Homeland Security: Challenges Facing the Department of Homeland Security in Balancing its Border Security and Trade Facilitation Missions

Published by the Government Accountability Office on 2003-06-16.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                            United States General Accounting Office

GAO                         Testimony
                            Before the Subcommittee on
                            Infrastructure and Border Security,
                            Select Committee on Homeland Security,
                            House of Representatives
For Release on Delivery
Expected at 3:00 p.m. EDT
Monday, June 16, 2003       HOMELAND SECURITY
                            Challenges Facing the
                            Department of Homeland
                            Security in Balancing its
                            Border Security and Trade
                            Facilitation Missions
                            Statement of Richard M. Stana, Director
                            Homeland Security and Justice Issues

    Mr. Chairman and Members of the Subcommittee:

    I am pleased to be here today to discuss the longstanding challenge of
    balancing our nation’s security and commercial needs, an issue that is
    especially important in the aftermath of the September 11, 2001, terrorist
    attacks that changed the nation’s security environment. Addressing this
    challenge now falls principally to the Department of Homeland Security
    (DHS) and its Border and Transportation Security directorate. Within this
    directorate, the responsibility has been assigned primarily to the Bureau of
    Customs and Border Protection (BCBP). BCBP consists of the inspections
    component of the former U.S. Customs Service; the Border Patrol and
    Inspections components of the former Immigration and Naturalization
    Service (INS); and a former component of the U.S. Department of
    Agriculture, the Animal and Plant Health Inspection Service (APHIS).1

    Achieving the balance between security and commercial needs is greatly
    affected by BCBP’s commercial and border and immigration control
    workload. Regarding commercial workload, in fiscal year 2002, the former
    U.S. Customs Service processed 24.9 million trade import entries valued at
    over $1.1 trillion and collected $23.8 billion in duties and fees; it also
    processed about 6 million cargo containers arriving at U.S. sea ports.
    While the cargo workload has stabilized somewhat as a result of the recent
    global economic slowdown, it is likely to begin growing again when an
    economic recovery is underway at some point in the future, thus
    exacerbating the challenges BCBP faces. Regarding border and
    immigration control workload, in fiscal year 2002, inspectors at over 300
    ports of entry inspected nearly 450 million travelers while the Border
    Patrol apprehended nearly 960,000 aliens trying to enter the U.S. illegally
    between the ports of entry.

    BCBP faces many challenges as it performs its important missions. In my
    testimony today, I make the following points:

•   With respect to cargo, BCBP has attempted to select and inspect the
    highest-risk incoming cargo, while enabling legitimate cargo to be cleared
    in a timely manner. These efforts pose a range of challenges, from the
    availability of threat assessments and actionable intelligence to the
    capability of nonintrusive inspection technology to detect potentially

     Following the creation of DHS and its absorption of Customs, the Secretary of the
    Treasury retained authority over Customs’ revenue functions.

    Page 1                                                                      GAO-03-902T
    harmful contraband. BCBP has made some progress in implementing
    initiatives that are designed to improve the efficiency of its regulation of
    legitimate commercial activities. But, additional challenges remain,
    including the need to improve its trade compliance program and to
    successfully implement its new trade processing information system.

•   BCBP also faces many challenges with respect to preventing illegal entry
    by individuals into the United States. These challenges impact BCBP’s
    ability to detect and deter illegal entry between ports of entry and to
    identify those individuals who should not be permitted entry at the ports.
    BCBP is faced with continuing to implement its southwest border strategy
    while simultaneously addressing emerging concerns over illegal entry
    along the northern border, mitigating the negatives affects the strategy
    may have on communities, and responding to continuing concerns over
    the safety of aliens who cross in remote and desolate areas. At our nation’s
    borders, the challenges include detecting false admissibility documents,
    unifying and enhancing inspector training, providing timely intelligence to
    the field, and successfully implementing the new entry-exit system.

•   In our recent Performance and Accountability series report, we designated
    implementation and transformation of DHS as high risk based on three
    factors. First, the implementation and transformation of DHS is an
    enormous undertaking that will take time to achieve in an effective and
    efficient manner. Second, components to be merged into DHS, including
    those forming BCBP, already face a wide array of existing challenges,
    some of which are described in this statement. Finally, failure to
    effectively carry out its mission would expose the nation to potentially
    very serious consequences.

