U.S. Customs Service: Enforcement Oversight Issues

Published by the Government Accountability Office on 1999-05-18.

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

                          United States General Accounting Office

GAO                       Testimony
                          Before the Committee on Finance
                          U. S. Senate

For Release on Delivery
Expected at
10:00 a.m. EDT
                          U.S. CUSTOMS SERVICE
on Tuesday
May 18, 1999

                          Enforcement Oversight
                          Statement of Norman J. Rabkin
                          Director, Administration of Justice Issues
                          General Government Division


U.S. Customs Service: Enforcement
Oversight Issues

                       Mr. Chairman and Members of the Committee:

                       I am pleased to be here today to discuss work we have done addressing
                       efforts by the U.S. Customs Service to interdict drugs, allocate inspectional
                       personnel, and develop performance measures. For the most part, our
                       testimony is based on products we have issued on each of these subjects
                       since 1997. You also asked us to discuss Customs’ action plan for resolving
                       management problems. Our discussion of the action plan is based on (1)
                       interviews with Customs officials from its Office of Planning, Management
                       Inspection Division, and Office of Strategic Trade and (2) our examination
                       of the several versions of the plan.

                       Created in 1789, the U.S. Customs Service is one of the federal
                       government’s oldest agencies. Customs is responsible for collecting
                       revenue from imports and enforcing customs and other U.S. laws and
                       regulations. Customs collects revenues of about $22 billion annually while
                       processing an estimated 15 million import entries and 450 million people
                       who enter the country. A major goal of Customs is to prevent the
                       smuggling of drugs into the country by creating an effective drug
                       interdiction, intelligence, and investigation capability to disrupt and
                       dismantle smuggling organizations. Customs’ workforce totals almost
                       20,000 employees at its headquarters, 20 Customs Management Centers, 20
                       Special Agent-in-Charge offices, and 301 ports of entry around the country.

                       Our work on Customs’ efforts to interdict drugs has focused on four
Drug Interdiction      distinct areas: (1) internal controls over Customs’ low-risk cargo entry
                       programs; (2) the missions, resources, and performance measures for
                       Customs’ aviation program; (3) the development of a specific technology
                       for detecting drugs; and (4) Customs drug intelligence capabilities.

Low-Risk Cargo Entry   In July 1998, at the request of Senator Dianne Feinstein, we reported on
                       Customs’ drug-enforcement operations along the Southwest border of the
Programs                              1
                       United States. Our review focused on low-risk, cargo entry programs in
                       use at three ports—Otay Mesa, California; Laredo, Texas; and Nogales,
                       Arizona. To balance the facilitation of trade through ports with the
                       interdiction of illegal drugs being smuggled into the United States,
                       Customs initiated and encouraged its ports to use several programs to
                       identify and separate low-risk shipments from those with apparently
                       higher smuggling risk. One such program is the Line Release Program,
                       designed to expedite cargo shipments that Customs determined to be

                        Customs Service Drug Interdiction: Internal Control Weaknesses and Other Concerns With Low-Risk
                       Cargo Entry Programs (GAO/GGD-98-175, July 31, 1998).

                       Page 1
U.S. Customs Service: Enforcement Oversight Issues

repetitive, high volume, and low risk for narcotics smuggling. The Line
Release Program was first implemented on the Northern border in 1986
and was expanded to most posts along the Southwest border by 1989. This
program requires importers, brokers (companies who process the
paperwork required to import merchandise), and manufacturers to apply
for the program and to be screened by Customs to ensure that they have
no past history of narcotics smuggling and that their prior shipments have
been in compliance with trade laws and Customs’ commercial importing
regulations. In 1996, Customs implemented the Land Border Carrier
Initiative Program, which required that the Line Release shipments across
the Southwest border be transported by Customs-approved carriers and
driven by Customs-approved drivers. After the Carrier Initiative Program
was implemented, the number of Southwest Border Line Release
shipments dropped significantly.

At each of the three ports we visited, we identified internal control
weaknesses in one or more of the processes used to screen Line Release
applicants for entry into the program. These weaknesses included (1) an
absence of specific criteria for determining applicant eligibility at two of
the three ports, (2) incomplete documentation of the screening and review
of applicants at two of the three ports, and (3) lack of documentation of
supervisory review for aspects of the applicant approval process. During
our review, Customs representatives from northern and southern land-
border cargo ports approved draft Line Release volume and compliance
eligibility criteria for program applicants and draft recertification
standards for program participants.

