Maritime Security: The SAFE Port Act: Status and Implementation One Year Later
Released: 2007-10-30T00:00:00

Letter

Prior Actions Have Improved Port Security, but Issues Remain

Port security overall has improved because of the development of organizations and programs such as AMSCs, Area Maritime Security Plans (AMSPs), maritime security exercises, and the International Port Security Program, but challenges to successful implementation of these efforts remain. Additionally, agencies may face challenges addressing the additional requirements directed by the SAFE Port Act, such as a provision that DHS establish interagency operational centers at all high- priority ports. AMSCs and the Coast Guard’s sector command centers have improved information sharing, but the types and ways information is shared vary. AMSPs, limited to security incidents, could benefit from unified planning to include an all-hazards approach. Maritime security exercises would benefit from timely and complete after-action reports, increased collaboration across federal agencies, and broader port-level coordination. The Coast Guard’s International Port Security Program is currently evaluating the antiterrorism measures maintained at foreign seaports.

Area Maritime Security Committees Share Information and Coast Guard Plans to Expand Interagency Operational Centers

Two main types of forums have developed for agencies to coordinate and share information about port security: area committees and Coast Guard sector command centers. AMSCs serve as a forum for port stakeholders, facilitating the dissemination of information through regularly scheduled meetings, issuance of electronic bulletins, and sharing key documents. MTSA provided the Coast Guard with the authority to create AMSCs— composed of federal, state, local, and industry members—that help to develop the AMSP for the port. As of August 2007, the Coast Guard had organized 46 AMSCs. Each has flexibility to assemble and operate in a way that reflects the needs of its port area, resulting in variations in the number of participants, the types of state and local organizations involved, and the way in which information is shared. Some examples of information shared include assessments of vulnerabilities at specific port locations, information about potential threats or suspicious activities, and Coast Guard strategies intended for use in protecting key infrastructure. As part of an ongoing effort to improve its awareness of the maritime domain, the Coast Guard developed 35 sector command centers, four of which operate in partnership with the U.S. Navy.

We have previously reported that both of these types of forums have helped foster cooperation and information sharing. We further reported that AMSCs provided a structure to improve the timeliness, completeness, and usefulness of information sharing between federal and nonfederal stakeholders. These committees improved upon previous information- sharing efforts because they established a formal structure and new procedures for sharing information. In contrast to AMSCs, the Coast Guard’s sector command centers can provide continuous information about maritime activities and involve various agencies directly in operational decisions using this information. We have reported that these centers have improved information sharing, and the types of information and the way information is shared vary at these centers depending on their purpose and mission, leadership and organization, membership, technology, and resources.

The SAFE Port Act called for establishment of interagency operational centers, directing the Secretary of DHS to establish such centers at all high-priority ports no later than 3 years after the act’s enactment. The act required that the centers include a wide range of agencies and stakeholders and carry out specified maritime security functions. In addition to authorizing the appropriation of funds and requiring DHS to provide Congress a proposed budget and cost-sharing analysis for establishing the centers, the act directed the new interagency operational centers to utilize the same compositional and operational characteristics of existing sector command centers. According to the Coast Guard, none of the 35 centers meets the requirements set forth in the SAFE Port Act. Nevertheless, the four centers the Coast Guard operates in partnership with the Navy are a significant step in meeting these requirements, according to a senior Coast Guard official. The Coast Guard is currently piloting various aspects of future interagency operational centers at existing centers and is also working with multiple interagency partners to further develop this project. DHS has submitted the required budget and cost-sharing analysis proposal, which outlines a 5-year plan for upgrading its centers into future interagency operations centers to continue to foster information sharing and coordination in the maritime domain. The Coast Guard estimates the total acquisition cost of upgrading 24 sectors that encompass the nation’s high-priority ports into interagency operations centers will be approximately $260 million, to include investments in information system, sensor network, and facilities upgrades and expansions. According to the Coast Guard, future interagency operations centers will allow the Coast Guard and its partners to use port surveillance with joined tactical and intelligence information, and share these data with port partners working side by side in expanded facilities.

In our April 2007 testimony, we reported on various challenges the Coast Guard faces in its information-sharing efforts. These challenges include obtaining security clearances for port security stakeholders and creating effective working relationships with clearly defined roles and responsibilities. In our past work, we found the lack of federal security clearances among area committee members had been routinely cited as a barrier to information sharing. In turn, this inability to share classified information may limit the ability to deter, prevent, and respond to a potential terrorist attack. The Coast Guard, having lead responsibility in coordinating maritime information, has made improvements to its program for granting clearances to area committee members and additional clearances have been granted to members with a need to know. In addition, the SAFE Port Act includes a specific provision requiring DHS to sponsor and expedite security clearances for participants in interagency operational centers. However, the extent to which these efforts will ultimately improve information sharing is not yet known. As the Coast Guard expands its relationships with multiple interagency partners, collaborating and sharing information effectively under new structures and procedures will be important. While some of the existing centers achieved results with existing interagency relationships, other high-priority ports might face challenges establishing new working relationships among port stakeholders and implementing their own interagency operational centers. Finally, addressing potential overlapping responsibilities —such as leadership roles for the Coast Guard and its interagency partners—will be important to ensure that actions across the various agencies are clear and coordinated.

Operations to Provide Overall Port Security Face Resource Constraints

As part of its operations, the Coast Guard has also undertaken additional activities to provide overall port security. The Coast Guard’s operations order, Operation Neptune Shield, first released in 2003, specifies the level of security activities to be conducted. The order sets specific activities for each port. However, the amount of each activity is established based on the port’s specific security concerns. Some examples of security activities include conducting waterborne security patrols, boarding high-interest vessels, escorting vessels into ports, and enforcing fixed security zones. When a port security level increases, the amount of activity the Coast Guard must conduct also increases. The Coast Guard uses monthly field unit reports to indicate how many of its security activities it is able to perform. Our review of these field unit reports indicates that many ports are having difficulty meeting their port security responsibilities, with resource constraints being a major factor. In an effort to meet more of its security requirements, the Coast Guard uses a strategy that includes partnering with other government agencies, adjusting its activity requirements, and acquiring resources. Despite these efforts, many ports are still having difficulty meeting their port security requirements. The Coast Guard is currently studying what resources are needed to meet certain aspects of its port security program, but to enhance the effectiveness of its port security operations, a more comprehensive study to determine all additional resources and changes to strategy to meet minimum security requirements may be needed.

Area Maritime Security Plans Are in Place but Need to Address Recovery and Natural Disasters

Implementing regulations for MTSA specified that AMSPs include, among other things, operational and physical security measures in place at the port under different security levels, details of the security incident command and response structure, procedures for responding to security threats including provisions for maintaining operations in the port, and procedures to facilitate the recovery of the marine transportation system after a security incident. A Coast Guard Navigation and Vessel Inspection Circular (NVIC) provided a common template for AMSPs and specified the responsibilities of port stakeholders under them. As of September 2007, 46 AMSPs are in place at ports around the country. The Coast Guard approved the plans by June 1, 2004, and MTSA requires that they be updated at least every 5 years.

The SAFE Port Act added a requirement to AMSPs that specified that they include recovery issues by identifying salvage equipment able to restore operational trade capacity. This requirement was established to ensure that the waterways are cleared and the flow of commerce through United States ports is reestablished as efficiently and quickly as possible after a security incident. While the Coast Guard sets out the general priorities for recovery operations in its guidelines for the development of AMSPs, we have found that this guidance offers limited instruction and assistance for developing procedures to address recovery situations.

The Maritime Infrastructure Recovery Plan (MIRP) recognizes the limited nature of the Coast Guard’s guidance and notes the need to further develop recovery aspects of the AMSPs. The MIRP provides specific recommendations for developing the recovery sections of the AMSPs. The AMSPs that we reviewed often lacked recovery specifics, and none had been updated to reflect the recommendations made in the MIRP. The Coast Guard is currently updating the guidance for the AMSPs and aims to complete the updates by the end of calendar year 2007 so that the guidance will be ready for the mandatory 5-year re-approval of the AMSPs in 2009. Coast Guard officials commented that any changes to the recovery section would need to be consistent with the national protocols developed for the SAFE Port Act. Additionally, related to recovery planning, the Coast Guard and CBP have developed specific interagency actions focused on response and recovery. This should provide the Coast Guard and CBP with immediate security options for the recovery of ports and commerce.

