More cards to deal

ACE program moves forward as IBM wrestles with more challenges

AUTOMATED COMMERCIAL ENVIRONMENT Awarded: 2001 | Prime: IBM Corp.

SUBCONTRACTORS:

Lockheed Martin Corp.

BearingPoint Inc.

Computer Sciences Corp.

Sandler and Travis Trade Services

Value: $1.3 billion over five years. It could be
worth $3.8 billion through 2012.

Purpose: Modernize the computer systems tracking
the nation's incoming cargo.

ACCOMPLISHMENTS:

  • Electronic shipping manifests for truckers.
  • Monthly fee statements for importers.
  • Processes 30,000 trucks a day.
  • Collects $1 billion in tariffs each month.
  • Automated Targeting System screens incoming
    cargo and identifies high-risk shippers.

STILL TO BE DONE:
  • Electronic manifests for shipments by sea, rail
    and air.
  • Electronic documents to admit commercial
    items.
  • System to identify merchandise in bonded
    warehouses.

CHALLENGE:
  • Implementing the 10 rule, which requires
    shippers to provide 10 additional data elements
    that include where cargo was packed,
    the packer's name and address, a cargo
    stowing map and cargo status messages.
    Traders are reluctant to provide the information
    because they consider it competitively
    advantageous.
  • Final rule is still pending, but officials said it
    will become part of ACE.

The Homeland Security Department's
$3.3 billion initiative to revamp the computer
systems that track the country's incoming
cargo is in its eighth year and
still has much work ahead.

Creation of the Automated Commercial
Environment (ACE) to replace outdated,
paper-based systems has been a high-profile
project in the trade community since its 2001
debut, when IBM Corp. won the contract. It is
one of the most complex information technology
modernizations in federal government,
with incremental, phased-in development
and deployment now projected through 2012.

ACE has received average to good reviews
thus far, although there have been significant
glitches along the way and a possibility of
delays ahead.

The U.S. Customs and Border Protection
Agency has spent about $2 billion on ACE to
date, said Lou Samenfink, executive director
of the Cargo Processing Systems Program
Office at CBP. His office oversees the program.

"We are happy with ACE," Samenfink said.
"It is a big IT project, and there are frustrations
and a lot of stakeholders."

DEADLINES LOOM

Will ACE be completed on schedule by 2012?
"We are pushing hard, but I am not sure,"
Samenfink said. "It is complicated stuff. I wish it
could move faster."

Congress has approved $100 million upfront
for ACE this year, and an additional $217 million
is available pending final approval of a modernization
plan by DHS.

The project began in 2001 before the Sept. 11
terrorist attacks. Its goal was to move customs
processing from its aging mainframe computer
and paper setup to a more efficient,
Web-enabled data system.

Reporting programs required by CBP are being
integrated into each step to eventually provide a
complete view of a shipper's activity by month
rather than transaction.

Prime contractor IBM ? supported by team
members Lockheed Martin Corp., BearingPoint
Inc., Computer Sciences Corp., and Sandler and
Travis Trade Services ? won a five-year,
$1.3 billion contract for the work in 2001. It was
renewed in 2006.

ACE's completed projects have included
deployment of electronic shipping manifests for
truckers, monthly fee statements for importers
and delivery statements. During the transition
period, ACE operates concurrently with the
existing Automated Commercial System, which
is slated to be shut down in 2012. ACE processes
about 30,000 trucks a day and collects about $1
billion in tariffs each month.

Following the 2001 attacks, ACE was reconceived
to focus more attention on security aspects, and its estimated cost increased sharply.

CBP officials began developing the related
Automated Targeting System to screen incoming
cargo and identify high-risk shippers. Those new
requirements contributed to delays in delivering
ACE's promised benefits. ACE also experienced
technical glitches during deployment of the electronic
manifests in November 2007 and at other
times.

"We have not really seen the features that can
benefit trade, and there have been significant
glitches," said Beth Peterson, a trade consultant
in San Francisco. "In the long run, though, it has
been worth it."

"The timing of 9/11 and the change in national
focus that followed, and the move of U.S.
Customs into the Homeland Security
Department ? all of that had impacts on the
scope and execution of ACE," said David Abel,
homeland security account leader at IBM Global
Business Services. "Originally, the goal was efficiency.
Now we try to balance security and convenience,
which can be mutually reinforcing with
new functionalities."

ACE will next begin to deploy electronic manifests
for vessel and rail cargo shipments and
then for air cargo. Electronic documents are also
being prepared to admit commercial items into
the United States and identify merchandise in
bonded warehouses.

"ACE will replace all existing stovepiped systems
into one system," Samenfink said.

In addition, ACE is linked to 42 other federal
agencies via the International Trade Data
System. For example, the Food and Drug
Administration can monitor all incoming drug
shipments, and the Agriculture Department can
check imported meats and animal products.

CHALLENGES AHEAD

The so-called 10 rule is a congressional initiative
under which shippers would be asked to
provide 10 additional data elements, including
where cargo was packed, the packer's name
and address, a cargo stowing map, and cargo
status messages. It has been controversial
because traders are reluctant to provide shipping
information they consider competitively
advantageous.

The 10 rule is likely to become part of
ACE, although how and when that will happen
hasn't been determined. "I am worried that
ACE may not stay on track because of the new
logistics needed for 10," Peterson said.

Samenfink said the 10 package will be part
of ACE, but because the final rule is not ready,
details about what it would entail were not
available.

Other challenges also lie ahead. The
Government Accountability Office warned in
October that more major program schedule
delays and cost overruns are likely because of
redefined requirements and shortcomings in
data security, enterprise architecture and risk
management.

Samenfink, who became director of ACE in
2004, said the cost of the program has risen
from its original estimate of $1.3 billion because
of additional features and functions added to
meet needs that arose after the 2001 attacks.

"To me, risk management is about 'How
good was our estimate? How well are you controlling
risks?' " Samenfink said. "Meanwhile,
the cost of resources is going up." He said the
cost to complete ACE might rise slightly, possibly
to $3.8 billion, to accommodate additional
requirements.

MORE OPPORTUNITIES

For IBM, ACE still presents many opportunities,
and the company is seeking subcontractors,
said Alan Heath, ACE program
leader at IBM Global Business Services. "We
probably have about 90 to 95 subcontractors
supporting us, small and large, and we are
open to discussions on new technologies and
processes."

Some vendors have developed ACE-related
software on their own. For example, MSR
eCustoms, of Buffalo, N.Y., has developed
comprehensive packages to serve shippers'
needs, including handling their ACE filings.
From the point of view of truckers, ACE is
already providing benefits. By filing and
obtaining customs' acceptance of electronic
manifests at least 30 minutes ahead of entry at
a U.S. border station, they can avoid being
turned back or detained at the border while
their paperwork is checked.

Alice Lipowicz (alipowicz@1105govinfo.com) is a
staff writer at Washington Technology.

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