    My testimony today is intended to provide an overview based primarily on
    the results of work that we have completed in recent years, namely, our
    Performance and Accountability Series and High-Risk reports related to
    DHS, Justice and Treasury;2 DHS’s international mail and package
    inspection processes;3 DHS’s acquisition and deployment of radiation

     U.S. General Accounting Office, Major Management Challenges and Program Risks: A
    Governmentwide Perspective, GAO-03-95 (Washington, D.C.: Jan. 2003); Major
    Management Challenges and Program Risks Department of Homeland Security,
    GAO-03-102 (Washington, D.C., Jan. 2003); Major Management Challenges and Program
    Risks: Department of the Treasury, GAO-03-109 (Washington, D.C.: Jan. 2003); and High-
    Risk Series: An Update, GAO-03-119 (Washington, D.C.: Jan. 2003).
     U.S. General Accounting Office, U.S. Customs Service: International Mail and Package
    Inspection Processes at Selected Locations, GAO-02-967 (Washington, D.C.: Aug. 2002).

    Page 2                                                                    GAO-03-902T
                        detection equipment;4 the Border Patrol’s southwest border strategy;5
                        DHS’s spending plans for its planned system to monitor the flow of foreign
                        nationals in and out of the United States;6 and our investigators’ efforts to
                        enter the country using fraudulent documents.7 My testimony also
                        highlights our ongoing work related to cargo inspections and individual
                        inspections at land ports of entry.8

                        BCBP has undertaken efforts to focus its enforcement on selecting and
Challenges Related to   inspecting the highest-risk incoming cargo, while enabling legitimate cargo
Cargo Processing        to be cleared in a timely manner. It has a number of initiatives underway
                        aimed at improving its ability to identify potentially risky cargo for
                        inspection. BCBP and Customs before it have longstanding efforts to use
                        information, personnel, and technology to identify such cargo. These
                        efforts pose a range of challenges, from the availability of threat
                        assessments and actionable intelligence to the capability of nonintrusive
                        inspection technology to detect potentially harmful contraband. From a
                        trade facilitation perspective, BCBP has made some progress in
                        implementing initiatives that are designed to improve the efficiency of its
                        regulation of commercial activities. But additional challenges remain,
                        including the need to improve its evolving trade compliance program and
                        acquire a new trade processing system.

                         U.S. General Accounting Office, Customs Service: Acquisition and Deployment of
                        Radiation Detection Equipment, GAO-03-235T (Washington, D.C.: Oct. 2002).
                         U.S. General Accounting Office, INS’ Southwest Border Strategy: Resource and Impact
                        Issues Remain After Seven Years, GAO-01-842 (Washington, D.C.: Aug. 2001).
                         U.S. General Accounting Office, Information Technology: Homeland Security Needs to
                        Improve Entry Exit System Expenditure Planning, GAO-03-563 (Washington, D.C.: June
                         U.S. General Accounting Office, Weaknesses in Screening Entrants into the United
                        States, GAO-03-438T (Washington, D.C.: Jan. 30, 2003) and Counterfeit Documents Used to
                        Enter the United States from Certain Western Hemisphere Countries Not Detected,
                        GAO-03-713T (Washington, D.C.: May 13, 2003).
                         The cargo inspection work was requested by the House Committee on Energy and
                        Commerce. The individual inspections at land ports of entry work is being done pursuant
                        to a mandate in the Illegal Immigration Reform and Immigrant Responsibility Act of 1996.
                        Since this work is ongoing and involves information that BCBP considers to be law
                        enforcement sensitive, we are precluded from further discussing it in this unclassified

                        Page 3                                                                      GAO-03-902T
Major Cargo Security         According to the Commissioner of BCBP, the priority mission is to prevent
Initiatives                  terrorists and terrorist weapons from entering the United States. This
                             important mission means improving security at our physical borders and
                             ports of entry, as well as extending the zone of security beyond our
                             physical borders. BCBP has a number of initiatives underway aimed at
                             improving security, including:

                         •   Container Security Initiative, which stations BCBP personnel in key
                             international ports to examine high-risk cargo before it is placed on ships
                             bound for the United States.
                         •   Customs-Trade Partnership Against Terrorism and the Free and Secure
                             Trade Program, which are designed to increase supply chain security and
                             expedite the clearance of legitimate trade.
                         •   Non-Intrusive Inspection technology, which increases the ability to detect
                             conventional explosives, nuclear weapons, radioactive components, and
                             other weapons of mass destruction.
                         •   Automated Targeting System, which is used by the National Targeting
                             Center and field targeting units in the United States and overseas to help
                             target high-risk cargo and passengers entering the United States.