Further, AMSPs generally do not address natural disasters (i.e., they do not have an all-hazards approach). In a March 2007 report examining how ports are dealing with planning for natural disasters such as hurricanes and earthquakes, we noted that AMSPs cover security issues but not other issues that could have a major impact on a port’s ability to support maritime commerce. As currently written, AMSPs are concerned with deterring and, to a lesser extent, responding to security incidents. We found, however, that unified consideration of all risks—natural and man- made—faced by a port may be beneficial. Because of the similarities between the consequences of terrorist attacks and natural or accidental disasters, much of the planning for protection, response, and recovery capabilities is similar across all emergency events. Combining terrorism and other threats can thus enhance the efficiency of port planning efforts. This approach also allows port stakeholders to estimate the relative value of different mitigation alternatives. The exclusion of certain risks from consideration, or the separate consideration of a particular type of risk, raises the possibility that risks will not be accurately assessed or compared, and that too many or too few resources will be allocated toward mitigation of a particular risk.

As ports continue to revise and improve their planning efforts, available evidence indicates that by taking a systemwide approach and thinking strategically about using resources to mitigate and recover from all forms of disaster, ports will be able to achieve the most effective results. AMSPs provide a useful foundation for establishing an all-hazards approach. While the SAFE Port Act does not call for expanding AMSPs in this manner, it does contain a requirement that natural disasters and other emergencies be included in the scenarios to be tested in the Port Security Exercise Program. On the basis of our prior work, we found there are challenges in using AMSCs and AMSPs as the basis for broader all-hazards planning. These challenges include determining the extent that security plans can serve all-hazards purposes. We recommended that DHS encourage port stakeholders to use the AMSCs and MTSA-required AMSPs to discuss all- hazards planning. DHS concurred with this recommendation.

Maritime Security Exercises Require a Broader Scope and Participation

The Coast Guard Captain of the Port and the AMSC are required by MTSA regulations to conduct or participate in exercises to test the effectiveness of AMSPs annually, with no more than 18 months between exercises. These exercises—which have been conducted for the past several years— are designed to continuously improve preparedness by validating information and procedures in the area plan, identifying weaknesses and strengths, and practicing command and control within an incident command/unified command framework. In August 2005, the Coast Guard and the TSA initiated the Port Security Training Exercise Program (PortSTEP)—an exercise program designed to involve the entire port community, including public governmental agencies and private industry, and intended to improve connectivity of various surface transportation modes and enhance AMSPs. Between August 2005 and October 2007, the Coast Guard expected to conduct PortSTEP exercises for 40 area committees and other port stakeholders. Additionally, the Coast Guard initiated its own Area Maritime Security Training and Exercise Program (AMStep) in October 2005. This program was also designed to involve the entire port community in the implementation of the AMSP. Between the two programs, PortSTEP and AMStep, all AMSCs have received a port security exercise each year since inception.

The SAFE Port Act included several new requirements related to security exercises, such as establishing a Port Security Exercise Program to test and evaluate the capabilities of governments and port stakeholders to prevent, prepare for, mitigate against, respond to, and recover from acts of terrorism, natural disasters, and other emergencies at facilities that MTSA regulates. The act also required the establishment of a port security exercise improvement plan process that would identify, disseminate, and monitor the implementation of lessons learned and best practices from port security exercises.

Though we have not specifically examined compliance with these new requirements, our work in examining past exercises suggests that implementing a successful exercise program faces several challenges. These challenges include setting the scope of the program to determine how exercise requirements in the SAFE Port Act differ from area committee exercises that are currently performed. This is especially true for incorporating recovery scenarios into exercises. In this past work, we also found that Coast Guard terrorism exercises frequently focused on prevention and awareness, but often did not include recovery activities. According to the Coast Guard, with the recent emphasis on planning for recovery operations, it has held several exercises over the past year that have either included or consisted solely of recovery activities. It will be important that future exercises also focus on recovery operations so public and private stakeholders can cover gaps that might hinder commerce after a port incident. Other long-standing challenges include completing after-action reports in a timely and thorough manner and ensuring that all relevant agencies participate. According to the Coast Guard, as the primary sponsor of these programs, it faces a continuing challenge in getting comprehensive participation in these exercises.

The Coast Guard Is Evaluating the Security of Foreign Ports, but Faces Resource Challenges

The security of domestic ports also depends upon security at foreign ports where cargoes bound for the United States originate. To help secure the overseas supply chain, MTSA required the Coast Guard to develop a program to assess security measures in foreign ports and, among other things, recommend steps necessary to improve security measures in those ports. The Coast Guard established this program, called the International Port Security Program, in April 2004. Under this program, the Coast Guard and host nations review the implementation of security measures in the host nations’ ports against established security standards, such as the International Maritime Organization’s International Ship and Port Facility Security (ISPS) Code. Coast Guard teams have been established to conduct country visits, discuss security measures implemented, and collect and share best practices to help ensure a comprehensive and consistent approach to maritime security in ports worldwide. The conditions of these visits, such as timing and locations, are negotiated between the Coast Guard and the host nation. Coast Guard officials also make annual visits to the countries to obtain additional observations on the implementation of security measures and ensure deficiencies found during the country visits are addressed.

Both the SAFE Port Act and other congressional directions have called for the Coast Guard to increase the pace of its visits to foreign countries. Although MTSA did not set a time frame for completion of these visits, the Coast Guard initially set a goal to visit the approximately 140 countries that conduct maritime trade with the United States by December 2008. In September 2006, the conference report accompanying the fiscal year 2007 DHS Appropriations Act directed the Coast Guard to “double the amount” of its visits. Subsequently, in October 2006, the SAFE Port Act required the Coast Guard to reassess security measures at the foreign ports every 3 years. Coast Guard officials said they will comply with the more stringent requirements and will reassess countries on a 2-year cycle. With the expedited pace, the Coast Guard now expects to assess all countries by March 2008, after which reassessments will begin.

We are currently conducting a review of the Coast Guard’s International Port Security Program that evaluates the Coast Guard’s implementation of international enforcement programs. The report, expected to be issued in early 2008, will cover issues related to the program, such as the extent to which the program is using a risk-based approach in carrying out its work, what challenges the program faces as it moves forward, and the extent to which the observations collected during the country visits are used by other programs such as the Coast Guard’s port state control inspections and high-interest vessel boarding programs.

As of September 2007, the Coast Guard reported that it has visited 109 countries under this program and plans to visit another 29 more by March 2008. For the countries for which the Coast Guard has issued a final report, the Coast Guard reported that most had “substantially implemented the security code,” while a few countries were found to have not yet implemented the ISPS Code and will be subject to a reassessment or other sanctions. The Coast Guard also found several facilities needing improvements in areas such as access controls, communication devices, fencing, and lighting.

While our review is still preliminary, Coast Guard officials told us that to plan and prepare for the next cycle of reassessments that are to begin next year, they are considering modifying their current visit methodology to incorporate a risk-based approach to prioritize the order and intensity of the next round of country visits. To do this, they have consulted with a contractor to develop an updated country risk prioritization model. Under the previous model, the priority assigned to a country for a visit was weighted heavily toward the volume of U.S. trade with that country. The new model being considered is to incorporate other factors, such as corruption and terrorist activity levels within the countries. Program officials told us that the details of this revised approach have yet to be finalized.

Coast Guard officials told us that as they complete the first round of visits and move into the next phase of revisits, challenges still exist in implementing the program. One challenge identified was that the faster rate at which foreign ports will now be reassessed will require hiring and training new staff—a challenge the officials expect will be made more difficult because experienced personnel who have been with the program since its inception are being transferred to other positions as part of the Coast Guard’s rotational policy. These officials will need to be replaced with newly assigned personnel.

Reluctance by some countries to allow the Coast Guard to visit their ports due to concerns over sovereignty was another challenge cited by program officials in completing the first round of visits. According to these officials, before permitting Coast Guard officials to visit their ports, some countries insisted on visiting and assessing a sample of U.S. ports. The Coast Guard was able to accommodate their request through the program’s reciprocal visit feature in which the Coast Guard hosts foreign delegations to visit U.S. ports and observe ISPS Code implementation in the United States. This subsequently helped gain the cooperation of the countries in hosting a Coast Guard visit to their own ports. However, as they begin to revisit countries as part of the program’s next phase, program officials stated that sovereignty concerns may still be an issue. Some countries may be reluctant to host a comprehensive country visit on a recurring basis because they believe the frequency—once every 2 to 3 years—is too high. Sovereignty also affects the conditions of the visits, such as timing and locations, because such visits are negotiated between the Coast Guard and the host nation. Thus the Coast Guard team making the visit could be precluded from seeing locations that are not in compliance.

