Amid tight budgets, U.S. Customs sets aggressive schedule to complete long-delayed IT project.
It’s been a marathon, but the finish line is finally coming into sight for U.S. Customs and Border Protection’s massive systems modernization project known as ACE.
More than a dozen years and $3.1 billion since development of the Automated Commercial Environment began there is genuine optimism in the trade community that the promise of fully electronic customs clearance, duty payment and document submission is nearing reality.
During the summer, the Department of Homeland Security gave CBP the green light to move ahead with plans to complete the trade processing hub after the agency demonstrated proper controls, testing and deployment strategies were in place to prevent the missteps and delays of the past. Customs officials subsequently announced three deadlines for transitioning from the older Automated Commercial System to ACE, although the schedule could still be thrown off by the ongoing budget battle in Washington.
ACE is the next-generation, Web-based information technology system being developed to monitor, control, and expedite commercial imports and exports, communicate with the trade community, and make risk assessments about cargo for regulatory enforcement and security purposes. It is also designed to provide a single-window portal for importers, and eventually exporters, to file trade data with agencies across the federal government and then access and analyze that data on an account-level basis.
By reducing the amount of data required and modernizing Customs’ operations, along with technology, to correspond with how modern businesses operate, shippers can get better information about the status of their shipments and CBP can render faster decisions about admissibility, which is expected to lead to more regulatory consistency at ports of entry and lower costs for all involved.
Some components of ACS are 20 to 25 years old and are difficult and expensive to maintain, CBP officials say.
Functions already available in ACE include paying consolidated duties on a monthly basis, filing antidumping and counterveiling duty entries from any location outside the port of arrival and making corrections to entry summaries after they are filed. Through the Secure Data Portal, importers can access current, account-level shipment information as well as more than 125 customizable reports, which may reveal trends that signal noncompliance with regulatory requirements or sourcing patterns that could be shifted to take advantage of duty benefits associated with certain rules. Entering trade information and saving it online for future use can also help shippers reduce time, paperwork and courier fees. CBP’s ability to retrieve and review shipment information before it reaches the border can speed up cargo processing when goods arrive at a port.
Automation has led to a 30-fold increase in food seizures while saving CBP $46 million per year, according to a CBP slide presentation posted on its Website. It also helps process trucks at the border 33 percent faster than with previous systems.
Eleven months ago, CBP switched to a software development strategy that emphasizes the frequent release of smaller pieces of functionality instead of holding related pieces of software until everything is complete and can be bundled into a single release. Software development is now based on open standards instead of proprietary software and customized off-the-shelf products. The more flexible approach gives users faster access to needed tools and provides constant feedback to programmers so they can make necessary changes before the architecture is finalized.
In early August, after extensive consultation with internal and external stakeholders, CBP announced the deployment schedule for core features to enable full cargo processing and decommissioning of ACS:
- May 1, 2015, all electronic import and export manifest data must be transmitted via ACE. The mandate essentially applies only to air manifests because CBP a year ago turned off ACS as an approved system for transmitting advance rail and sea manifests from carriers and in-bond transactions, while e-truck manifests have been required in ACE for several years.
- Nov. 15, 2015 — all data associated with the release of cargo, including documentation required by other government agencies, must be transmitted in ACE.
- Oct. 1, 2016 — all transactions must be done through ACE.
Automated cargo release will enable CBP officers to make quicker and better informed decisions on the disposition of imported cargo, issue electronic hold notices, expedite the entry process for trusted traders, replace paper filing and create electronic workflows to facilitate review of shipments by various regulatory bodies.
CBP postponed the first rollout of software under the Agile methodology, scheduled for Oct. 5, because of the lapse of appropriations and subsequent furlough of many employees when an ideologically split Congress failed to pass a short-term budget funding government operations over disagreements about the new national health insurance law.
Deployment “A” will enable more tasks associated with filing simplified entries for cargo release, validations for calculating the harbor maintenance fee and tariff classifications on entry summaries (the document filed after release that is attached to the entry, along with duty and user fees), and the first pilot projects for integrating specific message sets to be transmitted to other government agencies under the single portal concept. Under the pilots, which are scheduled to begin in late October, data related to vehicles, engines and ozone-depleting substances — items which are controlled by the Environmental Protection Agency — and Food Safety and Inspection Service certificates will be accepted in ACE.
The cargo release functionality includes the ability to file in-bond and split shipment entries. The latter refers to shipments listed on one bill of lading that moved on separate flights. In the past, if the shipment wasn’t on the same flight it was disqualified from being entered through ACE.
