[House Hearing, 106 Congress]
[From the U.S. Government Printing Office]




                               before the

                      INFORMATION, AND TECHNOLOGY

                                 of the

                              COMMITTEE ON
                           GOVERNMENT REFORM

                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED SIXTH CONGRESS

                             SECOND SESSION


                             APRIL 20, 2000


                           Serial No. 106-196


       Printed for the use of the Committee on Government Reform

  Available via the World Wide Web: http://www.gpo.gov/congress/house

70-547                     WASHINGTON : 2001

 For sale by the Superintendent of Documents, U.S. Government Printing 
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                     DAN BURTON, Indiana, Chairman
BENJAMIN A. GILMAN, New York         HENRY A. WAXMAN, California
CONSTANCE A. MORELLA, Maryland       TOM LANTOS, California
CHRISTOPHER SHAYS, Connecticut       ROBERT E. WISE, Jr., West Virginia
JOHN M. McHUGH, New York             EDOLPHUS TOWNS, New York
STEPHEN HORN, California             PAUL E. KANJORSKI, Pennsylvania
JOHN L. MICA, Florida                PATSY T. MINK, Hawaii
THOMAS M. DAVIS, Virginia            CAROLYN B. MALONEY, New York
DAVID M. McINTOSH, Indiana           ELEANOR HOLMES NORTON, Washington, 
MARK E. SOUDER, Indiana                  DC
JOE SCARBOROUGH, Florida             CHAKA FATTAH, Pennsylvania
    Carolina                         ROD R. BLAGOJEVICH, Illinois
BOB BARR, Georgia                    DANNY K. DAVIS, Illinois
DAN MILLER, Florida                  JOHN F. TIERNEY, Massachusetts
ASA HUTCHINSON, Arkansas             JIM TURNER, Texas
LEE TERRY, Nebraska                  THOMAS H. ALLEN, Maine
JUDY BIGGERT, Illinois               HAROLD E. FORD, Jr., Tennessee
GREG WALDEN, Oregon                  JANICE D. SCHAKOWSKY, Illinois
DOUG OSE, California                             ------
PAUL RYAN, Wisconsin                 BERNARD SANDERS, Vermont 
HELEN CHENOWETH-HAGE, Idaho              (Independent)

                      Kevin Binger, Staff Director
                 Daniel R. Moll, Deputy Staff Director
           David A. Kass, Deputy Counsel and Parliamentarian
                    Lisa Smith Arafune, Chief Clerk
                 Phil Schiliro, Minority Staff Director

   Subcommittee on Government Management, Information, and Technology

                   STEPHEN HORN, California, Chairman
JUDY BIGGERT, Illinois               JIM TURNER, Texas
THOMAS M. DAVIS, Virginia            PAUL E. KANJORSKI, Pennsylvania
GREG WALDEN, Oregon                  MAJOR R. OWENS, New York
DOUG OSE, California                 PATSY T. MINK, Hawaii
PAUL RYAN, Wisconsin                 CAROLYN B. MALONEY, New York

                               Ex Officio

DAN BURTON, Indiana                  HENRY A. WAXMAN, California
          J. Russell George, Staff Director and Chief Counsel
                         Randy Kaplan, Counsel
                           Bryan Sisk, Clerk

                            C O N T E N T S

Hearing held on April 20, 2000...................................     1
Statement of:
    Avila, Yvonne, president, the Foreign Trade Association of 
      Southern California and director of communications, Port of 
      Long Beach; Maurine Cecil, president, the Los Angeles 
      Customs Brokers and Freight Forwarders Association, Inc.; 
      Judy Grimsman, chairman of the board, the L.A. Customs 
      Brokers and Freight Forwarders Association, Inc.; and J. 
      Richard Williams, Ph.D., P.E., professor of mechanical and 
      aerospace engineering, California State University, Long 
      Beach......................................................    70
    Ekstrand, Laurie E., Director, Administration of Justice 
      Issues, U.S. General Accounting Office; Charles Winwood, 
      Acting Deputy Commissioner, U.S. Customs Service; Peter 
      Gordon, Assistant Regional Director for Inspections, 
      Immigration and Naturalization Service, Western Region; 
      Colleen M. Kelley, national president, National Treasury 
      Employees Union............................................     6
Letters, statements, etc., submitted for the record by:
    Avila, Yvonne, president, the Foreign Trade Association of 
      Southern California and director of communications, Port of 
      Long Beach, prepared statement of..........................    73
    Cecil, Maurine, president, the Los Angeles Customs Brokers 
      and Freight Forwarders Association, Inc., prepared 
      statement of...............................................    85
    Ekstrand, Laurie E., Director, Administration of Justice 
      Issues, U.S. General Accounting Office, prepared statement 
      of.........................................................     9
    Horn, Hon. Stephen, a Representative in Congress from the 
      State of California, prepared statement of.................     4
    Kelley, Colleen M., national president, National Treasury 
      Employees Union, prepared statement of.....................    34
    Williams, J. Richard, Ph.D., P.E., professor of mechanical 
      and aerospace engineering, California State University, 
      Long Beach, prepared statement of..........................    93
    Winwood, Charles, Acting Deputy Commissioner, U.S. Customs 
      Service, prepared statement of.............................    25



                        THURSDAY, APRIL 20, 2000

                  House of Representatives,
Subcommittee on Government Management, Information, 
                                    and Technology,
                             Committee on Government Reform
                                                    Long Beach, CA.
    The subcommittee met, pursuant to notice, at 10 a.m., in 
the Board Room, Port of Long Beach Administrative Building, 6th 
Floor, 925 Harbor Plaza, Long Beach, CA, Hon. Stephen Horn 
(chairman of the subcommittee) presiding.
    Present: Representatives Horn and Becerra.
    Staff present: J. Russell George, staff director and chief 
counsel; Randy Kaplan, counsel; Bryan Sisk, clerk; Ryan McKee, 
staff assistant; Bonnie Heald, communications director; Connie 
Szeibel, district staff director; and Devin Storey, intern.
    Mr. Horn. A quorum being present, the Subcommittee on 
Government Management, Information, and Technology will come to 
    The purpose of today's hearing is to examine a variety of 
challenges facing the U.S. Customs Service. The Customs Service 
has a wide-ranging mission to ensure that all imports and 
exports comply with U.S. laws and regulations. Originating in 
1789, the year of the first Congress in New York City, it is 
the oldest Federal agency within the executive branch of our 
government. In fact, until the income tax was implemented 
during the First World War, our government was funded entirely 
by Customs' duties.
    This year, it is estimated that $2.6 trillion in 
merchandise will be imported into and exported from the more 
than 300 ports in the United States. In addition, close to half 
a billion people will enter the country through U.S. border 
crossings this year.
    The Customs Service is responsible for processing those 
people, their baggage, and all cargo and mail that crosses the 
Nation's borders. Customs collects the appropriate duties, 
excise taxes, and fees on all merchandise entering the country. 
Next to the Internal Revenue Service, Customs is the second 
largest revenue-producing agency in the Federal Government, 
returning more than $22 billion each year to the U.S. Treasury.
    Customs also has a major enforcement role. The staggering 
growth in world trade over recent years has been accompanied by 
an equally dramatic increase in the smuggling of illegal drugs, 
weapons, printed, intellectual or pirated intellectual 
property, and in some instances, human cargo. Each region of 
our country faces unique threats based upon the nature, volume, 
and origin of the cargo it receives.
    Customs employs nearly 20,000 people to process and inspect 
the cargo of more than 300 ports around the country. However, 
as this subcommittee has learned during previous hearings, the 
Customs Service does not have a system to determine how to 
match its staffing resources with its enforcement and 
inspection responsibilities.
    In September 1998, Customs contracted with a private 
consultant to develop a resource allocation model. This model 
would serve as a tool to assist management in making staffing 
decisions and preparing budget requests. The resource 
allocation model was delivered to Customs over 1 year ago. We 
are all interested in learning what staffing levels the model 
predicted would be appropriate, and how Customs intends to use 
this information.
    In addition to the three source allocation model, Customs 
is delivering and developing a new import processing system 
called the Automated Commercial Environment [ACE] system. It is 
no secret that Customs needs to modernize the way it processes 
trade. The agency's current approach to enforcing trade laws 
and regulations, and assessing and collecting import duties is 
outdated. It is neither responsive to the needs of Customs nor 
the needs of its commercial clients. The present system, 
developed more than 16 years ago, has experienced frequent 
breakdowns and have delayed the flow of data and cargo entering 
the country. The Automated Commercial Environment, ACE system 
will streamline the commercial import process and increase the 
quality of service to its customers--the trade community. We 
are interested in learning how well Customs is managing the 
acquisition and development of this multi-billion-dollar 
    In its enforcement role, Customs is currently using some 
advanced technology, including x-rays and hand-held sensors to 
detect illegal smuggling. Nevertheless, illegal smuggling 
remains a significant problem. Today, we will hear about a new 
project that could enhance this enforcement effort for Customs 
and its partner, the Immigration and Naturalization Service, 
and could expedite the processing of people and cargo entering 
the country.
    I would like to thank the Port of Long Beach for hosting us 
today and for their help with the preparations for the hearing. 
I also welcome Representative Doug Ose who represents the 
Sacramento area and north of it, who is also a very 
distinguished member of this subcommittee and we appreciate him 
joining us here. He's done a great job on many of the hearings 
that we've had in Washington, and we're delighted to see him in 
southern California. And Representative Xavier Becerra, who is 
well known to those from this area, without objection will be 
sitting with this panel and have all the rights and 
responsibilities of a member of this investigating committee. I 
ask unanimous consent that he be permitted to join the 
subcommittee for today's hearing. Without objection, it is so 
ordered, and we welcome our witnesses, and we look forward to 
your testimony.
    Your full statement goes in the record, please don't read 
your full statement. We've all read it. What we are interested 
in is dialog with the witnesses and in others on the panel, 
too. So, we would welcome your summary, and do it from the 
heart and look us in the eye, and we'd appreciate it.
    Now, we are going to swear in the witnesses, since that's 
our tradition in Government Reform, and if you have staff 
backing you up that might speak behind you, you should stand 
also when we swear you in, and the clerk will note who has been 
sworn in for the testimony and put it into the record at that 
    So, first, before going to the witnesses, I want to ask Mr. 
Becerra if he has an opening statement that he'd like to make.
    [The prepared statement of Hon. Stephen Horn follows:]

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    Mr. Becerra. Mr. Chairman, let me first thank you for 
allowing me to sit with the Government Management, Information, 
and Technology Subcommittee of the Committee of Government 
Reform and join you and Congressman Ose today, I thank you for 
that opportunity.
    As a member of the Ways and Means Committee, with 
jurisdiction over Treasury, Customs, and the issues of trade, 
obviously, this is of great concern to me, and I'm pleased that 
you are holding this hearing.
    I do have a statement. I can submit it for the record, and 
rather than make further remarks I'd like to hear the testimony 
of the witnesses.
    Again, I thank you for the opportunity to be here and I 
congratulate you on the work that you've done on these 
particular issues with regards to Customs.
    Mr. Horn. Well, I thank the gentleman.
    Does the gentleman from California, northern California, 
want to say anything at this point?
    Mr. Ose. Speak less, say more.
    Mr. Horn. OK. Fine. Mr. Ose is going to do most of the 
    So, let me, if you would, stand, raise your right hands, 
and if there's any support staff behind you, have them stand. 
Yes, we have quite a few today.
    The clerk will note that the five witnesses and the, it 
looks like eight helpers, and we're delighted to have all of 
you, have taken the oath.
    So, we will now begin with the first witness. The first 
witness, which is usual for these hearings, is a key member of 
the U.S. General Accounting Office, otherwise known as GAO, and 
that is part of the legislative branch with the authority of 
Congress to look at both fiscal matters and programmatic 
matters, and we have as the principal witness on panel one 
Laurie E. Ekstrand, Director, Administration of Justice Issues, 
U.S. General Accounting Office.


    Ms. Ekstrand. Thank you very much, Chairman Horn. I'm 
pleased to be here today with Randy Hite, from our Accounting 
and Information Management Division, to discuss three issues 
that are of really great importance to the efficient and 
effective operations of the Customs Service.
    The needs for Customs to develop a Resource Allocation 
Model, called the RAM, and the development of an Automated 
Commercial Environment [ACE], have been the subject of a number 
of prior GAO reports and testimonies. And, as you know, our 
report on Customs' airline passenger personal searches was 
released 10 days ago. Let me address each one of these issues 
in turn, and first start with the Resource Allocation Model.
    In 1998, we recommended that Customs establish a process to 
determine the needs for inspectional personnel across all 
ports. Customs subsequently contracted with 
PriceWaterhouseCoopers [PWC] to develop a Resource Allocation 
Model. The model was intended to predict staffing levels needed 
agency-wide and locally by occupation, such as inspectors, and 
canine enforcement officers, and by core functions, such as 
passenger processing.
    PWC developed a model based on 1998 baseline data using two 
different methodologies. One was a regression analysis and the 
other an activity analysis. The regression analysis, which uses 
a variety of counts of workloads as input, yielded some very 
illogical results, and also failed to account for a variety of 
infrastructure differences between ports. These differences 
include elements such as facilities at the port, the extent of 
automation, and the extent of threat.
    PWC also produced an Activity Analysis Model. This approach 
basically involves multiplying the units of work by the time it 
takes to do each unit and then dividing by staff years.
    Our concern with the RAM centers on data reliability. In a 
previous report, we noted that source data for the amount of 
time Customs personnel spent on air and sea passenger 
processing activities is neither well documented, nor 
consistently collected from port to port. We also found, and 
PWC noted as well, that there are inconsistencies across source 
databases where there should be none. And finally we observed 
that there is considerable variation in activity times across 
ports, and we are unsure of the reasons for these variations.
    The bottom line on the RAM is that it could be a functional 
tool as input for resource allocation decisionmaking, but data 
reliability issues will have to be resolved. Customs is taking 
some steps to improve some reliability of source data, and this 
could change the picture.
    Now, let me turn to ACE. We have long held that the need to 
leverage information technology to modernize Customs approach 
to import processing is both urgent and undeniable. The 
outdated import processes currently in use are transaction-
based, paper laden, and time consuming, and they are out of 
step with the just-in-time inventory practices of the trades. 
It is, thus, absolutely critical that Customs' ACE project be 
successful, and to be successful Customs must do the right 
things the right way. To be right, Customs must, as we have 
recommended: No. 1, invest in and build systems within the 
context of an enterprise architecture. No. 2, make informed 
data-driven decisions about investment options, based on 
reliable analysis of business value for system increments, and 
No. 3, build system increments using mature software processes.
    Our work on other challenged modernization efforts has 
shown that to do less increases the risk of systems falling 
short of expectations, which is not in the best interest of 
either the trades or the government. To Customs' credit, it has 
already taken significant action to implement some of our 
recommendations. It has also made clear commitments to seeing 
that fundamental acquisition and investment management 
capabilities that our remaining recommendations call for are 
firmly in place before they invest huge sums of money in ACE.
    Nevertheless, much remains to be accomplished before: No. 
1, Customs is fully positioned to begin building large, 
expensive, software intensive increments of ACE, and No. 2, 
either the trade or the government will begin to see promised 
returns on hundreds of millions of dollars to be invested.
    As a result, we will continue to categorize ACE as a high-
risk endeavor and plan to monitor it closely.
    Finally, let me turn to Customs personnel searches. A 
recent GAO report was released that focused on who Customs 
selects for personal searches, and of those searched who was 
found to be carrying contraband. Our analysis utilized data 
from 1997 and 1998 for those passengers who were subject to 
some sort of personal search. Most were subject to frisks or 
pat-downs, 4 percent were subject to strip searches, and 1 
percent were subject to x-ray examination.
    Our analysis centered on the latter two groups, that is, 
those who were strip searched and those who were x-rayed, and 
the frequency with which contraband was found in those types of 
searches. Gender, race, citizenship, and year, that is, 1997 
and 1998, were the variables in our analysis.
    The analysis showed that searched passengers of certain 
races and genders were more likely to be subject to strip 
search and x-rays than other groups, and were less likely to be 
carrying contraband. Specifically, white men and women and 
Black women were more likely than Black men and Hispanic men 
and women to be strip searched, rather than just frisked, but 
were less likely to be found carrying contraband. The most 
pronounced difference occurred with Black women who were U.S. 
citizens. They were nine times more likely than white women to 
be x-rayed, but less than half as likely to be found carrying 
    During the course of our review, Customs was developing 
some new policies and procedures for personal searches. They 
included both new requirements for supervisory review prior to 
searches, and additional training for inspectors. Customs also 
started collecting more complete data on the characteristics of 
passengers selected for intrusive searches and search results. 
Analysis of these data could result in better targeting and, 
thus, more productive searches.
    This concludes my oral statement, and, of course, Mr. Hite 
and I will be happy to answer any questions you might have.
    [The prepared statement of Ms. Ekstrand follows:]