Another challenge program officials cite is having limited ability to help countries build on or enhance their capacity to implement the ISPS Code requirements. For example, the SAFE Port Act required that GAO report on various aspects of port security in the Caribbean Basin. We earlier reported that although the Coast Guard found that most of the countries had substantially implemented the ISPS Code, some facilities needed to make improvements or take additional measures. In addition, our discussions with facility operators and government officials in the region indicated that assistance—such as additional training—would help enhance their port security. Program officials stated that while their visits provide opportunities for them to identify potential areas to improve or help sustain the security measures put in place, other than sharing best practices or providing presentations on security practices, the program does not currently have the resources to directly assist countries with more in-depth training or technical assistance. To overcome this, program officials have worked with other agencies (e.g., the Departments of Defense and State) and international organizations (e.g., the Organization of American States) to secure funding for training and assistance to countries where port security conferences have been held (e.g., the Dominican Republic and the Bahamas). Program officials indicated that as part of reexamining the approach for the program’s next phase, they will also consider possibilities to improve the program’s ability to provide training and capacity building to countries when a need is identified.

Port Facility Security Efforts Continue, but Additional Evaluation Is Needed

To improve the security at individual facilities at ports, many long-standing programs are under way. However, new challenges to their successful implementation have emerged. The Coast Guard is required to conduct assessments of security plans and facility compliance inspections, but faces challenges in staffing and training to meet the SAFE Port Act’s additional requirements such as the sufficiency of trained personnel and guidance to conduct facility inspections. TSA’s TWIC program has addressed some of its initial program challenges, but will continue to face additional challenges as the program rollout continues. Many steps have been taken to ensure that transportation workers are properly screened, but redundancies in various background checks have decreased efficiency and highlighted the need for increased coordination.

The Coast Guard’s Compliance Monitoring of Maritime Facilities Identifies Deficiencies, but Program Effectiveness Overall Has Not Been Evaluated

MTSA and its implementing regulations required owners and operators of certain maritime facilities (e.g., power stations, chemical manufacturing facilities, and refineries that are located on waterways and receive foreign vessels) to conduct assessments of their security vulnerabilities, develop security plans to mitigate these vulnerabilities, and implement measures called for in the security plans by July 1, 2004. Under the Coast Guard regulations, these plans are to include items such as measures for access control, responses to security threats, and drills and exercises to train staff and test the plan. The plans are “performance-based,” meaning that the Coast Guard has specified the outcomes it is seeking to achieve and has given facilities responsibility for identifying and delivering the measures needed to achieve these outcomes.

Under MTSA, Coast Guard guidance calls for the Coast Guard to conduct one on-site facility inspection annually to verify continued compliance with the plan. The SAFE Port Act, enacted in 2006, required the Coast Guard to conduct at least two inspections—one of which was to be unannounced—of each facility annually. We currently have ongoing work that reviews the Coast Guard’s oversight strategy under MTSA and SAFE Port Act requirements. The report, expected later this year, will cover, among other things, the extent to which the Coast Guard has met its inspection requirements and found facilities to be in compliance with its security plans, the sufficiency of trained inspectors and guidance to conduct facility inspections, and aspects of the Coast Guard’s overall management of its MTSA facility oversight program, particularly documenting compliance activities.

Our work is preliminary. However, according to our analysis of Coast Guard records and statements from officials, the Coast Guard seems to have conducted facility compliance exams annually at most—but not all— facilities. Redirection of staff to a higher-priority mission, such as Hurricane Katrina emergency operations, may have accounted for some facilities not having received an annual exam. The Coast Guard also conducted a number of unannounced inspections—about 4,500 in 2006, concentrated in around 1,200 facilities—prior to the SAFE Port Act’s passage. According to officials we spoke with, the Coast Guard selected facilities for unannounced inspection based on perceived risk and inspection convenience (e.g., if inspectors were already at the facility for another purpose). The Coast Guard has identified facility plan compliance deficiencies in about one-third of facilities inspected each year, and the deficiencies identified are concentrated in a small number of categories (e.g., failure to follow the approved plan for ensuring facility access control, record keeping, or meeting facility security officer requirements). We are still in the process of reviewing the data Coast Guard uses to document compliance activities and will have additional information in our forthcoming report.

Sectors we visited generally reported having adequate guidance and staff for conducting consistent compliance exams, but until recently, little guidance on conducting unannounced inspections, which are often incorporated into work while performing other mission tasks. Lacking guidance on unannounced inspections, the process for conducting one varied considerably in the sectors we visited. For example, inspectors in one sector found the use of a telescope effective in remotely observing facility control measures (such as security guard activities), but these inspectors primarily conduct unannounced inspections as part of vehicle patrols. Inspectors in another sector conduct unannounced inspections at night, going up to the security gate and querying personnel about their security knowledge (e.g., knowledge of high-security-level procedures). As we completed our fieldwork, the Coast Guard issued a Commandant message with guidance on conducting unannounced inspections. This message may provide more consistency, but how the guidance will be applied and its impact on resource needs remain uncertain. Coast Guard officials said they plan to revise their primary circular on facility oversight by February 2008. They are also planning to revise MTSA regulations to conform to SAFE Port Act requirements in 2009 (in time for the reapproval of facility security plans) but are behind schedule.

We recommended in June 2004 that the Coast Guard evaluate its compliance inspection efforts taken during the initial 6-month period after July 1, 2004, and use the results to strengthen its long-term strategy for ensuring compliance. The Coast Guard agreed with this recommendation. Nevertheless, based on our ongoing work, it appears that the Coast Guard has not conducted a comprehensive evaluation of its oversight program to identify strengths or target areas for improvement after 3 years of program implementation. Our prior work across a wide range of public and private sector organizations shows that high-performing organizations continuously assess their performance with information about results based on their activities. For decision makers to assess program strategies, guidance, and resources, they need accurate and complete data reflecting program activities. We are currently reviewing the accuracy and completeness of Coast Guard compliance data and will report on this issue later this year.

TSA Has Made Progress in Implementing the TWIC Program, but Key Deadline Has Been Missed as TSA Evaluates Test Program

To control access to secure areas of port facilities and vessels, the Secretary of DHS was required by MTSA to, among other things; issue a transportation worker identification card that uses biometrics, such as fingerprints. TSA had already initiated a program to create an identification credential that could be used by workers in all modes of transportation when MTSA was enacted. This program, called the TWIC program, is designed to collect personal and biometric information to validate workers’ identities, conduct background checks on transportation workers to ensure they do not pose a threat to security, issue tamper- resistant biometric credentials that cannot be counterfeited, verify these credentials using biometric access control systems before a worker is granted unescorted access to a secure area, and revoke credentials if disqualifying information is discovered, or if a card is lost, damaged, or stolen. TSA, in partnership with the Coast Guard, is focusing initial implementation on maritime facilities.

We have previously reported on the status of this program and the challenges that it faces. Most recently, we reported that TSA has made progress in implementing the TWIC program and addressing problems we previously identified regarding contract planning and oversight and coordination with stakeholders. For example, TSA reported that it added staff with program and contract management expertise to help oversee the contract and developed plans for conducting public outreach and education efforts.

The SAFE Port Act required TSA to implement TWIC at the 10 highest-risk ports by July 1, 2007, conduct a pilot program to test TWIC access control technologies in the maritime environment; issue regulations requiring TWIC card readers based on the findings of the pilot; and periodically report to Congress on the status of the program. According to TSA officials, the July 1 deadline was not met because the agency and the TWIC enrollment contractor needed to conduct additional tests of the software and equipment that will be used to enroll and issue cards to workers to ensure that they work effectively before implementation. TSA officials stated that such testing was needed to ensure that these systems will be able to handle the capacity of enrolling as many as 5,000 workers per day, conducting background checks on these workers in a timely manner, and efficiently producing a TWIC card for each worker. In October 2007, TSA announced that this testing was complete, and the agency reported that it began enrolling and issuing TWIC cards to workers at the Port of Wilmington, Delaware, on October 16, 2007, and that implementation would extend to 11 additional ports by November 2007. TSA has also begun planning a pilot to test TWIC access control technologies, such as biometric card readers, in the maritime environment as required by the SAFE Port Act. According to TSA, the agency is partnering with the port authorities of Los Angeles, Long Beach, Brownsville, and New York and New Jersey, in addition to Watermark Cruises in Annapolis, Maryland, to test the TWIC access control technologies in the maritime environment and is still seeking additional participants. TSA’s objective is to include pilot test participants that are representative of a variety of facilities and vessels in different geographic locations and environmental conditions. According to TSA, the results of the pilot program will help the agency issue future regulations that will require the installation of access control systems necessary to read the TWIC cards. We will also be testifying before the full Committee on Homeland Security on several key challenges that can affect the successful implementation of the TWIC program.