                             We have work underway to review most of these initiatives and will make
                             our results available to the Subcommittee as soon as the work is

Selecting Highest-Risk       Separating high-risk cargo from low- or no-risk cargo is extremely
Cargo for Inspection         important to BCBP because searching each and every cargo and traveler
                             that enters the United States would cripple the flow of legitimate trade and
                             travel and would require a huge resource commitment. Over the years
                             Customs has recognized that it needed to identify what is high risk—and
                             to do so as early in the process as possible—and target its limited
                             resources accordingly. To select, or “target,” and inspect the highest-risk
                             cargoes and travelers, BCBP relies on the use of threat assessments and
                             actionable intelligence, the ability of inspectors to quickly discover or
                             sense an unlawful cargo, and the use of nonintrusive inspection
                             technology to detect potentially harmful contraband. Each of these poses
                             challenges to BCBP.

                             Information is key to identifying high-risk cargo. Such information can
                             come from manifests for air and sea shipments, from importers, or from
                             intelligence units within or outside DHS. Accurate information can help
                             BCBP make reliable risk determinations, particularly when it is used in
                             DHS computerized models that help assess cargo risk. Obviously, when

                             Page 4                                                          GAO-03-902T
information or intelligence is incomplete or unreliable, it can adversely
impact on BCBP’s ability to identify potentially risky cargo for inspection.

We are currently reviewing how BCBP is targeting cargo for further
inspection and how such cargo is inspected at ports. In this regard, we are
reviewing how BCBP developed the model used in targeting, how BCBP is
handling the targets generated by the model at sea ports, and whether and
how BCBP intends to evaluate targeting. Since this work is ongoing, and
involves information that BCBP also considers to be law enforcement
sensitive, we are precluded from discussing specific aspects of this matter
in this unclassified statement. However, in the broadest terms, our work to
date shows that BCBP’s targeting efforts face a range of challenges
relating to threat assessments, actionable intelligence, and nonintrusive
inspection technology.

Having sufficient numbers of well-trained and motivated staff is also key
to identifying high-risk cargo. Inspectors and canine officers are trained to
detect unusual or abnormal behaviors or circumstances that suggest a
potential threat or unlawful activity. Many have developed a “sixth sense”
in that they pick up on latent clues and unconnected information.
Nevertheless, these inspectors are challenged by the tight timeframes and
pressures they work under to move legitimate cargo through the ports.

Our recent work on the inspection of international mail showed that
relying on inspectors alone can increase the risk that contraband enters
the country. The inspection of incoming foreign mail remains largely a
manual process that relies primarily on physical examination. We found
several challenges relating to this process, but BCBP’s determination that
our results were law enforcement sensitive precludes our discussing them
here. However, at the time our work was completed, one courier was
working with the former Customs Service to pilot test an advance manifest
system—a computerized database that receives cargo manifest
information. The database is intended to allow Customs to analyze
incoming package information and make more informed decisions about
what packages to inspect.

In addition to information and staff, technology provides for a more
effective and efficient process. Large-scale x-ray and gamma–ray imaging
systems, portal radiation monitors, and portable and hand-held radiation
detection devices can reduce the need for costly, intensive inspections and
save inspection time and resources.

Page 5                                                           GAO-03-902T
                           As important as the use of technology is, there are certain limitations and
                           challenges that need to be considered. For example, we reviewed
                           Customs’ acquisition and deployment of radiation detection equipment.
                           We found that some of the radiation detection equipment being used—
                           radiation pagers—have a limited range and are not designed to detect
                           weapons-usable nuclear material. Furthermore, experts we contacted did
                           not view pagers as search instruments but rather as personal safety
                           devices. We plan to report later this summer on BCBP’s acquisition and
                           deployment of radiation detection equipment.