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    Mr. Horn. Well, we thank you for that statement, and our 
rule is sort of just to have all the presenters of the panel 
and then we'll go to questions.
    We're delighted to have the Acting Deputy Commissioner of 
the Customs Service here today, that's the ranking career 
servant in the system. He's spent at least three decades, I 
believe, working his way up, Mr. Charles Winwood. We appreciate 
you being here yesterday and showing us and Chairman Colby's 
Appropriations Subcommittee the workings with your people in 
the ports of Los Angeles and Long Beach.
    So, Mr. Winwood, it's all your's.
    Mr. Winwood. Thank you, Mr. Chairman, and thank you for the 
opportunity to testify today. But before I begin, Commissioner 
Kelly has asked me that I thank you for your efforts on 
Customs' behalf to find a solution to our facility problem at 
Terminal Island. Your letters and discussions with GSA were 
instrumental in helping to expedite the process. We appear to 
be on track now to relocate those Customs employees to 
facilities that are safer and closer to the majority of our 
work, and we very much appreciate it.
    Customs is currently faced with two major challenges; 
processing the expediential growth in legitimate trade and 
combating an array of threats to our national security.
    With regard to trade, in the last 5 years the number of 
commercial Customs declarations ``entries'' processed by the 
agency grew from 13 million to 18.4 million; that's an increase 
of 41 percent. And the value of these entries now approaches $1 
trillion, on which we collect over $22 billion in duty. Given 
the robust world trade environment, we anticipate another 43 
percent increase in entries and a doubling in their value; to 
almost $2 trillion--by the year 2005.
    Regarding national security, Customs is at the forefront of 
efforts to protect the United States from: terrorism, the drug 
trade, the trafficking of strategic materials, weapons of mass 
destruction, adulterated food, and unregulated pharmaceuticals; 
and economic crimes including intellectual piracy and commodity 
dumping, among other things. In fact, the Customs Service 
enforces over 400 statutes for more than 40 different agencies.
    To accomplish this broad mission, Customs requires the 
people and technology necessary to stand as America's Front 
Line, keeping the threat in check and legitimate trade moving.
    Mr. Chairman, as you are aware, in the past the Customs 
Service has been criticized for being less than systematic in 
the allocation of our limited resources. The GAO, as they just 
testified, and others have suggested that we need to develop 
methods to better calculate our workload and determine the most 
effective deployment of staff and equipment. To address these 
legitimate concerns, the Customs Service contracted with 
PriceWaterhouseCoopers to develop a Resource Allocation Model 
[RAM]. Constructed using quantitative analysis, the RAM, as far 
as we are aware, represents the first time ever an entire 
Federal agency's resource requirements have been modeled and 
then projected using workload and threat indicators.
    The RAM is currently under review by the Treasury 
Department and the Office of Management and Budget. Because we 
are awaiting their release of the document, I am limited in 
what I can say today about specific findings calculated using 
the model.
    However, it should be understood that Customs sees the RAM 
as an allocation tool, not a reallocation tool. Moreover, the 
RAM is not the final determinant of future resource decisions; 
rather it is intended to help management develop a 
comprehensive staffing strategy year to year. Nonetheless, the 
RAM's prescriptions should be received with three significant 
    First, beginning as it does with a 1998 baseline, which is 
the last full fiscal year for which data was available during 
RAM development, the RAM does not account for further 
operational efficiencies from applied technology in this 
version, but should naturally reflect these in successive data 
    Second, the successful future implementation of ACE, which 
I will discuss in a moment, will itself introduce major 
efficiencies in the way both Customs inspectors and the trade 
address the arrival of merchandise.
    Third, the part of the RAM related to ``threat'' will 
always involve a complex relationship between total threat and 
interdiction measures, where an increase in interdiction may 
herald a growing supply of contraband or success in preventing 
its introduction.
    The RAM relies on the best available workload, staffing, 
cost, and performance data. As accuracy is critical to the 
success of the model, Customs has undertaken a yearly risk 
assessment, annual data validation, and dedicated personnel to 
oversee data integrity efforts.
    We appreciate GAO's concerns regarding the reliability of 
the RAM data, and would further stress that RAM is a tool with 
excellent potential, which makes up one of several significant 
factors in Customs' decisions on managing limited appropriated 
    Properly allocating our employees is obviously critical to 
meeting the challenge of the future. But, in this day and age, 
equipping our work force with the most up-to-date computer 
technology is equally important. To do so the Customs Service 
must replace our antiquated Automated Commercial System [ACS] 
as you mentioned, with the proposed state-of-the-art Automated 
Commercial Environment [ACE].
    ACS, our present trade processing computer system, is now 
16 years old. Mr. Chairman, I ask you what private-sector 
company earning $22 billion a year, the amount of revenue 
collected by Customs in 1999, operates an obsolete central 
computer system. The answer, to the best of my knowledge, is 
none. ACS has become increasingly inadequate to meet the growth 
and demands of the expanding international trade environment. A 
trade process that relies more and more on paperless 
transactions overwhelms the system. To make matters worse, the 
system is subject to temporary service disruptions, which we 
refer to as brownouts.
    Implementation of ACE will provide significant benefits to 
Customs field operations personnel, the importing community, 
and most importantly, the U.S. economy. This will occur through 
uniformed and streamlined cargo entry processes and just-in-
time reporting capabilities, more efficient and accurate 
revenue collection, and enhanced targeting and analytical 
capabilities aimed at combating violations of U.S. import and 
export trade laws, drug smuggling, money laundering, and 
    Initially there was some concerns with how Customs was 
proceeding with the ACE project, but we believe, and others 
including the GAO agree, that we have addressed these problems. 
Customs created a program office to manage computer 
modernization activities and have contracted with the MITRE 
Corp., a company with expertise in supporting large government 
projects, to help us manage ACE construction.
    For fiscal year 2001, we are requesting $338.4 million. 
This funding request is based on a detailed cost-benefit study 
conducted by an outside expert and has been validated by two 
other independent parties. Our request includes $210 million 
for ACE software development and infrastructure, as well as 
$123 million for maintaining ACS and continuing Customs 
automation operations and an additional $5.4 million for the 
International Trade Data System. Customs modernization requires 
predictable and adequate funding. We need and hope for your 
continued support.
    On the matter of personal search, GAO's report on Customs 
personal search was welcomed by the Customs Service, and the 
findings in this instance were also welcomed, because it proved 
and validated our concerns identified 18 months ago regarding 
the manner in which the agency conducts and supervises personal 
    In 1998, Commissioner Kelly began a thorough review of 
Customs personal search practices. This led to numerous 
reforms. Customs lawyers are now on call 24 hours a day to 
advise Customs officers during the search process. Customs 
supervisors must now approve all pat-down searches, and Customs 
Port Directors must approve all searches that involve moving a 
person to a medical facility for a medical examination. A 
revised manual and new training was provided to all Customs 
officers involved in conducting personal searches. We have 
instituted far more comprehensive data collection on all those 
who undergo a Customs' search. We have purchased body scan 
technology, giving people the option to be scanned for external 
contraband rather than patted down.
    These are just some of the changes we have made to the 
personal search program, and they have made a difference. Our 
number of searches has gone down by 75 percent in the first 6 
months of fiscal year 2000, as compared to the same period last 
year, while our seizure rate has remained basically the same. 
And, with your permission, Mr. Chairman, I'd like to enter into 
the record these handouts which further clarify the changes we 
have made and the successes we are having.
    Mr. Horn. Without objection, they will be inserted at this 
point in the record.
    Mr. Winwood. Customs' border search authority is critical 
to perform our mission, but if its use is not carefully 
monitored, it can be abused. Under the strong leadership of 
Commissioner Kelly we are resolute to not let that happen.
    Mr. Chairman, this concludes my statement for the record, 
and I appreciate the opportunity to appear before you today and 
at the conclusion of testimony stand ready to answer any 
questions you might have.
    [The prepared statement of Mr. Winwood follows:]

