U.S. Customs Service: Oversight Issues (Testimony, 05/15/97,
GAO/T-GGD-97-107).
GAO discussed the Customs Service's drug interdiction efforts,
labor-management partnership concept, and issues related to inspectional
overtime.
GAO noted that: (1) its 1996 report on Customs' drug interdiction
efforts identified and described the key elements, resources, costs, and
performance measures of Customs' national drug interdiction program as
well as those of its investigative offices and selected ports; (2)
Customs' challenges included how to: (a) effectively interdict drugs and
enforce trade laws while facilitating border crossings; and (b) develop
performance measures that gauge the effectiveness of its drug
interdiction activities; (3) its March 1997 testimony discussed
labor-management activities within Customs; (4) in June 1994, Customs
and the National Treasury Employees Union (NTEU) entered into a
partnership agreement that established 19 goals, set up a National
Partnership Council, and stated that NTEU will participate in agency
meetings that affect the workforce; (5) GAO's limited work revealed that
most of the Customs managers and NTEU chapter presidents GAO interviewed
characterized their relationship as better while first-line supervisors'
views were more evenly distributed from "much better" to "much worse";
(6) Customs did not have any plans for an evaluation of the impact of
the partnership approach on its mission and GAO concluded that since the
partnership was almost 3 years old, it was not too soon for Customs to
develop a formal plan for evaluating it; (7) in 1991, GAO reported that
overtime pay to Customs inspectors had increased from about $57 million
in fiscal year (FY) 1985 to about $103 million in FY 1990; (8) GAO
concluded that an important cause was Customs' focus on ensuring that
inspectors did not exceed the $25,000 cap instituted by Congress in 1983
and its disregard of the individual overtime assignments that build to
the cap; (9) GAO also concluded that original overtime provisions
hindered efficient management and that the special payments were
premised on conditions that no longer existed; (10) GAO recommended
that: (a) overtime pay be more directly linked to actual hours worked;
and (b) overtime be used more efficiently; (11) the 1993 Customs
Officers Pay Reform Amendments (COPRA) were intended to more closely
match earnings to hours worked; (12) however, the Treasury Inspector
General (IG) reported in September 1996 that although COPRA reduced
direct spending associated with overtime pay, it caused a significant
increase in the costs associated with night differential pay in fiscal *
--------------------------- Indexing Terms -----------------------------
REPORTNUM: T-GGD-97-107
TITLE: U.S. Customs Service: Oversight Issues
DATE: 05/15/97
SUBJECT: Customs administration
Human resources utilization
Labor-management relations
Federal personnel law
Drug trafficking
Law enforcement
Overtime compensation
Government employee unions
Financial management systems
Differential pay
IDENTIFIER: Customs Service Operation Hard Line
Customs Service Line Release System
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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 2:00 p.m. EDT
Thursday, May 15, 1997
U.S. CUSTOMS SERVICE - OVERSIGHT
ISSUES
Statement of Norman J. Rabkin
Director, Administration of Justice Issues
General Government Division
GAO/T-GGD-97-107
GAO/GGD-97-107T
(264438)
Abbreviations
=============================================================== ABBREV
COPRA - Customs Officer Pay Reform Amendments
IG - Inspector General
NTEU - National Treasury Employees Union
SAC - Special Agent-in-Charge
U.S. CUSTOMS SERVICE: OVERSIGHT
ISSUES
====================================================== Chapter SUMMARY
One of the oldest federal agencies, the U.S. Customs Service
collects revenues in excess of $23 billion annually while processing
an estimated 14 million import entries and 450 million people through
301 ports of entry into the U.S. In recent years, GAO has reported
to the Subcommittee on three issues that are the subject of today's
oversight hearings: drug interdiction, labor-management relations,
and overtime pay.
GAO's September 1996 report on Customs' drug interdiction efforts
identified and described the key elements, resources, costs, and
performance measures of Customs' national drug interdiction program
as well as those of its investigative offices and selected ports in
the Miami and San Diego areas. It noted that Customs' challenges
included how to (1) effectively interdict drugs and enforce trade
laws while facilitating border crossings and (2) develop performance
measures that gauge the effectiveness of its drug interdiction
activities.
