oversight

Customs Service: Comments on Strategic Plan and Resource Allocation Process

Published by the Government Accountability Office on 1997-10-16.

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

                          United States General Accounting Office

GAO                       Testimony
                          Before the Subcommittee on Government Management,
                          Information and Technology, Committee on Government
                          Reform and Oversight, House of Representatives


For Release on Delivery
Expected at
10:00 a.m., PDT
                          CUSTOMS SERVICE
on October 16, 1997


                          Comments on Strategic Plan
                          and Resource Allocation
                          Process
                          Statement of Norman J. Rabkin
                          Director, Administration of Justice Issues
                          General Government Division




GAO/T-GGD-98-15
Summary

Customs Service: Comments on Strategic
Plan and Resource Allocation Process

              Under the Government Performance and Results Act of 1993, executive
              agencies are to develop strategic plans in which they define their missions,
              establish results-oriented goals, and identify strategies they will use to
              achieve those goals for the period covering at least 1997 through 2002. The
              Act specifies that strategic plans should contain (1) a mission statement;
              (2) agencywide long-term goals and objectives; (3) approaches (or
              strategies) and the various resources needed to achieve the goals and
              objectives; (4) a description of the relationship between the long-term
              goals/ objectives and the annual performance plans; (5) an identification of
              key external factors; and (6) a description of how program evaluations
              were used to establish and revise strategic goals.

              The Customs Service’s plan addresses the required elements. It also
              contains a discussion of management challenges but, in GAO’s opinion,
              does not adequately recognize Customs’ need to improve its financial
              management and internal control systems, its controls over seized assets,
              its plans to alleviate year 2000 problems, and its plans to improve
              computer security.

              Regarding its resource allocation process, Customs officials told GAO that
              they were not aware of any formal agency-wide efforts prior to 1995 to
              determine the need for additional cargo and passenger inspectional
              personnel for its 301 ports. However, Customs officials told GAO that in
              June 1995, in preparation for its fiscal year 1997 budget request and a new
              drug enforcement operation (Hard Line), Customs conducted a formal
              needs assessment using factors such as the need to (1) fully staff
              inspectional booths and (2) balance enforcement efforts with the need to
              quickly move complying cargo and passengers through the ports.




              Page 1                                                       GAO/T-GGD-98-15
Statement

Customs Service: Comments on Strategic
Plan and Resource Allocation Process

                        Mr. Chairman and Members of the Committee:

                        I am pleased to be here today to discuss our observations on the Customs
                        Service’s strategic plan and its allocation of inspectional resources. My
                        statement is based on our review of Customs’ September 30, 1997, plan
                        and extensive work we have performed at the Customs Service over the
                        past few years. It is also based on the limited amount of work we have
                        done reviewing its system for allocating inspectional resources to its cargo
                        ports of entry along the Southwest border.


                        The Government Performance and Results Act of 1993 (the Results Act)
The Customs Service’s   seeks to shift the focus of federal management and decisionmaking away
Strategic Plan          from a preoccupation with staffing, activity levels, and tasks completed to
                        a focus on results—that is, the real difference that federal programs make
                        in people’s lives. Under the Results Act, executive agencies were to
                        develop by September 30, 1997, strategic plans in which they defined their
                        missions, established results-oriented goals, and identified strategies that
                        they will use to achieve those goals for the period covering at least 1997
                        through 2002. These plans are to be updated at least every 3 years.

                        The Act specifies that all agencies’ strategic plans should have six critical
                        components: (1) a comprehensive agency mission statement;
                        (2) agencywide long-term goals and objectives for all major functions and
                        operations; (3) approaches (or strategies) to achieve the goals and
                        objectives and the various resources needed to do so; (4) a description of
                        the relationship between the long-term goals/objectives and the annual
                        performance plans required by the Act; (5) an identification of key factors,
                        external to the agency and beyond its control, that could significantly
                        affect achievement of the strategic goals; and (6) a description of how
                        program evaluations were used to establish and revise strategic goals and
                        a schedule for future program evaluations.

                        The plan developed by the Customs Service addresses the six
                        requirements of the Results Act.1 However, its discussion of the
                        management challenges it faces does not adequately recognize the
                        agency’s need to improve its financial management and internal control
                        systems, its controls over seized assets, its plans to alleviate year 2000
                        problems, and its plans to improve computer security.