The Three Tier Targeting Program—a method of targeting high-risk
shipments for narcotics inspection—was used at the three Southwest
border ports that we visited. According to officials at the three ports, they
lost confidence in the program’s ability to distinguish high- from low-risk
shipment because of two operational problems. First, there was little
information available in any database for researching foreign
manufacturers. Second, local officials doubted the reliability of the
designations. They cited examples of narcotics seizures from shipments
designated as “low-risk” and the lack of a significant number of seizures
from shipments designated as “high-risk.” Customs suspended this
program until more reliable information is developed for classifying low-
risk importations.

One low-risk entry program—the Automated Targeting System—was being
pilot tested at Laredo. It was designed to enable port officials to identify
and direct inspectional attention to high-risk shipments. That is, the

Page 2
                     U.S. Customs Service: Enforcement Oversight Issues

                     Automated Targeting System was designed to assess shipment entry
                     information for known smuggling indicators and thus enable inspectors to
                     target high-risk shipments more efficiently. Customs is evaluating the
                     Automated Targeting System for expansion to other land-border cargo

Aviation Program     In September 1998, we reported on Customs’ aviation program missions,
                     resources, and performance measures. Since the establishment of the
                     Customs Aviation Program in 1969, its basic mandate to use air assets to
                     counter the drug smuggling threat has not changed. Originally, the
                     program had two principal missions:

                   • border interdiction of drugs being smuggled by plane into the United
                     States and
                   • law enforcement support to other Customs offices as well as other federal,
                     state, and local law enforcement agencies.

                     In 1993, the administration instituted a new policy to control drugs coming
                     from South and Central America. Because Customs aircraft were to be
                     used to help carry out this policy, foreign counterdrug operations became
                     a third principal mission for the aviation program. Since then, the program
                     has devoted about 25 percent of its resources to the border interdiction
                     mission, 25 percent to foreign counterdrug operations, and 50 percent to
                     other law enforcement support.

                     Customs Aviation Program funding decreased from about $195 million in
                     fiscal year 1992, to about $135 million in fiscal year 1997—that is, about 31
                     percent in constant or inflation-adjusted dollars. While available funds
                     decreased, operations and maintenance costs per aircraft flight hour
                     increased. Customs Aviation Program officials said that this increase in
                     costs was one of the reasons they were flying fewer hours each year. From
                     fiscal year 1993 to fiscal year 1997, the total number of flight hours for all
                     missions decreased by over one-third, from about 45,000 hours to about
                     29,000 hours.

                     The size of Customs’ fleet dropped in fiscal year 1994, when Customs took
                     19 surveillance aircraft out of service because of funding reductions. The
                     fleet has remained at about 114 since then. The number of Customs
                      Customs Service: Aviation Program Missions, Resources, and Performance Measures (GAO/GGD-98-
                     186, Sept. 9, 1998).
                      Customs’ fleet should increase because additional aircraft were funded in the Fiscal Year 1999
                     Omnibus Consolidated and Emergency Supplemental Appropriations Act, P.L. 105-277, 112 Stat 2681-
                     553, 2681-583.

                     Page 3
                             U.S. Customs Service: Enforcement Oversight Issues

                             Aviation Program onboard personnel decreased, from a high of 956 in
                             fiscal year 1992 to 745 by the end of fiscal year 1997.

                             Customs has been using traditional law enforcement measures to evaluate
                             the aviation program (e.g., number of seizures, weight of drugs seized,
                             number of arrests). These measures, however, are used to track activity,
                             not measure results or effectiveness. Until 1997, Customs also used an air
                             threat index as an indicator of its effectiveness in detecting illegal air
                             traffic. However, Customs has discontinued use of this indicator, as well
                             as some other performance measures, because Customs determined that
                             they were not good measures of results and effectiveness. Having
                             recognized that these measures were not providing adequate insights into
                             whether the program was producing desired results, Customs said it is
                             developing new performance measures in order to better measure results.
                             However, its budget submission for fiscal year 2000 contained no new
                             performance measures.

Pulsed Fast Neutron          The pulsed fast neutron analysis (PFNA) inspection system is designed to
                             directly and automatically detect and measure the presence of specific
Analysis Inspection System   materials (e.g., cocaine) by exposing their constituent chemical elements
                             to short bursts of subatomic particles called neutrons. Customs and other
                             federal agencies are considering whether to continue to invest in the
                             development and fielding of this technology.