GAO's March 1997 testimony discussed labor-management activities
within Customs. In June 1994, Customs and the National Treasury
Employees Union (NTEU) entered into a partnership agreement that
established 19 goals, set up a National Partnership Council, and
stated that NTEU will participate in agency meetings that affect the
workforce. GAO's limited work revealed that most of the Customs
managers and NTEU chapter presidents GAO interviewed characterized
their relationship as better while first-line supervisors' views were
more evenly distributed from "much better" to "much worse." Customs
did not have any plans for an evaluation of the impact of the
partnership approach on its mission and GAO concluded that since the
partnership was almost 3 years old, it was not too soon for Customs
to develop a formal plan for evaluating it.
In 1991, GAO reported that overtime pay to Customs inspectors had
increased from about $57 million in fiscal year 1985 to about $103
million in fiscal year 1990. GAO concluded that an important cause
was Customs' focus on ensuring that inspectors did not exceed the
$25,000 cap instituted by Congress in 1983 and its disregard of the
individual overtime assignments that build to the cap. GAO also
concluded that original overtime provisions hindered efficient
management and that the special payments were premised on conditions
that no longer existed. GAO recommended that (1) overtime pay be
more directly linked to actual hours worked and (2) overtime be used
more efficiently. The 1993 Customs Officers Pay Reform Amendments
(COPRA) were intended to more closely match earnings to hours worked.
However, the Treasury Inspector General (IG) reported in September
1996 that although COPRA reduced direct spending associated with
overtime pay, it caused a significant increase in the costs
associated with night differential pay in fiscal years 1995 and 1996.
In addition, the IG pointed out that annually inspectors file and win
grievances if they are not allowed to work because they are close to
the $25,000 cap.
U.S. CUSTOMS SERVICE: OVERSIGHT
ISSUES
==================================================== Chapter STATEMENT
Mr. Chairman and Members of the Subcommittee:
I am pleased to be here today at this Customs oversight hearing to
discuss work we have done for this Subcommittee addressing Customs'
drug interdiction efforts, labor-management partnership concept, and
issues related to inspectional overtime. Our testimony is based
primarily on products we have issued on each of these subjects since
1991.
Created in 1789, the U.S. Customs Service is one of the federal
government's oldest agencies. Although its original mission was to
collect revenue, Customs' mission has expanded to include ensuring
that all goods and persons entering and exiting the United States do
so in accordance with all U.S. laws and regulations. Moreover, a
major goal of Customs is to prevent the smuggling of drugs into the
country by creating an effective drug interdiction, intelligence, and
investigation capability that disrupts and dismantles smuggling
organizations.
As of January 1997, Customs performed its mission with a workforce of
about 19,500 personnel at its headquarters, 20 Customs Management
Centers, 20 Special Agent-in-Charge (SAC) offices, and 301 ports of
entry around the country. Customs collects revenues in excess of $23
billion annually while processing the estimated 14 million import
entries and 450 million people who enter the country each year.
DRUG INTERDICTION
-------------------------------------------------- Chapter STATEMENT:1
In September 1996, we issued a report to this Subcommittee on the
drug interdiction efforts of the Customs Service.\1 As one of the
more than 50 federal agencies involved in the War on Drugs, Customs
is responsible for stopping the flow of illegal drugs across the
nation's borders. In addition to routine inspections to search
passengers, cargo, and conveyances for illegal drugs moving through
U.S. ports, Customs' drug interdiction program includes
investigations and other activities unique to specific ports.
Our report identified and described the key elements, resources,
costs, and performance measures of Customs' national drug
interdiction program, as well as those of its investigative offices
and selected ports in the Miami and San Diego areas.
Customs has two key organizational elements in its drug interdiction
program. First, the Office of Field Operations has over 6,600
inspectors and 527 canine enforcement officers who perform
inspections at the 301 air, land, and sea ports around the country.
Inspectors use an array of technology in their search for drugs, such
as an X-ray system for trucks and trailers, X-ray machines for
containerized cargo, and fiber-optic scopes to examine gas tanks and
other enclosed spaces. Inspectors also target persons, cargo, and
conveyances for examination using manifest reviews and databases such
as the Treasury Enforcement Communications System, which contains
information on suspected smugglers.