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    Mr. Horn. Well, we thank you very much for that statement 
on behalf of the Commissioner and yourself.
    Our next witness in this panel is Peter Gordon, the 
Assistant Regional Director for Inspections of the U.S. 
Immigration and Naturalization Service. He represents the 
Western Region.
    We're glad to have you here, Mr. Gordon.
    Mr. Gordon. Thank you. Good morning, Mr. Chairman, 
Congressman Becerra, and distinguished members of the 
subcommittee. I appreciate this opportunity to speak with you 
about the crucial role that the Immigration and Naturalization 
Service [INS], plays in our land, air, and sea ports of entry 
in southern California, particularly, the sea and air ports of 
entry in the Los Angeles/Long Beach area.
    We work closely and cooperatively with other Federal 
partners at ports of entry, particularly, the U.S. Customs 
Service. As you know, the INS is responsible for ensuring that 
individuals who seek to enter the United States at those ports 
are eligible to do so under U.S. immigration law. Individuals 
seeking entry into this country are inspected at ports of entry 
by Immigration Inspectors who determine their admissibility. 
This is accomplished at over 300 air, land and sea ports of 
entry throughout the United States, including nine major ports 
of entry here in southern California.
    Currently, there are over 5,000 Immigration Inspectors 
staffing our ports of entry nationwide. Of these inspectors, 
292 are deployed to ports of entry in the Los Angeles area, 
specifically, to Los Angeles International Airport [LAX], and 
the Port of Long Beach.
    In fiscal year 1999, our Immigration Inspectors nationwide 
handled more than 525 million applicants for entry into the 
United States. While the total number of applicants for entry 
has risen approximately 9 percent over the last 5 fiscal years, 
the amount of document fraud encountered in the course of those 
inspections has risen 20 percent. Enforcement actions, such as 
vehicle forfeitures, have doubled, while alien smuggling 
apprehensions at the ports of entry have risen nearly 120 
    We have experienced similar increases here in the Los 
Angeles area as well. In the last 12 months, our inspectors at 
LAX have intercepted more than 1,600 fraudulent documents, a 
nearly twofold increase compared to fiscal year 1998. One of 
the most significant patterns we have witnessed here in the Los 
Angeles area has been the increasing incidence of alien 
smuggling through LAX. We measure this by applicants who arrive 
at LAX with either fraudulent documents or without a passport. 
On application for admission, they admit they were coached by a 
smuggler in this method of travel to the United States. They 
then proceed to claim credible fear--asylum--of returning to 
their country of origin. Already this fiscal year, our 
inspectors at LAX have encountered nearly 900 aliens expressing 
a claim of credible fear. That is almost as many credible fear 
cases as we've handled in all of fiscal year 1999.
    While LAX continues to be the focus of the majority of 
smuggling activity at airports in southern California, in 
recent months we have witnessed a new and troubling trend, the 
growing use of hard and soft-top cargo containers for human 
smuggling. Just last week, two groups of 15 smuggled aliens 
were intercepted at two local seaports within 48 hours of one 
another. In both cases, the aliens had stowed away inside hard-
top cargo containers outfitted with escape hatches and 
sophisticated ventilation systems.
    Since December, more than 80 smuggled aliens have been 
intercepted at Los Angeles area ports in connection with 
container smuggling incidents. These migrants, not only stand 
to lose tens of thousands of dollars, the smuggling fees can 
run as high as $60,000 a piece, but they also risk their lives.
    In January of this year, three smuggled aliens who stowed 
away inside a soft-top container perished, after becoming 
violently seasick during the 2-week voyage from Hong Kong to 
    INS is looking at ways to enhance its enforcement efforts 
to combat this problem. We are seeking to identify methods to 
better manage the risks in the seaport environment. The 
development of intelligence is critical to achieving our 
enforcement goals. By automating the collection of data on 
vessels and those on board, we will be able to apply analytical 
techniques to identify and intercept smuggling operations and 
other illegal immigration activities in the seaport 
    We are also working closely with other enforcement 
agencies, both domestically and abroad, including the U.S. 
Customs Service and the U.S. Coast Guard, who have an interest 
in this issue. Our efforts along these lines are consistent 
with information shared in public hearings by the Interagency 
Commission on Crime and Security in U.S. seaports, and 
regionally we have established a working group to deal 
exclusively with Chinese smuggling. That group, which includes 
representatives from a number of Federal agencies, including 
the U.S. Coast Guard and U.S. Customs, provides a mechanism for 
us to share intelligence information and identify interdiction 
    That is a brief overview of some of the major issues and 
initiatives the INS Inspections Program is involved with in 
southern California. Our mission is to safeguard the borders 
and boundaries of the United States against illegal entries, 
while facilitating the flow of legal traffic. In a diverse and 
prosperous State like California, the challenges inherent in 
achieving that goal are considerable, but we are determined to 
    Following the conclusion of testimony, I'd be happy to 
answer any questions you may have.
    Mr. Horn. Thank you very much.
    One fact I just want to get on the record, you said there 
were 5,000 personnel, of which 292 were at the Los Angeles 
International Airport and the Port of Long Beach, what about 
the Port of Los Angeles?
    Mr. Gordon. The staffing, that 292 includes the Port of Los 
Angeles and Long Beach.
    Mr. Horn. OK, I just wanted to clarify that, because it 
wasn't mentioned.
    We now have the next witness, Colleen M. Kelley, who is 
president of the National Treasury Employees Union. We 
appreciate you coming out here for this testimony.
    Ms. Kelley. Thank you, Mr. Chairman, Mr. Ose, and Mr. 
Becerra, on behalf of the 13,000 Customs employees represented 
by the National Treasury Employees Union I want to specifically 
thank all of you, and you, particularly, Mr. Chairman, for 
holding this hearing today on resource allocation and for 
inviting NTEU to testify.
    This is an appropriate site for a discussion of staffing 
shortages in the Customs Service, because the inadequate 
staffing levels in southern California have impacts on morale, 
enforcement, efficiency, and progress. This geographic area 
includes NTEU Chapter 103, Los Angeles/Long Beach Seaport, 
Chapter 111, Los Angeles International Airport [LAX], Chapter 
105, San Diego Port of Entry, and Chapter 123, Calexico Port of 
    NTEU elected officials from these four chapters have 
accompanied me here today as part of their ongoing and tireless 
efforts to increase staffing at their respective sites. They 
know that staffing levels here have not kept pace with the 
dramatic increases in trade volume, drug smuggling, and public 
travel, and they are as concerned as I am and you are about the 
health and the welfare of the employees they represent, as well 
as the successful accomplishment of the Customs' mission.
    While the Resource Allocation Model is being revised and 
finalized, staffing levels cannot be allowed to continue to 
decrease in the U.S. Customs Service. The Port of Los Angeles/
Long Beach is the No. 3 container port in the world and the 
largest in the United States. Although over 6,000 containers 
arrive here for processing each day, only 30 of them will be 
examined due to the staffing levels. Inadequate staffing at our 
Nation's seaports leads to the risk of inadequate security, 
safety, and efficiency. Many Customs operations are covered 
with minimal staffing. For example, there are just six 
inspectors assigned to clear the almost 900,000 passengers and 
crews who arrive at these ports each year.
    Customs' outbound enforcement program at the seaport is 
designed to thwart illegal exports, including currency, 
technology, narcotic transshipments, and weapons. The staffing 
levels simply do not allow, however, for adequate staffing for 
these and for many other endeavors.
    Inspectors are also assigned to examine all imports for 
possible enforcement violations. Their progress in following up 
on potential violations of Federal law are considerably 
hampered by the lack of staffing assigned to this volume of 
    On the commercial side of the operations, the same lack of 
staffing exists. Import Specialists struggle to keep up with 
the volume of entries and trade. Ideally, a few import 
specialists should be able to concentrate their time on 
creating computer programs and scripts to respond to the 
workload and to be more efficient. Formal computer training 
would greatly enhance the operations, but there simply is not 
enough time to give people training, so operations remain 
static and the workload increases daily.
    Currently, there are only six associates working on the 
Import Specialist Enforcement Team [ISET], which processes 
violations of trade and tariff laws. Their caseload has 
increased from 322 cases in fiscal year 1998 to 428 cases in 
just the first 7 months of fiscal year 2000.
    The production and morale of Customs employees assigned to 
Terminal Island facilities has hit rock bottom. Chairman Horn, 
you have been instrumental in attempting to give the employees 
the relief from the hazardous health conditions at Terminal 
Island, and we thank you very much for your efforts, but there 
is more that can and must be done for the 260 employees who 
continue to remain at that facility and working as we speak. 
They should all be temporarily moved, pending the permanent 
move of the operations, and I implore this Congress to assist 
us in this effort.
    Mr. Horn. Thank you very much, and you can be assured a lot 
of us from southern California will be pushing for this.
    Ms. Kelley. I know I can count on them, Mr. Chairman, thank 
you very much. I actually visited the Customhouse on Terminal 
Island yesterday. After only 1 hour in the facility, I could 
feel the effects of the air in that building, with itchy eyes 
and scratchy throat, and the building also has an asbestos 
debris problem, as you know.
    Since 1999, in September, 236 employees working in that 
facility have filed Worker's Compensation claims, and the 
numbers continue to rise every day of those claims.
    As we are told today, the process to relocate these 
employees permanently will take up to 3 years. We need help, 
which we know we can count on from southern California, and we 
look to the rest of Congress and to GSA to provide relief as 
soon as possible, so that no Customs employee is working in 
that facility.
    At the Customs Port of Los Angeles International Airport 
[LAX], the enforcement efforts suffer from the lack of staff, 
just as they do at the L.A. seaport. There is inadequate staff 
to service the passenger, trade and outbound anti-smuggling 
operations and to cover the threats posed by 50,000 flights and 
7.4 million passengers that arrive at LAX each year. Staffing 
is the No. 1 issue identified by employees at all levels of the 
Customs Service at LAX, and the agency has responded to trade 
volume increases, not by adding staff, but by planning to 
modernize its computers. And, while the computers definitely 
need to be modernized, computer modernization efforts have not 
and will not solve the problems of inadequate staff levels. The 
failure to keep the staffing levels for Import Specialists 
remotely alive with the increased volume in trade has slowed 
trade facilitation and curtailed much of the enforcement 
efforts that need to be done commercially.
    In the San Diego/San Ysidro and Calexico ports of entry, 
the horrendous staffing shortages that they are experiencing 
have impacted morale and jeopardized the health of employees to 
the point that local NTEU officials have made this effort to 
increase staffing their No. 1 priority. Not only has the 
welfare of employees been impacted, but clearly, the ability to 
provide services to the public and to the trade community has 
been adversely affected. In these ports, the overtime system is 
not used to augment enforcement efforts and to meet demands of 
after-hour traffic, but its purpose is to ensure that the 
agency meets minimum levels of coverage.
    As of today, the port of San Diego operates with 60 fewer 
Inspector positions and six fewer Canine Officers than it did 
in 1998. Employees are being forced to work to the point of 
exhaustion. Customs' own statistics show that during one pay 
period between 20 and 25 Inspectors from Calexico will be 
required to work 12 to 15 hour shifts up to 3 days in a row. 
That is about one fifth of the Inspector ranks at Calexico who 
will suffer from sleep deprivation while doing their best to 
protect our borders.
    I have letters here, Mr. Chairman, from five Inspectors in 
Calexico that were sent to me urging that the inadequate 
staffing situation be rectified. According to them, morale is 
the lowest it has been in decades, and I would ask that these 
letters be included in the hearing record.
    Mr. Horn. Without objection, they'll be put in the record 
at this point.
    Ms. Kelley. Thank you, Mr. Chairman.
    I would invite each of you to tour the southern California 
ports and to hear from the dedicated front line employees 
working there. The resources have not been provided to them 
adequately to do their jobs, to maintain their family, and 
their private lives. I urge Congress to appropriate more 
funding to increase the staffing level in Customs and to 
provide them the resources that they need to do the jobs they 
want to do and the jobs that America needs them to do.
    Thank you again for the opportunity to be here today on 
behalf of the Customs Service employees to discuss these very 
important issues.
    [The prepared statement of Ms. Kelley follows:]