Assuring the Timely Flow   In trying to achieve the commercial-security balance, BCBP is challenged
of Legitimate Cargo        to ensure that antiterrorism efforts do not slow the flow of legitimate
                           international commerce and travel. According to BCBP, it has worked
                           with importers on concerns such as where their goods originated, the
                           physical security and integrity of their overseas plants and those of their
                           foreign suppliers, the background of their personnel, the means by which
                           they transport goods, and those who they have chosen to transport their
                           goods into the country. BCBP has reaffirmed to importers the importance
                           of knowing their customers and has examined the security practices of
                           their freight forwarders and the routes their shipments travel.

                           Although BCBP has made some progress in implementing initiatives that
                           are designed to improve the efficiency of its regulation of commercial
                           activities, additional challenges remain, particularly in view of the new and
                           heightened emphasis on terrorism. These challenges include (1)
                           continuing to improve its evolving trade compliance program and (2)
                           acquiring a new trade processing system.

Implementing the Customs   Although tempered recently by the global economic slowdown, growth in
Modernization Act          the volume and value of imports continues to create profound challenges
                           for BCBP to facilitate and enforce U.S. trade laws and regulations. The
                           volume of trade is expected to surpass $2 trillion in the year 2006. To
                           speed the processing of imports and improve compliance with trade laws,
                           specifically, the Customs Modernization and Informed Compliance Act of

                           Page 6                                                           GAO-03-902T
                        1993 (also known as the “Mod Act”),9 BCBP’s predecessor, Customs,
                        developed an “informed compliance strategy.”

                        In 1999, we recommended that the Customs Service develop and
                        implement an evaluation of the effectiveness of its informed compliance
                        strategy. Customs agreed with our recommendation and completed its
                        Trade Compliance Strategy Study on May 24, 2001. The study indicated
                        that the strategy improves compliance, but the impact on overall
                        compliance rates is small. For example, one initiative, the Company
                        Enforced Compliance Process (CECP), was to address large importers’
                        noncompliance that had a significant negative impact on the overall
                        national compliance rates. According to the study, Customs was to punish
                        noncomplying companies by imposing “confirmed risk” designations,
                        increasing examinations, removing privileges, and referring for penalties.
                        However, the confirmed risk status was only used six times, and loss of
                        privileges and referral for penalties were never used. The study concluded
                        that CECP was not much of an enforced compliance process, and it was

                        On the other hand, the study found that the companies’ compliance rates
                        increased after they participated in the other initiatives such as
                        compliance assessment and account management initiatives. While it is
                        not possible to attribute the increase in compliance totally to these
                        initiatives, the study concluded that these programs had a positive impact.

Acquiring a New Trade   Customs’ ongoing effort to acquire a new trade processing system is key to
Processing System       modernizing how Customs tracks, controls, and processes all commercial
                        goods imported into and exported out of the United States. This large and
                        complex system, known as the Automated Commercial Environment
                        (ACE), is expected to cost about $1.7 billion and is to replace Customs’
                        antiquated system. Expected benefits from ACE include speeding the flow
                        of legitimate commerce into and out of the United States, identifying and
                        targeting high-risk commerce requiring greater scrutiny, and providing a
                        single interface between the trade community and the federal government
                        for trade data. In April 2001, Customs awarded a 5-year contract, with

                         P.L. 103-183, title VI. The Mod Act fundamentally altered the relationship between
                        importers and, at the time, Customs by giving the importer the legal responsibility for
                        declaring the value, classification, and rate of duty applicable to merchandise being
                        imported into the United States. Customs, however, is responsible for determining the final
                        classification and value of the merchandise. The Mod Act also gave Customs and importers
                        a shared responsibility for ensuring compliance with trade laws.

                        Page 7                                                                       GAO-03-902T
    options to extend the contract to not more than 15 years, to a system
    integrator responsible for developing and deploying ACE.

