Teams Hope a Customs Deal Cuts Loose Soon

Teams Hope a Customs Deal Cuts Loose Soon<@VM>The Teams

By Nick Wakeman, Staff Writer

Like sprinters awaiting a starting gun, the four teams chasing the $2 billion Customs Modernization contract are poised and ready to run, and are pushing Congress to start the race by releasing the funds.

Customs is seeking $210 million for fiscal 2001, which begins Oct. 1, to start the project. While lawmakers have given no indication that they intend to cancel the project, industry officials are worried the competition for funds could put the project lower on the priority list for new money.

Moreover, once funding is approved by Congress, the request for proposals can be issued and then bids submitted by systems integrators.

Consequently, competing teams led by Andersen Consulting, Electronic Data Systems Corp., IBM Corp. and Logicon Inc. have been working together through the Information Technology Association of America to lobby Congress to appropriate the money.

The Customs Service wants to modernize and improve its systems that monitor imports and exports. Some of the computer systems currently in use are up to 16 years old and are subject to brownouts, which slow or shut down trade.

With the volume of international trade growing rapidly, new and improved systems are critical to keep pace, government and industry officials said.

"This will transform Customs," said Olga Grkavac, executive vice president of ITAA, who is heading up the lobbying effort.

While there is strong support for the project in Congress, there also is strong competition from other projects seeking new funding from Congress, she said. "We are quietly optimistic," she said.

The $210 million sought by Customs for fiscal 2001 could shrink if Congress delays approval and causes the contract award to be made several months into fiscal 2001, thus lowering the amount of money that will be needed in the first year, Grkavac said. June is the earliest that congressional approval is expected.

For the companies chasing the project, the contract is an opportunity to get in on one of the few large, agencywide modernization efforts.

"This is one that doesn't come along all that often, so it is an exciting job for us," said Gene Kakalec, vice president for business development for Logicon's Information Systems and Services division. Logicon of Herndon, Va., is the IT wing of Northrop Grumman Corp. of Los Angeles.

Logicon has put together a team that includes Ernst & Young of New York and Booz-Allen & Hamilton Inc., Litton-PRC Inc. and Wang Government Services Inc., all of McLean, Va.

Joining Chicago-based Andersen Consulting are Science Applications International Corp. of San Diego, Signal Corp. of Fairfax, Va., and Unisys Corp. of Blue Bell, Pa.

EDS of Plano, Texas, has only publicly announced one partner, PricewaterhouseCoopers of New York.
The team being led by IBM of Armonk, N.Y., includes Computer Sciences Corp. of El Segundo, Calif., KPMG of New York, Lockheed Martin Corp. of Bethesda, Md., and Sandler & Travis Trade Advisory Services Inc. of Miami.

Company executives described the modernization project as an effort with two missions to fulfill.

On one hand, Customs serves the international trade community trying to move goods quickly in and out of the United States.

"Customs is right in the middle of the country's supply chain," said Lisa Mascolo, managing partner for Treasury Department work at Andersen Consulting.

With the advent of just-in-time inventory practices, manufacturers along the U.S. border have had to shut down when parts get stopped at the border because of problems with the existing computer systems, she said. "There is a cascading impact to the economy," Mascolo said.

"With trade increasing, these systems just will not be able to keep up, and you can't just add another box and make them go faster," said Kevin Durkin, strategic account executive and capture manager for the contract for EDS. "When these systems go down, the results are disastrous."

But while Customs' mission is to make trade move faster across the borders, the agency also has a serious law enforcement duty to stop criminal activities, such as illegal drugs, weapons, child pornography and money laundering. There also are terrorist threats to combat.

"Customs is in the unique position of guarding our borders," said Bill Eldridge, director of federal civilian accounts for IBM. "They are there to make sure that the right tariffs and duties are paid, and they are there to fight crime."

On average, the Customs Service seizes more than 4,000 pounds of narcotics and $1.2 million in drug money a day, according to Woody Hall, assistant commissioner of information and technology for Customs.

Customs also processes more than 58,600 import shipments worth $2.6 billion and monitors 27,000 export shipments each day.

The agency also collects more than $60 million in revenue daily.

"There really are two sides to the system, and both [the trading community and law enforcement] have to feel like modernization is adding value for them," said Logicon's Kakalec.

The importance of Customs' role in the U.S. economy and in law enforcement puts a spotlight on the modernization project, company executives said.

The old system has to be maintained while the new system is built and implemented.

"There can be no down time," Kakalec said. The modernization likely will take about five years to complete.


The volume of trade and the number of ports of entry into the U.S. make the project very complex, which puts pressure and extra attention on the prime contractor and the modernization office at Customs.

Executives for the bidding companies emphasized that part of their role will be to build a partnership with the agency.

"A partnership is not something you can just declare to be. You have to work at it," Andersen's Mascolo said.

With a partnership approach, both the customer and the contractor have something to lose, so it is in both their interests to work together, she said.

The Customs contract, which could stretch out over 15 years, will be quite a coup for the winning team. Not only does the contract carry a hefty price tag, but a successful implementation could mean more work with other agencies as they review their own modernization efforts, one executive said.

"People are watching this one and the IRS [Prime Integration Services contract won by CSC] and looking for what goes right and what goes wrong," Kakalec said. The IRS deal was awarded in December 1998 and is worth more than $8 billion.

IBM, for one, sees the Customs project as a steppingstone to a bigger global market, Eldridge said. Nearly every country participates in international trade and has a customs system that must interact with other countries.

Eldridge said he has met with officials at the World Bank, the United Nations and the International Monetary Fund, who want to encourage the modernization of customs systems as a tool for economic development.

"Right now, customs systems are very labor intensive, paper-based systems," he said. "Every country is looking at the same issues."

Whether IBM wins or loses the U.S. modernization project, the company will keep pursuing other opportunities.


"From Sri Lanka to Poland to the U.S., there is a need to upgrade these systems and get them into the electronic age," Eldridge said. Andersen Consulting

? Science Applications International Corp.

? Signal Corp. ? Unisys Corp.


Electronic Data Systems Corp.

? PricewaterhouseCoopers


IBM Corp.

? Computer Sciences Corp.? KPMG, Lockheed Martin Corp.

? Sandler & Travis Trade Advisory Services Inc.

Logicon Inc.

? Booz-Allen & Hamilton Inc. ? Ernst & Young

? Litton-PRC Inc.? Wang Government Services Inc.

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