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    Mr. Horn. Thank you very much.
    We'll now start with the questioning of this panel, and 
we're going to alternate 5 minutes on this side of the aisle 
and 5 minutes on this side of the aisle, and we'll keep going 
until we are through all the questions.
    I will first yield 5 minutes to my colleague, Mr. Ose.
    Mr. Ose. Thank you, Mr. Chairman.
    If I may, Mr. Winwood, I'm curious, in terms of the $22 
million that the Customs Service collects on an annual basis, 
how much is generated here in the Port of Long Beach or across 
the way at the Port of Los Angeles?
    Mr. Winwood. I don't know the exact figure, Mr. 
Congressman, but it's quite a large sum. This is a very large 
    Mr. Ose. I understand, hundreds of millions?
    Mr. Winwood. Yes.
    Mr. Ose. My followup question is I'm trying to find out how 
much is generated here versus how much is spent here, for 
instance, addressing some of the things pointed out by Ms. 
Ekstrand, and Ms. Kelley, and Mr. Gordon. There's got to be a 
connection, and I'm trying to get to it.
    Mr. Winwood. Well, I don't have the exact figures on what 
is actually generated here as far as revenue, as far as duties 
collected for Long Beach, but we can get that for the record. 
But, there is no correlation between the money collected and 
the appropriations for staffing. As you know, the money 
collected from duties goes into the General Fund of the U.S. 
Government, and our appropriations for staffing and for 
distribution of resources and technology come through our 
yearly budget cycle appropriations. There is generally no 
connection between money collected and appropriations.
    Mr. Ose. Maybe we're trying to rationalize a little bit. If 
you could get that information, I would appreciate it, and I 
want to, at least for my own edification, understand how much 
is being generated versus how much is being spent here in Long 
Beach and Los Angeles.
    If I may, I want to particularly highlight something that 
is of great concern to me.
    Ms. Ekstrand, in your testimony on page 6, you talk about 
the accuracy and reliability of the data.
    Ms. Ekstrand. Yes.
    Mr. Ose. We've got a half million dollar contract with 
PriceWaterhouse to basically structure the Resource Allocation 
Model, but I'm new enough to this to know that if we put bad 
data in we're going to get bad analysis out.
    You stated that even a small amount of imprecision in the 
data can have enormous impact on the model's results. Can you 
kind of expand on that, as to what transpires?
    Ms. Ekstrand. Certainly.
    The activity analysis part of the model involves 
multiplying how much time it takes to do one unit of activity 
by the number of times that activity occurs. So, if an estimate 
is made of how much time it takes to process just one 
passenger, and just hypothetically maybe it's 2 minutes, and 
that gets multiplied by a million passengers, but that's off by 
15 seconds, that 15 second error is multiplied by a million, 
and it can become a very large number. So a very small amount 
of error in activity time calculation can result in a very big 
difference in terms of how much time is spent, or how much 
staff years are needed to do that activity at that particular 
    Mr. Ose. Does the Customs Service have a staffing standard, 
or is that what you are trying to establish?
    Ms. Ekstrand. Well, the staffing standard, in the way these 
models are constructed, is basically the 1998 level of service.
    Mr. Ose. The baseline.
    Ms. Ekstrand. This model is not designed to improve the 
level of service at any location. It basically perpetuates how 
long it took to do something in 1998 for the out years.
    Mr. Ose. It's simply a data collection model?
    Ms. Ekstrand. Well, it can predict how much staff you need, 
based on the predictions you put in the model of how much 
additional passengers there will be, how many additional 
containers at the port, etc., but in the model the time it 
takes to process these things, at least in the way the model is 
presented now, stays constant.
    Mr. Ose. How does Congress make intelligent decisions, for 
instance, on annual appropriations for Mr. Winwood if we can't 
get the base data correct?
    Ms. Ekstrand. Well, I think a lot of work needs to be done 
to make sure that the data that goes into the model is much 
more reliable than it is now. They have taken some steps in 
that direction, but we have not yet analyzed these steps to 
make us feel comfortable that the data next year will be more 
reliable than it is this year.
    Mr. Ose. Mr. Chairman, I'll come back.
    Mr. Horn. Thank you.
    Let me ask you at this point, do you feel that this model 
is reliable to generate what staffing is needed, and then I 
want to ask the Deputy Commissioner, have you used that model, 
and did you recommend to the President for the budget for this 
particular year any new resources? And, if so, did you send 
them to the Office of Management and Budget, which speaks to 
the President unless you appeal it, or did they just throw it 
away? So, can you tell me that model is reliable at least to 
project staffing when they go into the battles of the budget 
frenzies in the executive branch?
    Ms. Ekstrand. Conceptually, the model is a reasonable way 
to go about this kind of workload analysis, but because the 
data that is used to go into it seems to be quite flawed, the 
output is going to bear the same flaws that the input had in it 
to start with.
    So, you know, this can provide some information, but, you 
know, this certainly shouldn't be the sole basis for 
decisionmaking at this point.
    I believe Mr. Winwood would agree that this is too early in 
development, and that more data reliability issues need to be 
resolved before it can be considered solid.
    Mr. Horn. Well, the question really is, if you were an 
administrator in the Bureau of Customs, would you be able to 
count on this as the evidence that they need more resources?
    Ms. Ekstrand. I wouldn't count on this as evidence at this 
time. I would think the----
    Mr. Horn. OK, so you are saying it's an unsatisfactory 
    Ms. Ekstrand [continuing]. Given the input to the model at 
this point, I would have to say it's an unsatisfactory model.
    Mr. Horn. OK.
    Commissioner, how do you feel about it? Do you use that for 
the basis for staffing in the current budget of the President, 
and what was the increase Customs received in the President's 
    Mr. Winwood. Well, first of all, Mr. Chairman, we did not, 
and have not yet, used the model for any official purposes, and 
we did not use the model for any determinations of budget 
requests for the 2001 budget.
    As has been pointed out, it's still being further 
developed. We are looking at some of the data challenges we 
have, it's under review by the Office of Management and Budget, 
and by our parent organization, Treasury, to take a look at the 
model itself and to take a look at some of the concerns we've 
    But, I would like to say one more time for the record, Mr. 
Chairman, to the best of our knowledge it's the first time ever 
that a Federal agency has attempted to model their entire 
agency to come up with a systematic, analytical, data-driven 
approach to determining the best allocation of future 
    Now, we do have PriceWaterhouseCoopers taking a look at 
some of the additional challenges. If you remember my 
statement, I said there were three basic caveats, and one of 
them, in addition to the time to perform tasks, is building in 
for the future how technology and other issues affect that 
time. I don't think anybody disputes the workload numbers that 
we put into the data, the concern is a better way to determine 
how much time it takes to do each one of those workload units, 
taking into account the variances that occur because of 
infrastructure, multiple facilities, and more sophisticated 
automation versus less sophisticated automation. At one port it 
might take 15 minutes to do a function, at another port it 
might take a little bit longer, a little bit less, based on the 
technologies available to them. That's the challenge we'd like 
to continue to address. We have further engaged 
PriceWaterhouseCoopers to take on these issues. We are further 
developing the model, and like I said, it's the first time ever 
that an agency, an entire agency is attempting to do it 
scientifically, to do it based on data, and to do it uniformly, 
so that we all can have some dependable outcomes that we can 
look at.
    The last point I would make, as was pointed out, it is a 
tool, and it's an opportunity, but you also have to take into 
consideration other factors in addition to that tool.
    Mr. Horn. Well, let's get in the record, for the year 2000, 
which ends on September 30, 2000, and for the 2001 budget that 
begins October 1, could you give me the figures that the 
Commissioner and you recommended to the President as to what 
this number of positions that the Customs Service needs, what 
was the number?
    Mr. Winwood. I don't have the number for 2001. Mr. 
Chairman, I just want to reiterate that we did not use the 
model for either of those years.
    Mr. Horn. Well, what did you, I mean, I don't care if you 
used a Ouija Board.
    Mr. Winwood. Right, well, hopefully, we were a little more 
sophisticated than that, but we did----
    Mr. Horn. Oh, I don't know, I've been in administrations 
and, believe me, my favorite being the Pentagon, I might add.
    Mr. Winwood. For 2001, there's approximately 100 Customs 
inspectors and approximately 214 criminal investigators, as far 
as official FTE. There's also some additional positions being 
looked at because of a special amendment, under the Kyl 
amendment, which is for 1 year funding, but those are the basic 
numbers for 2001.
    Mr. Horn. So, you are saying 1,000 inspectors?
    Mr. Winwood. No, sir, I said approximately 100 inspectors 
for 2001 budget.
    Mr. Horn. OK.
    Mr. Winwood. In 2001, approximately 100 additional 
inspectors for the 2001 budget, and approximately 214 criminal 
investigators in the 2001 budget request.
    Mr. Horn. OK, so 100 inspectors, 214 criminal 
investigators, is that it? Anything else?
    Mr. Winwood. Yes. I can supply the rest of the numbers for 
the record.
    Mr. Horn. Yes, well, without objection we'll put them in 
the record at this point, but I just wanted to know, one, this 
is what you recommended and the Secretary of the Treasury did 
approve it?
    Mr. Winwood. This is the proposal sent forward in the 
President's budget, Mr. Chairman.
    Mr. Horn. This is the President's budget now for what year?
    Mr. Winwood. 2001.
    Mr. Horn. 2001, in other words, it's going into the shop 
right now, I would think.
    Mr. Winwood. Yes, sir.
    Mr. Horn. So then, we don't know what OMB is going to do to 
    Mr. Winwood. Well, that is the proposal for 2001, that's 
the approved----
    Mr. Horn. And, that's already cleared the Office of 
Management and Budget?
    Mr. Winwood. Yes, sir.
    Mr. Horn. OK.
    So, conceivably then, that is what everybody is talking 
from the same hymnal to congressional committees in the Senate 
and the House, and I'm glad that an authorizing committee 
member is with us today. I knew there was a reason I did this. 
He will go in there and squeeze it out of the Ways and Means 
Committee, right?
    Mr. Becerra. No pressure.
    Mr. Horn. Yeah, that's right, and I'm now delighted to 
yield to my friend from East Los Angeles, West Los Angeles, 
North, and South Los Angeles, Mr. Becerra. So, feel free to 
occupy us with questions.
    Mr. Becerra. Thank you, Mr. Chairman.
    Let me see if I can followup with the line of questioning 
that the chairman just undertook. Commissioner Winwood, of 
those 100 new positions for inspectors and 214 for criminal 
investigators that you are requesting, have you determined 
where they would go?
    Mr. Winwood. No, sir. We will make a further determination 
when the budget is passed based on what our allocated 
appropriation is, and then we will look at the proper 
allocation of those resources based on the most current 
information we have as to threat and need by geography.
    Mr. Becerra. Was there a determination made about where 
those positions should be located when you initially submitted 
the recommendation?
    Mr. Winwood. To the best of my knowledge, just general 
broad categories, Mr. Congressman, no specific city or no 
specific port was identified.
    Mr. Becerra. Then how did you come up with the precise 
numbers of new need?
    Mr. Winwood. Basically, looking at large geographic areas 
and, if I can use an example, our export threat, as has been 
mentioned here, they would be used for further enforcement of 
exports for technology, money, etc.
    Mr. Becerra. So, you do have some sense about where you 
would place those new positions?
    Mr. Winwood. Geographically, right, for instance----
    Mr. Becerra. OK, so give us the breakdown geographically 
where you would place these 100 new inspectors if Congress were 
to appropriate money for them.
    Mr. Winwood. I don't have that information today, but I can 
supply it to you when it's available.
    Mr. Becerra. If you could supply that, and supply the 
information about where geographically, and as precise as you 
can geographically where you would try to locate these new 
positions if you received funding for them.
    Mr. Winwood. We will do that.
    Mr. Becerra. Thank you, for all the various new positions, 
whether inspector, criminal investigator, or any other 
positions, if you would do that for us.
    Mr. Winwood. When it is available, we'll be glad to.
    Mr. Becerra. And, if you could keep in mind, I suspect that 
all of us here would probably say to you that we'll be keeping 
an eye on where you would place those people, given that, as 
Ms. Kelley testified, and others would indicate to you, that 
there is a vast shortage here in the western States for Customs 
inspectors, investigators, and any type of personnel.
    Let me ask you about the RAM, the Resource Allocation 
Model. When will Customs or Treasury conclude its review of the 
    Mr. Winwood. I can't predict that, Mr. Congressman. We're 
hoping, we've asked them to as expeditiously as possible, to 
take a look at what we have so far, look at where we are going 
with it, and we're just waiting for their----
    Mr. Becerra. When was the last time you had a conversation 
with someone in Treasury who was reviewing the RAM?
    Mr. Winwood. I can't say for sure, I haven't had any 
conversations this week. I've been on the road all week, but 
there have been ongoing conversations since it was submitted to 
them for their review.
    Mr. Becerra. Who at Treasury is reviewing the RAM document?
    Mr. Winwood. I can't say specifically who, but I will tell 
you it has to be the Office of the Undersecretary for 
Enforcement and the Office of Management, within the Treasury 
    Mr. Becerra. That modeling by PriceWaterhouse was completed 
in 1998, correct?
    Mr. Winwood. A first iteration was 1998, but there have 
been some other iterations and modifications. This is really a 
working model, Mr. Congressman, there's been a lot of 
continuing work, and as I mentioned earlier we are continuing 
to do work on it to further refine and, to further take into 
account some of the issues we identified as you start putting 
information in and looking at information that comes out, to 
further improve it. And, for instance, some of the issues that 
have been brought up by GAO, such as coming up with a better 
way to determine the actual time it takes to do some of the 
functions that were put in as actual workload totals.
    Mr. Becerra. But the concerns that Ms. Ekstrand and the GAO 
raised continue today. Have you made any dramatic changes in 
the way you allocate staff or resources within Customs 
geographically in the last 2 or 3 years?
    Mr. Winwood. No, we've been doing the best we can with the 
information we have, doing proper allocations based on what's 
    Mr. Becerra. So, the criticisms leveled by GAO remain 
    Mr. Winwood. I would suppose so, that's why, Mr. 
Congressman, the whole idea of the RAM is to give us a more 
scientific, analytical, statistical approach to be able to 
better allocate those resources.
    Mr. Becerra. I think we all agree. So let me ask you again, 
do you have any sense of when you will complete your review of 
    Mr. Winwood. I do not because it's in the hands of the 
Treasury Department and the Office of Management and Budget 
right now.
    Mr. Becerra. Give us the name of the person at Treasury or 
Customs who you believe best can give us a sense of when 
Treasury or Customs will complete its review of RAM and 
disclose what its recommendations will be.
    Mr. Winwood. Well, I don't have the name for you today, Mr. 
Congressman, but would be glad to find out who that might be.
    Mr. Becerra. You can't give us the name of someone right 
now who you think is most responsible for that?
    Mr. Winwood. Well, I can just tell you, Mr. Congressman, 
it's in the hands of the Undersecretary of the Treasury and the 
Assistant Secretary for Management. They have the staff over 
there to look at this, who is actually looking at it right now 
I can't tell you.
    Mr. Becerra. What's the name of the Undersecretary?
    Mr. Winwood. The Undersecretary for Enforcement is Mr. 
James Johnson.
    Mr. Becerra. James Johnson.
    Mr. Winwood. But, I'm not saying, in any way, that he is 
the one physically looking at it right now.
    Mr. Becerra. Mr. Chairman, and I know this is not my 
committee, but I would--everything I say, I hope that whatever 
is being provided will also be provided to those of us who sit 
on the Ways and Means Committee. We do have jurisdiction over 
authorization of resources to the Customs and Treasury 
    I'd be very interested in finding out who it is we contact 
to find out what the status of RAM is, because it's been 2 or 3 
years GAO, no one is saying from Customs that GAO was incorrect 
or it was misdirected in its findings, and if you've been 
working on RAM it would be very helpful for those of us who 
have to allocate dollars to make decisions to have some sense 
about where you are going to head, because it's tough for us to 
feel comfortable giving you dollars if we are not sure it's 
going to be used wisely, and second, if it's not going to be 
appropriated fairly. So, it would be very helpful if you could 
get that information to us, or give us the name of someone to 
    Mr. Chairman, if I may go on, I still have a couple more 
    ACE, can you tell us where you are with ACE, in replacing 
the ASE system?
    Mr. Winwood. Well right now we are in the process of 
preparing and finding additional money so that we can put out 
the request for bids for the prime contractor.
    Mr. Becerra. Where are you going to get the money?
    Mr. Winwood. Pardon me?
    Mr. Becerra. Where are you going to get the money?
    Mr. Winwood. Well, the money right now, as we have 
identified, there's a $12 million need, we have identified, 
approximately, I believe, $7 million of it, and looking for 
Treasury to help us with the other $5, so we can get the bid 
out on the street, the solicitation. We've also found some 
additional money from what we call ACS life support, there's an 
ongoing repair, maintenance, and upgrades to keep ACS as viable 
as possible while we are going through this transition. We hope 
to have all that money found the remainder of this year so we 
can get the bid out.
    Once the bid is out, then the challenge is, as I mentioned, 
our 2001 budget request, we requested approximately $338 
million in our budget request, $210 million of that would be 
for the beginning development and building of the ACE program, 
starting in 2001. Our hope would be, if we have continual 
predictable funding, using a prime contractor and paying for 
the MITRE services also to make sure we have an outsider 
overseeing the development of this project, our hope would be 
that we'd have a 4-year developmental cycle, so we'd have it in 
4 years.
    Mr. Becerra. So, you have internal moneys to begin the 
bidding process.
    Mr. Winwood. Right now we've identified a good portion of 
that, we're still looking for the rest of it so we can get the 
RFP out on the street.
    Mr. Becerra. How much do you need?
    Mr. Winwood. $5 million.
    Mr. Becerra. Additional?
    Mr. Winwood. Yes. We've found $7, we're looking for the 
additional $5 million within our budget for 2000.
    Mr. Becerra. Within your budget, you are not asking 
Congress for that additional money?
    Mr. Winwood. No, sir, between the Treasury Department and 
the U.S. Customs Service, we are looking for moneys from the 
unobligated funds, etc., from 1999 and 2000 to be able to have 
the proper funding to get the RFP out.
    Mr. Becerra. So, Congress need not concern itself about 
whether you could begin the bidding process, you are saying 
that internally you'll find the moneys to begin that process?
    Mr. Winwood. Yes, sir, to get the bid out on the street. 
The bigger issue is getting the appropriations so we can start 
the construction, because once you put it out----
    Mr. Becerra. That's what I wanted to get to.
    Mr. Winwood [continuing]. You get a prime contractor to 
bid, and then you'll need the funds to be able to start that 
process in 2001.
    Mr. Becerra. Let me ask you a question on that then. Of the 
$1.2 billion or so that it's estimated that this new system 
will cost, you are requesting, what was it, $380?
    Mr. Winwood. $338.4 million in 2001.
    Mr. Becerra. How much of that takes the form of new fees?
    Mr. Winwood. New fees?
    Mr. Becerra. That you are requesting that Congress allow 
you to charge?
    Mr. Winwood. One of the proposals by the administration is 
that the $210 million for ACE development for the first year, 
2001, is a user fee to get that money into the General Fund.
    Mr. Becerra. That's on top of any existing user fees?
    Mr. Winwood. I believe so, yes.
    Mr. Becerra. OK, and the remainder, is that an 
    Mr. Winwood. Yes, sir.
    Mr. Becerra. I think it becomes fairly clear to the Customs 
agency and to Treasury that a user fee is almost a non-starter, 
at least in this Congress, and it has been in the previous 
Congress, and I suspect will be a non-starter in the succeeding 
Congress. If that's the case, and I don't think my colleagues 
will disagree with me, that's probably the case, how are we 
going to fund a system that you yourself admit you vitally 
need, but don't have the money for and every time you have an 
administration that requests a new fee that will never get 
passed, you're going to end up with nothing, except a study or 
a bid that you can't put out?
    Mr. Winwood. It's an interesting challenge. I can only tell 
you our need. I'm here to represent to you that what we are 
proposing, and the amount of money it takes----
    Mr. Becerra. Can you tell us if there's been any change in 
thought by the administration about the use or the 
recommendation of a new user fee for the payment of ACE?
    Mr. Winwood. I cannot tell you that, I don't know what the 
thinking is. I just know that's the proposal right now from the 
administration, and that's the best I can do. I know that we 
were with Kolbe the past several days, and he has some very 
strong views from his committee as to how it should be funded, 
and he has proposed that he will work very hard to help find 
money to help us build the program.
    Mr. Becerra. Have you all considered coming to us and 
making the case that you are entitled to receive more of an 
appropriation, straight dollar appropriation from us, because 
you already have a merchandising fee that collects close to $1 
trillion, and it could be used for that very purpose?
    Mr. Winwood. There have been numerous proposals and ideas, 
like I said, but not coming from the administration. It's an 
interesting challenge. I can only speak to what we need. I will 
tell you the administration's position, and that's the only 
thing I can repeat today. It's an interesting challenge, and we 
know what the funding costs are. I think we've done a great 
deal of work to lay out the best way to do it. We've gone with 
a prime contractor. We've gone with an outside overseer, MITRE, 
who has a great reputation. I think we've documented well the 
architecture necessary, and as the GAO has pointed out we've 
been doing some tremendous----
    Mr. Becerra. That's all pipe dreams unless you come up with 
the money.
    Mr. Winwood. Correct.
    Mr. Becerra. And, you would have, rather than brownouts, 
you would have blackouts, and we all pay the price, and when we 
all start clamoring because those imported goods cost us more, 
simply because we don't have a system that can help us 
transport those goods inside this country, then we'll do 
something, but it will be too late.
    Mr. Chairman, I still have several questions, but I'll stop 
because I know we want to keep to our time. We'll go another 
    Mr. Horn. Well, yeah, we'll have another round, but let me 
pursue this with Ms. Ekstrand, on behalf of the General 
Accounting Office.
    In the last few years sitting on the Transportation 
Committee, as well as Government Reform, I have found two great 
computer boondoggles. One is the IRS, where they reviewed this, 
and I remember that very clearly, and another was the Federal 
Aviation Administration. I remember as a freshman Mr. Oberstar, 
the Ranking Democrat with Aviation, took two of us that were 
particularly feisty, out to look at the FAA. And you walked 
into the room and you knew right there they don't know what 
they are doing. And, there was no management, no anything, no 
go, and they eventually ran it up to $4 billion. And, they were 
looking at $4 million, then $40 million, and then they didn't 
pull the plug, and at $400 million they didn't pull the plug, 
but when they hit the $4 billion they finally realized, gee, if 
we don't pull the plug this thing is going to go to $40 
billion, so they pulled the plug.
    So, my question to you is, did you have anything to analyze 
in either of those situations, IRS, FAA, and is this the third 
one to grow, and what's your estimate of where they are on 
    Ms. Ekstrand. This is really Mr. Hite's forte, so let me 
have him answer for GAO.
    Mr. Horn. OK, Mr. Hite, the ball is passed to you. Good 
    Mr. Hite. Mr. Chairman, interestingly enough, I led GAO's 
work on FAA's Air Traffic Control Modernization and problems we 
found there. I currently lead the work on the IRS 
    Mr. Ose. You're the guy.
    Ms. Ekstrand. He's the good guy.
    Mr. Hite. And, there's a number of----
    Mr. Horn. I should say, Mr. Hite's title here is Associate 
Director, Government wide Defense Information Systems Issue. 
That's a wonderful gobbledy-gook out of GAO, you know, our own 
branch would not do crazy things like that. But, go ahead.
    Mr. Hite. There are a number of parallels among these major 
modernization programs, and we have long held that the key to 
success on these modernization programs is instilling rigorous 
and disciplined management controls around them. These controls 
take the form of things like an enterprise architecture, 
investment management controls, and software engineering 
process controls.
    When we first looked at the ACE program, we generally found 
a wholesale absence of these things, and we made a series of 
recommendations along those lines, and I have to say that 
Customs has been very responsive. The new Commissioner came in 
shortly after that. He embraced the recommendations and said 
this is a priority, and they have made progress. On some 
fronts, they have completely implemented our recommendations, 
on other fronts they haven't. But in order to complete the 
recommendations, in part they need funds in order to bring on 
the prime contractor, because the prime contractor is going to 
help them in these endeavors.
    So, while I would say that they are positioning themselves 
to begin building ACE, they are not there yet, but they are 
positioned to begin the ACE program, and to bring on the prime 
to help them with their initial task orders. These task orders 
don't get into building systems yet, they don't get into 
detailed system design, they don't get into software 
development. You bring in the contractor, one of the first 
things you have to do when the contractor comes in is, have to 
set up a program office. One doesn't exist with that 
contractor, whomever it may be right now, so that takes some 
time. Another thing they want to do initially is refine and 
validate the requirements for ACE, because time has passed 
since those requirements were defined and technology has 
changed, and the contractor is going to come in and propose its 
own system solutions. So, that's going to take some time to do.
    In the interim, until they get to that point where they are 
ready to begin building the system, that's the time that they 
are going to take to institute these rigorous investment 
management and acquisition management controls. And they have 
plans in place to do that, but they are not there yet. But, 
everything is getting lined up for this to be successful. Now, 
that's not a guarantee of success.
    We can talk about IRS. IRS 9 months ago put forth an 
expenditure plan that was a good plan. We commented, it was a 
good plan, a good first step, but the key was implementation. 
And as part of our testimony about a week ago before your 
committee, part of the point was IRS fell short in the 
implementation of that plan. So, it's not a guarantee, but at 
this point in time Customs is doing the right things to 
position itself for ACE to be successful.
    Mr. Horn. As I understand it, the ACE, the Automated 
Commercial Environment, is the successor of ACS, the Automated 
Commercial Systems, and we're still using ACS, I believe, and 
it's 17 years old, and COBOL is the program language, and it's 
a little back in the 1930's almost, or the 1960's in the case 
of COBOL when that popped around. So, you are saying you are 
confident that this particular process and model, you don't see 
going down to the $4 billion bit in more rat holes than we 
could imagine?
    Mr. Hite. Well, one predictor of success on a large-scale 
modernization program is the management structure and process 
and controls that you wrap around the program to ensure that 
that doesn't happen. In this case, what we see is that level of 
management capability could be put in place. And, again, I'll 
mention it's not a guarantee of success. Using a prime 
integration contractor acquiring the system is not a panacea, 
you have to be an effective applier in order for that to 
    Another parallel between Customs and IRS, because 
traditionally both organizations were system developers. They 
developed the systems in-house using their own people. Now they 
are going to a new model, that's one of acquiring systems. It 
requires a different set of management discipline and control 
in order to do that effectively.
    Mr. Horn. So, are you familiar with the GAO recommendations 
on the Automated Commercial Environment system, and has Customs 
implemented them?
    Mr. Hite. Yes, sir, I am. As a matter of fact, I crafted 
every one of those recommendations, every word in them.
    Mr. Horn. OK.
    Mr. Hite. And, they have, in fact, fully implemented some 
of the recommendations concerning the definition of an 
enterprise architecture and managing ACE within that context, 
recommendations concerning ITDS, which was the Integrated Trade 
Data System that Treasury was developing, which was at odds 
with ACE, and involved some duplication and incompatibility. 
They have since merged the two programs, so they have, in fact, 
acted on a number of the recommendations.
    There are some that are still outstanding, in fact, they 
need funding in order to complete those.
    Mr. Horn. Yes, that funding the Deputy Commissioner says 
will be found within Treasury, and in brief it will be 
reprogrammed money, is that not correct?
    Mr. Winwood. We have found the money internally through 
Customs, Mr. Chairman, for preparing to put a solicitation out 
on the street and the funds necessary to get the solicitation 
out. We do have the funding to do some of the other things that 
he is mentioning right now.
    Mr. Horn. What's your estimate of what's going to go out on 
the street?
    Mr. Winwood. Basically, the $12 million will help set up 
and pay for and fund an internal management structure, which is 
one of the recommendations they had, and to get the 
solicitation out on the street, and all the time, and money and 
energy and staff hours it takes to review that solicitation. 
That's what the $12 million is going to do, get the management 
office set up, get the solicitation out on the street, do all 
the necessary reviews, and then determine which is the best 
bidder and the most appropriate person.
    Mr. Horn. OK, at this point, how much have you spent on 
this system? Do you know, Mr. Hite?
    Mr. Hite. I know what they spent on the prototype of this 
system, which is roughly $68 million.
    Mr. Horn. So, we've got $68 million in the prototype, and 
that led to the current system?
    Mr. Hite. That led to our review and our set of 
recommendations, and with the current system----
    Mr. Horn. How much maintenance is going on to the current 
system, besides the $68?
    Mr. Hite. That's a different system, that's the Automated 
Commercial System [ACS], and I believe Mr. Woodwin mentioned 
the amount that was being requested in 2001 for maintenance of 
that, I think it was----
    Mr. Winwood. $123 million.
    Mr. Hite [continuing]. $123 million, when you are 
confronted with a system that's venerable and antiquated like 
this, you are going to pay for maintenance on something like 
that. There is proprietary middleware associated with this 
system, and there is an antiquated data management system 
associated with this. So, you are going to pay to keep ACS 
going; it's going to be expensive. But there's no alternative 
to that in the interim until----
    Mr. Horn. This is the 17-year old system using COBOL?
    Mr. Hite. Yes.
    Mr. Horn. Does that make sense to you?
    Mr. Hite. We're on record as saying we need to replace that 
with a modernized system, not just because it's that age.
    Mr. Horn. When you look at major corporations in this 
country, in terms of how they analyze their personnel needs, 
wouldn't it make more sense to simply say, let's get a new 
slate here, and not trying to pick the pieces of the COBOL 
program stuff that's in here, which you've already spent $68 
million on to patch it up.
    Mr. Hite. Correct, and that's, in fact, what Customs is 
doing here. ACS, as a legacy system, is going to be maintained 
until ACE is developed and brought on board, and they are two 
different programs. You maintain the current system that works 
to support ongoing operations, but then you have a separate 
program designed to bring in the new technology in order to 
support a new way of doing business.
    Mr. Horn. Now, Mr. Hite, I believe our staff's analysis of 
the GAO report is that you said the model predicts a fiscal 
year 2000 level for inspection personnel of 166 at Los Angeles/
Long Beach, and 442 inspectors for New York/Newark. Now, that's 
out of this particular program, right?
    Mr. Hite. No, sir, that's a different system used for a 
different purpose, and that's what Ms. Ekstrand was speaking 
    Mr. Horn. Well, which are they using to recommend 
    Ms. Ekstrand. That's the RAM, sir.
    Mr. Horn. OK. So you are saying, can you tell me that this 
isn't going to go the way of the Department of Defense, the 
FAA, the IRS, and all the rest of them that fool around with 
computer contracts?
    Ms. Ekstrand. Well, the computer contract business is this 
ACE system. This RAM model, of course, uses computer technology 
to do the work, to run the model, but this is a, you know, 
comparatively low priced computer programming operation 
compared to this major, major ACE effort. I mean, the ACE 
system is involved with processing all of the incoming Customs 
merchandise, all the imports. You know, the RAM system is 
related to how many staff you are going to have to do that 
    Mr. Horn. Yes, that's the Resource Allocation Model. Now, 
how old is that?
    Ms. Ekstrand. This is what has been developed by 
PriceWaterhouseCoopers in the last 2 years. This is something 
new for the Customs Service, and as we just said a little bit 
earlier, not quite ready for prime time yet.
    Mr. Horn. Well, can we get a realistic dollar figure that 
they will need to upgrade this or what? What are we getting out 
of this?
    Ms. Ekstrand. To work on the RAM?
    Mr. Horn. $68 million was used on the ACS and we've got 
$123 somewhere else, so what is it that you think they could 
use on the Resource Allocation system?
    Ms. Ekstrand. Maybe Mr. Winwood might know what the 
contracts are currently with PriceWaterhouseCoopers.
    Mr. Winwood. If I may, Mr. Chairman, I think we are mixing 
two different products.
    Mr. Horn. Right, and I want to separate them out.
    Mr. Winwood. Yes, we need to separate them out.
    Mr. Horn. Yes.
    Mr. Winwood. The figures on the $68 million for the NCAP 
prototype, that is automation, that was our first test for how 
ACE would work in a real world environment; that's the money 
was spent to develop and maintain, to run it over the last 
several years. The $123 million we talked about is money in the 
2001 budget for the purposes of making what we call ACS life 
support and further maintenance and development to keep us 
operating as efficiently as we can while ACE is being 
developed. The $210 million is additional money requested in 
2001 for the beginnings, to pay for the prime contractor and to 
start the process of validating user requirements and start 
establishing the necessary controls that Mr. Hite was pointing 
out for the new ACE environment.
    I would leave RAM out of that for a second. The RAM, the 
Resource Allocation Model, is not associated with the 
development of ACE, it's completely separate. The RAM, and 
those figures, is a relatively very inexpensive software 
application being developed by PriceWaterhouseCoopers; they 
spent approximately $500,000 to develop over the last 18 
months, the iteration is being reviewed. We are going to invest 
a couple hundred thousand more to take into account the issues 
that were brought out by GAO and others about having the proper 
data, the proper data analysis, the proper controls over data 
to make that model very viable. So, that's very small, that's 
an aside; that RAM is not associated with the development of 
    Mr. Horn. Well, if the RAM produced 166 for L.A./Long 
Beach, versus 442 inspectors for New York and Newark, do you 
think that makes sense when you look at the volume going here 
versus the volume in New York? Granted they've got drugs, 
granted they've got corruption, the mafia, and all the rest, 
all the containers out of the Port of New York and Newark, but 
does that make sense for 166 here versus 442 in New York?
    Mr. Winwood. The one reason we have not yet used that 
model, is that we've only run some test data. What you see in 
front of you, Mr. Chairman, is probably something that GAO used 
when they ran the first test of the RAM, to get an indication 
of what the outputs were. We haven't used those numbers, those 
numbers are not official numbers. We have not released any 
numbers, and those numbers were, at least I think, based on an 
analysis that GAO was doing when they were running the data 
that we had available to us to see what the outputs would be.
    I cannot tell you that those numbers are good or bad until 
that RAM is completely reviewed and adjustments are made, and 
we run it officially for the first time, which we haven't done 
    Mr. Horn. Yes, Ms. Ekstrand.
    Ms. Ekstrand. We received these numbers from the Customs 
Service. This was output from the model that they provided us.
    Mr. Winwood. A test run, which was not meant to be 
indicative of the actual staffing requests. Those numbers were 
not used for any staffing requests. Those numbers did not 
appear in any budget requests through our process yet, and 
we've not yet used the model for official purposes.
    Mr. Horn. Well, what you are saying is that GAO looked at 
the model, they decided to test it and see what the outcome 
would be, and this is the figure, is that not correct?
    Ms. Ekstrand. Well, we didn't actually do the data 
analysis. We received this from the Customs Service and 
PriceWaterhouseCoopers as the output from this model. And our 
understanding is, as Mr. Winwood said, that this has not been 
used for any official purposes yet, but this output, plus 
output that we did not see for year 2001 and 2002, is under 
review at Treasury now.
    But, we were given this year as what came out of their 
analysis, PriceWaterhouseCoopers and Customs. We did not do any 
analysis of our own.
    Mr. Horn. Well, it sounds like we've got a system that 
doesn't work and we're putting more money in it.
    Ms. Ekstrand. Well, again, this system will only be as good 
as the numbers that go into it. So, as long as there are data 
reliability problems, the system will not be reliable.
    Mr. Horn. The gentleman from California.
    Mr. Ose. Thank you, Mr. Chairman.
    Unfortunately, Mr. Chairman, I look at the clock and I need 
to leave probably in another 15 or 20 minutes, for which I 
apologize, and I apologize because as I prepared for this 
hearing the information as to the importance of the Long Beach 
and Los Angeles Ports, not only to this immediate area, but to 
the State as a whole, and basically the southwestern region of 
the United States, becomes abundantly clear.
    Now, what we see is Congress having made a commitment, the 
State having made a commitment, the community having made a 
commitment to making Long Beach/Los Angeles extremely 
competitive. We've invested in the trench. We have doubled our 
track lines. We are trying to address any number of issues.
    Mr. Horn. Translating to Alameda.
    Mr. Ose. Correct, but I keep coming back to this question, 
and many people have accused me of being a business person, and 
I plead guilty to that. In a very real sense I get pretty 
boring when I get focused on that, but I want to come back to a 
couple points.
    First, I want to followup on Congressman Becerra's question 
having to do with the 100 Customs inspectors and the 214 
criminal investigators. I think Mr. Winwood's comment was that 
there had been no determination where they would go, but the 
numbers were arrived at by a basis of somebody's judgment about 
broad categorical evaluations having been made for the need for 
these numbers.
    What I'm trying to get to is, this area, in particular, 
it's anticipated that trade through this port for the next 3 or 
4 years is going to increase by around 40 or 45 percent. And, I 
am somewhat stunned when you confront that, recognizing that we 
have staffing shortages here now, how we are unable to say how 
many, if any, of these 100 Customs inspectors, or 214 criminal 
investigators, being added to the work force will come here. We 
can't say that with any specificity, and we can't even get a 
date as to when we might be able to get that information.
    So, Mr. Winwood, I want to come back to that question. This 
is critically important, as I'm sure you know, to this region, 
to this city, to the State, however you want to craft it, to 
this country, however you want to craft it. Could we have a 
date certain by which time you will tell us how many of these 
added people will be coming to this port to handle the trade 
requirement, the processing requirement that we have here?
    Mr. Winwood. I guess the best way to answer that, Mr. 
Congressman, is when the budget is passed. That is a proposal 
for 2001, that's the administration's submission to the 
Congress, we are waiting for the approval of the budget. When 
the appropriations occur we'll be able to give you a more firm, 
definitive answer. That is a number that is yet to be finalized 
and appropriated.
    Mr. Ose. OK.
    In the President's deliberations on the 100 added Customs 
inspectors and the 214 added criminal investigators, how many 
of those 100, or how many of those 214 were identified for this 
particular marketplace?
    Mr. Winwood. I don't have that answer today.
    Mr. Ose. When can we get that answer?
    Mr. Winwood. Again, it would only be a speculative answer, 
as you understand, because, again, we don't have the 
appropriation, we do not have that money. And I think the best 
thing we are trying to do is that, based on when the 
appropriations are available to us, we have to reevaluate the 
issues that we have to face as far as the threat, and the 
    Mr. Ose. I'm not asking you for input as to after the fact 
congressional resolution issue, what I'm asking for is in the 
President's deliberations, this 100 and 214 evolve from 
something, and did that discussion of the 110 and 214 say we 
need three there, two there, five there, and four here, and 
when we got around to those numbers how many were designated 
for Long Beach and Los Angeles, within the President's 
    Mr. Winwood. Well, let me make two statements for you, if I 
may. As I mentioned earlier, we don't have the specific number 
that's in the budget. I used that 100 as a relative number; 
that's pretty close, but I don't know the exact figure.
    Mr. Ose. But 214 is not very much of a round number.
    Mr. Winwood. Well, I'm just saying that the number could be 
224. I will put the specific number in the record; the 100 may 
be 99 or 98 for inspectors, the 200 might be 214 or 225. I will 
put the actual number into the record.
    I will also say to you that the 98 or 100 inspectors, at 
the time the submission went in, were for special programs, for 
outbound enforcement, for money laundering, for issues 
associated with State find licensing, munitions for outbound; 
so a lot of those numbers are looking at areas in which we have 
to beef up our export and our outbound enforcement for law 
enforcement purposes.
    So, when we talk about the number specifically for Long 
Beach and L.A. seaport, I don't have a specific number there, 
but the deliberations revolved around those types of 
    Mr. Ose. Is that number available? Does somebody have it 
    Mr. Winwood. For outbound purposes, and for the----
    Mr. Ose. Generically for Long Beach and Los Angeles Port, 
the outbound or inbound.
    Mr. Winwood. It will be a small number, I don't know the 
exact number today, I will just tell you that that 98 
represents the needs that the administration put forward for 
the entire Customs Service.
    Mr. Ose. Mr. Chairman, if I may, I apologize for going 
over. What I'd like to do is, I'm hopeful that you'll leave the 
record open so that--I don't mean to be presumptuous, I mean, I 
don't live in the Long Beach/Los Angeles area, but I would like 
to submit a question for the record.
    Mr. Horn. You are doing great, we'll make you an honorary 
    Mr. Ose. To actually get a definitive answer.
    Mr. Horn. You'll have to ask the mayor and future mayors.
    Mr. Ose. I'm just trying to get to that, because, I mean, 
asking Congress for money for basically 314 people, I'd like to 
know where that number comes from. I mean, somewhere, somehow, 
the component parts of that sum total were developed. So, with 
your permission, I will submit a question for the record, that 
can be answered for the record, as to how many will be coming 
to Long Beach and Los Angeles Port.
    Mr. Horn. Without objection, that will be put at this point 
in the record.
    Mr. Ose. OK.
    Now, I want to go back, we've kind of spent a lot of time 
over here on this side, I want to talk to Mr. Gordon and Ms. 
Kelley a little bit.
    I noticed on page 7 of Ms. Ekstrand's testimony the comment 
about activities in different locations basically consuming a 
varing portion of time, in other words, processing a passenger 
in one location might not take the same amount of time in 
another or processing cargo in one location might be a 
different time allocation in another. And, I keep coming back 
to this data, and the Resource Allocation Model, how do we get 
accurate data so we can have accurate analyses, so we can make 
accurate decisions?
    Ms. Kelley. I wish I could give you a better answer to that 
question, because what I have to tell you is that in spite of 
repeated requests NTEU has not yet had access to any of the 
information that went into or out of the Resource Allocation 
Model. We have been requesting and have scheduled briefings on 
this that have been canceled. NTEU and Front Line employees had 
no direct input or involvement into the calculations of those 
things, so I can't even tell you what was used, if there are 
inconsistencies, if there is a standard way to measure.
    I think the employees who do those jobs would be the people 
who could answer those questions, and there has been no formal 
involvement at all with NTEU or those who are represented on 
that issue. So, I really couldn't even speak to the 
inconsistencies. I wish I could, because we would very much 
like to see the model and what went in and what came out.
    Mr. Ose. Mr. Gordon, is it accurate, is Ms. Ekstrand's 
comment accurate in terms of different localities having 
different efficiencies or inefficiencies in processing 
passengers or cargo?
    Mr. Gordon. Well, from the INS perspective, I can't speak 
for Customs, as far as processing passengers, yes, there are 
differences in the length of time. It has to do with 
facilities. For example, at LAX we have to process passengers 
arriving at five different terminals. We base our operation at 
Tom Bradley International, but we have to staff five different 
areas in various conditions of configuration for moving 
passengers through rapidly.
    Mr. Ose. Well, Mr. Chairman, my time is way over, I 
apologize for that fact, this must be quite a conundrum?
    Mr. Winwood. Can I give you an example, if I may, for 
different processing times?
    Mr. Ose. Yes.
    Mr. Winwood. One of the technologies that we are expanding 
as fast as we can, and have found very successful, particularly 
on our border locations, doesn't relate to Long Beach/L.A. 
because it is about cars.
    Mr. Ose. Pictures.
    Mr. Winwood. For instance, processing of a vehicle, one of 
the first requirements an officer must do is to query the 
license plate. One of the pieces of technology is an automated 
license plate reader. So rather than the officer having to take 
his attention away from the car, query the license plate 
number, read the screen and then look at the car, the license 
plate reader is reading the car that's next in line, so it's 
automatically doing the query for him.
    Mr. Ose. You are taking that bar code technology, for 
instance, that the railroads have developed and being able to 
translate license plate numbers into a visual----
    Mr. Winwood. Right into the automated system.
    Mr. Ose. Right.
    Mr. Winwood. And, it does the query versus the key 
stroking. So when you take into account the processing of a 
vehicle in a place that has a license plate reader, versus one 
that doesn't, there's a time variation. You multiply that over 
hundreds and hundreds of events, it's going to change the 
amount of time it takes one location to work versus the other 
    Mr. Ose. Well, let me go right to that. Clearly, you've got 
different locations around the country, ports of entries and 
the like, where you've developed prototypical processing 
    Mr. Winwood. Yes, sir.
    Mr. Ose. Which might serve as a model as to, if you will, 
the best practices that you might be able to implement.
    Mr. Winwood. Yes.
    Mr. Ose. Is the PriceWaterhouse study looking at that 
relative to, for instance, locations like Long Beach/Los 
Angeles that have a high volume capacity needs and whether that 
technology is transferrable, and what the consequence would be?
    Mr. Winwood. That's one of the caveats in my testimony that 
I brought out. That's the next phase that has to be done, 
because that has to be done, and that's one of the next stages 
that need to be looked at for the future development of a more 
sophisticated model, as we have more and more information 
available to us.
    The other thing we are looking at is coming up with what a 
model port would look like, a combination of the right staff, 
and the right technology, and the right equipment, and we 
haven't done that work yet.
    Mr. Ose. Does your $5 to $12 million number, I'm trying to 
recall correctly, on the Resource Allocation Model do that?
    Mr. Winwood. May I stop you there for a second?
    Mr. Ose. Yes.
    Mr. Winwood. That $12 million has nothing to do with the 
    Mr. Ose. All right, let me rephrase it. What is it that you 
are looking at to follow on the PriceWaterhouse study that 
would give Congress the information that I'm trying to get, in 
terms of prototype versus specific location?
    Mr. Winwood. Right, the next phase of the further 
development of the RAM, is contracted through an ongoing 
contract with PriceWaterhouse to take into consideration the 
very things we are talking about; to take into consideration 
what the GAO found as far as the accuracy of data, the time it 
takes to do the functions that are put in as raw data. We've 
asked PriceWaterhouse to look at that. We've also asked them to 
start considering things such as technology and automation that 
would take into account reduced processing times versus manual 
processing times. So that's the next phase. We are asking them 
to further refine the model they built for us, while the 
existing model is being reviewed for what it looks like today.
    Mr. Ose. Mr. Chairman, I thank you for your generous use of 
    Mr. Horn. Thank you.
    The gentleman from southern California, Mr. Becerra.
    Mr. Becerra. Thank you, Mr. Chairman, and I'm going to try 
to keep my questions short and see if I can get the answers to 
be short, because I know we are running late. And, Mr. 
Chairman, unfortunately, I, too, will have to leave shortly 
before 12, and I think we are going to miss the second panel. I 
apologize to those witnesses in the second panel, because I did 
wish to hear their testimony as well.
    Very quickly, let me ask Mr. Hite, you touched on this and 
it's starting to concern me the more I think about this, the 
longer we take to implement ACE don't we run the risk that ACE 
will become obsolete for the purpose that it's intended, unless 
we spend more money to update it, as you say, that already is 
occurring, because this was a program that was devised a few 
years ago now? And, as we know, with anything in technology, 
like a computer, in these days 2 or 3 years makes that product 
    Mr. Hite. Today's approach to designing large-scale 
computer systems takes into account what you need to do in 
order to introduce technology enrichment.
    Mr. Becerra. Into a system.
    Mr. Hite. Into a system and to be able to upgrade it and 
scale it to do more things. So, you build it with that in mind 
in today's environment. So, you bring on a world class systems 
integrator, they bring that to the table in terms of their 
solution, and it's part of the expectations that the government 
then will levy on the contract to ensure that that, in fact, 
    Mr. Becerra. So, we don't run the risk that ACE will also 
become obsolete before it is ever implemented?
    Mr. Hite. I'm not saying we don't run the risk, I'm saying 
it's probably a minimum risk given the state of systems 
engineering among big-time contractors.
    Mr. Becerra. By the way, Mr. Winwood, I just want to make 
sure this is very clear, you happen to be the representative 
for Customs and the Department of Treasury, so many of the 
questions that you get, obviously, will be tough, and I respect 
your attempts to try to answer. I appreciate that sometimes you 
have to deal within the confines of what you've been given to 
work with, and I know often times the answers are more 
appropriately given by OMB, the Office of Management and 
Budget, when we are talking about budgets and so forth. So, 
please understand that. Nonetheless, we do have to ask some 
pointed questions.
    Mr. Winwood. Yes, sir.
    Mr. Becerra. Ms. Kelley said something disturbing, that 
NTEU had no involvement or input in the formulation of RAM, is 
that true?
    Mr. Winwood. Why, I think what she said as an organization, 
may be true. Again, that's best answered by PriceWaterhouse, 
and who they surveyed, and where they got their information. I 
will say that a lot of the information gathered for developing 
the RAM by the contractor was using existing data sources that 
were already available to us.
    Mr. Becerra. But let me ask this.
    Mr. Winwood. Yes, sir.
    Mr. Becerra. As you continue in the process of reviewing--
    Mr. Winwood. Yes.
    Mr. Becerra [continuing]. RAM, what was delivered to you by 
PriceWaterhouseCoopers, do you think it would be smart to 
include NTEU in that ongoing review?
    Mr. Winwood. I think the idea is that once we get a 
workable model that we can all sit down and analyze, I think 
it's going to be incumbent upon us to have as many people as 
possible within the organization take a look at what went in 
and what comes on, and what the rationale and the reason was 
behind this. I agree with that.
    Mr. Becerra. I am going to get you to give me an answer 
that fits in really snug parameters, OK, so what I hear you say 
is, no, not until after we're done will we show it to them, is 
that what you are saying?
    Mr. Winwood. I'm saying that not until Treasury and OMB 
approve what we've done so far can we let it out to anybody. 
That's all I'm saying.
    Mr. Becerra. And, when you show it to them, the NTEU, will 
it be, this is it, take a look, or this is it, copy it, so we 
can, perhaps, tweak it again?
    Mr. Winwood. I would say no, because this is a model that 
has to constantly evolve, and we will constantly need to modify 
and change it, because our environment is going to change 
around us. So, we have to build a very flexible model that's 
going to take into account the ability to bring new ideas and 
new input all the time.
    Mr. Becerra. So, that was a no, we won't exclude them, or 
no we will exclude them?
    Mr. Winwood. No, we will not exclude them, and the reason 
is it's an environment that's changing constantly. We will need 
constant review.
    Mr. Becerra. So, let me make sure on the record we have a 
clear answer. Are you representing that Customs will allow NTEU 
to participate in what will become the final product of RAM?
    Mr. Winwood. I'm saying they will have an opportunity to 
see it when it is available to us for release. That's the best 
I can say.
    Mr. Becerra. So, you can't say at this stage that they'll 
have any chance to provide input into the final product of RAM?
    Mr. Winwood. As a representative of employees, I can say, 
yes, they will, but I will tell you, it depends upon when it is 
released and whether or not it's a model we can use.
    Mr. Becerra. OK, you are confusing me. Let me try again. 
And as I say, I appreciate your constraints, but I think the 
committee has to know, because when you come before us and tell 
us RAM is where we are going, we need this, we have to do that, 
we are going to continue staffing levels as they are in New 
York and Miami versus L.A., we're going to want to know how you 
came about that decision.
    Mr. Winwood. I understand.
    Mr. Becerra. And, if NTEU comes and testifies and says, we 
could have told you that this was not going to work, then we're 
going to ask them, what role did they play, and if they tell us 
they played no role, and they can come up with some good 
information, we're going to sit you all down and ask you again 
why you didn't allow them to participate.
    Mr. Winwood. Right.
    Mr. Becerra. So, let me see if I can get it again, an 
answer that fits that parameter. Up to the point where OMB, 
Customs, and Treasury finish their review, I understand you are 
saying that no one other than those representatives within 
Customs, Treasury and OMB will review the RAM document? Until 
you've finished your review, your department level review, only 
department authorized personnel will provide input?
    Mr. Winwood. Until that department level review is 
completed, the answer is yes.
    Mr. Becerra. OK.
    After that department level review is completed, will that 
document be a final document?
    Mr. Winwood. The best way I can answer that is to say no, 
because we've already contracted with PriceWaterhouseCoopers to 
make modifications and adjustments based on some of the 
recommendations that have been made by GAO and others as to how 
to incorporate better data.
    Mr. Becerra. So, the next question is, does that mean that 
document released after the Department's final review can be 
    Mr. Winwood. Yes, it can be.
    Mr. Becerra. And, within that process of potential 
amendments, will NTEU be allowed to participate and provide 
input in potential changes to that document?
    Mr. Winwood. I believe so. I'm just trying to keep my 
answers nice and short, but that----
    Mr. Becerra. No, that's a good answer, I like that. My 
sense is what you are saying is that they will have some input 
at the later stages before you make final pronouncements. So, 
you said ``I believe so,`` why complicate it more with further 
questions. A good attorney knows when to stop.
    Let me move on. Ms. Kelley, you mentioned that only 30 of 
6,000 containers in the L.A./Long Beach Ports are inspected 
every day. What happens to the other 5,970?
    Ms. Kelley. They just proceed without inspection.
    Mr. Becerra. So, whatever may be in those containers goes 
right through, cocaine, contraband, whatever it might be, it 
just goes right through.
    Ms. Kelley. There is no additional process that I'm aware 
of that provides for any other inspection.
    Mr. Becerra. Is there any chance that the inspectors could 
actually examine more of those containers on a daily basis?
    Ms. Kelley. If there were more inspectors, yes. With 
current staffing, no.
    Mr. Becerra. So, with current staffing the inspectors are 
performing at what's considered optimal levels?
    Ms. Kelley. Yes.
    Mr. Becerra. Mr. Winwood, would you disagree with anything 
she said?
    Mr. Winwood. I won't disagree, but I will say I will not 
necessarily agree with the number 30. I don't know that to be a 
factual number. I'll just take it for what it is today. But I 
will say this, that we do agree that we need more technology, 
we do need, because of the workload growth, additional 
resources to address the issue.
    Mr. Becerra. Let's assume, and again this is only an 
assumption, so I won't keep you to it if to the numbers are 
incorrect, but assuming that there are 6,000 containers that 
come into Los Angeles and Long Beach Ports every day, and 
assuming that what Ms. Kelley has represented is accurate, that 
the inspectors that they have working at optimal levels can 
inspect 30 of those 6,000 containers on a daily basis, does it 
concern you that 5,970 other containers move through the port 
never having been inspected?
    Mr. Winwood. Yes.
    Mr. Becerra. Do you think that the response then to that 
would be that you would try to increase the staffing levels in 
the Los Angeles/Long Beach Port area?
    Mr. Winwood. We'd love to increase the staffing of the 
Customs Service, and to include the Port of Long Beach/Los 
    Mr. Becerra. No, no. Not enough. Let's talk about what you 
can do. Would you be recommending that you increase the 
staffing levels in the Long Beach/Los Angeles Port area?
    Mr. Winwood. Again, Congressman, I can only do it based on 
appropriations and the money available to us to do that.
    Mr. Becerra. OK, well, let's move on, and that's a fair 
answer. As I say, I know some of these it's tough to be 
    Ms. Kelley mentioned that there are some 900,000 passengers 
that come through every year, and there are six inspectors to 
inspect all those people coming through, is that correct?
    Ms. Kelley. For the seaport, yes.
    Mr. Becerra. I did some quick math, if I didn't forget how 
to do this manually, that means for six inspectors, 900,000 
people, that's 150,000 people that each inspector is, on the 
average, responsible for on a year, in any given year. If you 
break it down by a month, that's 12,500 people that are 
passengers that are inspected by one individual each month. On 
a daily basis, that's 625 people that must be inspected by one 
inspector, and on an hourly basis that's 78 people, and if you 
want to bring it down to the minute, a little bit more than one 
person per minute that an inspector has to examine as those 
people are attempting to depart.
    Commissioner Winwood, is that enough time to adequately 
examine people who are entering this country, and maybe doing 
so for the wrong reasons?
    Mr. Winwood. If it was absolutely necessary to examine 
every person, the answer is no. But I will tell you, while I'm 
not agreeing that six is enough, and I'm not agreeing that that 
workload is the right workload, that you also have to take into 
consideration that there is a lot of honest, legitimate 
travelers we deal with. Our goal and the way we operate is that 
we don't examine or question every person that arrives on those 
cruise vessels. And, even if you add additional staff, if we 
were to get additional staff, we would probably put them 
somewhere else, rather than on that function.
    So, based on your math, those numbers are accurate, but my 
answer is it is necessary to actually spend that much time with 
every cruise vessel passenger that arrives here, would be no.
    Mr. Becerra. But, we do need more inspectors?
    Mr. Winwood. The answer is yes.
    Mr. Becerra. How do those numbers that you just heard for 
Los Angeles compare to other ports, New York, Miami, for 
    Mr. Winwood. I don't have the exact figure in my head for 
Miami, but I will say that although 900,000, is a lot of cruise 
ship passengers into a place such as Long Beach/L.A., in Miami 
there's millions.
    Mr. Becerra. Let me ask Ms. Kelley, do you happen to know 
the numbers in Miami?
    Ms. Kelley. I do not know, but I will be glad to get them 
for you.
    Mr. Becerra. If you could provide those to us.
    Ms. Kelley. I'll be glad to.
    Mr. Becerra. If you could do it for the major ports of 
entry in this country, Miami, New York and others.
    Mr. Horn. Without objection, they'll be put in the record 
at this point.
    Mr. Becerra. Thank you, Mr. Chairman.
    I just have a few more questions.
    Commissioner Winwood, first let me make sure I acknowledge 
the work that the chairman has done on the whole issue of the 
Terminal Island facility and thank him for moving forward so 
aggressively in trying to address the needs of the employees on 
    My understanding is that Customs, and which is the other 
department that's been working on this?
    Mr. Horn. You mean the General Service----
    Mr. Becerra. General Service, GSA. There's been an 
agreement now that you will relocate all the workers that are 
on Terminal Island?
    Mr. Winwood. I believe so. We've already located the 
temporary space. I believe the number is approximately 100 to 
150 people from Terminal Island into temporary office space off 
the island, and we put our space needs plan to GSA in the early 
part of April to temporarily move the remaining employees. They 
are looking for permanent office space and permanent work 
space, so we can permanently relocate everybody into one 
location that's convenient for the employees, homogenous, and 
also convenient to the work site.
    Mr. Becerra. Tell me the last date that there will be a 
Customs employee on Terminal Island.
    Mr. Winwood. I can't answer that.
    Mr. Becerra. How long do you think it will take before you 
are able to remove all the employees from Terminal Island?
    Mr. Winwood. In all fairness, I think that question is best 
asked of GSA. We are pushing them as hard as we can. They are 
the ones that find the space, they are the ones that help us 
move. I cannot answer that.
    Mr. Becerra. I've got to tell you that those are all 
disturbing responses, but----
    Mr. Winwood. If I add for the record, though, Mr. 
Congressman, it's disturbing to us, too.
    Mr. Becerra [continuing]. Does that include the chemical 
laboratory within there, will that be moved out also?
    Mr. Winwood. That's the second phase. Our first priority 
are the people within what we call the Customshouse. That's our 
first priority. The lab facility is relatively new, built 
within the last----
    Mr. Becerra. Yes, but the people are affected.
    Mr. Winwood [continuing]. That's the second phase.
    Mr. Becerra. But, you shouldn't be leaving people with 
asbestos in the building.
    Mr. Winwood. Right, they are in a separate new building, 
the lab. So, we are looking at that as an eventual move for the 
second phase. Our first priority are the people within the old 
Customshouse, the old building. It's been there for 35-36 
years; we're looking to move everybody there as quickly as we 
can, to get them out of that building and get them into more 
appropriate workspace.
    Mr. Becerra. I urge you to move quickly. The cost of 
litigation and liability probably exceeds the cost of finding a 
different location, even though temporary, and, you know, we 
always talk in terms of monetary costs, do you want to have 
your lungs filled with this stuff?
    Mr. Winwood. Mr. Congressman, I totally agree with you. 
Commissioner Kelly is pushing as hard as he can. He's put every 
energy into this to get this----
    Mr. Becerra. I would say that's where government looks so 
bad in the eyes of the public, is when we come up with answers 
that say we don't know. And I would really urge you to have 
Commissioner Kelley, who is a phenomenal individual, and 
Secretary Sumner, come back and give us some concrete numbers 
and dates, because these people deserve nothing less than that. 
They are working for us.
    Mr. Winwood. We agree, we totally agree.
    Mr. Becerra. But, let's get something concrete, because 
they've been saying this for the longest time, now we all agree 
they have to leave, but let's quit having them hang out there 
wondering when they are finally going to get to leave. It's 
    One last question, Mr. Chairman.
    Commissioner, with regard to the issue of personal 
searches, you mentioned that there have been some policy 
changes and you are going to try to do a better job of tracking 
some of this. What are you doing in terms of enforcement and 
discipline? Once you find that there's someone who doesn't 
abide by the new changes, and you find that there are still 
inappropriate searches occurring, are you doing anything with 
regards to enforcement or discipline?
    Mr. Winwood. Yes, we will when it occurs, but I must tell 
you, Mr. Becerra, the Customs employees and Customs officers 
take their job very seriously. We have not seen any indication 
of that. There has been no indication of wrongdoing on the part 
of employees, and if it would happen, of course, we would take 
the appropriate action, but I don't believe it's going to 
    Mr. Becerra. And, I'm not implying that there has been, I'm 
just saying that it always helps when people know there's 
severe punishment at the end of the day if they do the wrong 
    Mr. Winwood. Well, we make sure that our officers 
understand, Mr. Becerra, that we have policies and procedures. 
They've been trained, they've been given the proper 
documentation, and we have all the faith and all the knowledge 
that they will continue to work diligently. They have, and they 
continue to do so, and you can see it in the results.
    Mr. Becerra. Mr. Chairman, the witnesses have been more 
than gracious with their time. I appreciate the extension of 
time to ask questions, Mr. Chairman. Thank you.
    Mr. Horn. Well, I thank you, and all of you on this panel. 
It's been very helpful information.
    We are now going to go to panel two. We are going to take a 
4-minute recess, and then we will start in with panel two and 
give the clerk time to----
    Mr. Horn. And any assistants of your's, we'd like them to 
also stand and take the oath if they are going to talk and you 
are going to yield to them. So, if you'll stand and take the 
oath, we'd appreciate it, raise your right hands.
    The clerk will note that the four witnesses have all 
affirmed the oath, and we are delighted to start with Yvonne 
Avila, the president of the Foreign Trade Association of 
southern California and director of communications for the Port 
of Long Beach.


