Senate, Customs debate funding import system

A request by the Customs Service to fund a new computer system by increasing user fees met stiff opposition in the Senate Finance Committee late last week, but members agreed that the system still must be funded.

Customs wants $1.4 billion to build the Automated Commercial Environment, which would speed up cargo clearance and examination procedures for the $1 trillion worth of imports coming into the United States every year. Customs has been using a prototype of the ACE system at select ports and now wants to roll it out nationwide over the next four years.

ACE would replace Customs' aging Automated Commercial System, which last year processed 19 million trade entries - 10 percent more than the previous year. Customs uses ACS to collect data from importers about what they are bringing across the border. The data is used to assess whether the shipments need to be inspected and to collect tariffs. In most cases, this information is filed when, or shortly before, goods enter the country.

But last year, ACS crashed at least three times when the volume of transactions choked the system, causing delays of several hours in the movement of imports.

"We clearly need a new system," Raymond Kelly, commissioner of Customs, told the committee. "ACS has been in existence for 16 years. It uses software that was designed in 1978. It does not enable us to do business the way trade does business."

The proposed increase in the existing user fee would raise $163 million. The increase would take effect in fiscal 2000 and raise money that would be used beginning in fiscal 2001 to pay for the rollout of ACE. Customs needs $195 million in fiscal 2000 to fund ACE at the rate proposed in the installation schedule, a Customs spokesman said. In addition, the agency needs $47 million in fiscal 2000 to keep ACS running.

The funding proposal, which was offered last year and was rejected, again found little bipartisan support on the Finance Committee. "It is clear Congress is not going to adopt this fee," said Sen. Phil Gramm (R-Texas). Gramm said the Clinton administration's proposal "reached a new level of phoniness" by denying Customs the money it needs for the system while ignoring the fact that the current fee raises $900 million.

However, Gramm and other senators agreed that it is time to replace the old system and discussed taking the funds from other Treasury Department programs or claiming some of the money generated by the current fee, which currently flows directly into the U.S. Treasury.

Sen. Charles Grassley (R-Iowa) warned Kelly not to make the same mistake the Internal Revenue Service made when its computer upgrade was funded. "We gave [the IRS] $4 billion to upgrade their computer system, and 90 percent of it was wasted," Grassley said.

Woody Hall, Customs' chief information officer, said Customs has been cooperating with the General Accounting Office on its reforms, including development of an enterprise system architecture, adoption of Software Engineering Institute practices and reliance on outside consultants to improve cost estimates.

"All these things that we are doing are precisely aimed at avoiding what the IRS did," Hall said.

Customs two weeks ago hired Mitre Corp. to help write the request for proposals for ACE, Hall said. "We want to make sure we don't write an overly restrictive statement of work," he said.

Gene Millosh, president of the American Association of Exporters and Importers, said it was encouraging to see the committee shy away from increasing the user fee. He said a letter-writing campaign that the association sponsored appeared to have swayed many members.