This is the accessible text file for GAO report number GAO-10-12 
entitled 'Supply Chain Security: Feasibility and Cost-Benefit Analysis 
Would Assist DHS and Congress in Assessing and Implementing the 
Requirement to Scan 100 Percent of U.S.-Bound Containers' which was 
released on December 2, 2009. 

This text file was formatted by the U.S. Government Accountability 
Office (GAO) to be accessible to users with visual impairments, as part 
of a longer term project to improve GAO products' accessibility. Every 
attempt has been made to maintain the structural and data integrity of 
the original printed product. Accessibility features, such as text 
descriptions of tables, consecutively numbered footnotes placed at the 
end of the file, and the text of agency comment letters, are provided 
but may not exactly duplicate the presentation or format of the printed 
version. The portable document format (PDF) file is an exact electronic 
replica of the printed version. We welcome your feedback. Please E-mail 
your comments regarding the contents or accessibility features of this 
document to Webmaster@gao.gov. 

This is a work of the U.S. government and is not subject to copyright 
protection in the United States. It may be reproduced and distributed 
in its entirety without further permission from GAO. Because this work 
may contain copyrighted images or other material, permission from the 
copyright holder may be necessary if you wish to reproduce this 
material separately. 

Report to Congressional Requesters: 

United States Government Accountability Office: 
GAO: 

October 2009: 

Supply Chain Security: 

Feasibility and Cost-Benefit Analysis Would Assist DHS and Congress in 
Assessing and Implementing the Requirement to Scan 100 Percent of U.S.- 
Bound Containers: 

GAO-10-12: 

GAO Highlights: 

Highlights of GAO-10-12, a report to Congressional Requesters. 

Why GAO Did This Study: 

U.S. Customs and Border Protection (CBP), within the Department of 
Homeland Security (DHS) is responsible for, among other things, the 
security of cargo containers shipped to the United States. In fiscal 
year 2008, 611 ports shipped a total of 9.8 million containers to the 
country. The 9/11 Commission Act (9/11 Act) requires 100 percent of 
U.S.-bound cargo containers to be scanned by 2012, and CBP has begun 
implementing the Secure Freight Initiative (SFI) to address this 
requirement. GAO was requested to assess CBP’s efforts to implement the 
9/11 Act requirement. This report addresses (1) CBP’s progress at the 
initial ports participating in the SFI program, (2) CBP plans to 
implement SFI, (3) the extent to which CBP has estimated costs and 
conducted a cost-benefit analysis of 100 percent scanning, and (4) any 
challenges to integrating 100 percent scanning with existing container 
security programs. GAO reviewed operating procedures for the SFI ports 
and analyzed cost data. GAO also visited six of the seven original SFI 
ports and spoke to officials from CBP, foreign governments, and private 
industry. 

What GAO Found: 

CBP has made limited progress in scanning containers at the initial 
ports participating in the SFI program, leaving the feasibility of 100 
percent scanning largely unproven. Since the inception of the SFI 
program, CBP has not been able to achieve 100 percent scanning at any 
participating port. While CBP has been able to scan a majority of the 
U.S.-bound cargo containers at the comparatively low volume ports, it 
has not achieved sustained scanning rates above five percent at the 
comparatively larger ports. 

CBP has not developed a plan to scan 100 percent of U.S.-bound 
container cargo by 2012, but has a strategy to expand SFI to select 
ports where it will mitigate the greatest risk of WMD entering the 
United States. CBP does not have a plan to scan cargo containers at all 
ports because, according to agency officials, challenges encountered 
thus far in implementing SFI indicate that doing so worldwide will be 
difficult to achieve. However, CBP has not conducted a feasibility 
analysis of expanding 100 percent scanning, as required by the SAFE 
Port Act. Such an analysis could help both CBP and Congress determine 
the most effective way forward to enhance container security. 
Recognizing that its strategy will not meet the requirement to scan all 
U.S.-bound cargo containers, DHS plans to issue a blanket extension to 
all foreign ports by July 2012 to be in compliance with the 9/11 Act. 
DHS officials acknowledged that they may revisit this plan before the 
July 2012 deadline. 

CBP, while identifying some SFI program costs, has not developed a 
complete estimate of U.S. program costs because of the lack of a 
decision on a clear path forward. CBP has also not conducted any cost-
benefit analysis which would include other economic costs, including 
those borne outside the United States, which would be important to any 
analysis of alternatives to achieving the 100 percent scanning 
requirement. While uncertainties exist, a cost estimate and cost-
benefit analysis, consistent with federal best practices, could assist 
DHS and CBP in better communicating the magnitude of the costs and 
benefits to Congress and in designing a clear path forward for 
enhancing cargo container security. 

CPB faces a number of potential challenges in integrating the 100 
percent scanning requirement into its existing container security 
programs. The 100 percent scanning requirement is a departure from 
existing container security programs in that it requires that all 
containers be scanned before CBP determines their potential risk level. 
Senior CBP officials and international trading partners say this change 
differs from CBP’s current risk-based approach based on international 
supply chain security standards. Our work also indicates that the 100 
percent scanning requirement could present challenges to the continued 
operation of existing container security programs—depending upon how 
the SFI program is implemented and 100 percent scanning is achieved. 
Some foreign governments have stated they may adopt a reciprocal 
requirement that all U.S. origin containers be scanned, which would 
present additional challenges at domestic U.S. ports. 

What GAO Recommends: 

GAO recommends CBP complete a feasibility analysis, cost estimates, and 
a cost-benefit analysis, and provide these results to Congress. DHS 
partially agreed. It stated it has published reports addressing most of 
the recommendations, but GAO analysis revealed that these reports did 
not fully satisfy the recommendations’ intent. 

View GAO-10-12 or key components. For more information, contact Stephen 
Caldwell at 202-512-9610 or caldwells@gao.gov. 

[End of section] 

Contents: 

Letter: 

Results in Brief: 

Background: 

CBP's Progress with SFI Implementation and Operation to Date Has Been 
Limited, Leaving the Feasibility of 100 Percent Scanning Largely 
Unproven: 

CBP Plans to Improve Container Security Through Two Initiatives, but 
These Plans Will Not Achieve 100 Percent Scanning and Will Require a 
Process to Grant Extensions to Non-Compliant Ports: 

CBP Has Not Identified Total Program Costs of SFI Implementation or 
Conducted a Cost-Benefit Analysis to Assist in Evaluating Alternatives 
to Achieving the 100 Percent Scanning Requirement: 

Requirement for 100 Percent Scanning Creates Potential Challenges for 
CBP that May Hinder the Continued Operation of Existing Container 
Security Programs and Raises Concerns with International Partners: 

Conclusions: 

Recommendations for Executive Action: 

Agency Comments and Our Evaluation: 

Appendix I: Objectives, Scope, and Methodology: 

Appendix II: Comments from the Department of Energy: 

Appendix III: Comments from the Department of Homeland Security: 

Appendix IV: GAO Contact and Staff Acknowledgments: 

Related GAO Products: 

Tables: 

Table 1: Description of DHS and DOE Cargo Security Initiatives: 

Table 2: Information on Ports Initially Agreeing to Participate in the 
SFI Program: 

Table 3: Data on Containers Scanned and Container Volume at SFI Ports: 