                             The Chairman and the Ranking Minority Member of the Subcommittee on
                             Treasury and General Government, Senate Committee on Appropriations,
                             asked us to provide information about (1) the status of plans for field
                             testing a PFNA system and (2) federal agency and vendor views on the
                             operational viability of such a system. We issued the report responding to
                             this request on April 13, 1999.

                             Customs, the Department of Defense (DOD), the Federal Aviation
                             Administration (FAA), and Ancore Corporation—the inspection system
                             inventor—recently began planning to field test PFNA. Because they were
                             in the early stage of planning, they did not expect the actual field test to
                             begin until mid to late 1999 at the earliest. Generally speaking, agency and

                              Staffing for the Aviation program is expected to grow to 817 in fiscal year 2000, according to Customs’
                             latest budget justification.
                              The air threat index used various indicators, such as the number of stolen and/or seized aircraft, to
                             determine the potential threat of air drug smuggling.
                              Terrorism and Drug Trafficking: Testing Status And Views on Operational Viability of Pulsed Fast
                             Neutron Analysis Technology (GAO/GGD-99-54, Apr. 13, 1999).

                             Page 4
                            U.S. Customs Service: Enforcement Oversight Issues

                            vendor officials estimated that a field test covering Customs’ and DOD’s
                            requirements will cost at least $5 million and that the cost could reach $8
                            million if FAA’s requirements are included in the joint test. Customs
                            officials told us that they are working closely with the applicable
                            congressional committees and subcommittees to decide whether Customs
                            can help fund the field test, particularly given the no-federal-cost language
                            of Senate Report 105-251. In general, a complete field test would include
                            (1) preparing a test site and constructing an appropriate facility; (2)
                            making any needed modifications to the only existing PFNA system and its
                            components; (3) disassembling, shipping, and reassembling the system at
                            the test site; and (4) conducting an operational test for about 4 months.
                            According to agency and Ancore officials, the test site candidates are two
                            seaports in California (Long Beach and Oakland) and two land ports in El
                            Paso, Texas.

                            Federal agency and vendor views on the operational viability of PFNA
                            vary. While Customs, DOD, and FAA officials acknowledge that laboratory
                            testing has proven the technical feasibility of PFNA, they told us that the
                            current Ancore inspection system would not meet their operational
                            requirements. Among their other concerns, Customs, DOD, and FAA
                            officials said that a PFNA system not only is too expensive (about $10
                            million to acquire per system), but also is too large for operational use in
                            most ports of entry or other sites. Accordingly, these agencies question the
                            value of further testing. Ancore disputes these arguments, believes it can
                            produce an operationally cost-effective system, and is proposing that a
                            PFNA system be tested at a port of entry. The Office of National Drug
                            Control Policy has characterized neutron interrogation as an “emerging” or
                            future technology that has shown promise in laboratory testing and thus
                            warrants field testing to provide a more informed basis for deciding
                            whether PFNA has operational merit.

Federal Counterdrug         At the request of the Subcommittee on National Security, International
                            Affairs and Criminal Justice, House Committee on Government Reform
Intelligence Coordination                  9
                            and Oversight, in June 1998 we identified the organizations that collect
Efforts                     and/or produce counterdrug intelligence, the role of these organizations,
                            the federal funding they receive, and the number of personnel that support

                             Senate Report 105-251 (July 1998) on the fiscal year 1999 Treasury and General Government
                            Appropriations bill directs the Commissioner of Customs to enter into negotiations with the private
                            sector to conduct a field test of the PFNA technology at no cost to the federal government.
                                The existing (prototype) PFNA system is located at the vendor’s plant in Santa Clara, CA.
                             This is now the Subcommittee on National Security, Veterans’ Affairs and International Relations of
                            the House Committee on Government Reform.

                            Page 5
                      U.S. Customs Service: Enforcement Oversight Issues

                      this function. We noted that more than 20 federal or federally funded
                      organizations, including Customs, spread across 5 cabinet-level
                      departments and 2 cabinet-level organizations, have a principal role in
                      collecting or producing counterdrug intelligence. Together, these
                      organizations collect domestic and foreign counterdrug intelligence
                      information using human, electronic, photographic, and other technical

                      Unclassified information reported to us by counterdrug intelligence
                      organizations shows that over $295 million was spent for counterdrug
                      intelligence activities during fiscal year 1997 and that more than 1,400
                      federal personnel were engaged in these activities. The Departments of
                      Justice, the Treasury, and Defense accounted for over 90 percent of the
                      money spent and personnel involved. Customs spent over $14 million in
                      1997 on counterdrug intelligence, and it is estimated that 63 percent of its
                      309 intelligence research specialists’ duties involved counterdrug
                      intelligence matters.