DHS Working to Coordinate Multiple Background Check Programs for Transportation Workers

Since the 9/11 attacks, the federal government has taken steps to ensure that transportation workers, many of whom transport hazardous materials or have access to secure areas in locations such as port facilities, are properly screened to ensure they do not pose a security risk. Concerns have been raised, however, that transportation workers may face a variety of background checks, each with different standards. In July 2004, the 9/11 Commission reported that having too many different biometric standards, travel facilitation systems, credentialing systems, and screening requirements hampers the development of information crucial for stopping terrorists from entering the country, is expensive, and is inefficient. The commission recommended that a coordinating body raise standards, facilitate information-sharing, and survey systems for potential problems. In August 2004, Homeland Security Presidential Directive - 11 announced a new U.S. policy to “implement a coordinated and comprehensive approach to terrorist-related screening—in immigration, law enforcement, intelligence, counterintelligence, and protection of the border, transportation systems, and critical infrastructure—that supports homeland security, at home and abroad.”

DHS components have begun a number of their own background check initiatives. For example, in January 2007, TSA determined that the background checks required for three other DHS programs satisfied the background check requirement for the TWIC program. That is, an applicant who has already undergone a background check in association with any of these three programs does not have to undergo an additional background check and pays a reduced fee to obtain a TWIC card. Similarly, the Coast Guard plans to consolidate four credentials and require that all pertinent information previously submitted by an applicant at a Coast Guard Regional Examination Center will be forwarded by the center to TSA through the TWIC enrollment process.

In April 2007, we completed a study of DHS background check programs as part of a SAFE Port Act requirement to do so. We found that the six programs we reviewed were conducted independently of one another, collected similar information, and used similar background check processes. Further, each program operated separate enrollment facilities to collect background information and did not share it with the other programs. We also found that DHS did not track the number of workers who, needing multiple credentials, were subjected to multiple background check programs. Because DHS is responsible for a large number of background check programs, we recommended that DHS ensure that its coordination plan includes implementation steps, time frames, and budget requirements; discusses potential costs/benefits of program standardization; and explores options for coordinating and aligning background checks within DHS and other federal agencies.

DHS concurred with our recommendations and continues to take steps— both at the department level and within its various agencies—to consolidate, coordinate, and harmonize such background check programs. At the department level, DHS created SCO in July 2006 to coordinate DHS background check programs. SCO is in the early stages of developing its plans for this coordination. In December 2006, SCO issued a report identifying common problems, challenges, and needed improvements in the credentialing programs and processes across the department. The office awarded a contract in April 2007 that will provide the methodology and support for developing an implementation plan to include common design and comparability standards and related milestones to coordinate DHS screening and credentialing programs. Since April 2007, DHS and SCO have signed a contract to produce three deliverables to align its screening and credentialing activities, set a method and time frame for applying a common set of design and comparability standards, and eliminate redundancy through harmonization. These three deliverables are as follows: Credentialing framework: A framework completed in July 2007 that describes a credentialing lifecycle of registration and enrollment, eligibility vetting and risk assessment, issuance, expiration and revocation, and redress. This framework was to incorporate risk-based levels or criteria, and an assessment of the legal, privacy, policy, operational, and technical challenges.

Technical review: An assessment scheduled for completion in October 2007 is to be completed by the contractor in conjunction with the DHS Office of the Chief Information Officer. This is to include a review of the issues present in the current technical environment and the proposed future technical environment needed to address those issues, and provide recommendations for targeted investment reuse and key target technologies.

Transition plan: A plan scheduled to be completed in November 2007 is to outline the projects needed to actualize the framework, including identification of major activities, milestones, and associated timeline and costs.

Stakeholders in this effort include multiple components of DHS and the Departments of State and Justice.

In addition, the DHS Office of the Chief Information Officer (CIO) and the director of SCO issued a memo in May 2007 to promote standardization across screening and credentialing programs. In this memo, DHS indicated that (1) programs requiring the collection and use of fingerprints to vet individuals will use the Automated Biometric Identification System (IDENT); (2) these programs are to reuse existing or currently planned and funded infrastructure for the intake of identity information to the greatest extent possible; (3) its CIO is to establish a procurement plan to ensure that the department can handle a large volume of automated vetting from programs currently in the planning phase; and (4) to support the sharing of databases and potential consolidation of duplicative applications, the Enterprise Data Management Office is currently developing an inventory of biographic data assets that DHS maintains to support identity management and screening processes.

While continuing to consolidate, coordinate, and harmonize background check programs, DHS will likely face additional challenges, such as ensuring that its plans are sufficiently complete without being overly restrictive, and lack of information regarding the potential costs and benefits associated with the number of redundant background checks. SCO will be challenged to coordinate DHS’s background check programs in such a way that any common set of standards developed to eliminate redundant checks meets the varied needs of all the programs without being so strict that it unduly limits the applicant pool or so intrusive that potential applicants are unwilling to take part. Without knowing the potential costs and benefits associated with the number of redundant background checks that harmonization would eliminate, DHS lacks the performance information that would allow its program managers to compare their program results with goals. Thus, DHS cannot be certain where to target program resources to improve performance. As we recommended, DHS could benefit from a plan that includes, at a minimum, a discussion of the potential costs and benefits associated with the number of redundant background checks that would be eliminated through harmonization.

Container Security Programs Continue to Expand and Mature, but New Challenges Emerge

Through the development of strategic plans, human capital strategies, and performance measures, several container security programs have been established and matured. However, these programs continue to face technical and management challenges in implementation. As part of its layered security strategy, CBP developed the Automated Targeting System as a decision support tool to assess the risks of individual cargo containers. ATS is a complex mathematical model that uses weighted rules that assign a risk score to each arriving shipment based on shipping information (e.g., manifests, bills of lading, and entry data). Although the program has faced quality assurance challenges from its inception, CBP has made significant progress in addressing these challenges. CBP’s in- bond program does not collect detailed information at the U.S. port of arrival that could aid in identifying cargo posing a security risk and promote the effective use of inspection resources. In the past, CSI has lacked sufficient staff to meet program requirements. C-TPAT has faced challenges with validation quality and management in the past, in part due to its rapid growth. The Department of Energy’s Megaports Initiative faces ongoing operational and technical challenges in the installation and maintenance of radiation detection equipment at ports. In addition, implementing the Secure Freight Initiative and the 9/11 Commission Act of 2007 presents additional challenges for the scanning of cargo containers inbound to the United States.

Management of the Automated Targeting System Has Improved

CBP is responsible for preventing terrorists and WMD from entering the United States. As part of this responsibility, CBP addresses the potential threat posed by the movement of oceangoing cargo containers. To perform this mission, CBP officers at seaports utilize officer knowledge and CBP automated systems to assist in determining which containers entering the country will undergo inspections, and then perform the necessary level of inspection of each container based upon risk. To assist in determining which containers are to be subjected to inspection, CBP uses a layered security strategy that attempts to focus resources on potentially risky cargo shipped in containers while allowing other oceangoing containers to proceed without disrupting commerce. ATS is one key element of this strategy. CBP uses ATS as a decision support tool to review documentation, including electronic manifest information submitted by the ocean carriers on all arriving shipments, and entry data submitted by brokers to develop risk scores that help identify containers for additional inspection. CBP requires the carriers to submit manifest information 24 hours prior to a United States-bound sea container being loaded onto a vessel in a foreign port. CBP officers use these scores to help them make decisions on the extent of documentary review or additional inspection as required.

We have conducted several reviews of ATS and made recommendations for its improvement. Consistent with these recommendations, CBP has implemented a number of important internal controls for the administration and implementation of ATS. For example, CBP (1) has established performance metrics for ATS, (2) is manually comparing the results of randomly conducted inspections with the results of inspections resulting from ATS analysis of the shipment data, and (3) has developed and implemented a testing and simulation environment to conduct computer-generated tests of ATS. Since our last report on ATS, the SAFE Port Act required that the CBP Commissioner take additional actions to improve ATS. These requirements included steps such as (1) having an independent panel review the effectiveness and capabilities of ATS; (2) considering future iterations of ATS that would incorporate smart features; (3) ensuring that ATS has the capability to electronically compare manifest and other available data to detect any significant anomalies and facilitate their resolution; (4) ensuring that ATS has the capability to electronically identify, compile, and compare select data elements following a maritime transportation security incident; and (5) developing a schedule to address recommendations made by GAO and the Inspectors General of the Department of the Treasury and DHS.