Table 4: Costs Incurred by DHS and DOE to Implement and Operate SFI 
Program, through June 2009: 

Figures: 

Figure 1: Overview of Key Participants Involved in Shipping Containers 
in the International Supply Chain: 

Figure 2: World Map Indicating the 157 WCO Customs Administrations That 
Have Signed Letters of Intent to Implement the WCO SAFE Framework: 

Figure 3: Examples of Scanning Equipment Used at SFI Ports: 

Figure 4: Example of Scanning Outputs and Equipment at SFI Ports: 

[End of section] 

United States Government Accountability Office: 
Washington, DC 20548: 

October 30, 2009: 

Congressional Requesters: 

Concerns about the ability of terrorists to smuggle weapons of mass 
destruction (WMD) inside cargo containers bound for the United States 
have heightened since the terrorist attacks of September 11, 2001. 
[Footnote 1] Oceangoing cargo containers play a vital role in the 
movement of cargo between global trading partners. In fiscal year 2008, 
611 foreign ports shipped a total of 9.8 million cargo containers to 
the United States. Balancing security concerns with the need to 
facilitate the free flow of commerce remains an ongoing challenge for 
the public and private sectors alike. While U.S. Customs and Border 
Protection (CBP), within the Department of Homeland Security (DHS), has 
maintained that the likelihood of terrorists smuggling WMD into the 
United States in cargo containers is relatively low, the consequence of 
such an action could be devastating. For example, studies have 
estimated costs of a WMD attack at a U.S. port to range from $58 
billion to as high as $1 trillion.[Footnote 2] 

In the federal government, CBP is responsible for overseeing oceangoing 
container security and reducing the vulnerabilities associated with the 
supply chain--the flow of goods from manufacturers to retailers. As CBP 
performs this mission, it maintains two overarching and sometimes 
conflicting goals--increasing security while efficiently facilitating 
legitimate trade and commerce. CBP has developed a layered security 
strategy to address container security concerns. Core components of the 
layered security strategy include analyzing information to identify 
containers that may be at high-risk of transporting WMD, working with 
host governments to examine high-risk containers at foreign ports, and 
providing benefits to companies that comply with predetermined security 
measures. In addition to CBP's layered programs, the Department of 
Energy (DOE) provides radiation detection equipment to foreign 
governments to prevent terrorists from smuggling WMD in cargo 
containers through foreign seaports. Related to these U.S. container 
security programs, CBP has worked through the World Customs 
Organization (WCO) to develop and promote implementation of the SAFE 
Framework of Standards for supply chain security, which as of June 
2009, 157 countries have agreed to implement.[Footnote 3] 

To further address container security concerns, Congress passed, and 
the President signed, the Security and Accountability for Every (SAFE) 
Port Act in 2006.[Footnote 4] The SAFE Port Act requires that pilot 
projects be established at three ports to test the feasibility of 
scanning 100 percent of U.S.-bound containers at foreign ports. 
[Footnote 5] To fulfill this requirement and determine the overall 
feasibility and efficacy of 100 percent scanning, in December 2007, 
DHS, the Department of State, and DOE jointly announced the formation 
of the Secure Freight Initiative (SFI) pilot program. In August 2007, 2 
months before the SFI pilot began operations,[Footnote 6] the 
Implementing Recommendations of the 9/11 Commission Act of 2007 (9/11 
Act) was enacted,[Footnote 7] which requires, among other things, that 
by July 2012, 100 percent of all U.S.-bound cargo containers be scanned 
before being placed on a vessel at a foreign port, with possible 
extensions for ports at which certain conditions exist.[Footnote 8] 
While foreign ports are not required to participate, the 9/11 Act 
scanning requirement provides that cargo containers loaded on a vessel 
in a foreign port that have not been scanned are not to be allowed into 
the United States. This replaced a similar provision in the SAFE Port 
Act that called for 100 percent scanning but did not have a deadline 
for full implementation of the scanning requirement. The 9/11 Act did 
not, however, specify who is to conduct the container scans or who is 
to pay for scanning equipment or operations and maintenance. According 
to CBP officials, with the passage of the 9/11 Act, efforts to 
implement 100 percent scanning at participating ports changed from a 
pilot test of the operational feasibility of scanning 100 percent of 
U.S.-bound containers to an initial phasing in of the 100 percent 
scanning requirement.[Footnote 9] 

Both DHS and CBP, as well as foreign governments and customs 
organizations, have expressed serious concerns regarding the 
feasibility and efficacy of the 100 percent scanning requirement. In 
April 2009, the Acting Commissioner for CBP testified that much had 
been done to enhance the security of cargo containers relative to other 
modes of transportation, and added that the area of maritime security 
should not be overemphasized to the detriment of other transportation 
modes. He also emphasized that the threat of a significant nuclear 
weapon in a container remains remote and requested that the scanning 
requirement be thoughtfully reconsidered by Congress. In January 2009, 
the Secretary of the Department of Homeland Security also stated that 
any requirement regarding container scanning from Congress must be 
achievable and affordable and noted that the July 2012 deadline for 100 
percent container scanning appeared to be unattainable. In April 2009, 
the Secretary determined that CBP would focus deployment of the SFI 
program to foreign locations of strategic importance in a way that will 
maximize security benefits given its limited resources. In addition to 
DHS' concerns that the requirement to scan all U.S.-bound cargo 
containers cannot be met, foreign governments and customs organizations 
have expressed their opposition to the requirement. For example, in 
June 2008, members of the WCO unanimously endorsed a resolution 
expressing concern that implementation of 100 percent scanning would be 
detrimental to world trade and could result in unreasonable delays, 
port congestion, and international trading difficulties.[Footnote 10] 
Similarly, in May 2008, the European Parliament issued a resolution 
calling for the United States to repeal the 100 percent scanning 
requirement. 

In response to your request, we are providing you with information on 
CBP's efforts to implement the SAFE Port and 9/11 Acts. This report 
addresses the following questions: 

* What progress has CBP made toward implementing 100 percent scanning 
at the initial ports participating in the SFI program? 

* What planning efforts has CBP made to address the requirement to scan 
all U.S.-bound cargo containers by July 2012? 

* What are the estimated costs to date of the SFI program, and to what 
extent have future implementation costs been estimated? 

* What challenges, if any, does CBP face in integrating the 100 percent 
scanning requirement with its existing container security programs? 

