CBP maintains two overarching goals: (1) increasing security and (2) facilitating legitimate trade and travel. Disruptions to the supply chain could have immediate and significant economic impacts. For example, in terms of containers, CBP data indicates that in 2003 about 90 percent of the world’s cargo moved by container. In the United States, almost half of all incoming trade (by value) arrived by containers on board ships. Almost 7 million cargo containers arrive and are offloaded at U.S. seaports each year. Additionally, containers arrive via truck and rail. Therefore, it is vital for CBP to try to strike a balance between its antiterrorism efforts and facilitating the flow of legitimate international trade and travel. The terrorist events of September 11, 2001, raised concerns about company supply chains, particularly oceangoing cargo containers, potentially being used to move weapons of mass destruction to the United States. An extensive body of work on this subject by the Federal Bureau of Investigation and academic, think tank, and business organizations concluded that while the likelihood of such use of containers is considered low, the movement of oceangoing containerized cargo is vulnerable to some form of terrorist action. Such action, including attempts to smuggle either fully assembled weapons of mass destruction or their individual components, could lead to widespread death and damage. The supply chain is particularly vulnerable to potential terrorists because of the number of individual companies handling and moving cargo through it. To move a container from production facilities overseas to distribution points in the United States, an importer has multiple options regarding the logistical process, such as routes and the selection of freight carriers. For example, some importers might own and operate key aspects of the overseas supply chain process, such as warehousing and trucking operations. Alternatively, importers might contract with logistical service providers, including freight consolidators and nonvessel-operating common carriers. In addition, importers must choose among various modes of transportation to use, such as rail, truck, or barge, to move containers from the manufacturer’s warehouse to the port of lading. As shown in table 1, there are many players in the trade community, each with a role in the supply chain. According to research initiated by the U.S. Department of Transportation’s Volpe National Transportation Systems Center, importers who own and operate the entire supply chain route from start to finish suffer fewer security breaches than others because they have greater control over their supply chains. However, relatively few importers own and operate all key aspects of the cargo container transportation process, relying instead on second parties to move containerized cargo and prepare various transportation documents. CBP has implemented a layered enforcement strategy to prevent terrorists and weapons of mass destruction from entering the United States through the supply chain. A key element of this strategy is CBP’s targeting and inspection of cargo that arrives at U.S. ports. For all arriving cargo containers, CBP uses a targeting strategy that employs its computerized targeting model, the Automated Targeting System (ATS). CBP uses ATS to review container documentation and help select, or target, shipments for additional documentary review or physical inspection. ATS is operated by CBP’s National Targeting Center and is characterized by CBP as an expert system that uses hundreds of targeting rules to check available data for every arriving container, assigning a risk characterization to each container. The risk characterization helps to determine the type and level of scrutiny a container will receive. For example, CBP could review the container’s bill of lading, examine the container with nonintrusive inspection equipment (that is, X-ray), or physically open the container. The extent of review varies, since according to CBP, the large volume of imports and CBP’s limited resources make it impossible to physically inspect all containers without disrupting the flow of commerce. Initiated in November 2001, C-TPAT is another element of CBP’s layered enforcement strategy. C-TPAT is a voluntary program designed to improve the security of the international supply chain while maintaining an efficient flow of goods. Under C-TPAT, CBP officials work in partnership with private companies to review their supply chain security plans to improve members’ overall security. In return for committing to making improvements to the security of their shipments by joining the program, C-TPAT members may receive benefits that result in reduced scrutiny of their shipments (e.g., reduced number of inspections or shorter border wait times for their shipments). C-TPAT membership is open to U.S.