In January and April, CBP plans to release more functions associated with simplified entry filing, the rollout of cargo release applications to ocean ports and data validation for users through on-screen prompts, or edits, to ensure fields are correctly entered.
CBP officials consider simplified entry the first step in creating entries in ACE. In mid-2012, the agency began a pilot program for air shipments to test the concept of providing conditional release to shippers for filing streamlined customs declarations well in advance of the goods arriving in the United States. Under current practice, CBP cannot make a release decision until takeoff from a foreign airport.
The first phase of the demonstration program is scheduled to run through December. CBP eventually plans to expand simplified entry to ocean — where entries are reviewed no sooner than five days prior to arrival — and other modes.
Under simplified entry, filers only need to submit about half the information required on the standard customs entry, along with some data elements from the Importer Security Filing, any time prior to arrival in the United States. CBP quickly responds with a notice of “conditional release” or will request additional information, with final release provided once the carrier’s manifest is filed. Advance notification helps logistics operators plan cargo pickup for distribution to facilities and stores.
Each release subsequent to the simplified entry will build on that foundation until there is full release capability.
The focus for the following 12 months will be on exports and the reports. Trade compliance specialists generally like the information they can glean from ACE about their cross-border activity, but many say the reports are not as useful as they could be.
CBP is reengineering the Automated Export System, used for filing export declarations, and will coordinate with the Census Bureau and Bureau of Industry and Security to make sure it captures the commodity information they need in a streamlined fashion.
“We get the message that for both better facilitation and enforcement we need to have the data and use it better, and getting data has to be cheap,” to support expansion of U.S. exports, Brenda Smith, executive director of the ACE Business Office, said during a briefing with reporters in early August.
The Agile strategy has “greatly reduced the trade’s anxiety” about whether ACE will be completed, “Chip” Bowen, co-chairman of the Commercial Operations Advisory Committee’s trade modernization subcommittee and an official at FedEx Trade Networks, said at a recent meeting.
Publicizing the deployment schedule is important so the private sector can prepare its systems and personnel to interface with CBP’s new system, Smith said. As of April there were 188 approved trade filers transmitting entry summaries in ACE, accounting for more than a quarter of all eligible entry summaries filed with CBP. Agency officials constantly encourage customs brokers or importers that self-file entries to switch to ACE.
CBP requested $140 million for ACE in the Obama administration’s fiscal year 2014 budget and plans to annually spend the same amount through mid-2016 to complete the project, Smith said. That would put the total outlay for ACE at more than $3.5 billion.
Although congressional appropriators briefed on CBP’s schedule are pleased that there is an end in sight for ACE and support the effort to complete core functionality, according to Smith, Congress has yet to pass a 2014 appropriation for DHS and the brinksmanship over the size of government could still jeopardize anticipated funding for programs across the government. The ACE program, for example, lost $10 million earlier this year when House Republicans and the White House could not agree on how to address the national debt and automatic cuts, designed as a poison pill, kicked in.
The sequester cuts are scheduled to continue at the same level in the current fiscal year barring a broad budget deal, meaning another $10 million hit to ACE resources could occur.
But CBP officials have said development through 2014 will be made possible by cost savings in ACE operations, shifting money from other internal accounts and ACE carryover dollars from the prior fiscal year.
The government’s vision is to leverage ACE as the “single window” through which documentation can be filed once to some 47 agencies with jurisdiction over imports and exports instead of companies filing different forms with similar data to multiple agencies. “Transmit once, use multiple times,” is the mantra of those supporting a new inter-connected government. A harmonized set of trade-related data will be collected by Customs in ACE and distributed via an interoperable Web-based service to the agencies, along with any unique data requirements specific to each.
Getting other agencies to agree on a universal message set and to invest in systems that will interface with ACE has been a slow process since last decade.
The National Security Council at the White House has taken an active interest in the so-called International Trade Data System (ITDS) this year, as part of the Obama administration’s 2011 plan to create a 21st-century regulatory system and make government more efficient. An ITDS task force is studying how to get greater agency participation and cost savings through IT integration. It has conferred with a number of trade associations about validating the degree to which ITDS can help speed up admissibility decisions for cargo and save money, according to Marianne Rowden, executive director of the American Association of Exporters and Importers, and other industry sources.
The Obama administration is considering an executive order to ensure ITDS is implemented and the task force is working with the National Security Council staff to draft an order “to make clear the expectations and the implementation schedule for the departments and agencies,” Sanchitha Jayaram, director of trade policy at the Department of Homeland Security, said at the Aug. 7 COAC meeting.