    Successfully managing a project as large and complex as ACE is a
    challenging undertaking. Over the last 4 years, we have reported on ACE
    and recommended steps Customs needed to take to minimize project
    risks. To its credit, Customs has taken action to implement our
    recommendations, as follows:

•   We recommended Customs incrementally justify the ACE investment.
    Customs defined and committed to implement process controls for
    justifying and making ACE investment decisions incrementally. After
    implementing the first ACE release, Customs plans to verify that actual
    costs and benefits meet expectations and plans to continue this
    incremental investment approach for the remaining ACE releases.
•   We recommended Customs ensure ACE alignment with its enterprise
    architecture. Customs ensured that its enterprise architecture contained
    sufficient detail to build the first ACE release and has aligned the release
    with the enterprise architecture. Customs plans to continue to extend its
    enterprise architecture as necessary to build subsequent ACE releases.
•   We recommended Customs have sufficient human capital resources.
    Customs developed and plans to implement a human capital management
    strategy for the Customs modernization office, which is responsible for
    managing the ACE acquisition.
•   We recommended Customs develop rigorous and analytically verifiable
    cost estimating. Customs began developing and plans to implement a cost-
    estimating program that employs the tenets of effective cost estimating as
    defined by the Software Engineering Institute (SEI).
•   We recommended Customs employ effective software acquisition
    processes. Customs continues to make progress and has plans to establish
    effective software acquisition process controls, as embodied primarily in
    the second level of SEI’s Software Acquisition Capability Maturity Model.10

    Customs has made progress in implementing some, but not all, of our
    recommendations. Moreover, because Customs is in the early stages of
    acquiring ACE, many challenging tasks remain before Customs will have
    implemented full ACE capability.

      Capability Maturity ModelSM is a service mark of Carnegie Mellon University, and CMM is
    registered in the U.S. Patent and Trademark Office. The SA-CMM identifies key process
    areas that are necessary to effectively manage software-intensive system acquisitions.
    Achieving the second level of the SA-CMM’s five-level scale means that an organization has
    the software acquisition rigor and discipline to repeat project successes.

    Page 8                                                                      GAO-03-902T
                             To prevent illegal entry of individuals into the United States between the
Challenges Related to        ports of entry, BCBP has deployed significant resources but estimates
Immigration Control          significantly more are needed. Continued implementation of the southwest
                             border strategy faces a range of challenges, including meeting hiring goals
                             and obtaining needed approvals to deploy fencing and technology to
                             implement its strategy while simultaneously addressing emerging
                             concerns over illegal entry along the northern border, mitigating the
                             negatives affects the strategy may have on communities that experience an
                             increase in illegal alien traffic, and responding to continuing concerns over
                             the safety of aliens who cross in remote and desolate areas. At our nation’s
                             ports, BCBP faces an array of challenges, including improving inspectors’
                             ability to verify the identity of travelers and whether they can be admitted
                             into the country, unifying and enhancing inspector training, and complying
                             with the congressional mandate to implement a system to track the entry
                             and exit of all aliens.

Deterring Illegal Entry      Deterring illegal entry between the nation’s ports of entry will continue to
between the Ports of Entry   be a challenge for BCBP. In previous work, we reported that the Border
                             Patrol had estimated that significantly more resources would be needed to
                             fully implement its border control strategy and that various factors had
                             impeded the Border Patrol’s ability to implement its strategy as originally

                             Since 1994, the Border Patrol has been implementing a phased strategy to
                             increase deterrence to illegal entry beginning, first, with the areas that had
                             the largest influx of illegal aliens. The strategy postulated that as resources
                             were applied in one area, the flow of illegal alien traffic would shift to
                             other locations along the southwest border where resources had yet to be

                             In our last report on the southwest border strategy in August 2001, we
                             reported that the Border Patrol estimated it would need between 11,700
                             and 14,000 agents, additional support personnel, and hundreds of millions
                             of dollars in additional technology and infrastructure to fully implement
                             the Southwest border strategy.11 We reported that it would take at least 5
                             more years (until 2006) to reach the minimum number of agents the
                             Border Patrol believed it needed along the Southwest border if (1) the

                               See U.S. General Accounting Office, INS’ Southwest Border Strategy: Resource and
                             Impact Issues Remain After Seven Years, GAO-01-842 (Washington, D.C.: Aug. 2001).

                             Page 9                                                                   GAO-03-902T
administration’s agent hiring goals at that time were maintained and met
and (2) all new agents were deployed to the southwest border. However,
this estimate was made before the September 11, 2001, attacks and the
subsequent concerns regarding the need for additional resources to deter
illegal entry along the northern border.

BCBP continues to face hiring challenges to meet its estimated needs. The
Border Patrol currently has about 9,500 agents deployed along the
southwest border. While nearly a 3-fold increase from the 3,400 agents the
Border Patrol had along the southwest border in 1994, it is still about 2,200
agents short of the minimum number, 11,700, the Border Patrol said it
needed to fully implement the southwest border strategy. Currently, the
Border Patrol has 567 agents deployed along the northern border.