CBP’s Management of the In-Bond Cargo System Impedes Efforts to Manage Security Risks

CBP’s in-bond system—which allows goods to transit the United States without officially entering U.S. commerce—must balance the competing goals of providing port security, facilitating trade, and collecting trade revenues. However, we have earlier reported that CBP’s management of the system has impeded efforts to manage security risks. Specifically, CBP does not collect detailed information on in-bond cargo at the U.S. port of arrival that could aid in identifying cargo posing a security risk and promote effective use of inspection resources.

The in-bond system is designed to facilitate the flow of trade throughout the United States and is estimated to be widely used. The U.S. customs system allows cargo to move from the U.S. arrival port, without appraisal or payment of duties, to another U.S. port for official entry into U.S. commerce or for exportation. In-bond regulations currently permit bonded carriers from 15 to 60 days, depending on the mode of shipment, to reach their final destination and allow them to change a shipment’s final destination without notifying CBP. The in-bond system allows the trade community to avoid congestion and delays at U.S. seaports whose infrastructure has not kept pace with the dramatic growth in trade volume. In-bond facilitates trade by allowing importers and shipping agents the flexibility to move cargo more efficiently. Using the number of in-bond transactions reported by CBP for the 6-month period of October 2004 to March 2005, we found over 6.5 million in-bond transactions were initiated nationwide. Some CBP port officials have estimated that in-bond shipments represent from 30 percent to 60 percent of goods received at their ports.

As discussed earlier in this testimony, CBP uses manifest information it receives on all cargo arriving at U.S. ports (including in-bond cargo) as input for ATS scoring to aid in identifying security risks and setting inspection priorities. For regular cargo, the ATS score is updated with more detailed information as the cargo makes official entry at the arrival port. For in-bond cargo, the ATS scores generally are not updated until these goods move from the port of arrival to the destination port for official entry into United States commerce, or not updated at all for cargo that is intended to be exported. As a result, in-bond goods might transit the United States without having the most accurate ATS risk score.

Entry information frequently changes the ATS score for in-bond goods. For example, CBP provided data for four major ports comparing the ATS score assigned to in-bond cargo at the port of arrival based on the manifest to the ATS score given after goods made official entry at the destination port. These data show that for the four ports, the ATS score based on the manifest information stayed the same an average of 30 percent of the time after being updated with entry information, ATS scores increased an average of 23 percent of the time and decreased an average of 47 percent of the time. A higher ATS score can result in higher priority being given to cargo for inspection than otherwise would be given based solely on the manifest information. A lower ATS score can result in cargo being given a lower priority for inspection and potentially shift inspection resources to cargo deemed a higher security risk. Without having the most accurate ATS score, in-bond goods transiting the United States pose a potential security threat because higher-risk cargo may not be identified for inspection at the port of arrival. In addition, scarce inspection resources may be misdirected to in-bond goods that a security score based on better information might have shown did not warrant inspection.

We earlier recommended that the Commissioner of CBP take action in three areas to improve the management of the in-bond program, which included collecting and using improved information on in-bond shipments to update the ATS score for in-bond movements at the arrival port and enable better informed decisions affecting security, trade, and revenue collection. DHS agreed with most of our recommendations. According to CBP, it is in the process of developing an in-bond weight set to be utilized to further identify cargo posing a security risk. The weight set is being developed based on expert knowledge, analysis of previous in-bond seizures, and creation of rules based on in-bond concepts.

The SAFE Port Act of 2006 contains provisions related to securing the international cargo supply chain, including provisions related to the movement of in-bond cargo. Specifically, it requires that CBP submit a report to several congressional committees on the in-bond system that includes an assessment of whether ports of arrival should require additional information for in-bond cargo, a plan for tracking in-bond cargo in CBP’s Automated Commercial Environment information system, and assessment of the personnel required to ensure reconciliation of in-bond cargo between arrival port and destination port. It also requires that the report include an assessment of the feasibility of reducing transit time while traveling in-bond, and an evaluation of the criteria for targeting and examining in-bond cargo. CBP submitted the report to the Congress on October 17, 2007. In the report, CBP states its intention to propose various changes addressing the areas of concern, but it does not propose time frames for its actions.

The CSI Program Continues to Mature, but Addressing SAFE Port Act Requirements Adds New Challenges

CBP initiated its CSI program to detect and deter terrorists from smuggling WMD via cargo containers before they reach domestic seaports in January 2002. The SAFE Port Act formalized the CSI program into law. Under CSI, foreign governments sign a bilateral agreement with CBP to allow teams of U.S. customs officials to be stationed at foreign seaports to identify cargo container shipments at risk of containing WMD. CBP personnel use automated risk assessment information and intelligence to target to identify those at risk of containing WMD. When a shipment is determined to be high risk, CBP officials refer it to host government officials who determine whether to examine the shipment before it leaves their seaport for the United States. In most cases, host government officials honor the U.S. request by examining the referred shipments with nonintrusive inspection equipment and, if they deem necessary, by opening the cargo containers to physically search the contents inside. CBP planned to have a total of 58 seaports by the end of fiscal year 2007.

Our 2003 and 2005 reports on the CSI program found both successes and challenges faced by CBP in implementing the program. Since our last CSI report in 2005, CBP has addressed some of the challenges we identified and has taken steps to improve the CSI program. Specifically, CBP contributed to the Strategy to Enhance International Supply Chain Security that DHS issued in July 2007, which addressed a SAFE Port Act requirement and filled an important gap—between broad national strategies and program-specific strategies, such as for CSI—in the strategic framework for maritime security that has evolved since 9/11. In addition, in 2006 CBP issued a revised CSI strategic plan for 2006 to 2011, which added three critical elements that we had identified in our April 2005 report as missing from the plan’s previous iteration. In the revised plan, CBP described how performance goals and measures are related to CSI objectives, how CBP evaluates CSI program operations, and what external factors beyond CBP’s control could affect program operations and outcomes. Also, by expanding CSI operations to 58 seaports by the end of September 2007, CBP would have met its objective of expanding CSI locations and program activities. CBP projected that at the end of fiscal year 2007 between 85 and 87 percent of all U.S.-bound shipments in containers will pass through CSI ports where the risk level of the container cargo is assessed and the contents are examined as deemed necessary.

Although CBP’s goal is to review information about all U.S.-bound containers at CSI seaports for high-risk contents before the containers depart for the United States, we reported in 2005 that the agency has not been able to place enough staff at some CSI ports to do so. Also, the SAFE Port Act required DHS to develop a human capital management plan to determine adequate staffing levels in U.S. and CSI ports. CBP has developed a human capital plan, increased the number of staff at CSI ports, and provided additional support to the deployed CSI staff by using staff in the United States to screen containers for various risk factors and potential inspection. With these additional resources, CBP reports that manifest data for all US-bound container cargo are reviewed using ATS to determine whether the container is at high risk of containing WMD. However, the agency faces challenges in ensuring that optimal numbers of staff are assigned to CSI ports, in part because of its reliance on placing staff overseas at CSI ports without systematically determining which functions could be performed overseas and which could be performed domestically.

Also, in 2006 CBP improved its methods for conducting on-site evaluations of CSI ports, in part by requiring CSI teams at the seaports to demonstrate their proficiency at conducting program activities and by employing electronic tools designed to assist in the efficient and systematic collection and analysis of data to help in evaluating the CSI team’s proficiency. In addition, CBP continued to refine the performance measures it uses to track the effectiveness of the CSI program by streamlining the number of measures it uses to six, modifying how one measure is calculated to address an issue we identified in our April 2005 report, and developing performance targets for the measures. We are continuing to review these assessment practices as part of our ongoing review of the CSI program, and expect to report on the results of this effort shortly.

Similar to our recommendation in a previous CSI report, the SAFE Port Act called upon DHS to establish minimum technical criteria for the use of nonintrusive inspection equipment in conjunction with CSI. The act also directs DHS to require that seaports receiving CSI designation operate such equipment in accordance with these criteria and with standard operating procedures developed by DHS. CBP officials stated that their agency faces challenges in implementing this requirement due to sovereignty issues and the fact that the agency is not a standard-setting organization, either for equipment or for inspections processes or for practices. However, CBP has developed minimum technical standards for equipment used at domestic ports, and the World Customs Organization (WCO) had described issues—not standards—to consider when procuring inspection equipment. Our work suggests that CBP may face continued challenges establishing equipment standards and monitoring host government operations, which we are also examining in our ongoing review of the CSI program.