Rowden expressed concern that much of the groundwork to date could be wasted because some agencies now want to adopt a separate nomenclature (the Global Product Classification code) developed by GS1, the private sector standards organization that also brought the world the barcode to speed store checkout. The agencies feel the Harmonized Tariff Schedule code used to determine duty rates for products doesn’t provide enough detail about a product — such as a breakdown of the various chemical components in a product or a specific variety of flower — to make a determination about the risk of goods entering the United States. Some industries use the GS1 product code and catalogs. Agencies that want more granular information could require the GS1 identifier number on the entry instead of making importers describe the product and then could look it up in the global catalog.
The better approach, Rowden insisted, is to vet the operations of shippers so their shipments can be trusted rather than scrutinizing each shipment. Relying on a new product information code number will increase costs for businesses, especially small and midsized enterprises that wouldn’t be able to afford systems to track another type of number, she said.
Smith said CBP’s focus is onboarding agencies to ITDS that have the power to hold cargo or slow it down significantly at the border. Agencies have been divided into three categories: those that can delay release of cargo, such as the EPA, Food and Drug Administration, and Animal Plant and Health Inspection Service; those that have an interest in international transactions and may require some post-arrival information or special form signed; and those that need trade statistics to help fulfill their regulatory responsibilities, such as the Federal Maritime Commission, or because they are a statistical agency.
“The idea is that when we require mandatory transmission of cargo release data by November 2015, anybody who needs data to make a release decision has to be onboard a couple of months in advance,” she said.
Customs has to sign a memorandum of understanding with each agency spelling out how they will share the data and ensuring that proprietary data is protected, as required by the Privacy Act and Trade Secrets Act, Smith said.
The first ones to use the universal message set, as previously noted, are EPA and FSIS. An interface must be created so the two agencies can receive the data they require and respond back with a decision on whether to release shipments or hold them for inspection, which CBP can relay to the importer.
CBP hopes to build a generic interface, but agencies with extra data requirements may need a special interface as well, Phil Landfried, director of the cargo systems program office, said on the conference call.
A half dozen agencies are testing ACE’s document imaging system that allows supporting documents to be scanned and transmitted along with the entry. About 25 different documents can now be accepted in ACE.
ITDS goes hand-in-hand with CBP’s One-U.S.-Government-at-the-Border Initiative to develop a government-wide approach to risk assessments, cargo release and trusted shipper programs so that agencies with “release and hold” authority use the same decision-making criteria and tools for processing international shipments. CBP is trying to educate other agencies about the benefits of pre-vetting companies on the strength of their internal compliance measures so that shipments from highly rated ones move quickly through the system rather than trying to analyze each shipment for potential violations.
Customs organized within the past couple years a Border Interagency Executive Council that allows top leaders to meet regularly and hash out protocols for handling cargo and automation is considered key to the collaboration. Four of the 10 BIEC agencies have signed a letter of intent agreeing to follow the roadmap of principles for the unified government approach at the border, John Leonard, CBP’s acting executive director of trade policy and programs, said at the COAC meeting.
Smith said CBP cannot transform its trade operations simply by automating its existing processes. “It’s not just about automation. If we just drive automation and not the culture, the business processes, and the regulatory framework, then we as a government have missed an opportunity,” she said, referring to ongoing work such as rewriting rules governing customs brokers, implementing new industry-centric centers for centralized entry summary processing intended to avoid the enforcement vagaries at ports of entry, and developing simplified entry.
Trade Support Network.
Asked whether the Trade Support Network’s influence has waned because of the new Agile approach, COAC’s growing role providing input on ACE and the reduction in TSN plenary meetings, Smith said the group’s role has actually become more important.
TSN is a group of about 300 trade compliance professionals divided into committees that used to meet regularly to provide input about procedures, systems requirements, policies and other issues associated with the development of ACE.
Meeting face-to-face two or more times a year, either in a full group or subcommittees, has become too difficult for people in the private sector, so CBP relies on webinars, webcasts and conference calls to engage the Trade Leadership Council, which consists of subcommittee heads and trade ambassadors who work to educate the private sector about ACE, Smith said. The various groups are briefed on development plans every three months to make sure nothing is being overlooked. Midway through the process the ACE team will run a demonstration for them to show what is being built and consult with them again at the end of the increment.
TSN, for example, weighed in with displeasure about technical decisions being made about the universal message set so CBP brought in seven to eight members and five representatives from other agencies for two days to come up with a solution that gave the trade community comfort, she said.
“The trade community is feeling good about where the programming is,” Melissa Irmen, senior vice president of products and strategy for trade-management software provider Integration Point, said after the TSN’s plenary session in late September.