    Ms. Avila. Good morning, Congressman Horn.
    As stated, I am Yvonne Avila, director of communications 
for the Port of Long Beach. Today, I am speaking as the 
president of the Foreign Trade Association of southern 
California. I am accompanied by Marian Duntley and Dennis Heck, 
who serve on the Foreign Trade Association Board of Directors 
with me.
    The FTA of southern California is the oldest and most 
prestigious trade association, representing more than 400 
importers, exporters, manufacturers, retailers, and financial 
institutions involved in international trade. An adequately 
staffed U.S. Customs system is important to all of our members.
    Before we address our concerns about the Customs system, 
however, I think it is important to take a look at the growth 
that is occurring at our southern California seaports, which 
represent the two largest seaports in the United States and the 
third largest port complex in the world. During the last 10 
years, the volume of cargo containers passing through our 
southern California ports has grown by 122 percent.
    A recently completed cargo forecast indicates that the 
growth we have experienced since 1990 will continue well into 
the next two decades. The ports of Long Beach and Los Angeles 
handled a combined total of 8.2 million container units in 
1999. The most recent cargo forecast predicted the two ports 
will handle 9 million containers in the year 2005. 
Realistically, we will achieve those volumes this year, 5 years 
ahead of question.
    Projections also show that the two ports will handle a 
combined total of 12 million containers by 2010, 17 million 
units by 2015, 24 million units by 2020. Facing projections 
such as these, you can understand why the FTA is concerned 
about the adequacy of Customs staffing in southern California.
    We believe that Customs must be adequately staffed for some 
obvious reasons: to collect tax revenue, to detect drugs and 
illegal imports, to prevent illegal exports, to enforce U.S. 
intellectual property, to protect U.S. consumers from tainted 
goods, to provide security at our Nation's ports, and to 
collect accurate trade statistics for use in trade 
    We also believe that if additional resources are deployed 
they should be used for purposes directly related to one of the 
core duties of the Customs Service and in accordance with an 
objective risk management strategy agreed to by Congress.
    Customs resources should be used effectively and not as a 
club intended to cost importers time and money and as a means 
of getting your attention. We also believe that Customs must 
constantly identify ways to balance its staffing and its other 
resources between enforcement and commercial purposes.
    Customs staffing must be spread equitably between all U.S. 
ports of entry, because under staffing in one particular area 
means less enforcement and less revenue collected in that area. 
Under staffing caused by imbalance means some ports are 
receiving more security at the expense of others. Under staffed 
ports could be targeted by unscrupulous traders and drug 
    Finally, we believe that the Automated Commercial 
Environment system must be funded immediately and from the 
General Fund. We believe this because the existing ACS hardware 
and software are antiquated and operating at near capacity at 
all times. We are throwing good money after bad in maintaining 
the old system. The existing system uses COBOL language, and 
programmers familiar with this language are increasingly scarce 
as the technology moves toward internet-based applications. In 
fact, I think it's probably easier to find someone who speaks 
    There are other reasons why we support funding from ACE 
from the General Fund. The longer it takes ACE to be 
implemented the more it will cost. ACE would give Customs 
better tools and increase its efficiency. The Nation's 
importers are already paying $900 million annually in user 
fees. No new fees are needed to fund ACE. Other U.S. Government 
computer systems, as well as the Customs budget, is paid for 
via the General Fund, why should ACE be different?
    I'd like to leave you with a final, yet rather grim 
message. If the current Customs computer system were to 
experience an extended brownout, and if cargo could not being 
cleared through our seaports and airports, this Nation's 
economy would grind to a halt. Three years ago, southern 
California seaports were severely impacted by a shortage of 
rail cars and equipment following the merger of two major 
railroads. As a result, cargo containers were stacked four high 
inside our terminals. Labor that should have been used to 
unload ships was used instead to stack and unstack cargo. Ships 
sat idle for 5 or 6 days, rather than departing after a day or 
two. Other ships sat at anchor, waiting for space in 
overcrowded berths, and importers, exporters, manufacturers, 
farmers, and retailers throughout this Nation were left without 
critical links to overseas markets.
    What happened in 1997 would pale in comparison to what 
could happen in if the Customs computer system were to fail. If 
that happens, it will affect far more ports than those in 
southern California. It will impact every seaport and every 
international airport in our Nation. Cargo will not flow and 
both imports and exports will sit idle without reaching their 
    Our Nation cannot afford such an event. The members of the 
Foreign Trade Association believe that funding for ACE from the 
General Treasury is one of the best investments you can make in 
our Nation's economy.
    Thank you for giving me an opportunity to address you 
    [The prepared statement of Ms. Avila follows:]