C-TPAT Continues to Expand and Mature, but Management Challenges Remain

CBP initiated C-TPAT in November 2001 to complement other maritime security programs as part of the agency’s layered security strategy. In October 2006, the SAFE Port Act formalized C-TPAT into law. C-TPAT is a voluntary program that enables CBP officials to work in partnership with private companies to review the security of their international supply chains and improve the security of their shipments to the United States. In return for committing to improve the security of their shipments by joining the program, C-TPAT members receive benefits that result in the likelihood of reduced scrutiny of their shipments, such as a reduced number of inspections or shorter wait times for their shipments. CBP uses information about C-TPAT membership to adjust risk-based targeting of these members shipments in ATS. As of July 2007, CBP had certified more than 7,000 companies that import goods via cargo containers through U.S. seaports—which accounted for approximately 45 percent of all U.S. imports—and validated the security practices of 78 percent of these certified participants.

We reported on the progress of the C-TPAT program in 2003 and 2005 and recommended that CBP develop a strategic plan and performance measures to track the program’s status in meeting its strategic goals. DHS concurred with these recommendations. The SAFE Port Act also mandated that CBP develop and implement a 5-year strategic plan with outcome-based goals and performance measures for C-TPAT. CBP officials stated that they are in the process of updating their strategic plan for C-TPAT, which was issued in November 2004, for 2007 to 2012. This updated plan is being reviewed within CBP, but a time frame for issuing the plan has not been established. We recommended in our March 2005 report that CBP establish performance measures to track its progress in meeting the goals and objectives established as part of the strategic planning process. Although CBP has since put additional performance measures in place, CBP’s efforts have focused on measures regarding program participation and facilitating trade and travel. CBP has not yet developed performance measures for C-TPAT’s efforts aimed at ensuring improved supply chain security, which is the program’s purpose.

In our previous work, we acknowledged that the C-TPAT program holds promise as part of a layered maritime security strategy. However, we also raised a number of concerns about the overall management of the program. Since our past reports, the C-TPAT program has continued to mature. The SAFE Port Act mandated that actions—similar to ones we had recommended in our March 2005 report—be taken to strengthen the management of the program. For example, the act included a new goal that CBP make a certification determination within 90 days of CBP’s receipt of a C-TPAT application, validate C-TPAT members’ security measures and supply chain security practices within 1 year of their certification, and revalidate those members no less than once in every 4 years. As we recommended in our March 2005 report, CBP has developed a human capital plan and implemented a records management system for documenting key program decisions. CBP has addressed C-TPAT staffing challenges by increasing the number of supply chain security specialists from 41 in 2005 to 156 in 2007.

In February 2007, CBP updated its resource needs to reflect SAFE Port Act requirements, including that certification, validation, and revalidation processes be conducted within specified time frames. CBP believes that C-TPAT’s current staff of 156 supply chain security specialists will allow it to meet the act’s initial validation and revalidation goals for 2007 and 2008. If an additional 50 specialists authorized by the act are made available by late 2008, CBP expects to be able to stay within compliance of the act’s time frame requirements through 2009. In addition, CBP developed and implemented a centralized electronic records management system to facilitate information storage and sharing and communication with C-TPAT partners. This system—known as the C-TPAT Portal—enables CBP to track and ascertain the status of C-TPAT applicants and partners to ensure that they are certified, validated, and revalidated within required time frames. As part of our ongoing work, we are reviewing the data captured in Portal, including data needed by CBP management to assess the efficiency of C-TPAT operations and to determine compliance with its program requirements. These actions—dedicating resources to carry out certification and validation reviews and putting a system in place to track the timeliness of these reviews—should help CBP meet several of the mandates of the SAFE Port Act. We expect to issue a final report early next year.

Our 2005 report raised concerns about CBP granting benefits prematurely—before CBP had validated company practices. Instead of granting new members full benefits without actual verification of their supply chain security, CBP implemented three tiers to grant companies graduated benefits based on CBP’s certification and validation of their security practices. Related to this, the SAFE Port Act codified CBP’s policy of granting graduated benefits to C-TPAT members. Tier 1 benefits—a limited reduction in the score assigned in ATS—are granted to companies upon certification that their written description of their security profile meets minimum security criteria. Companies whose security practices CBP validates in an on-site assessment receive Tier 2 benefits that may include reduced scores in ATS, reduced cargo examinations, and priority searches of cargo. If CBP’s validation shows sustained commitment by a company to security practices beyond what is expected, the company receives Tier 3 benefits. Tier 3 benefits may include expedited cargo release at U.S. ports at all threat levels, further reduction in cargo examinations, priority examinations, and participation in joint incident management exercises.

Our 2005 report also raised concerns about whether the validation process was rigorous enough. Similarly, the SAFE Port Act mandates that the validation process be strengthened, including setting a year time frame for completing validations. CBP initially set a goal of validating all companies within their first 3 years as C-TPAT members, but the program’s rapid growth in membership made the goal unachievable. CBP then moved to a risk-based approach to selecting members for validation, considering factors such as a company’s having foreign supply chain operations in a known terrorist area or involving multiple foreign suppliers. CBP further modified its approach to selecting companies for validation to achieve greater efficiency by conducting “blitz” operations to validate foreign elements of multiple members’ supply chains in a single trip. Blitz operations focus on factors such as C-TPAT members within a certain industry, supply chains within a certain geographic area, or foreign suppliers to multiple C-TPAT members. Risks remain a consideration, according to CBP, but the blitz strategy drives the decision of when a member company will be validated. In addition to taking these actions to efficiently conduct validations, CBP has periodically updated the minimum security requirements that companies must meet to be validated and is conducting a pilot program of using third-party contractors to conduct validation assessments. As part of our ongoing work, we are reviewing these actions, which are required as part of the SAFE Port Act, and other CBP efforts to enhance its C-TPAT validation process.

CBP Has Played a Key Role in Promoting Global Customs Security Standards and Initiatives, but Progress with These Efforts Presents New Challenges for CSI and C-TPAT

The CSI and C-TPAT programs have provided a model for global customs security standards, but as other countries adopt the core principles of CSI and programs similar to C-TPAT, CBP may face new challenges. Foreign officials within the WCO and elsewhere have observed the CSI and C-TPAT programs as potential models for enhancing supply chain security. Also, CBP has taken a lead role in working with members of the domestic and international customs and trade community on approaches to standardizing supply chain security worldwide. As CBP has recognized, and we have previously reported, in security matters the United States is not self-contained, in either its problems or its solutions. The growing interdependence of nations requires policymakers to recognize the need to work in partnerships across international boundaries to achieve vital national goals.

For this reason, CBP has committed through its strategic planning process to develop and promote an international framework of standards governing customs-to-customs relationships and customs-to-business relationships in a manner similar to CSI and C-TPAT, respectively. To achieve this, CBP has worked with foreign customs administrations through the WCO to establish a framework creating international standards that provide increased security of the global supply chain while facilitating international trade. The member countries of the WCO, including the United States, adopted such a framework, known as the WCO Framework of Standards to Secure and Facilitate Global Trade and commonly referred to as the SAFE Framework, in June 2005. The SAFE Framework internationalizes the core principles of CSI in creating global standards for customs security practices and promotes international customs-to-business partnership programs, such as C-TPAT. As of September 11, 2007, 148 WCO member countries had signed letters of intent to implement the SAFE Framework. CBP, along with the customs administrations of other countries and through the WCO, provides technical assistance and training to those countries that want to implement the SAFE Framework, but do not yet have the capacity to do so.

The SAFE Framework enhances the CSI program by promoting the implementation of CSI-like customs security practices, including the use of electronic advance information requirements and risk-based targeting, in both CSI and non-CSI ports worldwide. The framework also lays the foundation for mutual recognition, an arrangement whereby one country can attain a certain level of assurance about the customs security standards and practices and business partnership programs of another country. In June 2007, CBP entered into the first mutual recognition arrangement of a business-to-customs partnership program with the New Zealand Customs Service. This arrangement stipulates that members of one country’s business-to-customs program be recognized and receive similar benefits from the customs service of the other country. CBP is pursuing similar arrangements with Jordan and Japan, and is conducting a pilot program with the European Commission to test approaches to achieving mutual recognition and address differences in their respective programs. However, the specific details of how the participating counties’ customs officials will implement the mutual recognition arrangement— such as what benefits, if any, should be allotted to members of other countries’ C-TPAT like programs—have yet to be determined. As CBP goes forward, it may face challenges in defining the future of its CSI and C-TPAT programs and, more specifically, in managing the implementation of mutual recognition arrangements, including articulating and agreeing to the criteria for accepting another country’s program; the specific arrangements for implementation, including the sharing of information; and the actions for verification, enforcement; and, if necessary, termination of the arrangement.

