused attention on specific high-risk shipments is  replaced by a blanket approach applying to all containers.
Because the100 percent scanning requirement was initiated solely by the  United States, government officials in Europe, Asia, and the Middle East  with whom we met have stated that the requirement is perceived as being  for the sole security benefit of the United States. The European Union has  formally stated that the 100 percent scanning requirement was imposed  unilaterally and implies extraterritoriality. In June 2008, WCO members  unanimously endorsed a resolution expressing concern that  implementation of 100 percent scanning would be detrimental to world  trade and could result in unreasonable delays, port congestion, and  international trading difficulties. Similarly, in May 2008, the European  Parliament issued a resolution calling for the United States to repeal the  100 percent scanning requirement. Further, in June 2009, the governments  of five developing countries submitted a position paper to the WCO  opposing 100 percent scanning due to the disproportionate impact it will  have on their developing economies.
According to State Department officials with whom we met, the 100  percent scanning requirement has negatively impacted interactions with  other countries on various issues. State Department officials overseas  have acknowledged that the 100 percent scanning requirement has already  impacted or could have impact on future U.S. interests. For example,  according to these officials, they have experienced difficulty making  progress on U.S. concerns related to agricultural exports and registration  of chemical products because they cannot discuss these issues without  foreign governments raising their concerns with 100 percent scanning.
Related to these international concerns, some foreign government officials  with whom we spoke are considering requiring a reciprocal scanning  requirement for cargo coming from the United States. Specifically,  government officials in Honduras and the European Commission—which  represents the 27 member states of the European Union—have indicated  that they may consider a reciprocal container scanning requirement in  which containers from the United States that are being shipped to these  countries would have to be scanned. Although the European Commission  indicated it does not think scanning will enhance security, it added it  would be difficult not to ask for reciprocity if their member states are  initiating cargo scanning programs for the security benefit of the United  States.
According to CBP and domestic port terminal officials, and our  observations at the domestic ports we visited, scanning outbound  containers to meet a reciprocity requirement would be challenging and  require additional resources. CBP officials noted that the difficulty  negotiating and obtaining space from terminal operators to install  scanning equipment for inbound containers would also apply to installing  equipment needed to scan outbound containers should reciprocity be  required. CBP officials also noted additional staff would be needed to  review container images and adjudicate identified anomalies. Further, it  would be difficult to identify the destination of outbound cargo containers,  according to CBP and port officials. Therefore, even if a few countries  asked that goods bound from their countries be examined, it might be  necessary for CBP to examine all outbound goods. CBP officials stated  scanning outbound containers could come at the expense of their ability to  secure the United States from inbound containers that might contain  WMD.
Given the situation, foreign governments and the trade industry are  awaiting information on how CBP plans to implement 100 percent  scanning. Although the scanning requirement is a U.S. law, officials from  the European Commission stated that they are aware that DHS and CBP  have stated that implementing the law by July 2012 is likely not feasible,  which has created a sense of uncertainty regarding future implementation  of the scanning requirement. DHS acknowledged this concern, noting that  without a clear path forward for SFI, partnerships with foreign  governments would be put at risk. Although the Secretary of DHS  consequently endorsed the strategic trade corridor strategy as the path  forward, the department has not specified whether implementation of 100  percent scanning at strategic corridors would constitute the entirety of  CBP’s efforts to implement 100 percent scanning or was an initial phase of  a broader effort to implement 100 percent scanning.
Foreign terminal operators have also expressed concerns regarding the  lack of a clear path forward for the SFI program. During our discussion  with the Federation of European Private Port Operators, the terminal  operator representatives noted the July 2012 deadline was quickly  approaching, but there was a lack of information as to how the  requirement would be achieved. The terminal operator representatives  added that decisions needed to be made regarding who is required to pay  for and operate the scanning equipment, among other things. The officials  noted that they did not want to purchase scanning equipment without  standards being established because they did not want to bear this  expense and later learn that the scanning equipment they purchased is not  considered sufficient.
section_title: Conclusions
paragraphs: Challenges in scanning U.S.-bound cargo containers at participating ports  to date, as well as challenges in getting additional ports to participate,  have raised questions about the feasibility of scanning 100 percent of U.S.- bound cargo containers. While CBP officials have stated that they may not  be able to overcome these challenges based on the experiences of the SFI  program to date, the agency has not conducted an analysis of the  feasibility of implementing 100 percent scanning. Such an analysis could  assist both the agency and Congress by providing important information  regarding CBP’s ability to fully implement the 100 percent scanning  requirement and determining a path forward to enhance container  security.