                        1
                         The Customs Service is not a separate executive branch agency and therefore is not required under
                        the Results Act to develop its own strategic plan.



                        Page 2                                                                           GAO/T-GGD-98-15
Statement
Customs Service: Comments on Strategic
Plan and Resource Allocation Process




Concerning the elements required by the Results Act, Customs’ mission
statement is results oriented and covers its principal statutory
mission—“ensuring that all goods and persons entering and exiting the
United States do so in compliance with all United States laws and
regulations.” This covers Customs’ responsibilities to collect revenues and
prevent smuggling.

Second, the plan’s goals and objectives cover Customs’ major
functions—processing cargo and passengers entering the U.S. and cargo
leaving the U.S. In addition, Customs has developed goals and objectives
for two chronic problem areas—narcotics smuggling and money
laundering—as well as for three mission support functions—information
and technology, finance, and human resources management. These goals
and objectives are generally results-oriented and appear to be measurable.
For example, Customs’ overall goal for its processing of arriving
international passengers is that the passengers it admits into the country
will be in compliance with applicable laws and regulations. This goal is
results oriented because it focuses on the outcomes Customs is mandated
to achieve—compliance with applicable laws and regulations. In this case,
Customs plans to gauge its success by measuring the extent to which it
identifies and denies entry to noncompliant passengers.

Third, the plan discusses the strategies by which Customs hopes to
achieve its goals. Customs’ overall strategy is two-pronged: it plans to
maximize compliance by (1) informing the trade and traveling community
of applicable laws and regulations and (2) taking enforcement activities
against noncompliant exporters, importers, and travelers. Its specific
strategies are logically linked to the goals. For example, among its
strategies for maximizing trade compliance are to (1) detect areas of
noncompliance and, through informed compliance and targeted
enforcement actions, raise compliance levels; and (2) “investigate and
prosecute willfully noncompliant importers, exporters, and brokers,
wherever detected, and provide a highly visible deterrent factor.”

Fourth, the strategic plan discusses in very general terms how it relates to
annual performance plans. In addition, for each goal, Customs provides
specific targets it hopes to achieve during fiscal years 1997 through 2000.
For example, among Customs’ strategies for facilitating exports while
achieving compliance with applicable laws and regulations is to redesign
its outbound process “so that it is clear, consistent, and understandable to
all customers and stakeholders of the process.” Customs’ targets for fiscal
years 1997 and 1998 are to “continue to implement the uniform policies”



Page 3                                                       GAO/T-GGD-98-15
Statement
Customs Service: Comments on Strategic
Plan and Resource Allocation Process




and “implement performance measures.” For fiscal years 1999 through
2002, Customs’ targets are to “implement the redesigned process” and
“determine the resources needed to optimally implement the redesigned”
process. However, these targets are more process oriented than results
oriented; targets more closely related to the strategy, such as the extent of
positive results from a customer survey and eventually higher compliance
rates, might give Customs a better idea of whether its strategy is working.

Fifth, the plan discusses some key factors, external to Customs and
beyond its control, that could significantly affect achievement of the
strategic goals. These factors range from the level of cooperation of other
countries in reducing the supply of narcotics to the level of support from
what Customs refers to as its “customers”—the trade community and the
traveling public.

Finally, Customs’ strategic plan contains a listing of program evaluations
used to prepare the plan and provides a schedule of evaluations to be
conducted in each of the functional areas. For example, in developing its
narcotics strategy, the plan states that Customs used the 1996 and 1997
National Drug Control Strategy prepared by the Office of National Drug
Control Policy. Similarly, in developing strategies for its mission support
processes, the plan states that Customs used one of our reports.2

In addition to the six elements required by the Results Act, there are
several other areas where agencies’ strategic plans can provide Congress
and other stakeholders important insights into whether the agency will be
able to achieve its goals. First, there is the recognition of how the agency
will work with other federal agencies to achieve common goals. Customs’
plan recognizes that the agency shares responsibilities for carrying out
many of its core functions with other agencies. For example, Customs is
one of over 50 federal agencies involved in drug control activities.
Customs’ plan acknowledges the relationships the agency has with the
Departments of Justice, State, and Defense and discusses how it plans to
work with these agencies to achieve its narcotics smuggling goals.