We also reported on various factors that had impeded the Border Patrol’s
ability to implement its strategy, some of which still appear to be
problematic. For example, it had taken the Border Patrol longer to
implement the strategy than originally planned because, among other
things, the Border Patrol experienced difficulties hiring agents and delays
in obtaining approvals needed to deploy technology and build fences.

The Border Patrol also recognized the need to make outreach efforts to
communities because its initial failure to warn some communities about
anticipated increases in illegal alien traffic caught community officials by
surprise and angered some residents due to the negative effects the
increased traffic had on the community. When apprehensions surged in
communities into which the illegal alien traffic was reportedly pushed,
officials and residents in one community reported experiencing loss of
business, destruction of private property, and environmental degradation.
Concerns have been raised over the environmental impact of current plans
to build additional fencing along the border in Arizona. A recent news
article described how some local residents in the border area southwest of
Tucson, Arizona, are patrolling the border to report illegal crossings
raising the concern of law enforcement officials. The Border Patrol has
realized its goal of shifting illegal alien traffic away from urban areas into
more remote areas. However, rather than being deterred from attempting
illegal entry, many aliens have instead risked injury and death by trying to
cross mountains, deserts, and rivers. This prompted the Border Patrol to
implement a Border Safety Initiative consisting of, among other things, a
media campaign to warn aliens about the dangers of crossing illegally, as
well as establishing search-and-rescue units.

Page 10                                                          GAO-03-902T
                              We further reported in August 2001 that although alien apprehensions had
                              shifted along the border as expected, overall apprehensions along the
                              southwest border had continued to increase to over 1.6 million in fiscal
                              year 2000—raising questions about the strategy’s effect on overall illegal
                              entry along the southwest border. However, since then apprehensions
                              along the southwest border have declined to less than 1 million in fiscal
                              year 2002.

                              While there may be many reasons for the decline in apprehensions, in
                              response to our recommendation, the Border Patrol has developed a plan
                              designed to evaluate the impacts of its southwest border strategy.
                              However, the evaluation has yet to be completed.

Preventing Illegal Entry at   Our recent work at ports of entry and our ongoing work specifically at
Ports of Entry                land border ports, indicate that BCBP inspectors continue to face
                              challenges that those from their predecessor agencies also faced in
                              balancing the need to identify violators of immigration and other laws
                              while facilitating the movement of lawful travelers. Today, I will touch on
                              several issues relating to the inspection of entry documents, inspector
                              training, intelligence information needs of the field, and BCBP plans for
                              implementing the U.S. Visitor and Immigrant Status Indication Technology
                              system, known as the U.S. VISIT system.

Determining Traveler          At land border ports of entry, inspectors must quickly make decisions
Admissibility                 about whether to admit a traveler into the United States or refer travelers
                              for more intensive inspection if admissibility cannot be readily
                              determined. Two of the factors that challenge inspectors’ ability to verify
                              the travelers’ identity and admissibility are that (1) some travelers may
                              enter the United States without having to present a travel document and
                              (2) travelers can present a variety of documents to gain entry into the
                              United States, some of which can be easily counterfeited.

                              First, some travelers do not need to present proof of citizenship at the
                              border. U.S. and certain Canadian citizens are exempt from having to
                              present any document upon entry. Instead, they can make an oral claim of
                              citizenship, if this satisfies the inspector. According to immigration data,
                              inspectors at land border ports intercepted nearly 15,000 people in 2002
                              who falsely claimed to be U.S. citizens in order to gain illegal entry,
                              suggesting an unknown number of travelers successfully entered the
                              United States this way.

