Customs Service: Comments on Strategic Plan and Resource Allocation
Process (Testimony, 10/16/97, GAO/T-GGD-98-15).

GAO discussed the strategic plan submitted by the U.S. Customs Service,
as required by the Government Performance and Results Act.

GAO noted that: (1) the Customs Service's plan addresses the required
elements; (2) it also contains a discussion of management challenges
but, in GAO's opinion, does not adequately recognize Customs' need to
improve its financial management and internal control systems, its
controls over seized assets, its plans to alleviate year 2000 problems,
and its plans to improve computer security; (3) regarding its resource
allocation process, Customs officials told GAO that they were not aware
of any formal agencywide efforts prior to 1995 to determine the need for
additional cargo and passenger inspectional personnel for its 301 ports;
and (4) however, Customs officials told GAO that in June 1995, in
preparation for its fiscal year 1997 budget request and a new drug
enforcement operation (Hard Line), Customs conducted a formal needs
assessment using factors such as the need to: (a) fully staff
inspectional booths; and (b) balance enforcement efforts with the need
to quickly move complying cargo and passengers through the ports.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  T-GGD-98-15
     TITLE:  Customs Service: Comments on Strategic Plan and Resource 
             Allocation Process
      DATE:  10/16/97
   SUBJECT:  Agency missions
             Strategic planning
             Information resources management
             Financial management systems
             Law enforcement
             Human resources utilization
             Inspection
             Congressional/executive relations
             Customs administration
IDENTIFIER:  National Drug Control Strategy
             GPRA
             Government Performance and Results Act
             Customs Service Operation Hard Line
             
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Cover
================================================================ COVER


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

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

CUSTOMS SERVICE - COMMENTS ON
STRATEGIC PLAN AND RESOURCE
ALLOCATION PROCESS

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

GAO/T-GGD-98-15

GAO/GGD-98-15T


(264440)


Abbreviations
=============================================================== ABBREV


CUSTOMS SERVICE:  COMMENTS ON
STRATEGIC PLAN AND RESOURCE
ALLOCATION PROCESS
====================================================== Chapter SUMMARY

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

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

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


CUSTOMS SERVICE:  COMMENTS ON
STRATEGIC PLAN AND RESOURCE
ALLOCATION PROCESS
==================================================== Chapter STATEMENT

Mr.  Chairman and Members of the Committee: 

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


   THE CUSTOMS SERVICE'S STRATEGIC
   PLAN
-------------------------------------------------- Chapter STATEMENT:1

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

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

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

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

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

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

Fourth, the strategic plan discusses in very general terms how it
relates to annual performance plans.  In addition, for each goal,
Customs provides specific targets it hopes to achieve during fiscal
years 1997 through 2000.  For example, among Customs' strategies for
facilitating exports while achieving compliance with applicable laws
and regulations is to redesign its outbound process "so that it is
clear, consistent, and understandable to all customers and
stakeholders of the process." Customs' targets for fiscal years 1997
and 1998 are to "continue to implement the uniform policies" and
"implement performance measures." For fiscal years 1999 through 2002,
Customs' targets are to "implement the redesigned process" and
"determine the resources needed to optimally implement the
redesigned" process.  However, these targets are more process
oriented than results oriented; targets more closely related to the
strategy, such as the extent of positive results from a customer
survey and eventually higher compliance rates, might give Customs a
better idea of whether its strategy is working. 

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

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

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

Customs' plan also recognizes some of the management challenges that
the agency faces in carrying out its core functions but does not, in
our opinion, cover some important management challenges it will face
in successfully carrying out the plan.  The plan discusses three
functions--information and technology, finance, and human resources
management.  In a broad sense, the plan references the problems that
we and others have identified regarding Customs' automated systems
modernization efforts and its need to improve its financial
management and internal control systems.\3

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

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

Our report on high-risk issues within the information technology area
cited information security and the year 2000 problem as two issues
requiring agency-specific actions.\4 Customs' plan contains some
discussion of the importance of information security but does not
address the Year 2000 problem.  Specifically, regarding information
security, the plan briefly mentions that the agency will follow
applicable security-related directives and policies while providing a
secure global network.  Also, the plan mentions the need for secure
technology in the context of improving certain information systems. 
However, the plan does not describe information security-related
strategies or measures and there is no comprehensive discussion about
the need to focus on information security issues such as Customs
attempts to move to an environment where the agency increasingly
relies on automation and technology to perform its mission. 

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


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

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

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

\4 GAO High-Risk Series, Information Management and Technology
(GAO/HR-97-9, Feb.  1997). 


   CUSTOMS' RESOURCE ALLOCATION
   PROCESS
-------------------------------------------------- Chapter STATEMENT:2

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

Officials in Customs' Office of Field Operations told us that they
were not aware of any formal needs assessments used to determine the
number of cargo and passenger inspectional personnel to be assigned
to each of its 301 ports, prior to 1995.  Beginning in 1995, for the
fiscal year 1997 appropriations cycle, Customs requested additional
inspectors to help implement Operation Hard Line.\5 To determine how
many more inspectors it needed and where it needed them, Customs
asked its field managers--at the then district (and subsequently at
the Customs Management Center\6 ) level--to assess their resource
needs on the basis of a variety of factors, such as the need to (1)
fully staff primary cargo and passenger lanes and inspection
facilities, (2) respond to staffing agreements with INS,\7 (3)
provide canine enforcement to cargo and passenger processing
operations, and (4) balance enforcement efforts with the need to
quickly move complying cargo and passengers through the ports.  As a
result of this needs assessment and the ensuing appropriations
process, Congress provided Customs with authority to hire an
additional 657 inspectors and other staff in fiscal year 1997. 

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

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

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


--------------------
\5 Operation Hard Line is Customs' effort to address border violence
and drug smuggling through intensified inspections, improved
facilities, and advances in technology. 

\6 On October 1, 1995, Customs closed its 7 regional and 42 district
offices and replaced them with 20 Customs Management Centers. 

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


------------------------------------------------ Chapter STATEMENT:2.1

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

*** End of document. ***