Customs’ plan also recognizes some of the management challenges that
the agency faces in carrying out its core functions but does not, in our
opinion, cover some important management challenges it will face in
successfully carrying out the plan. The plan discusses three
functions—information and technology, finance, and human resources

2
 Improving Mission Performance Through Strategic Information Management and
Technology—Learning From Leading Organizations (GAO/AIMD-94-115, May 1994).



Page 4                                                                    GAO/T-GGD-98-15
Statement
Customs Service: Comments on Strategic
Plan and Resource Allocation Process




management. In a broad sense, the plan references the problems that we
and others have identified regarding Customs’ automated systems
modernization efforts and its need to improve its financial management
and internal control systems.3

However, the plan does not provide the detail necessary to determine how
Customs plans to address such challenges so that they do not continue to
hamper its ability to meet stated goals and objectives. For example, we
have reported that Customs’ financial management problems have
hindered its ability to reasonably ensure that (1) duties, taxes, and fees on
imports are properly assessed and collected; (2) sensitive data maintained
in its automated systems, such as information used to monitor its law
enforcement operations, are adequately protected from unlawful access
and modification; and (3) core financial systems capture all activity that
occurred during the year and provide reliable information for management
to use in controlling operations.

The Treasury Department’s Inspector General (IG) issued an unqualified
opinion on Customs’ fiscal year 1996 financial statements. However, the IG
also reported that Customs had significant internal control weaknesses
and that the financial management systems may not be able to provide
reliable information in a timely manner. Further, the IG’s report disclosed
that extensive manual procedures and analyses were required to process
certain routine transactions and to prepare financial statements at fiscal
year-end. This lack of readily accessible, quality data raises questions
about Customs’ capacity to track and measure its performance. Customs’
strategic plan would be more helpful to decisionmakers if it more clearly
addressed how Customs intends to correct these data reliability problems.

Our report on high-risk issues within the information technology area
cited information security and the year 2000 problem as two issues
requiring agency-specific actions.4 Customs’ plan contains some
discussion of the importance of information security but does not address
the Year 2000 problem. Specifically, regarding information security, the
plan briefly mentions that the agency will follow applicable
security-related directives and policies while providing a secure global


3
 We have included Customs’ financial management and its handling of seized assets on our list of
high-risk areas. In 1990 we began a special effort to review and report on the federal program areas our
work had identified as high risk because of vulnerabilities to waste, fraud, abuse, and mismanagement.
Our third series of reports, issued in February 1997, provides the current status of designated high-risk
areas. See High-Risk Series, (GAO/HR-97-20 SET, Feb. 1997), and High-Risk Program: Information on
Selected High-Risk Areas, (GAO/HR-97-30, May 1997).
4
 GAO High-Risk Series, Information Management and Technology (GAO/HR-97-9, Feb. 1997).



Page 5                                                                              GAO/T-GGD-98-15
                     Statement
                     Customs Service: Comments on Strategic
                     Plan and Resource Allocation Process




                     network. Also, the plan mentions the need for secure technology in the
                     context of improving certain information systems. However, the plan does
                     not describe information security-related strategies or measures and there
                     is no comprehensive discussion about the need to focus on information
                     security issues such as Customs attempts to move to an environment
                     where the agency increasingly relies on automation and technology to
                     perform its mission.

                     With the year 2000 less than 3 years away, federal agencies including
                     Customs must act quickly to ensure that systems are year 2000 compliant.
                     Necessary steps include identifying and analyzing mission-critical
                     computer systems, developing date conversion strategies and plans, and
                     dedicating sufficient resources convert the computer systems by early
                     1999 to allow 1 year for testing and error correction. However, the
                     Customs strategic plan, while identifying information and technology as a
                     key mission support process, does not recognize the year 2000 problem.
                     There is no discussion of the strategies or activities to address the year
                     2000 problem and the plan does not identify risks associated with the year
                     2000 problem as factors that could hinder accomplishment of the plan.