                              Page 11                                                         GAO-03-902T
                         Second, a variety of documents are accepted at ports, and many can be
                         counterfeited or used fraudulently with apparent ease. With nearly 200
                         countries issuing unique passports, official stamps, seals, and visas, the
                         potential for document fraud is great. A wide variety of documents can be
                         presented for inspection—including more than 8,000 state and local
                         offices issue birth certificates, driver’s licenses, and other documents, any
                         of which could potentially be counterfeit. According to immigration data,
                         inspectors at land ports intercepted nearly 60,000 fraudulent documents in
                         fiscal year 2002, including over 10,000 U.S. citizenship-related documents.
                         Clearly, others have successfully gained access to this country using
                         counterfeit documents. Earlier this year, we testified on how our
                         investigators entered the country from Canada, Mexico, and Jamaica
                         through land, air, and sea ports of entry using fictitious names, and
                         counterfeit driver’s licenses and birth certificates made using readily
                         available software.12 INS and Customs Service inspectors never questioned
                         the authenticity of the counterfeit documents, and our investigators
                         encountered no difficulty in entering the country using them.

Unifying and Enhancing   BCBP will also face an array of challenges in ensuring that its border
Inspector Training       inspectors are adequately trained, including ensuring appropriate training
                         is provided in the detection of fraudulent documents. For example, former
                         INS and Customs inspectors are still being trained at separate basic
                         training academies using two different curricula. If border inspectors are
                         to wear “one face” at the border, a unified curriculum and training
                         approach will need to be developed and implemented. These training
                         challenges will continue beyond the academy—BCBP will also need to
                         ensure that a field training program is established that meets the needs of
                         the newest as well as experienced inspectors at the ports. For example,
                         neither the former INS nor Customs agencies had a standard on-the-job
                         training program for their inspectors working at land border ports. The
                         prior work I mentioned in which our investigators used counterfeit
                         documents to enter the United States, as well as our ongoing work at 15
                         land border ports, suggest that one training challenge for BCBP will be to
                         ensure that both new and experienced border inspectors are capable of
                         readily detecting fraudulent documents.

                          U.S. General Accounting Office, Weaknesses in Screening Entrants into the United
                         States, GAO-03-438T (Washington D.C.: Jan. 30, 2003) and Counterfeit Documents Used to
                         Enter the United States from Certain Western Hemisphere Countries Not Detected,
                         GAO-03-713T (Washington D.C.: May 13, 2003).

                         Page 12                                                                  GAO-03-902T
Meeting Field Intelligence   Our ongoing work at land border ports suggests that the Bureau will also
Needs                        face challenges regarding the collection, analysis, and use of intelligence
                             information in the field. The former INS recognized the need for more
                             intelligence support in the field. In 1997, an INS-contracted study reported
                             the lack of an intelligence capability at all INS locations, including districts
                             and ports.13 More recent studies suggest needs in this area persist.
                             Although some steps have been taken to bring the intelligence function to
                             the field level, additional steps remain if the intelligence needs of the field
                             are to be met. These challenges include, but are not limited, to decisions
                             related to staffing and training, as well as merging intelligence positions
                             from the former Customs and INS.

Implementing the New U.S.    One of the most significant challenges facing DHS at ports of entry is the
VISIT System                 implementation of the U.S. VISIT system. This significant undertaking is
                             intended to capture both entry and exit data on travelers. It will also have
                             many implications for operations at U.S. ports of entry, including
                             expenditures, staffing, inspection procedures, and infrastructure. We
                             reviewed INS’s fiscal year 2002 expenditure plan and associated system
                             acquisition documentation and system plans. We reported that INS’s
                             preliminary plans showed that it intended to acquire and deploy a system
                             that will satisfy the general scope of capabilities required under various
                             laws. However, we found that the initial plan did not provide sufficient
                             information about INS commitments for the system, such as what specific
                             system capabilities and benefits will be delivered, by when, and at what
                             cost. We concluded that this lack of detail is a material limitation in the
                             first plan that will become even more problematic in the future as the
                             magnitude and complexity of the system acquisition increases, as will the
                             importance of creating plans with the appropriate level and scope of
                             information.14 Responsibility for implementing U.S. VISIT now resides in
                             the Border and Transportation Security directorate. We are currently
                             reviewing the fiscal year 2003 expenditure plan and will ascertain whether
                             these problems were addressed.

                              INS Intelligence Program Strategic Plan, September 30, 1997 (submitted by LB&M
                             Associates, Inc.).
                               U.S. General Accounting Office, Information Technology: Homeland Security Needs to
                             Improve Entry Exit system Expenditure Planning, GAO-03-563 (Washington D.C.: Jun.