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    Mr. Horn. Thank you very much. We appreciate it.
    Now Maurine Cecil is president of the Los Angeles Customs 
Brokers and Freight Forwarders Association, and she's 
accompanied by Judy Grimsman, the chairman of the Board, the 
Los Angeles Customs Broker and Trade Forwarders Association. 
So, please proceed.
    Ms. Cecil. Thank you. Thank you for the opportunity to 
testify today on behalf of the Los Angeles Customs Brokers and 
Freight Forwarders Association. The Association is honored to 
have the opportunity to address the subcommittee. Completion of 
the automated process, as expressed in our prior testimony in 
1997, is essential to the expeditious processing of shipments 
imported and exported. We thank you for allowing us the 
opportunity to return today to express our concerns.
    We are directly and daily involved with Customs and much of 
its core business, especially cargo review, release, and duty 
collections. Our membership is integral to the processing by 
Customs of both imports and exports, as we are the conduit 
between Customs and the shipping and importing public. Most 
importantly, we think Customs must develop a realistic 
strategic plan addressing its future needs and increases in 
both the real and electronic worlds.
    In the past, we have seen too many different pilot programs 
started without being permanently adopted. Customs has 
allocated too great a portion of its resources in pursuit of 
too many initiatives, often all at the same time and competing 
for the same resources, resulting in an inability to direct 
sufficient resources to its core business.
    Customs must be willing to take one step at a time in a 
well-thought-out strategic plan. It should also complete the 
basic automation process before diverting resources to other 
new programs.
    The overall mission of Customs sometimes seems to suffer if 
such short-sighted planning is allowed to overwhelm the agency, 
which is what sometimes seems to be the case from the outside 
looking in. We have seen too many programs that Customs has 
failed to complete, due to unreliable funding, forcing the 
trade to operate with only partial systems available, creating 
delays and tremendous additional work.
    We think Customs would be better served to defer 
implementation of programs such as AES, Automated Export 
System, until they have additional funding available. Customs 
needs to expand its use of technology in the inspection of 
cargo, such as increased use of non-intrusive technologies such 
as x-ray units, allowing more efficient and timely examination 
of legitimate cargo. It is our understanding that 8 to 12 
containers can be processed within an hour using the x-ray 
technology available. I have been told we will be getting one 
x-ray unit in September.
    Importers are already paying and continuing to pay large 
sums of money for examinations being handled by private 
companies contracted by U.S. Customs. We support the allocation 
of money from the General Fund toward the ACE concept, as long 
as the trade continues to have input into the design of its 
programs and resulting products meet the needs of Customs' 
mission. Funds are needed for detection and enforcement, but 
Customs must also offer support of a realistic understanding of 
world commerce.
    The Association firmly believes that funding for the new 
ACE must come from the current user fees already being 
collected by Customs. This fee is currently being sent to the 
General Fund and is of such a size that it can easily cover the 
needed appropriations. The current user fees are generally 
approximately $800 million yearly. The original intent of that 
user fee was supposed to be to reimburse Customs for the cost 
of commercial operations, including automation.
    We should also keep in mind the concept of ITDS, which was 
only recently transferred to Customs for completion. ITDS must 
not be an obstacle to other programs currently being developed 
under the ACE umbrella. These programs limit the number of data 
elements needed for release to those necessary to make an 
admissibility determination. The majority of data needs by 
Customs and most other government agencies can be provided post 
entry. The goal of ITDS should be to consolidate the gathering 
of data, primarily in a post-entry mode, and compliment, not 
complicate, the single release process already laid out in the 
early ACE prototypes. Lack of support of automation funding 
will cause port backlogs, and possible brownouts such as the 
recent 5-hour outage in Buffalo which would cripple our port 
and shut down the flow of cargo.
    The MOD Act empowered each of the 301 Customs ports, and in 
many cases the empowerment has created different local 
interpretations of rules and regulations for entry processing, 
and headquarters seems unwilling or unable to intercede. 
Automation should eliminate the need for different local port 
procedures, which necessarily complicate the release process 
and add nothing substantive to the process.
    The reorganization of Customs has also resulted in a loss 
of expertise within the agency. As a result of reorganization, 
the personnel directly involved in entry processing are being 
reduced. In addition, many of the most experienced Customs 
personnel have left the agency to join private industry. 
Customs has not replaced this expertise.
    One of the goals of the Customs reorganization and the MOD 
Act was to discourage port shopping, or the selection of 
disqualification of a port based on the way in which Customs 
processes shipments at specific locations. The numbers of 
entries filed at the Customs port in southern California have 
continued to grow at amazing rates. The responsibility for the 
review of this data for admissibility evaluating 
classification, whether filed electronically or on actual 
paper, still falls on the shoulders of Customs personnel. 
Commodity specialists, in addition to their current workload, 
have been given the task of being port and national account 
managers, and they are also the main point of interest with 
primary focus industries.
    These people are already overworked, and are now being 
asked to head up most outreach programs with the trade. They 
are also often asked to be instructors for Customs for training 
programs, internal and external. These additional tasks 
interfere with their primary responsibility of dealing with 
data review and transaction processing. We believe that the 
proportion of the number of entries filed at the ports of 
southern California to the number of import specialists is very 
high compared to the other ports, notably, New York, New 
Jersey. We subscribe to the theory that effective enforcement 
makes for effective facilitation.
    We feel there should also be an equivalent of an ABI 
representative to coordinate with the trade when they bring on 
the new ACE program. They should have direct line authority to 
headquarters, rather than to a local authority, so that there 
will be a smooth transition and continuity when the system is 
in place. Customs will also need this sort of expertise 
internally to help all personnel make a smooth transition.
    Until all aspects of trade are totally automated, the 
location of the local Customs office is critical for timely 
review of entry paperwork for Customs, brokers, carriers, 
truckers, importers and individuals. The temporary and/or 
permanent relocation of Customs should be in a central and 
strategic area to which the trade has fast and convenient 
    In closing, we'd like to affirm that the Customs Service 
officials and personnel at the Port of Los Angeles/Long Beach, 
and Los Angeles International Airport, have always been open, 
accessible and responsive to the concerns of the Association 
and its membership. We look forward to the continuation of that 
open dialog.
    I want to thank you also for allowing us to have this 
opportunity to speak in front of you.
    [The prepared statement of Ms. Cecil follows:]