DNDO Faces Challenges Testing Radiation Detection Equipment

DHS also has container security programs to develop and test equipment to scan containers for radiation. Its DNDO was originally created in April 2005 by presidential directive, but the office was formally established in October 2006 by Section 501 of the SAFE Port Act. DNDO has lead responsibility for conducting the research, development, testing, and evaluation of radiation detection equipment that can be used to prevent nuclear or radiological materials from entering the United States. DNDO is charged with devising the layered system of radiation detection equipment and operating procedures—known as the “global architecture”—designed to prevent nuclear smuggling at foreign ports, the nation’s borders, and inside the United States.

Much of DNDO’s work on radiation detection equipment to date has focused on the development and use of radiation detection portal monitors, which are larger-scale equipment that can screen vehicles, people, and cargo entering the United States. Current portal monitors detect the presence of radiation but cannot distinguish between benign, naturally occurring radiological materials such as ceramic tile, and dangerous materials such as highly enriched uranium. Since 2005, DNDO has been testing, developing, and planning to deploy the next generation of portal monitors, known as “Advanced Spectroscopic Portals” (ASP), which can not only detect but also identify radiological and nuclear materials within a shipping container. In July 2006, DNDO announced that it had awarded contracts to three vendors to develop and purchase $1.2 billion worth of ASPs over 5 years for deployment at U.S. points of entry.

We have reported a number of times to Congress concerning DNDO’s execution of the ASP program. To ensure that DHS's substantial investment in radiation detection technology yields the greatest possible level of detection capability at the lowest possible cost, in March 2006 we recommended that once the costs and capabilities of ASPs were well understood, and before any of the new equipment was purchased for deployment, the Secretary of DHS work with the Director of DNDO to analyze the costs and benefits of deploying ASPs. Further, we recommended that this analysis focus on determining whether any additional detection capability provided by the ASPs was worth the considerable additional costs. In response to our recommendation, DNDO issued its cost-benefit analysis in May 2006 and an updated, revised version in June 2006. According to senior agency officials, DNDO believes that the basic conclusions of its cost-benefit analysis showed that the new ASP monitors are a sound investment for the U.S. government.

However, in October 2006, we concluded that DNDO’s cost-benefit analysis did not provide a sound basis for DNDO’s decision to purchase and deploy ASP technology because it relied on assumptions of the anticipated performance level of ASPs instead of actual test data and that it did not justify DHS’s planned $1.2 billion expenditure. We also reported that DNDO did not assess the likelihood that ASPs would either misidentify or fail to detect nuclear or radiological material. Rather, it focused its analysis on reducing the time necessary to screen traffic at border check points and reduce the impact of any delays on commerce. We recommended that DNDO conduct further testing of ASPs and the currently deployed portal monitors before spending additional funds to purchase ASPs. DNDO conducted this testing of ASPs at the Nevada test site during February and March 2007.

In September 2007, we testified on these tests, stating that, in our view, DNDO used biased test methods that enhanced the performance of the ASPs. In particular, DNDO conducted preliminary runs of almost all the materials and combination of materials that it used in the formal tests and then allowed ASP contractors to collect test data and adjust their systems to identify these materials. In addition, DNDO did not attempt in its tests to identify the limitations of ASPs—a critical oversight in its test plan. Specifically, the materials that DNDO included in its test plan did not emit enough radiation to hide or mask the presence of nuclear materials located within a shipping container. Finally, in its tests of the existing radiation detection system, DNDO did not include a critical standard operating procedure that officers with CBP use to improve the system’s effectiveness.

It is important to note that, during the course of our work, CBP, DOE, and national laboratory officials we spoke to voiced concern about their lack of involvement in the planning and execution of the Nevada test site tests. For example, DOE officials told us that they informed DNDO in November 2006 of their concerns that the materials DNDO planned to use in its tests were too weak to effectively mask the presence of nuclear materials in a container. DNDO officials rejected DOE officials’ suggestion to use stronger materials in the tests because, according to DNDO, there would be insufficient time to obtain these materials and still obtain the DHS Secretary’s approval for full-scale production of ASPs by DNDO’s self- imposed deadline of June 26, 2007. Although DNDO has agreed to perform computer simulations to address this issue, the DNDO Director would not commit at the September testimony to delaying full-scale ASP production until all the test results were in.

DOE Continues to Expand Its Megaports Program

The Megaports Initiative, initiated by DOE’s National Nuclear Security Administration in 2003, represents another component in the efforts to prevent terrorists from smuggling WMD in cargo containers from overseas locations. The goal of this initiative is to enable foreign government personnel at key foreign seaports to use radiation detection equipment to screen shipping containers entering and leaving these ports, regardless of the containers’ destination, for nuclear and other radioactive material that could be used against the United States or its allies. DOE installs radiation detection equipment, such as radiation portal monitors and handheld radioactive isotope identification devices, at foreign seaports that is then operated by foreign government officials and port personnel working at these ports.

Through August 2007, DOE had completed installation of radiation detection equipment at eight ports: Rotterdam, the Netherlands; Piraeus, Greece; Colombo, Sri Lanka; Algeciras, Spain; Singapore; Freeport, Bahamas; Manila, Philippines; and Antwerp, Belgium (Phase I). Operational testing is under way at four additional ports: Antwerp, Belgium (Phase II); Puerto Cortes, Honduras; Qasim, Pakistan; and Laem Chabang, Thailand. Additionally, DOE has signed agreements to begin work and is in various stages of implementation at ports in 12 other countries, including the United Kingdom, United Arab Emirates/Dubai, Oman, Israel, South Korea, China, Egypt, Jamaica, the Dominican Republic, Colombia, Panama, and Mexico, as well as Taiwan and Hong Kong. Several of these ports are also part of the Secure Freight Initiative, discussed in the next section. Further, in an effort to expand cooperation, DOE is engaged in negotiations with approximately 20 additional countries in Europe, Asia, the Middle East, and Latin America.

DOE had made limited progress in gaining agreements to install radiation detection equipment at the highest priority seaports when we reported on this program in March 2005. Then, the agency had completed work at only two ports and signed agreements to initiate work at five others. We also noted that DOE’s cost projections for the program were uncertain, in part because they were based on DOE’s $15 million estimate for the average cost per port. This per port cost estimate may not be accurate because it was based primarily on DOE’s radiation detection assistance work at Russian land borders, airports, and seaports and did not account for the fact that the costs of installing equipment at individual ports vary and are influenced by factors such as a port’s size, physical layout, and existing infrastructure. Since our review, DOE has developed a strategic plan for the Megaports Initiative and revised it’s per port estimates to reflect port size, with per port estimates ranging from $2.6 million to $30.4 million.

As we earlier reported, DOE faces several operational and technical challenges specific to installing and maintaining radiation detection equipment at foreign ports as the agency continues to implement its Megaports Initiative. These challenges include ensuring the ability to detect radioactive material, overcoming the physical layout of ports and cargo-stacking configurations, and sustaining equipment in port environments with high winds and sea spray.

Secure Freight Initiative Testing Feasibility of Combining Scanning Technologies

The SAFE Port Act required that a pilot program—known as the Secure Freight Initiative (SFI)—be conducted to determine the feasibility of 100 percent scanning of U.S.-bound containers. To fulfill this requirement, CBP and DOE jointly announced the formation of SFI in December 2006, as an effort to build upon existing port security measures by enhancing the U.S. government’s ability to scan containers for nuclear and radiological materials overseas and better assess the risk of inbound containers. In essence, SFI builds upon the CSI and Megaports programs. The SAFE Port Act specified that new integrated scanning systems that couple nonintrusive imaging equipment and radiation detection equipment must be pilot-tested. It also required that, once fully implemented, the pilot integrated scanning system scan 100 percent of containers destined for the United States that are loaded at pilot program ports.

According to agency officials, the initial phase of the initiative will involve the deployment of a combination of existing container scanning technology—such as X-ray and gamma ray scanners used by host nations at CSI ports to locate high-density objects that could be used to shield nuclear materials inside containers—and radiation detection equipment. The ports chosen to receive this integrated technology are: Port Qasim in Pakistan, Puerto Cortes in Honduras, and Southampton in the United Kingdom. Four other ports located in Hong Kong, Singapore, South Korea, and Oman will receive more limited deployment of these technologies as part of the pilot program. According to CBP, containers from these ports will be scanned for radiation and other risk factors before they are allowed to depart for the United States. If the scanning systems indicate that there is a concern, both CSI personnel and host country officials will simultaneously receive an alert and the specific container will be inspected before that container continues to the United States. CBP officials, either on the scene locally or at CBP’s National Targeting Center, will determine which containers are inspected.