To address these questions, we compared data on the volume of U.S.- 
bound cargo containers and the number of containers scanned at SFI 
ports to the scanning requirement set forth in the 9/11 Act. After 
speaking with CBP officials to resolve inconsistencies with the 
scanning data, we determined that the data provided were sufficiently 
reliable for our purposes. We reviewed available CBP documentation on 
expanding the SFI program, including the SFI program management plan 
and implementation strategy, and assessed it against A Guide to the 
Project Management Body of Knowledge.[Footnote 11] We obtained 
available data on costs for operating the SFI program as reported by 
CBP and DOE, which we determined to be sufficiently reliable after 
assessing how CBP and DOE collect and manage cost data. We assessed 
CBP's cost estimates for further implementation of the SFI program 
using the GAO Cost Estimating and Assessment Guide.[Footnote 12] We 
reviewed the need to do a cost-benefit analysis using criteria in DHS' 
Cost-Benefit Analysis Guidebook[Footnote 13] and Office of Management 
and Budget (OMB) Circulars.[Footnote 14] We reviewed bilateral and 
multilateral efforts to enhance container security, such as the WCO 
SAFE Framework of Standards. We conducted site visits at six of the 
seven foreign ports that have been involved in the SFI program, and 
spoke with foreign government, CBP, and terminal operator officials 
during these visits.[Footnote 15] While the results of these site 
visits and interviews cannot be generalized across all ports that ship 
cargo containers to the United States, by observing operations at six 
of the seven ports involved with the SFI program to date--Busan, South 
Korea; Puerto Cortes, Honduras; Salalah, Oman; Southampton, United 
Kingdom; Hong Kong; and Singapore--we gained an understanding of the 
factors and challenges associated with implementing SFI at foreign 
ports. In addition, we met with CBP, DOE, and State Department 
officials who have program responsibilities for SFI and other programs 
that are part of the U.S. government's layered maritime cargo container 
security strategy. Further, we met with representatives from the WCO 
and European Commission, and officials from seven foreign governments, 
five of which contain an SFI pilot port, to discuss multilateral and 
bilateral efforts to promote supply chain security. We also spoke with 
six members of CBP's Customs Trade Partnership against Terrorism (C- 
TPAT) program.[Footnote 16] Our interviews with these trade industry 
representatives were based on a nonprobability sample, so while they 
are not generalizable to the entire maritime trade industry, they 
provide insight into the relationship between the SFI and C-TPAT 
programs. We met with CBP officials at domestic ports, as well as 
domestic port authorities to understand the impact of a reciprocal 
scanning requirement. As appropriate, we also relied on our prior body 
of work on container security conducted over the last several years 
(see list of Related GAO Products at the end of this report). 

We conducted this performance audit from August 2008 through October 
2009 in accordance with generally accepted government auditing 
standards. Those standards require that we plan and perform the audit 
to obtain sufficient, appropriate evidence to provide a reasonable 
basis for our findings and conclusions based on our audit objectives. 
We believe that the evidence obtained provides a reasonable basis for 
our findings and conclusions based on our audit objectives. A detailed 
discussion of our scope and methodology is contained in appendix I. 

Results in Brief: 

CBP has made limited progress in working with the initial seven SFI 
ports to ensure the scanning of U.S.-bound container cargo, and the 
feasibility of 100 percent scanning remains largely unproven. CBP and 
DOE have been successful in integrating images of scanned containers 
onto a single computer screen that can be reviewed remotely from the 
United States. They have also been able to use these initial ports as a 
test bed for new applications of existing technology, such as mobile 
radiation scanners. However, the SFI ports' level of participation, in 
some cases, has been limited in terms of duration (e.g., the Port of 
Hong Kong stopped their participation in scanning after approximately 
16 months) or scope (e.g., the Port of Busan, Korea allowed scanning in 
only one of the eight terminals). In addition, one port has withdrawn 
from the SFI program and another port has yet to begin scanning 
operations. Furthermore, since the inception of the SFI program in 
October 2007, no participating port has been able to achieve 100 
percent scanning. While 54 to 86 percent of the U.S.-bound cargo 
containers were scanned at three comparatively low-volume ports that 
are responsible for less than 3 percent of container shipments to the 
United States, sustained scanning rates above 5 percent have not been 
achieved at two comparatively larger ports--the type of ports that ship 
most containers to the United States. Scanning operations at the 
initial SFI ports have encountered a number of challenges--including 
safety concerns, logistical problems with containers transferred from 
rail or other vessels, scanning equipment breakdowns, and poor quality 
scan images. Both CBP and GAO had previously identified many of these 
challenges, and CBP officials are concerned that they and the 
participating ports cannot overcome them. Thus, the feasibility of 100 
percent scanning remains largely unproven. 

CBP has planned two initiatives to improve container security; however, 
neither initiative would achieve the 9/11 Act requirement to scan 100 
percent of all U.S.-bound cargo by July 2012. The first initiative, the 
"strategic trade corridor strategy," would involve scanning 100 percent 
of U.S.-bound containers at selected foreign ports where CBP believes 
it will mitigate the greatest risk of WMD entering the United States. 
The Secretary of Homeland Security approved this strategy and, 
according to CBP, it is in negotiations with foreign governments to 
expand SFI to ports in those countries. Because negotiations are 
ongoing, details on the number of ports involved are not yet finalized. 
The second initiative, known as the "10+2" program, requires importers 
to provide 10 data elements and vessel carriers to provide 2 data 
elements on containers and their cargo to CBP, adding to the 
information available to CBP and improving its ability to identify 
containers that may pose a risk for terrorism for additional scrutiny--
such as scanning or physical inspection. CBP believes the strategic 
trade corridor strategy, combined with its recently implemented 10+2 
program, will enhance cargo container security. Based on discussions 
with DHS and CBP officials, it is unclear whether DHS intends for the 
strategic trade corridor strategy and 10+2 program to be implemented in 
lieu of the 100 percent scanning requirement or whether it is the first 
phase of implementation at all ports worldwide. While the strategic 
trade corridor strategy and 10+2 may improve container security, they 
do not achieve the legislative requirement to scan 100 percent of U.S.- 
bound containers. According to CBP, it does not have a plan for full- 
scale implementation of the statutory requirement by July 2012 because 
challenges encountered thus far in implementing the SFI program 
indicate that implementation of 100 percent scanning worldwide by the 
2012 deadline will be difficult to achieve. However, it has not 
performed a feasibility analysis of the SFI pilot and expanding 100 
percent scanning to other foreign ports as required by the SAFE Port 
Act. Furthermore, best practices for project management call for the 
feasibility of a program to be considered early on, which can be done 
through evaluating alternatives. The analysis should consider the 
scope, objectives, time line and resources needed to achieve 100 
percent scanning to determine if it is feasible and if so what is the 
best way to achieve it, or if it is not feasible, what are the other 
alternatives. Given the challenges encountered in implementing SFI at 
the initial ports, such an analysis could help CBP and Congress 
determine the most effective way forward to enhance container security. 
Further, senior DHS and CBP officials acknowledge that most, if not all 
foreign ports, will not be able to meet the July 2012 target date for 
scanning all U.S.-bound cargo, and DHS will need to issue extensions to 
such ports to allow the continued flow of commerce and still comply 
with the 9/11 Act. DHS officials told us that the department had made a 
decision to grant a blanket extension to all foreign ports rather than 
on a port-by-port basis since some of the conditions listed in the 9/11 
Act as a basis for granting extensions can be applied systemically to 
all ports. Specifically, DHS believes the last two conditions--that the 
use of the equipment would significantly impact trade capacity and the 
flow of cargo, and that scanning equipment does not adequately provide 
automatic notification of an anomaly in a container--could apply to all 
foreign ports and, thus, warrant the use of a blanket extension because 
two conditions are sufficient to justify an extension under the 
statute. DHS officials acknowledged that this plan for extensions could 
be revisited if there are significant changes (e.g., advancements in 
scanning technology) before the July 2012 deadline. 

