The Customs crisis
- By Judi Hasson
- Jun 19, 2000
At the Peace Bridge connecting Canada to the Port of Buffalo, N.Y., commercial
trucks hauling everything from car parts to fresh produce are idling lazily
one after another, waiting their turn to be checked through the Customs
Service office there.
It might be a long wait. The cargo the trucks are hauling are part of
the $8.8 billion in goods that must be processed daily at U.S. border entry
points nationwide by the Automated Commercial System, a 17-year old computer
system that is rapidly — and some say dangerously — nearing its capacity
to handle the information.
When ACS fails or browns out, which happens at least once a month according to shipping officials, the fallout ricochets across America — in goods not getting to their destinations, in import fees not getting paid, in contraband getting smuggled into the country and in criminals not getting caught.
Part of the problem is technology. According to Customs officials, ACS
can no longer handle the increasingly complex codes on entry documents that
account for the contents of shipments. At the same time, the burgeoning
domestic economy and the tide of globalization and are putting a severe
load on the system.
In 1999 alone, the Customs Service processed over 21 million entries
totaling $1.025 trillion in goods through ACS. With imports growing at 8
percent a year, customs officials expect ACS to hit capacity early next
year. Beyond that, customs Commissioner Raymond Kelly has predicted that
trade volume will double by 2005.
So Customs officials are well aware of the dangers of not fixing this
problem. They recognize the damage that might be done if the old technology
remains in place as the workload continues to increase. And yet the problem
Customs, for its part, has a solution. To help meet the challenge, Customs
officials want a to launch new Web-based system known as the Automated Commercial
Environment. In addition to providing more processing capacity, ACE is smarter,
For example, it would allow goods from a single importer to be registered
en masse rather than individually. The system would connect every U.S. port
of entry to Customs via the Internet. The system would also replace a slow
telephone network with a high-speed connection to get data in seconds instead
All these features would help the Customs Service do more than just
book fees faster and more accurately. Proponents of the system say it would
also help strengthen the security of U.S. borders, including helping to
ferret out potential terrorists and narcotics traffickers. "It's not that
the current system is not technical, but it probably could do better and
be faster," said Mark MacVittie, chief inspector at the Port of Buffalo.
"What we need is speed of targeting so we can concentrate our efforts on
With so much at stake, what's been the holdup in getting a new system
started? Some say the problem is not the traditional objection — that a
massive upgrade like ACE would cost too much.
In fact, most importers, retailers and members of Congress agree that
the system has to be replaced. Instead, officials believe it might be the
funding strategy used for big systems like ACE, especially if the project
is large and involves infrastructure improvements.
"IT is just like a lot of infrastructure issues," said Alan Balutis,
director of the Advanced Technology Program at the National Institute of
Standards and Technology. "What do you do about aging dams, roads and bridges?
How do you fund the long-term capital investment projects, IT now being
a part of it? The problem is we're not."
For ACE, the Clinton administration has proposed in its 2001 budget
a funding scheme that relies on an increase in user fees to pay for the
new computer system. The administration left the details to be filled in
later, but the proposal has angered venders, brokers and importers who already
pay a user fee that goes into the general treasury, not directly to Customs.
Funding such big projects is a problem recognized by virtually everyone
in the IT world. "We're working within finite budgets and we're trying to
do more and more to modernize the use of technology," said James Flyzik,
chief information officer for the Treasury Department and co-chairman of
the CIO Council. "It is putting a strain on an agency's ability to do these
modernization projects under current budget restraints."
Some programs are easier to sell than others, Flyzik said, because they
directly affect the public. The Internal Revenue Service, for example, is
seeking billions for its modernization program, but it is "easier to move
forward because both Congress and the public know what it will do," he said.
Sales Job Needed
So Customs has to conduct a sales job as much as it has to forage for
"This system literally controls the economic livelihood of this country
with $8 billion going in and out every day. You have to have a comprehensive
system that tracks imports and exports," said Rep. Jim Kolbe (R-Ariz.),
chairman of the House appropriations subcommittee that must find the money
to keep the system humming.
Meanwhile, the cost of goods may go up because of delays. And there
may be spot shortages on the shelves of stores if goods are not delivered
on time, said Jonathan Gold, an official with the International Mass Retail
Association, which represents hundreds of business trying to get Customs
moving faster. For one thing, Christmas goods will begin flowing across
the borders in July and if delayed, may not get to their destinations on
time, he said.