Per the SAFE Port Act, CBP is to report by April 2008 on, among other things, the lessons learned from the SFI pilot ports and the need for and the feasibility of expanding the system to other CSI ports. Every 6 months thereafter, CBP is to report on the status of full-scale deployment of the integrated scanning systems to scan all containers bound for the United States before their arrival.

New Requirement for 100 Percent Scanning Introduces New Challenges

Recent legislative actions have updated U.S. maritime security requirements and may affect overall international maritime security strategy. In particular, the recently enacted Implementing Recommendations of the 9/11 Commission Act (9/11 Act) requires, by 2012, 100 percent scanning of U.S.-bound cargo containers using nonintrusive imaging equipment and radiation detection equipment at foreign seaports. The act also specifies conditions for potential extensions beyond 2012 if a seaport cannot meet that deadline. Additionally, it requires the Secretary of DHS to develop technological and operational standards for scanning systems used to conduct 100 percent scanning at foreign seaports. The Secretary also is required to ensure that actions taken under the act do not violate international trade obligations and are consistent with the WCO SAFE Framework. The 9/11 Act provision replaces the requirement of the SAFE Port Act that called for 100 percent scanning of cargo containers before their arrival in the United States, but required implementation as soon as possible rather than specifying a deadline. While we have not yet reviewed the implementation of the 100 percent scanning requirement, we have a number of preliminary observations based on field visits of foreign ports regarding potential challenges CBP may face in implementing this requirement: CBP may face challenges balancing new requirement with current international risk management approach. CBP may have difficulty requiring 100 percent scanning while also maintaining a risk- based security approach that has been developed with many of its international partners. Currently, under the CSI program, CBP uses automated targeting tools to identify containers that pose a risk for terrorism for further inspection before being placed on vessels bound for the United States. As we have previously reported, using risk management allows for reduction of risk against possible terrorist attack on the nation given resources allocated and is an approach that has been accepted governmentwide. Furthermore, many U.S. and international customs officials we have spoken to, including officials from the World Customs Organization, have stated that the 100 percent scanning requirement is contrary to the SAFE Framework developed and implemented by the international customs community, including CBP. The SAFE Framework, based on CSI and C-TPAT, calls for a risk management approach, whereas the 9/11 Act calls for the scanning of all containers regardless of risk.

United States may not be able to reciprocate if other countries request it. The CSI program, whereby CBP officers are placed at foreign seaports to target cargo bound for the United States, is based on a series of bilateral, reciprocal agreements with foreign governments. These reciprocal agreements also allow foreign governments the opportunity to place customs officials at U.S. seaports and request inspection of cargo containers departing from the United States and bound for their home country. Currently, customs officials from certain countries are stationed at domestic seaports, and agency officials have told us that CBP has inspected 100 percent of containers that these officials have requested for inspection. According to CBP officials, the SFI pilot, as an extension of the CSI program, allows foreign officials to ask the United States to reciprocate and scan 100 percent of cargo containers bound for those countries. Although the act establishing the 100 percent scanning requirement does not mention reciprocity, CBP officials have told us that the agency does not have the capacity to reciprocate should it be requested to do so, as other government officials have indicated they might when this provision of the 9/11 Act is in place.

Logistical feasibility is unknown and may vary by port. Many ports may lack the space necessary to install additional equipment needed to comply with the requirement to scan 100 percent of U.S. bound containers. Additionally, we observed that scanning equipment at some seaports is located several miles away from where cargo containers are stored, which may make it time consuming and costly to transport these containers for scanning. Similarly, some seaports are configured in such a way that there are no natural bottlenecks that would allow for equipment to be placed such that all outgoing containers can be scanned and the potential to allow containers to slip by without scanning may be possible. Transshipment cargo containers—containers moved from one vessel to another—are only available for scanning for a short period of time and may be difficult to access. Similarly, it may be difficult to scan cargo containers that remain on board a vessel as it passes through a foreign seaport. CBP officials told us that currently containers such as these that are designated as high-risk at CSI ports are not scanned unless specific threat information is available regarding the cargo in that particular container.

Technological maturity is unknown. Integrated scanning technologies to test the feasibility of scanning 100 percent of U.S. bound cargo containers are not yet operational at all seaports participating in the pilot program, known as SFI. The SAFE Port Act requires CBP to produce a report regarding the program, which will include an evaluation of the effectiveness of scanning equipment at the SFI ports. However, this report will not be due until April 2008. Moreover, agency officials have stated that the amount of bandwidth necessary to transmit scanning equipment outputs to CBP officers for review exceeds what is currently feasible and that the electronic infrastructure necessary to transmit these outputs may be limited at some foreign seaports. Additionally, there are currently no international standards for the technical capabilities of inspection equipment. Agency officials have stated that CBP is not a standard setting organization and has limited authority to implement standards for sovereign foreign governments.

Resource responsibilities have not been determined. The 9/11 Act does not specify who would pay for additional scanning equipment, personnel, computer systems, or infrastructure necessary to establish 100 percent scanning of U.S.-bound cargo containers at foreign ports. According to the Congressional Budget Office (CBO) in its analysis of estimates for implementing this requirement, this provision would neither require nor prohibit the U.S. federal government from bearing the cost of conducting scans. For the purposes of its analysis, CBO assumed that the cost of acquiring, installing, and maintaining systems necessary to comply with the 100 percent scanning requirement would be borne by foreign ports to maintain trade with the United States. However, foreign government officials we have spoken to expressed concerns regarding the cost of equipment. They also stated that the process for procuring scanning equipment may take years and can be difficult when trying to comply with changing U.S. requirements. These officials also expressed concern regarding the cost of additional personnel necessary to (1) operate new scanning equipment, (2) view scanned images and transmit them to the United States, and (3) resolve false alarms. An official from one country with whom we met told us that while his country does not scan 100 percent of exports, modernizing its customs service to focus more on exports required a 50 percent increase in personnel, and other countries trying to implement the 100 percent scanning requirement would likely have to increase the size of their customs administrations by at least as much.

Use and ownership of data have not been determined. The 9/11 Act does not specify who will be responsible for managing the data collected through 100 percent scanning of U.S.-bound containers at foreign seaports. However, the SAFE Port Act specifies that scanning equipment outputs from SFI will be available for review by U.S. government officials either at the foreign seaport or in the United States. It is not clear who would be responsible for collecting, maintaining, disseminating, viewing or analyzing scanning equipment outputs under the new requirement. Other questions to be resolved include ownership of data, how proprietary information would be treated, and how privacy concerns would be addressed.

CBP officials have indicated they are aware that challenges exist. They also stated that the SFI will allow the agency to determine whether these challenges can be overcome. According to senior officials from CBP and international organizations we contacted, 100 percent scanning of containers may divert resources, causing containers that are truly high risk to not receive adequate scrutiny due to the sheer volume of scanning outputs that must be analyzed. These officials also expressed concerns that 100 percent scanning of U.S.-bound containers could hinder trade, leading to long lines and burdens on staff responsible for viewing images. However, given that the SFI pilot program has only recently begun, it is too soon to determine how the 100 percent scanning requirement will be implemented and its overall impact on security.

Agency Comments

We provided a draft of the information in this testimony to DHS. DHS provided technical comments, which we incorporated as appropriate.

Madam Chairwoman and members of the subcommittee, this completes my prepared statement. I will be happy to respond to any questions that you or other members of the subcommittee have at this time.

GAO Contact and Staff Acknowledgments

For information about this testimony, please contact Stephen L. Caldwell, Director, Homeland Security and Justice Issues, at (202) 512-9610, or caldwells@gao.gov. Contact points for our Office of Congressional Relations and Public Affairs may be found on the last page of this statement. Individuals making key contributions to this testimony include Richard Ascarate, Jonathan Bachman, Jason Bair, Fredrick Berry, Christine Broderick, Stockton Butler, Steven Calvo, Frances Cook, Christopher Currie, Anthony DeFrank, Wayne Ekblad, Christine Fossett, Nkenge Gibson, Geoffrey Hamilton, Christopher Hatscher, Virginia Hughes, Valerie Kasindi, Monica Kelly, Ryan Lambert, Nicholas Larson, Daniel Klabunde, Matthew Lee, Gary Malavenda, Robert Rivas, Leslie Sarapu, James Shafer, Kate Siggerud, Daren Sweeney, and April Thompson.

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