-based companies in the trade community, including (1) air/rail/sea carriers, (2) border highway carriers, (3) importers, (4) licensed customs brokers, (5) air freight consolidators and ocean transportation intermediaries and nonvessel-operating common carriers, and (6) port authorities or terminal operators. According to CBP officials, program membership has grown rapidly, and continued growth is expected, especially as member importers are requiring their suppliers to become C-TPAT members. For example, as of January 2003 approximately 1,700 companies had become C-TPAT members. By May 2003, the number had nearly doubled to 3,355. According to CBP officials, as of November 2004, the C-TPAT program had 7,312 members. For fiscal year 2004, the C-TPAT budget was about $18 million, with a requested budget for fiscal year 2005 of about $38 million for program expansion efforts. As of August 2004, CBP had hired 40 supply chain specialists, who are dedicated to serve as the principal advisers and primary points of contact for C-TPAT members. The specialists are located in Washington, D.C., Miami, Florida, Los Angeles, California, and New York, New York. CBP has a multistep review process for the C-TPAT program. As figure 1 shows, applicants first submit signed C-TPAT agreements affirming their desire to participate in the voluntary program. Applicants must also submit security profiles—executive summaries of their company’s existing supply chain security procedures—that follow guidelines jointly developed by CBP and the trade community. These security profiles are to summarize the applicant’s current security procedures in areas such as physical security, personnel security, and education and training awareness. CBP established a certification process in which it reviews the applications and profiles by comparing their contents with the security guidelines jointly developed by CBP and the industry, looking for any weaknesses or gaps in the descriptions of security procedures. Once any issues are resolved to CBP’s satisfaction, CBP signs the agreement and the company is considered to be a certified C-TPAT member, eligible for program benefits. Members that are not importers begin receiving benefits at this point, but members that are importers must undergo another layer of review, as described below. CBP encourages members to conduct self-assessments of their security profiles each year to determine any significant changes and to notify CBP. For example, members may be using new suppliers or new trucking companies and would need to update their security profiles to reflect these changes. For certified importers, CBP has an additional layer of review called the vetting process in which CBP reviews information about an importer’s compliance with customs laws and regulations and violation history. CBP requires the vetting process for certified importers as a condition of granting them key program benefits. As part of the vetting process, CBP obtains trade compliance and intelligence information on certified importers from several data sources. If CBP gives the importer a favorable review, benefits are to begin within a few weeks. If not, benefits are not to be granted until successful completion of the validation process (see below). The final step in the review process is validation. CBP’s stated purpose for validations is to ensure that the security measures outlined in certified members’ security profiles and periodic self-assessments are reliable, accurate, and effective. In the validation process, CBP staff meet with company representatives to verify the supply chain security measures contained in the company’s security profile. The validation process is designed to include visits to the company’s domestic and, potentially, foreign sites. The member and CBP jointly determine which elements of the member’s supply chain measures will be validated, as well as which locations will be visited. Upon completion of the validation process, CBP prepares a final validation report it presents to the company that identifies any areas that need improvement and suggested corrective actions, as well as a determination if program benefits are still warranted for the member. We have conducted previous reviews of the C-TPAT program and CBP’s targeting and inspection strategy. In July 2003, we reported that CBP’s management of C-TPAT had not evolved from a short-term focus to a long- term strategic approach. We recommended that the Secretary of Homeland Security work with the CBP Commissioner to develop (1) a strategic plan that clearly lays out the program’s goals, objectives, and detailed implementation strategies; (2) performance measures that include outcome-oriented indicators; and (3) a human capital plan that clearly describes how C-TPAT will recruit, train, and retain new staff to meet the program’s growing demands as it implements new program elements. In March 2004, we testified that CBP’s targeting system does not incorporate all key elements of a risk management framework and recognized modeling practices in assessing the risks posed by oceangoing cargo containers. CBP officials cite numerous benefits to C-TPAT members. As table 2 shows, these benefits may reduce the scrutiny of members’ shipments. These benefits are emphasized to the trade community through direct marketing in presentations and via CBP’s Web site. Although these benefits potentially reduce the likelihood of inspection of members’ shipments, CBP officials noted that all shipments entering the United States are subject to random inspections by CBP officials or inspections by other agencies.