                      Among its many missions, Customs is the lead agency for interdicting
                      drugs being smuggled into the United States and its territories by land, sea,
                      or air. Customs’ primary counterdrug intelligence mission is to support its
                      own drug enforcement elements (i.e., inspectors and investigators) in their
                      interdiction and investigation efforts. Customs is responsible for producing
                      tactical, operational, and strategic intelligence concerning drug-smuggling
                      individuals, organizations, transportation networks, and patterns and
                      trends. In addition to providing these products to its own drug
                      enforcement elements, Customs is to provide this information to other
                      agencies with drug enforcement or intelligence responsibilities. Customs is
                      also responsible for analyzing the intelligence community’s reports and
                      integrating them with its own intelligence. Customs’ in-house collection
                      capability is heavily weighted toward human intelligence, which comes
                      largely from inspectors and investigators who obtain information during
                      their normal interdiction and investigation activities.

                      In 1998, we reported on selected aspects of the Customs Service’s process
Resource Allocation   for determining its need for inspectional personnel—such as inspectors

                        Drug Control: An Overview of U.S. Counterdrug Intelligence Activities (GAO/NSIAD-98-142, June 25,

                      Page 6
  U.S. Customs Service: Enforcement Oversight Issues

  and canine enforcement officers—for the commercial cargo or land and
  sea passengers at all of its 301 ports.

  Customs officials were not aware of any formal agencywide efforts prior to
  1995 to determine the need for additional cargo or passenger inspectional
  personnel for its 301 ports. However, in preparation for its fiscal year 1997
  budget request and a new drug enforcement operation called Hard Line,
  Customs conducted a formal needs assessment. The needs assessment
  considered (1) fully staffing all inspectional booths and (2) balancing
  enforcement efforts with the need to move complying cargo and
  passengers quickly through the ports. Customs conducted two subsequent
  assessments for fiscal years 1998 and 1999. These assessments considered
  the number and location of drug seizures and the perceived threat of drug
  smuggling, including the use of rail cars to smuggle drugs. However, all
  these assessments were

• focused exclusively on the need for additional personnel to implement
  Hard Line and similar initiatives,
• limited to land ports along the Southwest border and certain sea and air
  ports considered to be at risk from drug smuggling,
• conducted each year using generally different assessment factors, and
• conducted with varying degrees of involvement by Customs’ headquarters
  and field units.

  We concluded that these limitations could prevent Customs from
  accurately estimating the need for inspectional personnel and then
  allocating them to ports. We further concluded that, for Customs to
  implement the Results Act successfully, it had to determine its needs for
  inspectional personnel for all of its operations and ensure that available
  personnel are allocated where they are needed most.

  We recommended that Customs establish an inspectional personnel needs
  assessment and allocation process, and Customs is now in the process of
  responding to that April 1998 recommendation. Customs has awarded a
  contract for the development of a resource allocation model, and Customs

    Customs Service: Process for Estimating and Allocating Inspectional Personnel (GAO/GGD-98-107,
  Apr. 30, 1998); Customs Service: Inspectional Personnel and Workloads (GAO/GGD-98-170, Aug. 14,
  1998); and Customs Service: Inspectional Personnel and Workloads (GAO/T-GGD-98-195, Aug. 14,
     Operation Hard Line was Customs’ effort to address border violence and drug smuggling through
  intensified inspections, improved facilities, and advances in technology.
       Government Performance and Results Act of 1993, P.L. 103-62.

  Page 7
                         U.S. Customs Service: Enforcement Oversight Issues

                         officials told us that the model was delivered in March 1999 and that they
                         are in the early stages of deciding how to use the model and implement a
                         formal needs assessment system.

                         Under the Results Act, executive agencies are to develop strategic plans in
Performance Measures     which they, among other things, define their missions, establish results-
                         oriented goals, and identify strategies they plan to use to achieve those
                         goals. In addition, agencies are to submit annual performance plans
                         covering the program activities set out in the agencies’ budgets (a practice
                         which began with plans for fiscal year 1999); these plans are to describe
                         the results the agencies expect to achieve with the requested resources
                         and indicate the progress the agency expects to make during the year in
                         achieving its strategic goals.