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    Mr. Horn. Thank you very much.
    Ms. Grimsman, the chairman of the Board of the Los Angeles 
Customs Brokers and Freight Forwarders Association.
    Ms. Grimsman. Well, I didn't have a prepared statement 
    Mr. Horn. Well, just what you'd like.
    Ms. Grimsman. OK.
    One thing I would like, from what I thought I heard the 
first panel, that the ACS, life support fund not be diverted to 
the ACE RFP, and they were talking about $12 million, they had 
$7 and there was $5 that they needed, and I'm not sure if I 
heard that that's where they were going to look, because it was 
going back and forth somewhat.
    Mr. Horn. Well, they were going to look, basically, at 
funds within the Treasury or within Customs; what we call 
reprogramming. When you are at the end of the fiscal year 
there's always millions of dollars that you haven't quite 
applied to existing programs, and if you can get a sign off 
from the Secretary of the Treasury and the ranking and chair of 
the appropriate committees on the Hill, you are home free. So, 
that's good, the way we solved the Y2K thing years ago, 
Director Rains agreed with me on reprogramming, otherwise you 
waste a year going through the Presidential and congressional 
budget process. So, that's, basically, looking for money that 
you can apply to something, but you've got to get a sign off.
    Ms. Grimsman. Because keeping that system alive, while we 
are developing the new system, is absolutely critical, and I 
think you've heard from all of us that if it goes down for a 
couple hours, it's a serious problem.
    Mr. Horn. Well, Doctor Williams, distinguished professor 
and expert on all sorts of things. He's now a professor of 
mechanical and aerospace engineering at California State 
University, Long Beach. Glad to have you here.
    Mr. Williams. Mr. Chairman, thank you for the opportunity 
to address new and emerging technologies for Customs processing 
enhancement. Advanced sensing technologies are becoming 
available for automated container inspection that will enable 
INS and Customs to more accurately assess container content, 
location, and improved targeting of selected containers for 
manual inspection.
    For example, new x-ray devices have been developed that can 
provide detailed information on container content with the 
total x-ray dosage much, much less than that of a conventional 
medical x-ray. A variety of other advanced sensing systems that 
are safe and effective are also becoming available.
    Appropriate new technology sensors as part of an integrated 
automated system for container inspection can be deployed to 
facilitate effective interdiction of illegal or inappropriate 
imports by containerized freight. Detection of human beings 
attempting to illegally enter the United States by container 
will be enhanced. As a result, the unscrupulous practice of 
profiting from the inhumane and illegal smuggling of persons by 
shipping containers, that has resulted in the tragic and 
unnecessary loss of human life, will be reduced and curtailed.
    INS and Customs are currently pursuing a number of 
technology initiatives to improve their inspection and 
processing capabilities, including automated license plate 
readers, and as you've heard earlier, the sentry systems that 
use technology to identify enrolled vehicles, people, and 
display information to the inspector. The vehicle and cargo 
inspection system, which uses gamma ray images to detect 
contraband within vehicles and cargo containers, is not only 
non-intrusive, it can be disassembled, moved and reassembled at 
another location the same day.
    INS and Customs are also developing and deploying a variety 
of non-intrusive technologies that lessen the physical 
invasiveness of searches for drugs and other contraband, as 
well as saving time, money and reducing the tensions of the 
search. Large x-ray scanners examine entire railroad cars as 
they cross the border, permitting much more rapid inspection 
than manual searches.
    Big site cargo search x-ray systems, which are currently 
being deployed, scan the contents of a tractor trailer in 
minutes, using a pencil sized beam of x-rays that produce 
detailed transmission and backscattered x-ray images, providing 
an excellent view of the contents. A person would have to pass 
through the system 100 times to receive the same exposure as 
the typical medical x-ray. This non-intrusive search technology 
is safe to operate and quickly pinpoints concealed contraband.
    INS and Customs are deploying a wide variety of hand-
operated technologies to examine commercial conveyances which 
include detection devices, fiberoptic scopes, vapor particle 
detectors and laser range finders. Broadband encrypted 
communication systems and computers that can filter data, 
noting which vehicles need special attention, are also being 
    Classification technologies, such as weigh in motion and 
automated vehicle identification systems, are used in concert 
with bypass lanes to help border crossings pursue the dual 
goals of efficient and effective operation. The Transportation 
Automated Measuring System, or TrAMS, developed and 
demonstrated at Ft. Bragg by the California State University, 
Long Beach, Center for the Commercial Deployment of 
Transportation Technologies, is an example of the new 
classification technology that can have broad implications for 
ports and border crossings, particularly, when deployed with 
additional sensors. Future classification technologies 
integrated with historical databases may greatly improve the 
selection mechanism to recognize carriers that are habitual or 
potential border crossing problems.
    New electronic tags, seals, and transponders can be used to 
allow containers and vehicles inspected at the points of origin 
to bypass further inspections.
    In support of INS and Customs efforts to enhance their 
inspection capabilities, our university, in collaboration with 
the Port of Long Beach, the Port of Los Angeles, and the 
Alameda Corridor Transportation Authority, has proposed a 
national demonstration project known as the CSULB, INS, and 
Customs Inspection Technology Infrastructure Project. This 
demonstration project would include the installation and 
evaluation of existing and new technologies described 
previously and the development and evaluation of advanced 
technology prototypes in the Port of Long Beach, Port of L.A., 
the Alameda Corridor, and LAX. This project could be crucial to 
the dissemination of enhanced inspection technologies, 
ultimately, throughout the United States, as new technology 
prototypes are proven.
    Mr. Chairman, with your permission, I would like to 
introduce for the record letters of support for this project 
from Larry Keller, executive director of the Port of Los 
Angeles, from Richard Steinke, executive director of the Port 
of Long Beach, from James Hankla, chief executive officer of 
the Alameda Corridor Transportation Authority, and from Doctor 
Robert Maxson, president of California State University/Long 
    Mr. Horn. Without objection, the letters the gentleman has 
cited will be put at this point in the record.
    Mr. Williams. The CSULB, INS, and Customs Inspection 
Technology Infrastructure Project would be a 3-year program 
specifically designed to expedite the flow and throughput of 
people and goods at border crossings, and air and seaports 
throughout the United States eventually. This project would 
employ advanced technologies to identify people illegally 
trying to enter the United States, and also expedite the 
processing of personnel at INS border stations. It would 
provide an increased ability to identify containers entering 
and exiting ports, utilizing advanced sensing technologies for 
automated container inspection that would enable inspectors to 
assess the content, including human cargo, and improve 
targeting of selected containers.
    It is important that funding for this project clearly be in 
addition to the existing budget proposals, and not a 
redirection of funds from some other critical need. INS and 
Customs are two of America's oldest Federal law enforcement 
agencies and have been protecting our borders for over 200 
years. To perform their missions, they must keep on the cutting 
edge of technology applications. The same technologies that are 
available to the government are increasingly available to well-
financed criminal and terrorist organizations. It is imperative 
that Congress provide the funding that INS and Customs need to 
counter these threats.
    Thank you, Mr. Chairman.
    [The prepared statement of Mr. Williams follows:]