CBP and DOE have tracked some information on their own costs for 
implementing SFI--about $100 million to date--but CBP has not developed 
a comprehensive estimate for future U.S. program costs, or conducted a 
cost-benefit analysis that compares the costs and benefits of the 100 
percent scanning requirement with other alternatives, such as the 
strategic trade corridor strategy. The SAFE Port Act requires CBP to 
report on costs for implementing the SFI program at foreign ports, but 
CBP has not yet estimated total U.S. program costs because of both the 
lack of a decision by DHS on a clear path forward and the unique set of 
challenges that each foreign port presents. While uncertainties exist 
regarding a path forward for the program, a credible cost estimate 
consistent with cost estimating best practices could better aid DHS and 
CBP in determining the most effective way forward for SFI and 
communicating the magnitude of the costs to Congress for use in annual 
appropriations. In evaluating the 9/11 Act, the Congressional Budget 
Office assumed that foreign ports would pay for implementing the 
scanning systems at their ports; however, CBP and DOE have paid the 
majority of SFI costs for operating the SFI program to date. The SAFE 
Port Act and 9/11 Act do not address the issue of who is expected to 
pay the cost of developing, maintaining, and using the infrastructure, 
equipment, and people needed for the 100 percent scanning requirement, 
but implementing the requirement would entail costs beyond U.S. 
government program costs, including those incurred by foreign 
governments, private terminal operators, and could result in higher 
prices for American consumers. CBP has not estimated these additional 
economic costs, though they are relevant in assessing the balance 
between improving security and maintaining trade capacity and the flow 
of cargo. Both the Office of Management and Budget and DHS guidance 
cite cost-benefit analysis as a key practice for agencies to use in 
making decisions and allocating resources. Conducting a cost-benefit 
analysis would allow CBP to evaluate the costs and benefits of 
achieving 100 percent scanning as well as other alternatives for 
enhancing container security. Such an analysis could provide important 
information to CBP and to Congress to determine the most effective way 
forward to enhance container security. 

CBP faces a number of potential challenges in integrating the 100 
percent scanning requirement with its existing container security 
programs as it may hinder the continued operation of such programs, and 
its international trading partners have raised concerns regarding, 
among other things, the effectiveness of the 100 percent scanning 
requirement. The scanning requirement is a departure from existing 
container security programs because it requires CBP to apply the 
scrutiny of scanning to all containers rather than conducting analyses 
to determine the containers' potential risk level to determine whether 
scanning is needed. Senior CBP officials have stated that the 100 
percent scanning requirement differs from the risk-based strategy it 
uses to identify containers that may require more scrutiny--such as 
scanning and physical inspection. Our work also indicates that the 100 
percent scanning requirement could present potential challenges to the 
continued operation of other existing container security programs, 
depending upon how the SFI program is expanded and 100 percent scanning 
is implemented. For example, at one of the pilot ports we visited, the 
continued operation of the SFI program reduced the willingness of the 
foreign government to work with CBP to identify and physically inspect 
containers under an existing bilateral program. The implementation of 
100 percent scanning could also present challenges by reducing the 
willingness of private companies to partner with CBP to improve their 
internal security programs. For example, as a benefit, when importers 
currently partner with CBP through the C-TPAT program (and share 
information on their internal security practices), their containers 
generally receive less scrutiny. With the potential worldwide 
requirement to scan all U.S.-bound containers, regardless of the 
importer's membership in C-TPAT, importers could lose one of the key 
benefits of participating in C-TPAT. The new requirement has also 
created challenges for CBP in its overall working relationships with 
foreign governments. Because of the global nature of the supply chain, 
international cooperation has been a key tenant of U.S. maritime 
security strategy and practices. However, the 100 percent scanning 
requirement is being put forth solely by the United States, in contrast 
to some existing container security programs that were negotiated 
multilaterally or bilaterally with willing partners. Officials at 
international organizations and foreign governments we spoke with have 
raised concerns to CBP about 100 percent scanning, stating that the new 
requirement is inconsistent with the risk-based strategy adopted in 
international standards for supply chain security that CBP uses in its 
existing programs. The officials also stated the new requirement will 
diminish security by reducing resources available to focus on high-risk 
containers. If the United States enforces the 100 percent scanning 
requirement, the European Commission has stated the European Union may 
impose a reciprocal scanning requirement. This could present further 
challenges to CBP. CBP officials and terminal operators at domestic 
U.S. ports we met with stated that they would have a difficult time 
meeting such a foreign-required scanning process and it could come at 
the expense of their ability to secure the United States from inbound 
containers that might contain WMD. 

To better position DHS to comply with the scanning provisions of the 
SAFE Port and 9/11 Acts, improve container security, and better inform 
Congress on CBP's efforts to implement 100 percent scanning, we are 
recommending that the Secretary of Homeland Security, working with the 
Commissioner of CBP and in consultation with the Secretaries of Energy 
and State as appropriate (1) conduct a feasibility analysis of 
implementing the 100 percent scanning requirement in light of the 
challenges faced; (2) develop comprehensive and credible estimates of 
total U.S. program costs; (3) conduct a cost-benefit analysis 
(including all significant economic costs) of 100 percent scanning and 
alternative container security programs, and (4) report the results of 
the feasibility analysis, cost estimates, and cost benefit analysis to 
Congress, to assist DHS and Congress in addressing existing challenges 
and determining the best path forward to enhance container security. 

In commenting on a draft of this report, DHS stated that it concurred 
with three of our recommendations related to developing a feasibility 
analysis and a comprehensive cost estimate and providing the results of 
these and other analyses to Congress, but that it had already published 
reports that had addressed these recommendations. We disagree because 
our analysis of these reports reveals that DHS has not fully satisfied 
the intent of the recommendations as its reports do not include a 
feasibility analysis that includes specific elements required by the 
SAFE Port Act and its cost estimates are not comprehensive. DHS also 
said that it agreed in part with our recommendation that it develop a 
cost benefit analysis of 100 percent scanning, acknowledging that the 
recommended analyses would better inform Congress, but stated the 
recommendations should be directed to the Congressional Budget Office. 
While CBO does prepare cost estimates for pending legislation, we think 
the recommendation is appropriately directed to CBP. DHS's comments are 
reprinted in Appendix III. CBP and the State Department also provided 
technical comments, which we incorporated as appropriate. 

Background: 

Vulnerabilities of Containers in the International Supply Chain: 

Ports are critical gateways for the movement of commerce through the 
international supply chain. The facilities, vessels, and infrastructure 
within ports, and the cargo containers passing through them, all have 
vulnerabilities that terrorists could exploit. Containers carrying 
goods that are shipped in oceangoing vessels are of particular concern 
because they can be filled overseas at many different locations and are 
transported through complex logistics networks before reaching U.S. 
ports. In addition, transporting a shipping container from its 
international point of origin to its final destination involves many 
different participants and many points of transfer. The container, or 
material in it, can be affected not only by the manufacturer or 
supplier of the material being shipped, but also by carriers who are 
responsible for getting the material to a port, as well as by personnel 
who load containers onto the ships. Others who interact with the cargo 
or have access to the records of the goods being shipped include 
exporters who make arrangements for shipping and loading, freight 
consolidators who package disparate cargo into containers, and 
forwarders who manage and process the information about what is being 
loaded onto the ship. Figure 1 illustrates many of the key participants 
and points of transfer involved from the time that a container is 
loaded for shipping to its arrival at the destination port and 
ultimately the importer. 

