Customs Service Modernization: Third Expenditure Plan Meets Legislative Conditions, but Cost Estimating Improvements Needed

The U.S. Customs Service has begun a multiyear, multibillion-dollar project: the Automated Commercial Environment (ACE), a new import processing system that is planned to support effective and efficient movement of goods into the United States. By congressional mandate, Customs' expenditure plans for ACE must meet certain conditions, including being reviewed by GAO. This report addresses whether Customs' latest plan satisfies these conditions and provides observations about the plan and Customs' efforts to implement GAO's open recommendations for improving ACE management. Customs' May 2002 ACE expenditure plan is the third in a series of legislatively required plans. This plan provides for the design, development, and deployment of the second release of the first of four planned ACE increments. The plan also meets the legislative conditions governing investment in ACE that Congress imposed on Customs. Since 1999, GAO has reported on Customs' management of ACE and made a series of recommendations to correct deficiencies. Customs currently has efforts under way to respond to all of GAO's recommendations. One of these deficiencies that affects the third expenditure plan is Customs' lack of effective cost estimating capabilities. Specifically, the cost estimate in the third expenditure plan is questionable because of limitations in how it was derived and inconsistencies between this estimate and an independent estimate developed by a Customs contractor. Customs is currently determining the cause of the variance in the estimates.