As CBP attempts to expand the SFI program, it will need more  comprehensive cost estimates. Such cost estimates could provide CBP  with valid cost information to share with Congress to allow it to make  sound and prudent decisions regarding SFI program implementation. CBP  and Congress could also benefit from a cost-benefit analysis (that includes  costs to international maritime stakeholders) to evaluate the relative costs  and benefits of various alternatives for implementing the 100 percent  scanning requirement, to include its strategic trade corridor strategy. Such  an analysis could help to guide CBP and Congress in attempting to  implement the 100 percent scanning requirement, as well as assessing  other alternatives short of 100 percent scanning for enhancing container  security.
DHS and CBP officials have acknowledged that they will likely not be able  to achieve 100 percent scanning of U.S.-bound cargo containers by 2012,  and expressed concerns over the feasibility, costs, and security benefits  associated with the requirement. However, without conducting feasibility  and cost-benefit analyses, DHS and CBP will not be able to fully evaluate  various alternatives for implementing the 100 percent scanning  requirement or other alternatives that enhance cargo container security in  a cost-efficient manner.
section_title: Recommendations for Executive Action
paragraphs: To better position DHS to implement the cargo container scanning  provisions of the SAFE Port and 9/11 Acts, improve container security  programs, and better inform Congress, we recommend that the Secretary  of Homeland Security, working with the CBP Commissioner, in  consultation with the Secretaries of Energy and State as appropriate, take  the following actions:    conduct a feasibility analysis of implementing the 100 percent scanning  requirement of all U.S.-bound cargo containers in light of the  challenges faced at the initial SFI ports;    develop more comprehensive cost estimates for achieving the  requirement to scan 100 percent of U.S.-bound cargo containers,  consistent with best practices for implementing, operating, and  maintaining U.S. government programs;    conduct a cost-benefit analysis (to include all significant economic  costs) of different alternatives for achieving the 100 percent scanning  requirement, to include as appropriate, other alternatives short of  achieving 100 percent scanning, to enhance container security, and to  address the impact that 100 percent scanning may have on other  container security programs; and    provide the results of the feasibility analysis, U.S. program cost  estimates, and cost-benefit analysis outlined above to Congress, along  with various cost-effective alternatives to implementing the 100 percent  scanning requirement, as appropriate.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided a copy of this report to the State Department, the Department  of Energy (DOE), and the Department of Homeland Security (DHS) for  comment. The State Department did not provide written comments to  include in the report, but provided technical comments that have been  incorporated into the report, where appropriate. DOE provided comments  on October 19, 2009, that cite the need to distinguish between challenges  regarding the use of radiation versus nonintrusive image scanning  equipment. We have modified the report to include this distinction. DOE  made no comments on the recommendations since they were directed  towards DHS and CBP. A copy of DOE’s comments are reprinted in  appendix II. DHS and CBP provided technical comments that have been  incorporated into the report, where appropriate.
DHS also provided written comments—that incorporated comments from  CBP—on October 19, 2009. A copy of DHS’s comments are reprinted in  appendix III. In commenting on a draft of this report, DHS noted that it  concurred with three recommendations and concurred in part with one. It  also commented that CBP views these recommendations as having been  largely achieved through its publication of previous reports to Congress.  We disagree with this for the reasons discussed in the paragraphs below.