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    Mr. Horn. We thank you very much for that very thorough and 
accurate--of the Customs Service, and since the Deputy 
Commissioner has had to catch a plane, why, if there are any 
comments you'd like to make, particularly, on Doctor Williams' 
presentation on the technical aspects, as to whether that would 
be helpful to the Customs Service.
    Ms. Jankov. Yes, I believe I would like to make just one 
comment. I have very, very little information about this new 
project that Doctor Williams is talking about, but I certainly 
think that there is a role for Customs to play with the other 
participants of the group, with the Port of Long Beach, with 
the Port of Los Angeles, and with the members of the Alameda 
Corridor. And, I would very much like to participate or have 
Customs represented on that group, because I think it is a 
group that looks at the Customs needs and requirements, as well 
as those of the trade.
    Mr. Horn. OK, any other reaction to the other witnesses?
    Ms. Jankov. I believe that they've made the case.
    Mr. Horn. OK.
    I think the gentleman from the Immigration Service had to 
leave, I don't know if there was a Deputy under him, but if so 
we'd be glad to have your comments on anything that you have 
heard here on the technical aspects. Since you are representing 
the clients, I'd be interested to know what your reaction was 
to Doctor Williams.
    Ms. Avila. Congressman Horn, the Port of Long Beach is 
working with U.S. Customs now to identify a location for that 
non-invasive gamma ray x-ray system, and we do hope to identify 
that location in order to implement that very shortly. That's 
referred to as a docking system, and I am sure that we will be 
able to install such a system within our seaports.
    Mr. Horn. Very good.
    Well, if there aren't any other questions, we will thank 
the staff that set up this hearing, and J. Russell George, the 
staff director for the Subcommittee on Government Management, 
Information, and Technology, and Mr. Kaplan, the counsel to my 
left and your right, is the one that put a lot of this hearing 
together, Bonnie Heald, the director of communications, is also 
here, and Brian Sisk is the clerk to make sure that everything 
functions along with Ryan McKee. I want to thank, in 
particular, the district director for our office, Connie 
Martinez Sziebel, and her staff, which is located in Lakewood, 
CA, who serve the 38th Congressional District, we thank her and 
the intern, Devin Storey, we particularly like his help because 
he got to get up bright and early this morning to bring Mr. Ose 
down here.
    Port of Long Beach people that have been especially helpful 
are Steve Sakora, the graphic artist, Arturo Garcia, graphic 
artist, and Cathleen Stephens is our court reporter.
    So, we thank you all for what's made this a successful day, 
so thank you very much. We are adjourned.
    [Whereupon, the subcommittee was adjourned.]
    [Additional information submitted for the hearing record