CBP postpones benefits for C-TPAT qualifiers
Importers who participate in the Customs-Trade Partnership Against Terrorism trusted shipper program could soon notice an increase in shipments held for inspection.
U.S. Customs and Border Protection Commissioner Robert C. Bonner, under pressure from Congress to tighten loopholes in the supply chain security program, acknowledged Thursday that the agency has changed the formula for conferring full program benefits so that companies that have committed to tighten up internal controls must wait until they have gone through the validation process before their inspection levels drop to the maximum allowable extent. In the past companies certified as having a solid security plan that meets program standards were labeled low risk, resulting in six times less probability of their cargo being pulled over for a secondary inspection (one in 306 vs. one in 47).
“I believe there will be some degree of increased inspections over what it had been before for just being certified and it may well be that there are increased benefits once a company is validated,” Bonner testified before the Senate Homeland Security and Governmental Affairs subcommittee on investigations. The change took effect in late April, but it was too early to quantify the average level of reduced inspections, he said.
The Government Accountability Office, the congressional watchdog agency, recently recommended that CBP end its practice of granting benefits to members before they undergo the validation process. Bonner said he reviewed the program after receiving the GAO report and consulting with the subcommittee and agreed that full benefits should not kick in just for being certified.
CBP uses a risk-management system to sort out which containers to inspect each day. Once a company’s security profile is certified it gets a credit against its risk targeting score. CBP has reduced the scoring credit for being certified from about 125 to 75 points after evaluating the 300 risk factors in the targeting rules that can trigger an exam, Bonner said.
A shipment is considered high risk if it scores 190 or above.
Bonner has talked in recent months about establishing tiers of benefits for C-TPAT companies depending on their shipping and compliance history and the level of security they have in place to insure their shipments cannot be compromised by terrorists. Companies that go beyond minimum criteria and adopt other best practices would see virtually no inspections under a “green lane” customs clearance concept for very low-risk shippers.
Bonner’s testimony is the first time the agency has publicly indicated that the tiered system actually rolls back the system of benefits in place during the last couple of years.
After companies apply for C-TPAT membership, CBP reviews their security profile and action plan and certifies those that meet C-TPAT guidelines. Companies are also vetted through a database search to make sure they don’t have any criminal violations or other compliance issues. The last step is for CBP to validate companies through on-site visits to make sure their foreign manufacturing or distribution facilities are following through with the importer’s security plan.
Several senators expressed concern that C-TPAT was increasing the vulnerability that a weapon of mass destruction could be smuggled into the United States in a container by conducting fewer inspections on some cargo before a thorough review that a shipper had implemented promised supply chain security measures. CBP has audited about 11 percent of the 9,200 companies that have signed up to participate in the voluntary cargo security program.
“If we fail, folks are going to come back and say, ‘How did you let this operation get through? You simply applied, it was done on paper, you never looked at their operation, never did any physical review, never did any audit, never did any validation. And they are going to be pointing right at you and I think it will be tough to respond if, God forbid, the unthinkable happens,” Subcommittee Chairman Norm Coleman, R-Minn., told Bonner.
“This strikes me as a reasonable risk assessment to prioritize inspection activities on those about whose security practices we know very little, but to withhold full facilitation benefits pending validation,” said Stewart Verdery, who was assistant secretary for border and transportation security policy and planning at the Department of Homeland Security until March.
Verdery, now a principal at government relations firm Mehlman Vogel Castagnetti, suggested Congress should consider whether C-TPAT should be transformed into a mandatory, regulated program for all companies involved in international trade.
“As the guidelines become more and more a de facto industry standard and place more and more demands on the trade, converting C-TPAT into a series of regulations that apply to all relevant players in the supply chain might provide more transparency into our public policy making and build more public confidence in those policies,” he said in prepared testimony.
Congress’ reaction to C-TPAT “is going to put more pressure on Customs to get the validations done,” Jonathan Gold, vice president for global supply chain policy at the Retail Leaders Industry Association, told Shippers’ NewsWire. “If members are concerned, they need to give Customs the resources to help get through the validations.”
In addition to criticizing CBP for not ensuring that companies have implemented effective supply chain controls, the GAO, in a report released Wednesday, said that CBP should:
* Conduct its validations more like an independent audit rather than in conjunction with importers.
* Develop written guidelines so that supply chain specialists conduct consistent validations.
* Determine how many, or what percentage of companies should be validated after abandoning its goal of validating all companies.
* Develop an effective records management system to document decisions and program changes.
In a separate report on the Container Security Initiative, GAO found that as many as 35 percent of high-risk shipments were not inspected at the overseas port due to inadequate staffing levels and lack of cooperation in some cases by host governments. CSI is a program that establishes bilateral agreements allowing partner nations to conduct outbound exams of cargo headed to the United States.
Bonner reassured the subcommittee that high-risk containers (those with a score above 190) are scanned or physically inspected at the U.S. port if an exam is not conducted at the port of embarkation.
“I can say with some confidence that every high-risk container, defined that way does get some inspection,” the commissioner said.
CBP also has not established minimum technical requirements for the detection capability of non-intrusive inspection and radiation detection equipment used by other governments as part of CSI, GAO said. The lack of technical requirements means CBP has limited assurance that inspections conducted under CSI are effective.
Bonner testified that, except for one country, large-scale container X-ray and radiation equipment used by CSI partner customs authorities is equal to or better than equipment used by CBP in the United States.
CBP has still been able to develop adequate performance measures for both C-TPAT and CSI, the GAO said.