Figure 1: Overview of Key Participants Involved in Shipping Containers 
in the International Supply Chain: 

[Refer to PDF for image: 3 photographs and associated data] 

Export Side: 
Exporter: 
Freight consolidator: 
Inland carrier (e.g., truck, rail): 
Terminal operator: 
Freight forwarder. 

Import Side: 
Customs broker: 
Customs inspectors: 
Terminal operator: 
Inland carrier (e.g., truck, rail): 
Importer. 

Photographs: 
Containerized goods ready for shipment; 
Shipment aboard ocean carrier; 
Arrival at receiving port. 

Source: GAO, DHS. 

[End of figure] 

Several studies of maritime security conducted by federal, academic, 
nonprofit, and business organizations have concluded that the movement 
of oceangoing cargo in containers is vulnerable to some form of 
terrorist action. Every time responsibility for cargo in containers 
changes hands along the supply chain there is the potential for a 
security breach. As a result, vulnerabilities exist that terrorists 
could take advantage of by, for example, placing a WMD into a container 
for shipment to the United States or elsewhere. U.S. government 
officials believe that the likelihood of terrorists smuggling WMD into 
the United States in cargo containers is relatively low. While there 
have been no known incidents of containers being used to transport WMD, 
criminals have exploited containers for other illegal purposes, such as 
smuggling weapons, people, and illicit substances. 

The U.S. Government Is Engaged in Efforts to Secure Containers in the 
International Supply Chain: 

In the federal government, CBP is responsible for overseeing oceangoing 
container security and reducing the vulnerabilities associated with the 
supply chain. While CBP officials at domestic ports continue efforts to 
identify and examine imports arriving in containers that may pose a 
risk for terrorism, CBP's post-9/11 strategy also involves focusing 
security efforts beyond U.S. borders to target and examine cargo that 
may pose a risk for terrorism before it enters U.S. ports. CBP's 
strategy is based on a layered approach of related initiatives that 
attempt to focus limited resources on potentially risky cargo shipped 
in containers bound for the United States while allowing other 
containers carrying cargo to proceed without unduly disrupting 
commerce. CBP's layered strategy to address container security is 
complimented by DOE's efforts to prevent the proliferation of nuclear 
materials. DOE has led U.S. efforts to detect radioactive material in 
cargo containers originating at foreign ports. A brief description of 
CBP and DOE initiatives is provided in table 1. 

Table 1: Description of DHS and DOE Cargo Security Initiatives: 

Initiative and year introduced: Automated Targeting System (ATS), 1999; 
Department currently responsible: DHS; 
Description: CBP uses ATS--a mathematical model that uses weighted 
rules to assign a risk score to arriving cargo shipments based on 
shipping information--to help identify and prevent potential terrorists 
and terrorist weapons from entering the United States. ATS is a 
computerized decision support tool used by CBP to review documentation, 
including cargo manifest information[A] submitted by the ocean carriers 
on all arriving shipments, and entry data (more detailed information 
about the cargo) submitted by brokers, to develop risk scores that help 
identify containers for additional examination. 

Initiative and year introduced: 24-hour Rule, 2002; 
Department currently responsible: DHS; 
Description: CBP generally requires ocean carriers to electronically 
transmit cargo manifests to CBP's Automated Manifest System 24 hours 
before the U.S.-bound cargo is loaded onto a vessel at a foreign port. 
Carriers and importers are to provide information to CBP that is used 
to strengthen how ATS assigns risk scores. The cargo manifest 
information is submitted by ocean carriers on all arriving cargo 
shipments. 

Initiative and year introduced: Container Security Initiative (CSI), 
2002; 
Department currently responsible: DHS; 
Description: CBP places staff at participating foreign ports to work 
with host country customs officials to target and examine high-risk 
container cargo for weapons of mass destruction before they are shipped 
to the United States. CBP officials identify the containers that may 
pose a risk for terrorism and request that their foreign counterparts 
examine the contents of the containers. 

Initiative and year introduced: Customs-Trade Partnership Against 
Terrorism (C-TPAT), 2001; 
Department currently responsible: DHS; 
Description: CBP develops voluntary partnerships with members of the 
international trade community comprised of importers; customs brokers; 
forwarders; air, sea, and land carriers; and contract logistics 
providers. Private companies agree to improve the security of their 
supply chains in return for various benefits, such as a reduced 
likelihood that their containers will be examined. 

Initiative and year introduced: Megaports Initiative, 2003; 
Department currently responsible: DOE; 
Description: DOE installs radiation detection equipment at key foreign 
ports, enabling foreign government personnel to use radiation detection 
equipment to screen shipping containers entering and leaving these 
ports, regardless of the containers' destination, for nuclear and other 
radioactive material that could be used against the United States and 
its allies. As of June 2009, the Megaports Initiative was fully 
operational at 23 foreign ports and in various stages of implementation 
at 21others. 

Initiative and year introduced: Standards to Secure and Facilitate 
Global Trade (SAFE) Framework of Standards, 2005; 
Department currently responsible: DHS; 
Description: CBP, along with international partners developed the WCO 
Framework of Standards to Secure and Facilitate Global Trade (commonly 
referred to as the SAFE Framework), the core concepts of which are 
based on components in CBP's CSI and C-TPAT programs. In June 2005, the 
173-member customs administrations of the World Customs Organization 
adopted the SAFE Framework and as of June 2009, 157 member countries, 
including the United States, had signed letters of intent for 
implementing the SAFE Framework. 

Initiative and year introduced: Secure Freight Initiative (SFI), 2006; 
Department currently responsible: DHS, DOE; 
Description: CBP and DOE program at selected ports to scan 100 percent 
of U.S.-bound container cargo for nuclear and radiological materials 
overseas using integrated examination systems that couple non-intrusive 
inspection (NII) and radiation detection equipment. 

Initiative and year introduced: Domestic Port Radiation Detection 
Scanning, 2007; 
Department currently responsible: DHS; 
Description: CBP program to scan 100 percent of containers arriving in 
the United States with radiation detection equipment prior to leaving a 
domestic port. As of April 2009, CBP had 409 radiation portal monitors 
deployed at domestic ports, through which approximately 98 percent of 
all arriving containers passed through. 

Initiative and year introduced: Mutual Recognition Arrangements, 2007, 
2008, 2009; 
Department currently responsible: DHS; 
Description: CBP bilateral program to develop mutual recognition of 
Authorized Economic Operator (AEO) programs.[B] This occurs when 
customs administrations agree to recognize the members of their 
respective programs. As of June 2009, CBP has signed mutual recognition 
arrangements with New Zealand, Canada, Jordan, and Japan. Furthermore, 
the United States is in discussions with the European Union regarding 
the possibility of entering into a nonbinding mutual recognition 
arrangement. 

Initiative and year introduced: Importer Security Filing and Additional 
Carrier Requirements (also known as 10+2), 2009; 
Department currently responsible: DHS; 
Description: CBP regulation that requires importers and vessel carriers 
to provide additional data elements for improved identification of 
containers that may pose a risk for terrorism. The importer is 
responsible for supplying CBP with 10 shipping data elements 24 hours 
prior to lading while the vessel carrier is required to provide 2 data 
elements in addition to those previously required. 