Regarding our first recommendation to conduct a feasibility analysis for  implementing the 100 percent scanning requirement for all U.S.-bound  cargo containers, DHS noted that CBP concurred with our  recommendation. The agency further stated that the recommendation had  been achieved in its June 2008 report to Congress, “Report to Congress on  Integrated Scanning Systems Pilot (Security and Accountability for  Every Port Act of 2006), Section 231,” where it discussed challenges to  implementing the requirement at participating seaports. Specifically, CBP  noted that its report concluded that the 100 percent scanning of U.S.- bound maritime container is possible on a limited scale in locations with  an array of accommodating and supportive conditions, such as host nation  cooperation, low cargo volumes, low transshipment rates and technology  and infrastructure costs covered primarily by the U.S. government. It also  noted that its report determined that these conditions would not likely  exist at all ports shipping to the United States. During our review, we  analyzed the June 2008 report and while it discusses these and other  challenges that exist at participating ports, we do not believe that it  constitutes a feasibility analysis of the 100 percent scanning requirement,  as required by the SAFE Port Act. In particular, as we have noted in this  report, the SAFE Port Act requires certain specific elements to be included  when evaluating the feasibility of expanding 100 percent scanning to other  ports, including an analysis of the infrastructure requirements to  implement 100 percent scanning and an analysis of requirements,  including costs, to install and maintain an integrated scanning system at  ports participating in the Container Security Initiative.  These analyses  were not included in the 2008 report and CBP has acknowledged that they  have not been conducted.
Regarding our second recommendation to develop more comprehensive  cost estimates for achieving the requirement to scan 100 percent of U.S.- bound cargo containers, consistent with best practices, DHS commented  that CBP concurred with the recommendation and had already achieved it  through issuance of its June 2008 report to Congress. In particular, CBP  stated that it believes that it is incumbent upon the agency to develop  realistic cost estimates for the overall operational elements associated  with implementing legislative mandates, such as the 100 percent scanning  requirement. However, as acknowledged by CBP, the cost estimates  generated by CBP to date were not developed in a manner that is  consistent with cost estimation guidelines. For example, estimates  developed by CBP to date cover implementation of the program as it  currently exists, but do not examine costs over the life of the program,  which is a best practice identified by GAO and accepted by DHS. As a  result, total costs for the life of the SFI program could be significantly  greater than CBP’s current cost estimates.  As we have noted in this  report, having more comprehensive cost estimates could provide CBP  with valid cost information to share with Congress to allow it to make  sound and prudent decisions regarding SFI program design and  implementation.
Regarding our third recommendation to conduct a cost-benefit analysis (to  include all significant economic costs) of different alternatives for  achieving the 100 percent scanning requirement, to include as appropriate,  other alternatives short of achieving 100 percent scanning, DHS  commented that CBP concurred in part with our recommendation. In its  response CBP acknowledged that a cost-benefit analysis would be helpful  to frame the discussion and better inform Congress; however, it noted that  such a comprehensive study would place significant burdens on its limited  resources. Given the potential costs to the United States, foreign  governments and trade industry of implementing 100 percent scanning, we  believe a cost-benefit analysis is warranted to evaluate other alternatives.  CBP added that neither the SAFE Port Act nor the 9/11 Act require CBP to  conduct such an analysis and suggests that the Congressional Budget  Office is the most appropriate entity to conduct such an analysis. While  CBO does prepare cost estimates for pending legislation, as we mention in  this report, CBO has evaluated the 9/11 Act and assumed that foreign  governments would pay for implementing scanning systems at their port,  which has generally not been the case thus far. We believe that, given its  daily interaction with foreign customs services and its direct knowledge of  port operations, CBP is in a better position to conduct any cost-benefit  analysis and bring results to Congress for consideration. Further, as noted  in this report, DHS cites cost-benefit analysis as a proven management tool  to support planning and manage costs.  We believe that the challenges  faced in implementing the program thus far, and the potential costs of  implementing and operating the 100 percent scanning requirement— particularly non-financial costs such as reductions in the effectiveness of  existing container security programs like CSI and C-TPAT—emphasize the  importance of such an analysis. This analysis could assist both the agency  and Congress in understanding CBP’s ability to implement the 100 percent  scanning requirement as well provide Congress more complete  understanding of the scanning requirement’s advantages and  disadvantages. Congress could then use this information in its role  providing oversight over the program or in considering alternatives for  enhancing cargo container security in a cost-efficient manner.
