Customs Service Modernization: ACE Poses Risks and Challenges (Testimony,
05/15/97, GAO/T-AIMD-97-96).
GAO discussed issues related to the U.S. Customs Service's systems
modernization, focusing on: (1) Customs' efforts to address risks
associated with the agency's modernization of its automated systems; and
(2) challenges Customs faces as it plans and develops the Automated
Commercial Environment (ACE) System.
GAO noted that: (1) in May 1996, Customs was ill-prepared to develop ACE
because the agency was not effectively applying critical management
practices that help organizations mitigate the risks associated with
modernizing automated systems and better position themselves to achieve
success; (2) consequently, efforts to successfully develop ACE were
vulnerable to failure; (3) because GAO found that clear accountability
for meeting National Customs Automation Program (NCAP) requirements was
lacking, GAO recommended that Customs assign such responsibility; (4)
Customs acted quickly by assigning overall, policy-level responsibility
for implementing NCAP to the Trade Compliance Board of Directors and
day-to-day responsibility for implementing NCAP to the Assistant
Commissioner, Office of Information and Technology; (5) because the
remaining three recommendations call for significant changes in
long-standing management practices, they will require Customs
leadership's sustained commitment and focus; (6) GAO recommended that
Customs identify and analyze how it will conduct its future business
before selecting the information systems architecture; (7) Customs
changed the CDC-2000 project to emphasize conducting analyses of
business requirements prior to selecting an architecture; (8) Customs
hired a contractor in January 1997 that is expected to conduct these
analyses and recommend a process for selecting an architecture in June
1997; (9) GAO recommended that Customs manage information technology
systems as investments; (10) in April 1997, Customs specifically tasked
a contractor to assist with the development, implementation, and
institutionalization of a complete information technology investment
management process; (11) as of early May 1997, Customs officials told
GAO that the contractor's work will be completed and the investment
process will be in place in July 1997; (12) GAO recommended that Customs
ensure that the agency adhere to its own policies for developing
information systems; (13) Customs updated these policies to include new
provisions on software project planning and project management; (14) as
of early May 1997, Customs had revised the ACE project plan and Customs
officials told GAO that the revised project plan complies with their
system development policies; (15) Customs also faces a number of
challenges in planning and implementing the ACE project itself that wil*
--------------------------- Indexing Terms -----------------------------
REPORTNUM: T-AIMD-97-96
TITLE: Customs Service Modernization: ACE Poses Risks and
Challenges
DATE: 05/15/97
SUBJECT: Customs administration
Systems conversions
Inspection
Importing
Information resources management
Strategic information systems planning
Requirements definition
Accountability
Systems design
ADP procurement
IDENTIFIER: Customs Service Automated Commercial Environment Import
System
Customs Service Automated Commercial System
Customs Service National Customs Automation Program
Customs Service Distributed Computing for the Year 2000
Project
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Cover
================================================================ COVER
Before the Subcommittee on Trade, Committee on Ways and Means, House
of Representatives
For Release on Delivery
Expected at
2 p.m.
Thursday,
May 15, 1997
CUSTOMS SERVICE MODERNIZATION -
ACE POSES RISKS AND CHALLENGES
Statement of Linda D. Koontz
Associate Director, Information Resources Management/General
Government Issues
Accounting and Information Management Division
GAO/T-AIMD-97-96
GAO/AIMD-97-96T
(511107)
Abbreviations
=============================================================== ABBREV
ACE - Automated Commercial Environment
CDC - Customs Distributed Computing
CDC-2000 - Customs Distributed Computing 2000
IRB - investment review board
NCAP - National Customs Automation Program
============================================================ Chapter 0
Mr. Chairman and Members of the Subcommittee:
I am pleased to be here today to discuss issues related to the U. S.
Customs Service systems modernization. My remarks will focus
primarily on Customs' efforts to address risks associated with the
agency's modernization of its automated systems. We made
recommendations to help Customs address these risks in our May 1996
report\1 to this Subcommittee. I will also identify challenges
Customs faces as it plans and develops the Automated Commercial
Environment or ACE--which is critical because this system is planned
to support improvements to Customs' trade compliance (import) process
through greater use of information technology.
--------------------
\1 Customs Service Modernization: Strategic Information Management
Must Be Improved for National Automation Program To Succeed
(GAO/AIMD-96-57, May 9, 1996).