Source: GAO summary of information obtained from DHS, DOE, and WCO. 

[A] Cargo manifests are prepared by the ocean carrier and are composed 
of bills of lading for each shipment of cargo loaded on a vessel to 
describe the contents of the shipment. 

[B] Authorized Economic Operators are those companies that participate 
in a country's customs-to-business partnership programs and may 
include, for example, manufacturers, importers, and exporters. 
Incentives for businesses participating in AEO programs are defined and 
offered by the individual member states. 

[End of table] 

CBP Has Taken Steps to Promote Customs Security Standards 
Internationally: 

CBP has taken a lead role in working with foreign customs 
administrations on approaches to standardize supply chain security 
worldwide. In 2004, CBP, along with 11 other member customs 
administrations of the WCO, formed the High Level Strategic Group to 
develop international standards for customs security practices. The 
group developed the WCO Framework of Standards to Secure and Facilitate 
Global Trade (commonly referred to as the SAFE Framework), the core 
concepts of which are based on components in CBP's CSI and C-TPAT 
programs. For example, just as in the CSI program, the SAFE Framework 
states that members should use a risk-management system to target and 
identify cargo that may pose a risk for terrorism. Similar to C-TPAT, 
the SAFE Framework incorporates the concept of the Authorized Economic 
Operator (AEO) and provides technical guidance for customs 
administrations to develop an AEO program that offers incentives to 
companies that comply with predetermined minimum supply chain security 
standards. According to data from the WCO, as of July 2009, about 70 
countries, including the 27 members states of the European Union, have 
implemented or have begun developing AEO programs. In the United 
States, C-TPAT is the designated AEO program and businesses 
participating in the program are Authorized Economic Operators. In June 
2005, the 173-member customs administrations of the WCO adopted the 
SAFE Framework. Further, as of June 2009, 157 WCO members, including 
the United States, had signed letters of intent to implement the SAFE 
Framework (see figure 2). 

Figure 2: World Map Indicating the 157 WCO Customs Administrations That 
Have Signed Letters of Intent to Implement the WCO SAFE Framework: 

[Refer to PDF for image: map and associated data] 

WCO member countries that intend to implement the SAFE Framework: 

South, North and Central America, and the Carribean: 
Argentina; 
Bahamas; 
Bermuda; 
Bolivia; 
Brazil; 
Canada; 
Chile; 
Colombia; 
Costa Rica; 
Cuba; 
Dominican Republic; 
Ecuador; 
El Salvador; 
Guatemala; 
Haiti; 
Honduras; 
Jamaica; 
Mexico; 
Netherlands Antilles; 
Nicaragua; 
Panama; 
Paraguay; 
Peru; 
Saint Lucia; 
Trinidad and Tobago; 
United States; 
Uruguay. 

Europe: 
Albania; 
Armenia; 
Azerbaijan; 
Belarus; 
Croatia; 
Georgia; 
Iceland; 
Israel; 
Kazakhstan; 
Kyrgyzstan; 
Moldova; 
Montenegro; 
Norway; 
Russian Federation; 
Serbia; 
Tajikistan; 
The Former Yugoslav Republic of Macedonia; 
Turkey; 
Ukraine; 
Uzbekistan; 
European Union – 27 Member States. 

Africa, Middle East: 
Angola; 
Bahrain; 
Benin; 
Botswana; 
Burkina Faso; 
Burundi; 
Cameroon; 
Cape Verde; 
Central African Republic; 
Chad; 
Comoros; 
Congo (Republic of the); 
Côte d'Ivoire; 
Democratic Republic of the Congo; 
Egypt; 
Ethiopia; 
Gabon; 
Gambia; 
Ghana; 
Guinea; 
Iraq; 
Jordan; 
Kenya; 
Kuwait; 
Lebanon; 
Lesotho; 
Liberia; 
Libyan Arab Jamahiriya; 
Madagascar; 
Malawi; 
Mali; 
Mauritania; 
Mauritius; 
Morocco; 
Mozambique; 
Namibia; 
Niger; 
Nigeria; 
Oman; 
Qatar; 
Rwanda; 
Saudi Arabia; 
Senegal; 
Sierra Leone; 
South Africa; 
Sudan; 
Syrian Arab Republic; 
Swaziland; 
Tanzania; 
Togo; 
Tunisia; 
Uganda; 
United Arab Emirates; 
Yemen; 
Zambia; 
Zimbabwe. 

Far East, South and Southeast Asia, Australia and the Pacific: 

Afghanistan; 
Australia; 
Bhutan; 
Cambodia; 
China; 
Fiji; 
Hong Kong, China; 
India; 
Indonesia; 
Iran (Islamic Republic of); 
Japan; 
Korea (Republic of); 
Japan; 
Korea (Republic of); 
Lao People's Democratic Republic; 
Macau, China; 
Malaysia; 
Maldives; 
Mongolia; 
Myanmar; 
Nepal; 
New Zealand; 
Pakistan; 
Papua New Guinea; 
Philippines; 
Singapore; 
Sri Lanka; 
Thailand; 
Vietnam. 

Source: GAO (map art), Map Resources (map), WCO (data). 

Note: Countries' names and geographic regions have been defined by WCO. 

[End of figure] 

While CBP has developed cooperative relationships with foreign 
governments to enhance the security of U.S.-bound cargo containers 
before they are placed on a vessel, several factors at foreign ports 
that impact the security of cargo are beyond CBP's control. For 
example, while CBP has developed specific standards for the inspection 
equipment used to scan cargo containers at domestic ports, CBP has 
potentially limited assurance that this inspection equipment is capable 
of detecting and identifying potential WMD at foreign ports. 
Additionally, while CBP can issue a "do not load" order so that a 
specific cargo container would not be allowed on a U.S.-bound vessel, 
it has no authority to compel host governments to participate in 
security programs or to scan cargo containers that it has determined 
may pose some risk. For example, when CBP determines that cargo in a 
particular container at a CSI or SFI port poses some risk, it must 
request that the host government's customs service conduct a physical 
examination of the container since CBP has no authority to do so 
itself. Similarly, unlike domestic ports, CBP cannot compel private 
sector entities operating at foreign ports to participate in security 
initiatives. For example, at one port, for a period of approximately 2 
months, the terminal operator ceased to provide CBP information on 
which containers leaving the port were bound for the United States. As 
a result, CBP had greater difficulty determining which containers were 
U.S.-bound and, therefore, should be scanned with imaging equipment. 
Under these circumstances, CBP would still have the option of 
preventing the cargo containers from being loaded onto U.S. bound 
vessels, or flagging the containers for further inspection once they 
arrive in the United States. 

Equipment Used to Conduct Examinations of Cargo Containers: 

There are generally two types of cargo container examinations--scanning 
equipment and physical searches--used as part of the SFI and CSI 
programs. There are two basic types of scanning equipment currently 
used to examine cargo containers that do not require the container to 
be opened: (1) radiation detection equipment, including radiation 
portal monitors, and (2) non-intrusive imaging equipment (NII), which 
may use X-rays or gamma rays. Radiation detection equipment, such as 
radiation portal monitors (RPM) and radiation isotope identification 
devices (RIID) detect the presence of radioactive material that may be 
in a container. RIIDs and certain types of RPMs can identify the type 
of material emitting the radiation and whether the material poses a 
threat or is a naturally occurring radioactive material, such as that 
found in certain ceramic tiles.[Footnote 17] We observed at domestic 
and foreign ports that if radioactive emissions were detected from a 
cargo container, customs officials used a handheld RIID to determine 
whether the radiation being emitted posed a threat. The second type of 
equipment, referred to as NII, uses X-rays or gamma rays to scan a 
container and create images of the container's contents without opening 
it. Examples of a RPM, handheld RIID, and NII are depicted in figure 3. 