Finally, regarding our fourth recommendation to provide results of the  feasibility analysis, U.S. program costs estimates, and cost-benefit analysis  to Congress, along with various cost-effective alternatives to implementing  the 100 percent scanning requirement, DHS commented that CBP  concurred with our recommendation, had already achieved it, and outlined  its intent to continue to explore the full range of costs associated with  scanning efforts at foreign ports. Specifically, CBP stated that in June  2008, it submitted to Congress the findings of the feasibility study required  under Section 231 of the SAFE Port Act. It added that this report and the  number of subsequent reports provided at 6-month intervals detailed CBP  and DOE expenditures under SFI, including the cost of scanning  equipment, as well as personnel expenditures for each potential scanning  site. While these reports have contained useful information, as mentioned  previously, our view is that they do not contain comprehensive analyses of  the feasibility or costs of the 100 percent scanning requirement or evaluate  potential program alternatives to determine which may be most feasible  and cost effective. We believe that feasibility and cost-benefit analyses are  critical to help ensure that DHS and CBP have the necessary information  to assist the Congress as it considers options for implementing the 100  percent scanning requirement or other alternatives to enhancing cargo  container security.  This information should include more definitive  information on the feasibility of the scanning requirement—to include the  factors discussed in the SAFE Port Act such as infrastructure  requirements, impact on processing times, ability to meet forecasted  container volume, costs, and personnel needs—across different alternative  implementation scenarios.
As arranged by your offices we plan no further distribution until 30 days  after the date of this report.  At that time, we will send copies of this report  to the Secretaries of Energy, Homeland Security, and State; and other  interested parties.  In addition, the report will be available on GAO’s Web  site at http://www.gao.gov.
If you or your staff have any questions about this report, please contact me  at (202) 512-9610 or at caldwells@gao.gov. Key contributors to this report  are listed in appendix IV. This report will also be available at no charge on  the GAO Web site at http://www.gao.gov.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: Our objectives were to identify (1) what progress U.S. Customs and  Border Protection (CBP) has made toward implementing 100 percent  scanning at the initial ports participating in the Secure Freight Initiative  (SFI) program; (2) what planning efforts CBP has made to address the  requirement to scan all U.S.-bound cargo containers by July 2012; (3) the  estimated costs to date of the SFI program, and to what extent future  implementation costs have been estimated; and (4) what challenges, if any,  CBP faces in integrating the 100 percent scanning requirement with its  existing container security programs.
To determine the progress CBP has made in implementing the requirement  to scan 100 percent scanning of U.S.-bound cargo containers, we  conducted site visits at six of the seven foreign ports that have been  involved in SFI, and spoke with foreign government, U.S. customs, and  terminal operator officials during these visits. While the results of these  site visits and interviews cannot be generalized across all ports that ship  cargo containers to the United States, by observing operations at six of the  seven ports involved with the SFI program to date—Busan, South Korea;  Puerto Cortes, Honduras; Salalah, Oman; Southampton, United Kingdom;  Hong Kong; and Singapore—we gained a critical understanding of the  factors and challenges associated with implementing SFI at these ports.  Due to ongoing security concerns, we did not conduct a site visit at Port  Qasim, Pakistan. Instead, we observed CBP’s remote operation of the SFI  program in Qasim from the National Targeting Center-Cargo in Virginia. To  assess CBP’s progress implementing SFI at individual ports, we compared  data on the number of containers scanned to the total volume of U.S.- bound containers at each SFI port, to the requirement set forth in the 9/11  Act. CBP was unable to provide container scan data based on container  arrival mode (e.g., truck, rail, and transshipment) due to system  limitations. After reviewing possible limitations of all the data sources, we  determined that the data provided were sufficiently reliable for the  purposes for which we have used them in this report. criteria, and a methodology and time line for granting extensions to ports  that cannot meet the 2012 deadline for scanning U.S.-bound containers.  We compared CBP’s planning efforts to best practices in A Guide to the  Project Management Body of Knowledge.