                     We have not completely reviewed the processes by which the Customs
Customs’ Resource    Service determines its operational resource needs and allocates available
Allocation Process   resources to ports of entry. We are currently reviewing those processes for
                     cargo inspections; this work has been requested by Senator Feinstein. We
                     expect to report our results in the Spring of 1998. However, I can comment
                     on some of the work we have completed so far.

                     Officials in Customs’ Office of Field Operations told us that they were not
                     aware of any formal needs assessments used to determine the number of
                     cargo and passenger inspectional personnel to be assigned to each of its
                     301 ports, prior to 1995. Beginning in 1995, for the fiscal year 1997
                     appropriations cycle, Customs requested additional inspectors to help
                     implement Operation Hard Line.5 To determine how many more inspectors
                     it needed and where it needed them, Customs asked its field managers—at
                     the then district (and subsequently at the Customs Management Center6)
                     level—to assess their resource needs on the basis of a variety of factors,
                     such as the need to (1) fully staff primary cargo and passenger lanes and

                     5
                      Operation Hard Line is Customs’ effort to address border violence and drug smuggling through
                     intensified inspections, improved facilities, and advances in technology.
                     6
                     On October 1, 1995, Customs closed its 7 regional and 42 district offices and replaced them with 20
                     Customs Management Centers.



                     Page 6                                                                            GAO/T-GGD-98-15
           Statement
           Customs Service: Comments on Strategic
           Plan and Resource Allocation Process




           inspection facilities, (2) respond to staffing agreements with INS,7
           (3) provide canine enforcement to cargo and passenger processing
           operations, and (4) balance enforcement efforts with the need to quickly
           move complying cargo and passengers through the ports. As a result of
           this needs assessment and the ensuing appropriations process, Congress
           provided Customs with authority to hire an additional 657 inspectors and
           other staff in fiscal year 1997.

           During preparation of its fiscal year 1998 budget request, Customs
           headquarters conducted another needs assessment for inspectors. The
           Customs’ official who conducted the assessment told us that it was
           influenced by the number of drug seizures at ports, the increased
           smuggling threat through railway ports of entry, and the threat of internal
           conspiracies at certain ports.

           We are currently reviewing the documentation for these needs
           assessments, as well as the process by which Customs officials
           determined the actual number of new inspectors to be assigned to each
           Customs Management Center and port.

           At the request of this Subcommittee, we have obtained data from Customs
           on the total number of inspectors assigned to its major cargo and
           passenger ports, as well as on the latest workloads at those ports.
           However, Customs did not provide these data in time for us to complete
           our analysis and include our results in this statement. We are working with
           the data and hope to have the results for you soon.


           Mr. Chairman, this concludes my prepared statement. I will be pleased to
           answer any questions.




           7
            Both Customs and INS inspect incoming passengers at ports of entry.



(264440)   Page 7                                                                 GAO/T-GGD-98-15
Ordering Information

The first copy of each GAO report and testimony is free.
Additional copies are $2 each. Orders should be sent to the
following address, accompanied by a check or money order
made out to the Superintendent of Documents, when
necessary. VISA and MasterCard credit cards are accepted, also.
Orders for 100 or more copies to be mailed to a single address
are discounted 25 percent.

Orders by mail:

U.S. General Accounting Office
P.O. Box 37050
Washington, DC 20013

or visit:

Room 1100
700 4th St. NW (corner of 4th and G Sts. NW)
U.S. General Accounting Office
Washington, DC

Orders may also be placed by calling (202) 512-6000
or by using fax number (202) 512-6061, or TDD (202) 512-2537.

Each day, GAO issues a list of newly available reports and
testimony. To receive facsimile copies of the daily list or any
list from the past 30 days, please call (202) 512-6000 using a
touchtone phone. A recorded menu will provide information on
how to obtain these lists.

For information on how to access GAO reports on the INTERNET,
send an e-mail message with "info" in the body to:

info@www.gao.gov

or visit GAO’s World Wide Web Home Page at:

http://www.gao.gov




PRINTED ON    RECYCLED PAPER
United States                       Bulk Rate
General Accounting Office      Postage & Fees Paid
Washington, D.C. 20548-0001           GAO
                                 Permit No. G100
Official Business
Penalty for Private Use $300

Address Correction Requested