Customs has another headache, too. It must keep ACS patched and operating
while it waits for Congress to decide whether to provide $210 million for
modernization just this year. It will eventually cost $1.2 to 1.8 billion
over four years. That is quite a price tag for a system that was designed
by six men in Treasury's basement cafeteria in 1982, according to Thompson
Anastasi, who was there.
"Some of it is a very old way of thinking," said Anastasi, vice president
for border operations at Tower Group International, a subsidiary of Federal
Express, and one of the largest customs brokers in the United States. "But
first fix the network. Then, when you're stable, build a new one."
ACS runs smoothly in the morning, when only the East Coast is operating,
but when the West Coast goes up, problems begin. When the Christmas imports
begin flowing in, usually in July, the system is overloaded. And that's
when Customs is forced to add new servers to handle more memory.
Its replacement would work differently. It would rely on the Internet,
allowing customs inspectors to call up shipments anywhere in the country
and analyze the import flow, looking for contraband and patterns of problems.
Instead of paying tariffs on every shipment, importers would be able to
file reports each month, cutting costs. And while there would still be a
mainframe, each port would be able to communicate independently with any
Anne Reed, former CIO at the Agriculture Department and now vice president
of the global industry group at Electronic Data Systems Corp., said Congress
makes the budget process harder than it needs to be. "If there was more
flexibility in the way the funds were allocated, a lot of good would be
done," she said.
And without money specifically earmarked for technology, lawmakers will
have a hard time coming up with the funds necessary to keep the Information
Age rolling. "A lot of government agencies have been cut to the bone over
the last decade," Reed said. "And with the budget process we have, our hands
are tied. Coming up with new money for anything is extremely difficult."
Nevertheless, when Congress wants to cut through budget quicksand, it
does. Two years ago, lawmakers passed a $219 billion highway transportation
law that provided a huge infusion of money to repair and replace aging roads
and bridges across the United States. And like information technology, contractors
can build a road in pieces, but eventually every part has to be completed
to get where you are going.
Customs is not alone in pleading for cold, hard cash in these flush
times. Like hungry children, virtually every government agency wants more
for major infrastructure projects:
n The Internal Revenue Service is seeking $5 billion for a 15-year modernization
project after spending $3 billion on the Tax Systems Modernization program,
which became a symbol for wasteful, mismanaged IT projects.
n The Federal Aviation Administration is asking for more than $4 billion
to make the skies safer by developing new computer systems for air traffic
n The military wants billions of dollars, too, to modernize its forces
and supporting networks. The Navy says it must have $16 billion to create
a worldwide intranet linking Navy and Marine facilities. The Army wants
$70 billion over 14 years to transform itself from a Cold War force into
a light but lethal high-tech organization.
And more money — no one is willing to say just how much — is needed
to secure the government's computer systems, which federal IT managers
have learned are not foolproof after the recent spurt of hacker attacks
But Congress does not want to throw good money after bad when it comes
to IT, having suffered the sting of misspent dollars. "Money is tight, and
it's a lot of money," said Woody Hall, the chief information officer for
Customs. "There are a lot of good ideas. And we're trying to add one."
On the other hand, the reality is that the system will break down without
the funding. "This is a big, complex system. The only way to get that reliability
up is to replace the old gear with new," Hall said.
Global Economy at Center Stage
With the global economy taking center stage in the list of national
priorities, Congress may not be able to wait much longer. "The center of
the global economy cannot run on obsolete computer systems and a patch-it-when-it-breaks
game plan," said Harris Miller, president of the Information Technology
Association of America. "But that is exactly what is proposed in the current
stalemate over the modernization."
Retired Adm. Willie Williamson, now a vice president for Microsoft Corp.'s
federal office, called it a classic clash of titans — government vs. industry.
With such an enormous investment in legacy systems, it is hard to let go.
"We've got a terrible mismatch between the technology cycle and the
acquisition cycle," he said. "What is happening is that we're measuring
technology in weeks and months and acquisitions almost in decades."
"Is the money there? Absolutely, the money is there," Williamson said
. "Is it there to the degree that meets or could fund every single requirement
of the federal government? Absolutely not."
Meanwhile, back at the border, customs inspectors are trying to keep
the black tarmac from turning into a parking lot for 3,000 trucks a day
racing to their destinations.
"We absolutely need automation," MacVittie said. "I want to free up
the limited number of people I have, get them out of the clerk business
and into the automation business."