FROM THE OFFICE OF PUBLIC AFFAIRS

Mr. Chairman and members of the Subcommittee, I appreciate the opportunity to appear today to discuss the U.S. Customs Service modernization, and more specifically, the Automated Commercial Environment (ACE) program. First, I want to thank the Chairman and the other members of the Subcommittee for your continued support and encouragement toward the development of a modernization program for the U.S. Customs Service.

As many of you know, I serve as the Deputy Assistant Secretary for Information Systems and Chief Information Officer for the Treasury Department. My office provides strategic direction and oversight for all information technology programs within the Treasury Department and its fourteen Bureaus. Since February of 1998, I have served as the Vice Chair of the Federal CIO Council where I play a key role in the strategic direction of the Federal Government's use of information technology.

In October of 1997 when the Fiscal Year 1998 funds for ACE were on hold pending the resolution of several technical issues, the Treasury Department made the decision to have the Treasury Investment Review Board (TIRB) take an active role in the oversight of the program. Since that time, Treasury and Customs have worked very closely to make the necessary changes in the program toward a successful development and implementation. The Customs CIO and I have met with the Appropriations staff on a regular basis to discuss our progress.

The General Accounting Office described three weaknesses in the ACE program. These weaknesses were: a lack of complete enterprise systems architecture, a lack of effective investment management practices relating to ACE, and a lack of sound software engineering rigor and discipline.

Treasury is working with Customs to comply with the GAO recommendations. Customs has developed an architecture and instituted a process to make sure that ACE complies with the architecture. Customs has hired a Federally Funded Research and Development Center contractor to develop and implement plans for Customs to achieve a Software Engineering Institute Level 2 capability for software development. This contractor will also assist Customs in bringing on a prime integration contractor for ACE, serve as an independent verification and validation agent to monitor the prime contractor's performance, and ensure the prime contractor processes are at the Software Engineering Institute level 3 capability. Both Treasury and Customs have Investment Review Boards in place to monitor ACE development.

The Customs Service has also revamped the Cost Benefit Analysis for ACE. An independent Cost Benefit Analysis was performed to determine the most cost-effective approach for modernization. The Cost Benefit analysis consisted of estimating both internal and external benefits, and included a risk analysis to account for estimating uncertainties. Included in the Cost Benefit Analysis were options to revamp the old system or to design a new one. The results indicated that a new system would offer the Government the greatest return. This CBA was provided to the Appropriations and GAO staff late last year.

In addition to the steps outlined above to address the GAO recommendations, Customs also hired additional skilled IT professionals such as their CIO and their Chief Architect. I believe Customs has made significant progress toward adopting "best practices" in the areas of reengineering business processes, building to an architecture, developing sound project management skills, and developing the complex system in manageable incremental stages. To further institutionalize these improvements, Customs has developed an Enterprise Life Cycle methodology as the framework for planning, development, and deployment of ACE. The Enterprise Life Cycle methodology will be used to guide and prioritize the development of systems and infrastructure.

During this process of management improvements, Customs was able to maintain reasonable momentum in the development of ACE. The first two releases of the ACE prototype were rolled out within budget and according to the schedule proposed by Customs. The prototype proved the basic concept of a paperless border crossing.

In summary, I would like to reiterate that although the Customs modernization has faced funding delays, the time was used very effectively to better plan and build the program and project management capacity to minimize risk and better assure a successful outcome. We look forward to working with Customs to achieve a world class information technology environment.

Mr. Chairman and members of the subcommittee, this concludes my opening remarks. I thank you for the opportunity to present to you this morning and will continue to keep you apprised of progress on this most important endeavor. I will be happy to respond to any questions. Thank You.