Customs picks IBM as prime

Customs modernization request for proposals

The U.S. Customs Service, marking a significant milestone in its efforts to modernize its antiquated trade systems, awarded the prime contract for the $1.4 billion project to IBM Corp.

Today's announcement is the latest step in the Customs' plans to build the Automated Commercial Environment (ACE), which will replace the 17-year-old Automated Commercial System (ACS).

IBM won out over Accenture and Electronic Data Systems Corp., which also had been vying for the contract.

Major subcontractors in the e-Customs Partnership led by IBM Global Services include Lockheed Martin Mission Systems, KPMG Consulting LLC, Computer Sciences Corp. and Sandler & Travis Trade Advisory Services Inc.

Experts suggest that the modernization plan is the only way Customs will be able to deal with the increasing volume of international trade, which is projected to double by 2005. Few expect an increase in the Customs Service's 15,000-person workforce.

Customs officials announced the ACE contract award at a press conference today after spending much of the week getting the General Accounting Office and congressional appropriators to free $45 million in fiscal 2001 funds to use to kick off the modernization project.

Like the IRS, Customs modernization money is put in a separate account and can be spent after the agency gets approval from Treasury Department officials, GAO and congressional appropriators.

Industry groups had been pushing for funding to replace ACS, which has become susceptible to brownouts and delaying shipments of imported goods at U.S. ports and border crossings. Customs handles 18 million to 19 million cargo summaries per year, representing $1 trillion worth of commerce and collecting $22 billion in duties each year — the federal government's second-largest revenue source.

The modernization project still faces some significant hurdles. Agency officials have said such large projects are risky. And industry officials said last week that the Bush administration has not allocated enough money to roll out the new system efficiently and effectively.

President Bush has proposed $130 million for ACE for fiscal 2002, a figure that the business leaders calculate would stretch implementation of the system across 14 years.