Second, the Office of Investigations has about 2,500 special agents,
about half of whom are authorized to react to and investigate drug
seizures at ports and develop cases that implicate drug smuggling
operations. Investigations also is responsible for about 1,100
personnel in aviation, marine, and intelligence units, which support
the drug interdiction mission. The aviation unit supports foreign
interdiction operations, interdicts and apprehends air smugglers, and
supports other Customs and federal, state, and local law enforcement
efforts. Marine units interdict, investigate, and apprehend
violators that smuggle drugs into the United States via commercial
and pleasure vessels. To assist in performing these missions, the
aviation and marine units have 78 vessels, 77 airplanes, and 39
helicopters. The intelligence unit supports Customs' management and
all field elements; this involves developing assessments of drug
smuggling threats for various parts of the country. For example,
threat assessments of the Southwest border led, in part, to the
Customs Commissioner's support for creating a major national
initiative, Operation Hard Line,\2 for the Southwest border.
Customs reported to the Office of National Drug Control Policy that
its combined budget for drug interdiction and investigations averaged
about $575 million for fiscal years 1990 to 1996. In fiscal year
1995, its drug interdiction budget was about 38 percent and its drug
investigations budget was about 3 percent of the federal drug control
budget.
Customs has traditionally measured the output from its drug
interdiction effort by the resulting number of seizures, arrests,
indictments, and convictions. For example, in fiscal year 1995,
Customs reported about 2,200 cocaine seizures, about 900 heroin
seizures, and about 10,000 marijuana seizures--these seizures
accounted for over 50 percent of all drugs seized by federal
agencies. It also reported participating in the seizure of an
additional 13 percent of the total drugs seized.
These traditional measures, however, track activity, not outcome or
effectiveness. Customs has sought to develop nontraditional measures
for use in assessing the effectiveness of its drug strategy
initiative. For example, Customs is testing a program designed to
estimate the number of drug smugglers entering the ports, thus
providing it with a baseline from which to measure how effective its
inspectors have been at targeting drug smugglers at the ports. At
the time of our report, the program was implemented at major air and
land border ports.
Our September 1996 report also described drug interdiction activities
at major ports in the Miami and San Diego areas. It provided
information on the ports, estimates of the resources Customs had
invested in drug interdiction and investigation activities there, and
traditional measures of its success. In addition, we described a
special cargo entry program at the Otay Mesa, California cargo port.
The program, called Line Release, was designed to expedite the
release and tracking of low-risk, high-volume shipments. Under the
Line Release program, Customs is to prescreen manufacturers,
importers, brokers, and shippers in an attempt to ensure they are low
risk for drug smuggling; Line Release participants are required to
pass five intensive examinations and meet a minimum requirement of 50
shipments per year. Although the program has been criticized for
allowing trucks to enter the United States from Mexico without
inspection, our work showed that vehicles participating in the Line
Release program were subject to the same special enforcement
operations as non-Line Release vehicles, and were inspected more
frequently through these operations than were non-Line Release
vehicles.
Finally, our report discussed the challenges Customs was facing in
its drug interdiction mission. First, we pointed out that Customs'
major challenge was to effectively carry out its drug interdiction
and trade enforcement missions while facilitating the flow of persons
and cargo across the borders. Customs has to perform these missions
despite continuous and extensive threats from drug smugglers along
the border.
Second, because its financial information systems are not designed to
account for costs by mission component, Customs has to estimate the
amount it is spending for drug interdiction overall. This reduces
Customs' ability to determine whether allocation of additional
resources at specific ports or in a specific region has produced
commensurate benefits. Customs officials told us that they were
developing mission- and performance-based budgets, in accordance with
Department of the Treasury directives, that would enable them to
determine with greater reliability the costs of drug interdiction
activities throughout Customs.
Third, Customs--like other law enforcement agencies engaged in the
fight against drug smuggling--has attempted to develop performance
measures. Traditional output measures do not allow officials to
gauge the effectiveness of drug interdiction activities. Even the
new, nontraditional measures being developed may not allow Customs to
assess, over time, whether increased efforts are producing better
outcomes.
--------------------
\1 Customs Service: Drug Interdiction Efforts (GAO/GGD-96-189BR,
Sept. 26, 1996). The data in this section were current as of
September 1996, unless otherwise indicated.
