A dozen years after Congress first allocated funding, Customs and Border Protection’s Automated Commercial Environment isn’t fully delivering on the promises made to importers and brokers. Vaunted as Customs’ cutting-edge cargo-processing system for the 21st century, the program is years behind schedule and more than $1 billion over budget.
And some pieces of an entry transaction still reside on the Automated Commercial System, the 1980s-vintage technology ACE is replacing. That division of entry processing costs customs brokers hundreds of thousands of dollars to maintain software for the two systems — costs that trickle down to shippers. Just as important, shifting between the systems can delay the release of the importers’ goods.
ACE originally was budgeted for $1.4 billion. The price tag now exceeds $3 billion, so it’s no surprise the Obama administration is reluctant to invest new money. The ACE budget for fiscal 2012 gives Customs $140 million for operation and maintenance. The 2013 budget requests the same. There is no new development money, at least on paper.
Still, although ACE isn’t out of the hole, there are encouraging signs. Last year, the White House Office of Management and Budget put ACE on a watch list of information technology projects in danger of failure. Richard Spires, chief information officer at the Department of Homeland Security, rated ACE a two on a scale of five.
This year, Spires reported to the OMB that ACE made “significant advancements … toward deploying much-needed services to CBP’s governance of the important import-export business.” ACE’s rating is now three.
“I think that we have delivered so much in a year-and-a-half. We do have some credibility,” said Cynthia Allen, executive director of the ACE project.
In earlier days, insufficient funding for ACE would stir mass lobbying on Capitol Hill to coax lawmakers to sweeten the pot. Not this year. With members of Congress eager to reduce the budget and cut a nick in the trillion-dollar deficit, chances of more money for ACE are nil. One congressional staff member said appropriations committees won’t give Customs money for ACE development because the administration didn’t request it.
But committee members who approved money for ACE aren’t likely to pull the plug, lest they face political reprisals for squandering billions in taxpayer dollars, said Jon Kent, chief lobbyist for the National Customs Brokers and Forwarders Association of America. “They are heavily invested in ACE, particularly the appropriations committees. It’s not a matter of just letting it trail off, and then have the finger pointed at them because they let ACE die,” Kent said. “I think it would be very difficult for the committees to increase the budget above $140 million, although I think there ought to be a good, solid effort by the trade to get out there and advocate for ACE.”
The key factor is the cargo release function, the largest piece of unfinished ACE business. Allen said it would take new creativity in the face of scarce resources to develop and pay for cargo release. The method is to give programmers bite-size pieces to work on, rather than a complex development task. That’s the government’s new doctrine for IT development, she said.
“We’re taking each piece of cargo release and asking, what’s the next module? What’s the next one after that … until we finish cargo release,” Allen said. Two pieces are done. Customs drew some criticism for straying from the path by developing simplified entry that, when deployed, can release importers’ goods before they land at a U.S. port. The problem, Kent said, is that simplified entry only benefits a handful of large importers.
Allen sees simplified entry as the first step toward cargo release. There’s another piece that’s already finished, and only needs to be plugged into ACE. She calls it the PG — participating government agencies — record set. It’s part of the International Trade Data System that distributes essential trade information to other federal regulators, such as the Food and Drug Administration or the Consumer Product Safety Commission.
Brokers are angry that ACE eliminated “edits” — automatic corrections to some data entry errors — from the ACS. If the broker, for example, was claiming special duty treatment under the North American Free Trade Agreement, but entered China as the country of origin, the system would alert the broker to the error.
As it stands now, correcting such errors would require a Customs audit, something no broker welcomes. Customs heard the complaint, Allen said, and there is still carryover money in the budget to put some edits into ACE. “I can do all this with the money that I have, and we’ve got the OK from DHS to do it,” she said. “Everything after that becomes new development. I have to have the DHS OK, which we anticipate to come in the fall, and I have to have money.”
Allen believes the economy is currently the greatest impediment to ACE development. The federal government has few resources and many demands, from defending the nation to educating its children.
The question is, where does a cargo-processing system fit into the grand scheme of things? “The federal government is tough with the budget right now. There has to be some understanding that there are competing priorities,” Allen said. Even so, “the commissioner has continued to identify ACE as one of his top three priorities.” Customs has a list of six “priority trade issues.” Five of them depend on a fully functional ACE.
The NCBFAA is putting its credibility on the line by encouraging more brokers to sign up to use ACE. Brokers say they file 97 percent of all entries, but according to Customs, only 6 percent of entry summaries are filed in ACE. Kent said the association faces a catch-22. On the one hand, more brokers using ACE would be a strong vote for completing the system. On the other, brokers want to see more progress before they sign up.
“If you don’t get people to participate, there’s another reason not to move it along,” Kent said. “We’re doing our darndest to get people onto ACE, but we owe them not to lead them into a swamp. We owe it to them to make sure this system is moving forward.”
“One of the pushbacks we got from our members is that some of the software providers have not programmed for ACE,” said Amy Magnus, director of customs affairs and compliance at broker A.N. Deringer and secretary of the NCBFAA. “It depends on what software the broker has, how seamless the transaction is going to be.”
Deringer was the first company to successfully file an entry in ACE, Magnus said. ACE and ACS, which have different entry protocols that require staff training, both connect to the outside world through the Automated Broker Interface. “The longer we have to work in the two systems, the more frustrating it will be over time,” Magnus said. “It’s not very economical or streamlined. It’s very frustrating.”
The best argument for adopting ACE, Allen said, is simply that ACS will not be around forever. Customs is preparing to move ocean and rail cargo manifest systems from ACS to ACE. That leaves only the air manifest system running on ACS, which is scheduled to be turned off in September. Under the new development system, portions of the ocean or rail manifests may be adapted for air, Allen said. Before, air manifests would have been a whole new — and costly — development project.
“If this costs a lot less, then we can take another look at our budget,” Allen said. “I’m not discouraged that we only have O&M money because there are great opportunities here. The more we can show we can capitalize on opportunities at a lesser cost and manage it better, the more opportunities we’ll have. I think there has been a realization that ACE is not going away. The more we put into ACE, the more it becomes a competitive advantage to participate in ACE.”
She said importers can only benefit from simplified entry by using ACE. “If I’m an importer and I want to have more predictability earlier in the process, what do you think my broker is going to do? ACE. We know that ACS is going away at some point. Let’s just play in the ACE world.”
Magnus said ACE has gone so far toward completion that backing out now isn’t an option. “ACE is not a perfect environment, but we recognize we can’t have two systems,” he said. “There’s only one direction, and that’s forward.”