                         The strategic plan developed by the Customs Service addressed the six
                         requirements of the Results Act. Concerning the elements required, the
                         mission statement was results oriented and covered Customs’ principal
                         statutory mission—ensuring that all goods and persons entering and
                         exiting the United States do so in compliance with all U.S. laws and
                         regulations. The plan’s goals and objectives covered Customs’ major
                         functions—processing cargo and passengers entering and cargo leaving
                         the United States. The plan discussed the strategies by which Customs
                         hopes to achieve its goals. The strategic plan discussed, in very general
                         terms, how it related to annual performance plans. The plan discussed
                         some key factors, external to Customs and beyond its control, that could
                         significantly affect achievement of the strategic goals, such as the level of
                         cooperation of other countries in reducing the supply of narcotics.
                         Customs’ strategic plan also contained a listing of program evaluations
                         used to prepare the plan and provided a schedule of evaluations to be
                         conducted in each of the functional areas.

                         In addition to the required elements, Customs’ plan discussed the
                         management challenges it was facing in carrying out its core functions,
                         including information and technology, finance, and human resources
                         management. However, the plan did not adequately recognize Customs’
                         need to improve

                       • financial management and internal control systems,
                       • controls over seized assets,
                       • plans to alleviate Year 2000 problems, and

                            Customs has established effective Year 2000 program management controls, including structures and
                         processes for Year 2000 testing, contingency planning, and Year 2000 status reporting. See Year 2000

                         Page 8
                U.S. Customs Service: Enforcement Oversight Issues

              • plans to improve computer security.

                We reported that these weaknesses could affect the reliability of Customs’
                performance data.

                Further, our initial review of Customs’ fiscal year 2000 performance plan
                showed that it is substantially unchanged in format from the one presented
                for 1999. Although the plan is a very useful document for decisionmakers,
                it still does not recognize Customs’ need to improve its internal control
                systems, control over seized assets, or plans to improve computer security.

                You asked us to comment on the performance measures proposed by
                Customs, which are to assess whether Customs is achieving its goals.
                Customs has included 26 performance measures in its fiscal year 2000
                performance plan. These measures range from general information on the
                level of compliance of the trade community with trade laws and Customs’
                regulations (which Customs has traditionally used) to very complex
                measures, such as transportation costs of drug smuggling organizations.
                Many of these complex measures were still being developed by Customs
                when the fiscal year 2000 performance plan was issued. In addition,
                Customs did not include performance targets for 8 of the 26 measures in
                its fiscal year 2000 plan.

                You asked us to discuss Customs’ action plan, which is a document
Action Plan     comprised of action items to resolve management problems.
                Commissioner Kelly originated the action plan; all assistant commissioners
                and office directors were asked to submit a list of actual or perceived
                management problems in Customs. The action plan is organized around 31
                categories ranging from “integrity” to the “Mod Act implementation,” and
                the May 1999 version had 219 items under the 31 categories. Since 16 of the
                items are listed under more than one category, there are 203 discrete
                items. For each action item, the plan currently includes the (1) date
                initiated, (2) responsible office(s), and (3) status. If more than one office is
                responsible for an action, one of the offices is designated as the lead office.
                Twenty-one offices within Customs are responsible for taking the lead on
                resolving the action items. The number of items that the offices are

                Computing Crisis: Customs Has Established Effective Year 2000 Program Controls (GAO/AIMD-99-37,
                Mar. 29, 1999).
                  See Customs Service: Comments on Strategic Plan and Resource Allocation Process (GAO/T-GGD-98-
                15, Oct. 16, 1997); and Results Act: Observations on Treasury’s Fiscal Year 1999 Annual Performance
                Plan (GAO/GGD-98-149, June 30, 1998).

                Page 9
U.S. Customs Service: Enforcement Oversight Issues

responsible for ranges from 1 to 37. The first action plan was issued in
February 1999 and has since been updated three times.

According to the plan, it is Customs’ intention to implement all action
items included in the plan by 2000. Customs’ Director for Planning is to
manage and monitor the plan on an ongoing basis. He told us that items
are usually added at the behest of the Commissioner. The Management
Inspection Division (part of the Office of Internal Affairs) is responsible for
verifying and validating the items that have been reported as completed,
including determining whether the action taken was effective. The action
plan of May 7—the latest version available—shows that 91 of the 203 items
had been completed; 110 were ongoing, pending, or scheduled; and 2 had
no description of their status.

Overall, use of this kind of management tool can be very helpful in
communicating problems and proposed solutions to executives, managers,
and the Customs Service workforce, as well as to other groups interested
in Customs such as this Committee and us.

Mr. Chairman, this completes my statement. I would be pleased to answer
any questions.

Page 10
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