\2 First implemented on the Southwest border, Operation Hard Line
emphasizes intensified inspections, improved facilities, and the use
of technology to detect drug smuggling. It has been expanded beyond
the Southwest border to the southern tier of the United States,
including the Caribbean and Puerto Rico, with enhanced air and marine
enforcement.
LABOR-MANAGEMENT PARTNERSHIP
CONCEPT
-------------------------------------------------- Chapter STATEMENT:2
In March 1997, I testified before this Subcommittee on
labor-management activities within Customs.\3 The Subcommittee had
asked us to review, among other topics, the history of union activity
at Customs and the effect that the partnership agreement between
Customs and the National Treasury Employees Union (NTEU), the
exclusive representative of Customs' bargaining unit employees,\4 had
on Customs' ability to establish and achieve its mission-related
goals. At the time of that hearing, we had performed preliminary
work at Customs headquarters, 5 Customs Management Centers, 11 ports
of entry around the country, the NTEU national office, and 7 local
NTEU chapters.\5
Executive Order 12871, October 1, 1993, required the head of each
federal agency to create labor-management councils to help involve
employees and their unions as full partners. These partnership
councils are to identify problems and craft solutions to better serve
the agency's customers and accomplish its mission. In June 1994, the
Customs Service and NTEU entered into a partnership agreement that
established 19 goals, set up a National Partnership Council, and
stated that NTEU will participate in agency operational meetings that
affect the workforce. In February 1997, Customs and NTEU implemented
a new national contract.
Our limited work revealed a variety of opinions regarding
Customs-NTEU relations since the implementation of the executive
order. Most of the Customs managers we interviewed characterized
their relationship with NTEU chapters as better. Most of the NTEU
chapter presidents we spoke with also said the relationship was
better. The views of the Customs first-line supervisors we
interviewed were more evenly distributed from "much better" to "much
worse."
Customs managers and supervisors and NTEU representatives provided
similar comments about the advantages of the partnership concept,
citing faster problem resolution, improved communications, and mutual
involvement in decisions. However, comments on disadvantages
revealed no clearly shared views. For example, managers and
supervisors generally stated that all issues must be bargained with
the union before any action can be taken, while NTEU officials
generally indicated that managers want to choose when they include
NTEU in making decisions and when they do not.
Customs' partnership agreement with NTEU and Executive Order 12871
call for evaluating the progress of and improvements in the agency's
performance resulting from the partnership concept. To a limited
extent, Customs had begun that effort. However, at the time of our
testimony, these efforts had not set the groundwork for the kind of
comprehensive evaluation envisioned by the Executive Order and
partnership agreement. In our work at Customs' headquarters and
several field locations, we did not see any plans for an evaluation
of the impact of the partnership approach on Customs' mission.
We pointed out in our testimony that cultural changes such as those
promised by the partnership concept do not occur quickly. The
Commissioner of Customs told us that he expected it to take at least
5 years for the new relationship to become Customs' normal operating
environment. Nevertheless, given that Customs and NTEU had been in
this new relationship for almost 3 years, we concluded that it was
not too soon for Customs to develop a formal plan for the evaluation
of progress and improvements in organizational performance resulting
from this labor-management partnership.
--------------------
\3 U.S. Customs Service: Varied Reaction to the Labor-Management
Partnership Concept (GAO/T-GGD-97-54, Mar. 11, 1997).
\4 As of January 1997, approximately 11,200 of the 19,500 Customs
personnel were eligible to join NTEU, and about 7,200 had done so.
\5 Because the testimony satisfied the Subcommittee's interests at
that time, we have not conducted further work on this issue.
OVERTIME ISSUES
-------------------------------------------------- Chapter STATEMENT:3
In the Act of February 13, 1911, Congress enacted overtime pay
provisions for Customs inspectors. Sunday work was to be compensated
at the rate of 2 days' regular pay; on holidays, the rate was to be
the total of 2 days' pay plus the hourly rate for the period of time
worked on the holiday. No minimum period of work was required to
qualify for the premium--overtime--pay. Thus, inspectors could have
worked as little as 1 minute and received 2 days' pay for Sunday
work. For overtime work at other times during a week, the minimum
compensation was 4 to 12 hours' pay, depending on whether the
inspector worked late, came in early, or was called back to work. In
1983, Congress set a cap of $25,000 on the amount of individual
overtime earnings. With the enactment of the Consolidated Omnibus
Budget Reconciliation Act of 1985, Customs began charging user fees
for processing passengers and cargo; the revenue from these fees paid
for Customs' overtime and premium pay.