To examine the estimated costs of implementing 100 percent scanning of  U.S.-bound cargo containers at foreign ports, we interviewed CBP and  Department of Energy (DOE) officials, international organization  personnel, foreign government officials, and terminal operators to obtain  their views as to the types of costs associated with implementing 100  percent scanning. To determine the costs to the U.S. government of  implementing, operating, and maintaining the SFI program, we reviewed  documentation on CBP’s and DOE’s expenditures to date. After reviewing  possible limitations of the cost data provided, we determined that the data  provided were sufficiently reliable for the purposes for which we have  used them in this report. We compared CBP’s methods for developing cost  estimates to further implement 100 percent scanning with the best  practices outlined in the GAO Cost Estimating and Assessment Guide.  We examined DHS’s Cost-Benefit Analysis Guidebook, as well as Office of  Management and Budget (OMB) Circular No. A-11 Preparation,  Submission, and Execution of the Budget, OMB Circular No. A-94  Guidelines and Discount Rates for Benefit-Cost Analysis of Federal  Programs, and OMB Circular A-4 Regulatory Analysis to identify the need  for, and elements of a comprehensive cost-benefit analysis. To understand  the costs to entities other than the U.S. government, we spoke with  terminal operators and officials from foreign governments participating in  the SFI program. We also interviewed the World Customs Organization  (WCO) and the World Bank to further understand other costs that may  result from 100 percent scanning, such as changes in trade flow and  impacts on developing economies. We reviewed economic studies  conducted on the issue, including those conducted by the University of Le  Havre and Industrial Economics, Inc. Furthermore, we discussed with  officials from foreign governments, representatives of the European  Commission, and terminal operators, including the Federation of  European Private Port Operators, their willingness to share the costs of  container scanning with the United States at SFI ports. over the last several years (see list of Related GAO Products at the end of  this report). To determine the impact of scanning on the use of the  Automated Targeting System in conjunction with the 24-hour rule, we  interviewed CBP officers working at the ports of Baltimore, Maryland and  Los Angeles/Long Beach, California—domestic ports with access to SFI  data—to discuss how the availability of SFI data affects adjudication of  high-risk containers. We observed how domestic CBP officers access and  review SFI scan data. To determine the impact of scanning on the  Container Security Initiative (CSI), we interviewed foreign government  officials at ports participating in both CSI and SFI on how the programs  operate simultaneously, and the resulting impact on collaboration between  U.S. and host government customs officials. We interviewed CBP’s  Customs-Trade Partnership Against Terrorism (C-TPAT) office and six  members of C-TPAT to determine what impact 100 percent scanning may  have on the benefits of membership and how this will affect participation  in C-TPAT. Our interviews with these trade industry representatives were  based on a nonprobability sample, so while their views are not  generalizable to the entire maritime trade industry, they provide  knowledgeable insight into the relationship between the SFI and C-TPAT  programs. We spoke with DOE officials responsible for implementing the  Megaports Initiative to understand the impact of 100 percent scanning on  efforts to expand the Megaports Initiative. We interviewed representatives  of the WCO, International Maritime Organization, International Chamber  of Shipping, European Commission, and foreign government officials to  obtain their views on the consistency of 100 percent scanning with  multilateral and bilateral efforts to promote supply chain security. With  these entities, we discussed how scanning may affect core principles of  the SAFE Framework, including the establishment of customs-to-business  partnerships and mutual recognition between countries of these  partnerships. While we obtained the perspective of all foreign  governments participating in the SFI program that intend to implement the  SAFE Framework, with the exception of Pakistan, these views are not  necessarily representative of all foreign governments intending to  implement the SAFE Framework. We interviewed State Department  officials in Washington D.C.; at the U.S. Mission to the European Union;  and the U.S. Embassy in Seoul, to discuss how the 100 percent  requirement affects the ability of the State Department to defend U.S.  interests. With foreign government officials and representatives of the  European Commission we discussed their intensions to require a  reciprocal 100 percent container scanning requirement of the United  States. We also discussed the impact of reciprocity on domestic ports with  CBP officials at the Ports of Baltimore, Houston, and Los Angeles/Long  Beach; as well as the Houston and Miami Port Authorities.