TRADE COMPLIANCE PROCESS
REDESIGN
---------------------------------------------------------- Chapter 0:1
One of Customs' primary responsibilities is to assess and collect
duties, taxes, and fees on imported merchandise. Today, this is
accomplished with a variety of processes for handling, inspecting,
and accounting for imports that have grown paper intensive,
inefficient, and ineffective. Customs is acutely aware that its
ability to process the growing volume of imports while improving
compliance with trade laws depends heavily on successfully
modernizing its trade compliance process and its supporting automated
systems. In recognizing this need to modernize, Customs undertook a
major initiative to redesign the trade compliance process. Also, the
Congress enacted legislation in 1993 that enabled Customs to
streamline trade compliance processing through automation by
establishing the National Customs Automation Program (NCAP). The
legislation eliminated certain mandated paper requirements and
specified critical functions that NCAP must provide, including the
ability for members of the trade community to electronically file
import entries at remote locations and for Customs to electronically
process "drawback" claims, which are refunds of duties and taxes paid
on imported goods that are subsequently exported or destroyed.
In 1994, Customs began the ACE project that is planned to replace the
Automated Commercial System--Customs' existing automated import
system--with an integrated, automated information system for
collecting, disseminating, and analyzing import data and ensuring the
proper collection and allocation of revenue. The NCAP prototype,
intended as the first operational demonstration of ACE, is planned to
implement selected features of the NCAP legislation beginning in
October 1997. Customs is also undergoing a separate but related
project, called Customs Distributed Computing 2000 (CDC-2000), to
select an information systems "architecture." This architecture is
essentially a blueprint or framework for guiding the development and
evolution of all Customs' automated information systems, including
ACE and, as I will highlight in my testimony today, is a key
component in successfully developing automated systems.
FOLLOW-UP ON GAO
RECOMMENDATIONS
---------------------------------------------------------- Chapter 0:2
The framework for GAO's 1996 review of Customs' automation was
research we previously conducted across a variety of public and
private sector organizations to identify "best practices" that help
these organizations consistently apply information technology to
improve mission performance. The Paperwork Reduction Act and the
Clinger-Cohen Act, which establish responsibilities for effective
information technology management, embrace these practices. These
important legislative requirements include implementation of an
information technology architecture, establishment of a disciplined
process to evaluate information technology investments, and
measurement of how well information technology supports agency
programs.
In our May 1996 report to this Subcommittee, we stated that Customs
was ill-prepared to develop ACE because the agency was not
effectively applying critical management practices that help
organizations mitigate the risks associated with modernizing
automated systems and better position themselves to achieve success.
Specifically, we found that Customs (1) lacked clear accountability
for ensuring successful implementation of NCAP requirements, (2)
selected an information systems architecture without first analyzing
its business requirements, (3) lacked policies and procedures to
manage ACE and other systems as investments, and (4) did not ensure
that systems under development adhere to Customs' own systems
development policies. Consequently, efforts to successfully develop
ACE were vulnerable to failure. The following is a brief summary of
our May 1996 recommendations, each of which Customs agreed with, and
the actions the agency has taken in response.
Assigning clear accountability and responsibility for information
management decisions and results is an important practice identified
by successful organizations. Because we found that clear
accountability for meeting NCAP requirements was lacking, we
recommended that Customs assign such responsibility. In response,
Customs acted quickly by assigning overall, policy-level
responsibility for implementing NCAP to the Trade Compliance Board of
Directors, which is headed by the Assistant Commissioner, Office of
Strategic Trade. Day-to-day responsibility for implementing NCAP is
assigned to the Assistant Commissioner, Office of Information and
Technology, who is also the Chief Information Officer.
The remaining three recommendations each required that Customs take
substantive action to develop and implement improved information
technology management practices over a long term. Because these
recommendations call for significant changes in long-standing
management practices, they will require sustained commitment and
focus on the part of Customs' leadership. While Customs has
initiated a variety of actions and made progress toward addressing
each situation, it is too early to determine whether Customs will
successfully implement each recommendation.
First, we recommended that Customs identify and analyze how it will
conduct its business in the future before selecting the information
systems architecture for the whole of Customs and on which ACE will
run. Failure to base selection of the architecture on such business
requirements could result in the development of systems that do not
function well or cannot be readily integrated with other systems. In
response, in October 1996 Customs reconsidered its approach to
selecting the architecture. Customs changed the CDC-2000
project--which had entailed acquiring hardware, software, and
telecommunications for ACE--to emphasize conducting analyses of
business requirements prior to selecting an architecture. As part of
the refocused CDC-2000 project, Customs hired a contractor in January
1997 that is expected to conduct these analyses and recommend a
process for selecting an architecture in June 1997. As of early May
1997, Customs officials stated that the contractor is on schedule to
complete its work in mid-June 1997.