                             Page 13                                                                 GAO-03-902T
                        We designated implementation and transformation of the new Department
Challenges Related to   of Homeland Security as high risk based on three factors. First, the
Implementing and        implementation and transformation of DHS is an enormous undertaking
                        that will take time to achieve in an effective and efficient manner. Second,
Transforming DHS        components to be merged into DHS—including those that now form
                        BCBP—already face a wide array of existing challenges, some of which we
                        have described in this statement. Finally, failure to effectively carry out its
                        mission would expose the nation to potentially very serious consequences.

                        In the aftermath of September 11, invigorating the nation’s homeland
                        security missions has become one of the federal government’s most
                        significant challenges. DHS, with an anticipated budget of almost $40
                        billion and an estimated 170,000 employees, will be the third largest
                        government agency; not since the creation of the Department of Defense
                        (DOD) more than 50 years ago has the government sought an integration
                        and transformation of this magnitude. In DOD’s case, the effective
                        transformation took many years to achieve, and even today, the
                        department continues to face enduring management challenges and high-
                        risk areas that are, in part, legacies of its unfinished integration.

                        Effectively implementing and transforming DHS may be an even more
                        daunting challenge. DOD was formed almost entirely from agencies whose
                        principal mission was national defense. DHS will combine 22 agencies
                        specializing in various disciplines: law enforcement, border security,
                        biological research, disaster mitigation, and computer security, for
                        instance. Further, DHS will oversee a number of non-homeland-security
                        activities, such as the Coast Guard’s marine safety responsibilities and the
                        Federal Emergency Management Agency’s (FEMA) natural disaster
                        response functions. Yet, only through the effective integration and
                        collaboration of these entities will the nation achieve the synergy that can
                        help provide better security against terrorism. The magnitude of the
                        responsibilities, combined with the challenge and complexity of the
                        transformation, underscores the perseverance and dedication that will be
                        required of all DHS’s leaders, employees, and stakeholders to achieve

                        Further, it is well recognized that mergers of this magnitude in the public
                        and private sector carry significant risks, including lost productivity and
                        inefficiencies. Generally, successful transformations of large
                        organizations, even those undertaking less strenuous reorganizations and
                        with less pressure for immediate results, can take from 5 to 7 years to
                        achieve. Necessary management capacity and oversight mechanisms must
                        be established. Moreover, critical aspects of DHS’s success will depend on

                        Page 14                                                           GAO-03-902T
well-functioning relationships with third parties that will take time to
establish and maintain, including those with state and local governments,
the private sector, and other federal agencies with homeland security
responsibilities, such as the Department of State, the Federal Bureau of
Investigation, the Central Intelligence Agency, DOD, and the Department
of Health and Human Services. Creating and maintaining a structure that
can leverage partners and stakeholders will be necessary to effectively
implement the national homeland security strategy.

The new department is also being formed from components with a wide
array of existing major management challenges and program risks. For
instance, one DHS directorate’s responsibility includes the protection of
critical information systems that we already consider a high risk. In fact,
many of the major components merging into the new department,
including the Transportation Security Administration (TSA), FEMA and
the U.S. Coast Guard, face at least one major problem, such as strategic
human capital risks, critical information technology challenges, or
financial management vulnerabilities; they also confront an array of
challenges and risks to program operations. For example, TSA has had
considerable challenges in meeting deadlines for screening baggage, and
the agency has focused most of its initial security efforts on aviation
security, with less attention to other modes of transportation. The Coast
Guard faces the challenges inherent in a massive fleet modernization.

DHS’s national security mission is of such importance that the failure to
address its management challenges and programs risks could have serious
consequences on our intergovernmental system, our citizens’ health and
safety, and our economy. Overall, our designation of the implementation
and transformation of DHS as a high-risk area stems from the importance
of its mission and the nation’s reliance on the department’s effectiveness
in meeting its challenges for protecting the country against terrorism.

Mr. Chairman, this concludes my prepared statement. I would be pleased
to answer any questions that you or other Members of the Subcommittee
may have.

Page 15                                                          GAO-03-902T
Appendix: Contacts and Acknowledgments

             For further information regarding this testimony, please contact Richard
             M. Stana at (202) 512-8777. Individuals making key contributions to this
             testimony included Seto J. Bagdoyan, Michael P. Dino, Darryl W. Dutton,
             Barbara Guffy, E. Anne Laffoon, and Lori Weiss.

             Page 16                                                       GAO-03-902T
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