Figure 3: Examples of Scanning Equipment Used at SFI Ports: 

[Refer to PDF for image: 3 photographs] 

Radiation portal monitor (RPM); 
Handheld radiation isotope identification device (RIID); 
Non-intrusive imaging (NII) scanner. 

Source: GAO. 

[End of figure] 

CBP officials, along with host government officials, review the images 
produced with the NII to detect anomalies or shielding that could 
indicate the presence of WMD. The 100 percent scanning provision of the 
9/11 Act requires containers to be scanned with both radiation 
detection and NII equipment; doing so may identify WMD material that is 
successfully shielded from detection by RPM. The average time at which 
a container is processed through the scanning system is 3 to 5 minutes. 
If the use of the RIID is necessary, the average time increases another 
5 to 10 minutes. 

Secure Freight Initiative (SFI): 

In response to the SAFE Port Act requirement to implement a pilot 
program to determine the feasibility of scanning 100 percent of U.S.- 
bound containers with both RPM and NII equipment, CBP, the State 
Department, and DOE jointly announced the formation of SFI in December 
2006 as an effort to build upon existing container security measures by 
enhancing the U.S. government's ability to ensure containers are 
scanned for nuclear and radiological material overseas and better 
assess the risk of inbound containers. In essence, SFI builds upon the 
CSI and Megaports programs by combining each program's scanning 
technology equipment. To accomplish this, CBP met with terminal 
operators to identify foreign ports for inclusion in the pilot program 
to scan 100 percent of U.S.-bound containers. Based on discussions with 
terminal operators and subsequent discussions with host government 
officials, three ports were selected to implement the SAFE Port Act 
pilot program: Qasim, Pakistan; Puerto Cortes, Honduras; and 
Southampton, United Kingdom. According to CBP officials, while 
initiating the SFI program at these ports satisfied the SAFE Port Act 
requirement to implement the program at three ports,[Footnote 18] CBP 
also selected the ports of Hong Kong; Busan, South Korea; and Salalah, 
Oman to more fully demonstrate the capability of the integrated 
scanning system at larger, more complex ports with higher percentages 
of transshipment container cargo--cargo containers from one port that 
are taken off a vessel at another port to be placed on another vessel 
bound for the United States. For example, port officials told us that 
at the Ports of Hong Kong, Singapore, and Salalah, transshipment cargo 
constitutes about 50 percent, 87 percent, and 99 percent of U.S.-bound 
containers, respectively. CBP officials also stated that with the 
passage of the 9/11 Act, the focus of the SFI program shifted from 
determining the feasibility of 100 percent scanning to becoming the 
first phase of CBP's phased-in approach to implementing the 100 percent 
scanning requirement. 

CBP's Progress with SFI Implementation and Operation to Date Has Been 
Limited, Leaving the Feasibility of 100 Percent Scanning Largely 
Unproven: 

While CBP and DOE have made progress in integrating new technologies as 
part of the SFI program, progress in implementing and expanding the 
scanning of U.S.-bound cargo containers at participating ports has been 
limited. Some ports that initially agreed to participate in the SFI 
program did so for a limited time, or on a limited basis. Logistical, 
technological, and other problems at participating ports, as well as 
concerns regarding the safety of the NII equipment used for the SFI 
program, have prevented any of the participating ports from achieving 
100 percent scanning, as ultimately required by the 9/11 Act, leaving 
the feasibility and efficacy of 100 percent scanning largely unproven. 
Moreover, attempts to implement 100 percent scanning at these foreign 
ports have confirmed challenges previously identified by CBP and GAO. 
[Footnote 19] 

CBP and DOE Have Made Progress in Integrating and Modifying Scanning 
Equipment: 

CBP has been successful in integrating outputs from the various types 
of scanning equipment used to scan cargo containers at foreign ports 
participating in the SFI program. CBP and DOE were able to integrate 
the outputs from RPM and NII equipment with the Automated Targeting 
System (ATS) so a CBP officer can review all the data and information 
associated with a container on a single screen.[Footnote 20] CBP 
officers can also access scanning information remotely and do not need 
to be present at an SFI port to analyze the RPM results and NII images 
of containers. For example, at the National Targeting Center-Cargo 
(NTCC), we observed that outputs from RPM and NII equipment located at 
Port Qasim in Pakistan were accessible to CBP officers located in the 
United States.[Footnote 21] These officers could observe the scanning 
equipment outputs in combination with information from ATS to make 
determinations as to whether to request that the cargo container being 
scanned be more closely examined by host government personnel. CBP 
officers could also observe scans of cargo containers being conducted 
at the port in real time via cameras that can be operated remotely from 
the United States. Examples of scanning outputs and equipment used at 
an SFI port are shown in figure 4. 

Figure 4: Example of Scanning Outputs and Equipment at SFI Ports: 

[Refer to PDF for image: 2 photographs] 

CBP officer reviewing outputs from SFI scanning equipment in ATS, Port 
of Southampton, United Kingdom; 
Radiation detection equipment known as Mobile Radiation Detection 
Identification System (MRDIS), Port of Salalah, Oman. 

Source: GAO. 

[End of figure] 

This integration of technologies has also allowed CBP to transfer 
targeting efforts involving the Port of Southampton, United Kingdom, to 
domestic ports. Currently, CBP officers in Newark, Baltimore, Savannah, 
and other domestic port locations have been trained to incorporate the 
scanned data from the Port of Southampton into their targeting 
methodology and coordinate secondary examinations with the SFI team at 
the port. Similarly, at Puerto Cortes in Honduras, we observed that 
scan data from imaging and RPM equipment were available for review by 
CBP and Honduran Customs officials almost instantly after the images 
were generated by the inspection equipment. Honduran Customs officials 
stated that, in addition to CBP's interest in detecting WMD, having 
this information available greatly assisted in their efforts to detect 
and identify contraband, such as narcotics, being shipped in cargo 
containers through the port. 

Ports participating in the SFI program have also been able to serve as 
a testing ground for new inspection technologies. For example, at the 
Port of Salalah in Oman, we observed the testing of mobile platforms to 
carry large format radiation detection equipment, known as Mobile 
Radiation Detection Identification Systems (MRDIS) that Pacific 
Northwest National Laboratory, in conjunction with DOE, has developed 
(see figure 4). The MRDIS units were built to more effectively capture 
transshipment cargo (cargo taken off of one vessel to be placed on a 
U.S.-bound vessel) as it is being unloaded from a vessel without 
creating congestion. However, the effectiveness of the MRDIS, and its 
impact on the flow of containers, has not been fully tested because the 
SFI program is not yet operational at the Port of Oman. 

