IBM Snares Prestigious Customs Modernization Contract

IBM Corp. has snagged the $1.3 billion Customs Service modernization contract to build the Automated Commercial Environment system to streamline the processing of goods across U.S. borders.

The modernization effort, which stretches over 15 years, includes re-engineering the way the Customs Service processes the import and export of goods.

The contract also covers the development of a new information technology infrastructure, computer systems and software to support Customs' re-engineered processes. The new system also will enhance Customs' ability to intercept contraband.

"We're back," said Tom Burlin, vice president of the federal government industry for IBM Global Services. The win is the largest government contract IBM has captured since the company sold its Federal Systems Division in 1993.

IBM is leading a team that includes Lockheed Martin Corp., KPMG Consulting Inc., Computer Sciences Corp., Sandler & Travis Trade Advisory Services Inc., Booz-Allen & Hamilton Inc., ITS Services Inc., and more than 40 small businesses.

"It is good to see IBM back in the fray," said Ray Bjorklund, vice president of consulting services for Federal Sources Inc., a McLean, Va., market research firm.

Burlin said the team's understanding of the Customs Service and the camaraderie of the team helped it edge out its competitors.

Bidding against IBM were teams led by Accenture Ltd. and Electronic Data Systems Corp., according a Customs Service spokesman.

The modernization effort, said Charles Winwood, acting commissioner of the Customs Service, will enable Customs to "begin the process of bringing 21st century business practices to America's borders."

Customs is operating a 17-year-old system. It experiences outages that causes the service to revert to manual methods. The growing volume of trade also overwhelms the system, Customs Service officials said.

While the new system carries a hefty price tag, Customs estimates it will save $3.3 billion over the life of the system.

"The Customs Service carries tremendous responsibilities," Burlin said. The agency is responsible not only for trade that crosses U.S. borders, but also for law enforcement activities that include drug smuggling and potential terrorist threats.

"The prime integration contractor will help us design, build and implement new information systems," said S.W. Hall Jr., assistant commissioner for the office of information and technology and Customs chief information officer.

The contract also is a return of sorts to the traditional systems integration project of building a large complex system from the ground up, Bjorklund said. The project includes a lot of systems engineering, systems integration and software development.

"You don't see many of these large projects among civilian agencies," he said. In recent years, the trend has been toward agencies buying solutions, such as financial management packages to address specific needs. But this project has a broad scope and emphasizes traditional systems integration skills, he said.

Bjorklund said he sees the biggest challenge of the project coming in two areas ? security, including protecting national security, and the application of modern communication technologies for Web-enabling functions. Bjorklund compared the project's complexity to building a military command and control system.

But looming larger than technical challenges are cultural ones, Burlin said. "People get accustomed to doing things a certain way, and we have to work very closely with Customs to get their people on board, especially in the early stages," he said.

Customs has about $130 million to spend during fiscal 2001 and another $130 million is proposed for the fiscal 2002 budget. "That's a good start," Burlin said.

More money may become available as the project rolls out and the Customs Service has business results it can point to, so early successes are critical, he said.