Second, we recommended that Customs manage information technology
systems as investments. Doing so involves senior management applying
a disciplined process for selecting, controlling, and evaluating
major information technology projects. As a result, the Customs
investment review board (IRB) was designated in February 1996. The
Deputy Commissioner is chair of the IRB. Other high-level Customs
officials and representatives from other Customs offices and the
Department of the Treasury constitute the membership. The IRB meets
monthly and has primarily discussed issues related to the purpose,
organization, operation, and scope of the board. Customs has not yet
established policies and procedures or implemented an investment
review process that the IRB will implement. In November 1996,
Customs hired a contractor to develop a plan to help bring the agency
into compliance with the Clinger-Cohen Act. In April 1997, Customs
specifically tasked the contractor to assist with the development,
implementation, and institutionalization of a complete information
technology investment management process. As of early May 1997,
Customs officials told us that the contractor's work will be complete
and the investment process will be in place in July 1997.
Third, we recommended that Customs ensure that the agency adhere to
its own policies for developing information systems. Customs has
such policies to provide a standard approach to developing systems
and to help ensure the delivery of accurate, effective, and efficient
information systems. In October 1996, Customs updated these policies
to include new provisions on software project planning and project
management. The policy specifies that extensive project planning,
including estimating the size of software products and estimating
resource needs, should occur in initiating a project of the magnitude
of ACE. Also, the policy requires that project plans include
top-level management reviews and decisions at various stages and
between various phases of development. Such reviews are important
because they provide higher management with a basis for deciding
whether the expenditure of resources for the next phase is justified.
As of early May 1997, Customs had revised the ACE project plan and
Customs officials told us that the revised project plan complies with
their system development policies. Also, in January 1997, the
Assistant Commissioner, Office of Information and Technology,
assigned responsibility for system development policy enforcement to
his information resources management division. This division
established a schedule for compliance reviews, with ACE scheduled for
review in October 1997. These reviews are intended to promote
compliance with the software development process and provide
management visibility into the development process.
ACE PROJECT POSES MANY
CHALLENGES
---------------------------------------------------------- Chapter 0:3
The management practices described above, if successfully implemented
by Customs, will help reduce the risk inherent in a major information
system project such as ACE. However, Customs also faces a number of
challenges in planning and implementing the ACE project itself that
will require additional effort to resolve. These challenges relate
to the cost and schedule for ACE and include, for example:
Customs cannot say how much ACE will cost. While Customs estimates
ACE will cost $150 million to develop over a 10-year period, the
agency does not have an estimate for the total cost of ACE that
includes system operation and maintenance. Customs did not base
this estimate for development on the projected size of the
system or level of effort expected for development. Instead, it
is based on the level of funding Customs has historically
obtained for ACE.
Customs has not determined when ACE will be completed. Assessing
Customs' progress in developing ACE is difficult because the
agency lacks an overall schedule for the project. Customs does,
however, have a schedule for the first phase of ACE--the NCAP
prototype--although the agency has had difficulty adhering to
this schedule. Specifically, implementation of the NCAP
prototype has slipped from January 1997 to August 1997 and again
to a series of four releases beginning in October 1997 with the
fourth stage starting in June 1998.
We have discussed these issues with Customs' Assistant Commissioner,
Office of Information and Technology, and the Assistant Commissioner,
Office of Strategic Trade, and they are receptive to the need to
better identify the ACE cost and schedule. Currently, Customs' plan
is to produce a comprehensive project plan that includes cost and
schedule information in February 1998.
In conclusion, Customs faces some very significant challenges as it
develops ACE and attempts to address broader information technology
management issues. To ensure that the initial steps succeed in
implementing effective information technology management, Customs
will have to sustain its commitment and attention through the more
difficult phases of the modernization effort which are yet to come.
We plan to continue monitoring implementation of our May 1996
recommendations as well as the additional issues I have highlighted
today. In this regard, we will review the revised ACE project plan
and the results of the contractors that are helping Customs determine
its information system architecture and establish an investment
review process. Additionally, we have an ongoing review that is
designed to help Customs answer basic questions about ACE with regard
to cost, schedule, and performance.
-------------------------------------------------------- Chapter 0:3.1
Mr. Chairman, this concludes my statement. I would be pleased to
address any questions you or the other members may have.
*** End of document. ***