We conducted this performance audit from August 2008 through October  2009 in accordance with generally accepted government auditing  standards. Those standards require that we plan and perform the audit to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  that the evidence obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives.
section_title: Appendix II: Comments from the Department of Energy
section_title: Appendix III: Comments from the Department of Homeland Security
section_title: Appendix IV: GAO Contact and Staff Acknowledgments
subsections: section_title: Acknowledgments
paragraphs: In addition to the contact named above, Christopher Conrad, Assistant  Director, and Robert Rivas, Analyst-in-Charge, managed this review. Lisa  Canini and Julia Coulter made significant contributions to the work.  Chuck Bausell, Richard Hung, Stanley J. Kostyla, and Timothy M. Persons  assisted with design, methodology, and data analysis. Frances Cook,  Geoffrey Hamilton, and Jan Montgomery provided legal support. Katherine  Davis and Sally Williamson provided assistance in report preparation.  Avrum Ashery and Pille Anvelt helped develop the report’s graphics.
section_title: Related GAO Products
paragraphs: Combating Nuclear Smuggling: DHS Improved Testing of Advanced  Radiation Detection Portal Monitors, but Preliminary Results Show  Limits of New Technology. GAO-09-655. Washington, D.C.: May 21, 2009.
Combating Nuclear Smuggling: DHS’s Phase 3 Test Report on Advanced  Portal Monitors Does Not Fully Disclose the Limitations of the Test  Results. GAO-08-979. Washington, D.C.: September 20, 2008.
Supply Chain Security: CBP Works with International Entities to  Promote Global Customs Security Standards and Initiatives, but  Challenges Remain. GAO-08-538. Washington, D.C.: August 15, 2008  Supply Chain Security: Challenges to Scanning 100 Percent of U.S.- Bound Cargo Containers. GAO-08-533T. Washington, D.C.: June 12, 2008.
Supply Chain Security: Examinations of High-Risk Cargo at Foreign  Seaports Have Increased, but Improved Data Collection and Performance  Measures Are Needed. GAO-08-187. Washington, D.C.: January 25, 2008.
Maritime Security: The SAFE Port Act: Status and Implementation One  Year Later. GAO-08-126T. Washington, D.C.: October 30, 2007.
Maritime Security: One Year Later: A Progress Report on the SAFE Port  Act. GAO-08-171T. Washington, D.C.: October 16, 2007.
Maritime Security: The SAFE Port Act and Efforts to Secure Our  Nation’s Seaports. GAO-08-86T. Washington, D.C.: October 4, 2007.
Combating Nuclear Smuggling: Additional Actions Needed to Ensure  Adequate Testing of Next Generation Radiation Detection Equipment.  GAO-07-1247T. Washington, D.C.: September 18, 2007.
Maritime Security: Observations on Selected Aspects of the SAFE Port  Act. GAO-07-754T. Washington, D.C.: April 26, 2007.
Customs Revenue: Customs and Border Protection Needs to Improve  Workforce Planning and Accountability. GAO-07-529. Washington, D.C.:  April 12, 2007.
Cargo Container Inspections: Preliminary Observations on the Status of  Efforts to Improve the Automated Targeting System. GAO-06-591T.  Washington, D.C.: March 30, 2006.
Combating Nuclear Smuggling: Efforts to Deploy Radiation Detection  Equipment in the United States and in Other Countries. GAO-05-840T.  Washington, D.C.: June 21, 2005.
Container Security: A Flexible Staffing Model and Minimum Equipment  Requirements Would Improve Overseas Targeting and Inspection  Efforts. GAO-05-557. Washington, D.C.: April 26, 2005.
Homeland Security: Key Cargo Security Programs Can Be Improved.  GAO-05-466T. Washington, D.C.: May 26, 2005.
Maritime Security: Enhancements Made, but Implementation and  Sustainability Remain Key Challenges. GAO-05-448T. Washington, D.C.:  May 17, 2005.