In 1991,\6 we reported to this Subcommittee that overtime pay to
Customs inspectors had increased from about $57 million in fiscal
year 1985 to about $103 million in fiscal year 1990. We concluded
that an important contributing cause of this growth was Customs'
focus on ensuring that inspectors did not exceed the $25,000 cap and
its disregard of the individual overtime assignments that build to
the cap. We found internal control weaknesses that resulted in
errors in preparing overtime documentation, certifying payments, and
entering data in the overtime system. We also concluded that the
1911 Act provisions hindered the efficient management of overtime and
that the special payments were premised on conditions that no longer
existed. Although we believed that inspectors should be paid extra
for working overtime, we recommended that (1) the 1911 Act be amended
so that inspector overtime pay would be more directly linked to
actual hours worked and (2) Customs management focus on achieving a
more efficient use of overtime.
Based in part on our findings, the Customs Officers Pay Reform
Amendments (COPRA), Section 13811 of the Omnibus Budget
Reconciliation Act of 1993, established the overtime and premium pay
system for Customs officers performing inspectional services. The
intent behind changing the 1911 Act was to more closely match
earnings to hours worked, thereby reducing overtime costs. It was
expected that the changes made by COPRA would result in overtime
savings of $12 million in both fiscal years 1994 and 1995, and a
total of $52 million for the 5-year period ending with fiscal year
1998.\7 However, in September 1996 the Treasury Inspector General
(IG) reported that although COPRA reduced direct spending associated
with Customs officers' overtime pay, it caused a significant increase
in the costs associated with night differential pay.\8 The IG
reported a net increase in overtime pay of $8.9 million in fiscal
year 1995.\9
Further, the IG pointed out that future night differential pay to
Custom officers will be even higher. On December 9, 1995, an
arbitrator ruled favorably on a grievance filed by NTEU that
protested Customs' refusal to pay night differential to Customs
officers who were on sick or annual leave for 8 hours or longer. The
ruling required Customs to pay employees who would ordinarily receive
COPRA night differential when at work but who did not receive it when
on leave since January 1, 1994. Customs estimated that it paid over
$1 million in premium pay for work not performed as a result of that
ruling. Customs' appropriation act for fiscal year 1997 prohibits
this practice for that fiscal year, but this prohibition expires at
the end of fiscal year 1997.
The IG report also pointed out that the pay cap has caused additional
increases in administrative costs for Customs. Annually, inspectors
(and canine enforcement officers) file grievances because they are
not allowed to work overtime assignments if they are close to the
$25,000 cap. According to a Customs official, most port management
stop those Customs officers who are approaching the cap (usually
those who had earned about $24,500) from working any more overtime.
This work was performed by other Customs officers who were not at the
cap. The IG reported that in fiscal year 1994 over $100,000 in
settlements were paid as a result of these overtime cap grievances.
--------------------
\6 Customs Service: 1911 Act Governing Overtime Is Outdated
(GAO/GGD-91-96, June 14, 1991).
\7 See House Report 103-111, May 25, 1993.
\8 Night differential pay depends on the regularly scheduled hours of
the Customs officer. If the majority of the officer's hours are
between 3 p.m. and midnight, compensation equals the basic hourly
rate plus premium pay of 15 percent of the hourly rate. If the
majority of the hours are between 11 p.m. and 8 a.m., compensation
equals the basic hourly rate plus premium pay of 20 percent of the
hourly rate.
\9 Customs Officer Pay Reform Amendments (COPRA), Office of Inspector
General, Department of the Treasury, OIG-96-094 (Sept. 13, 1996).
Customs reported that this amount increased to $9.5 million in fiscal
year 1996.
------------------------------------------------ Chapter STATEMENT:3.1
Mr. Chairman, this completes my statement. I would be pleased to
answer any questions.
*** End of document. ***