Foreign Port Participation in the SFI Program Has Been Limited: 

CBP reached arrangements with foreign governments to implement the SFI 
program at seven foreign ports. As of June 2009, SFI operations have 
been conducted at five ports, but in some cases for a limited time or 
on a limited basis. In addition, one port has withdrawn and another has 
yet to begin scanning operations. 

As shown in table 2, the SFI program has operated continuously since 
October 2007 at Port Qasim, Pakistan; Puerto Cortes, Honduras; and the 
Port of Southampton, United Kingdom and the majority of U.S.-bound 
cargo containers from these ports have been scanned. Host government 
officials at Puerto Cortes have expressed a desire to continue with the 
SFI program and have allocated personnel to support program operations. 
At the Port of Southampton, the host government has allowed SFI 
operations to continue, but withdrew customs personnel originally 
allocated to support program operations after the 6-month arrangement 
it had with CBP to participate in the SFI program came to an end. 
Customs officials in the United Kingdom stated that the costs 
associated with assigning personnel to assist CBP with SFI program 
operations were preventing these officials from fulfilling their 
domestic responsibilities, such as detecting drugs. As a result, the 
SFI program at the Port of Southampton is now solely supported by CBP 
officers working directly with the terminal operator. 

Table 2: Information on Ports Initially Agreeing to Participate in the 
SFI Program: 

SFI port: Qasim, Pakistan; 
Date of SFI operations: October 12, 2007 to present. 

SFI port: Puerto Cortes, Honduras; 
Date of SFI operations: October 12, 2007 to present. 

SFI port: Southampton, United Kingdom; 
Date of SFI operations: October 12, 2007 to present[A]. 

SFI port: Hong Kong; 
Date of SFI operations: January 11, 2008 to April 30, 2009. 

SFI port: Busan, South Korea; 
Date of SFI operations: March 18, 2009 to present. 

SFI port: Salalah, Oman; 
Date of SFI operations: Program postponed with no planned initiation 
date. 

SFI port: Singapore[B]; 
Date of SFI operations: CBP and the Government of Singapore mutually 
agreed the Port of Singapore would not participate in SFI prior to 
operations beginning. 

Source: GAO analysis of data provided by CBP. 

[A] Although SFI operations at the Port of Southampton are ongoing, the 
SFI program is operated solely by CBP officials. United Kingdom customs 
withdrew its participation from the program in April 2008, after the 6- 
month arrangement it had to participate came to an end. 

[B] While CBP and the Government of Singapore initially signed a 
declaration of principles in December 2007 to establish the Port of 
Singapore's participation in the SFI program, this decision was later 
mutually rescinded. 

[End of table] 

Among ports that participated in the SFI program, the largest port in 
terms of container volume shipped to the United States, the Port of 
Hong Kong, participated in the program for about 16 months--scanning 
containers at one of the nine terminals on a voluntary basis. The 
program ended as scheduled in April 2009 and was not renewed at the 
mutual decision of the Hong Kong government and DHS. Discussing their 
decision not to extend SFI, Hong Kong port officials observed that CBP- 
provided statistics showed no trade facilitation benefits for 
containers passing through SFI scanning and noted CBP's efforts to 
focus container scanning at those ports where there was greater risk. 
They also stated that they saw no benefit to participation in the 
program in terms of their own port security and expressed concerns that 
equipment and infrastructure costs, as well as costs to port 
efficiency, would make full implementation of the SFI program at all of 
its terminals unfeasible. 

Similarly, according to CBP officials, the government of South Korea 
agreed to allow the Port of Busan to participate in the SFI program for 
6 months at one terminal at the port. CBP officials stated that the 
South Korean government has agreed to extend the program for another 6 
months, but no permanent arrangement has been reached. 

In addition, two ports that had initially agreed to participate in the 
program have since withdrawn or postponed their operations. DHS and the 
government of Singapore mutually agreed to suspend the SFI program at 
the Port of Singapore before the program began scanning operations, 
noting concerns about the potential adverse impact on port efficiencies 
due to the large volume and complexity of operations at the port. In 
this instance, both DHS and Singapore agreed that the benefits of 
initiating the program with existing technology were outweighed by the 
potential impact the operations could have on trade flow through the 
port. Also, according to CBP officials, Port Salalah in Oman had 
initially agreed to participate in the SFI program for 6 months. 
However, according to U.S.-government officials, implementation of the 
SFI program at Port Salalah has been postponed due to port management 
concerns regarding the scope, time line, and criteria for success for 
the program. The officials said that U.S. government personnel are 
working with Omani Customs to find a path forward, but no firm plans or 
time line yet exist for initiating SFI operations at the Port of 
Salalah. 

Government officials we spoke with in Asia and Europe generally stated 
that they viewed the implementation and operation of the SFI program to 
be a pilot--with a definite start and end date--to determine the 
feasibility and usefulness of further implementation. As such, they 
stated that they do not view the SFI program as being permanent. 

Scanning Rates at Larger SFI Ports Have Been Far Short of 100 Percent: 

While CBP has been able to scan a majority of U.S.-bound cargo 
containers from three comparatively low-volume ports participating in 
the SFI program, at two higher volume ports--which constitute 
approximately 17 percent of containers arriving in the United States-- 
it has been able to scan no more than 5 percent of U.S.-bound cargo 
containers, on average, most of which were scanned after they were 
determined to be high risk by CBP officers as part of the CSI program, 
according to CBP officials.[Footnote 22] As shown in table 3, at Port 
Qasim, Puerto Cortes, and the Port of Southampton--which together 
account for 2.4 percent of U.S.-bound cargo containers with little or 
no transshipment cargo containers--CBP has been able to scan, on 
average, 54 percent to 86 percent of the U.S.-bound cargo containers. 
In contrast, at the Ports of Hong Kong and Busan--which together 
account for 16.6 percent of U.S.-bound cargo containers and have larger 
percentages of transshipped cargo--CBP has been able to scan, on 
average, 3 to 5 percent of the U.S.-bound cargo containers. CBP 
officials stated that while scanning percentages are low, operations at 
these ports have been limited to a single terminal or to an area within 
a single terminal. They added that these larger ports would only agree 
to participate in the program if SFI operations were limited in scope, 
and the agency has worked with host governments to expand operations. 
However, as of yet, CBP has not made arrangements to expand operations 
at these ports. 

Table 3: Data on Containers Scanned and Container Volume at SFI Ports: 

SFI port: Qasim[B]; 
Average percentage of U.S.-bound containers scanned during SFI program: 
RPM[A]: 85; 
Average percentage of U.S.-bound containers scanned during SFI program: 
NII: 86; 
Number of U.S.-bound containers exported from SFI ports, fiscal year 
2008: 29,191; 
Rank of SFI ports in terms of volume of containers exported to the 
U.S., fiscal year 2008: 61st; 
Percentage of all cargo containers that arrived in U.S. from SFI ports, 
fiscal year 2008: 0.3. 

SFI port: Puerto Cortes[B]; 
Average percentage of U.S.-bound containers scanned during SFI program: 
RPM[A]: 76; 
Average percentage of U.S.-bound containers scanned during SFI program: 
NII: 78; 
Number of U.S.-bound containers exported from SFI ports, fiscal year 
2008: 188,438; 
Rank of SFI ports in terms of volume of containers exported to the 
U.S., fiscal year 2008: 21st; 
Percentage of all cargo containers that arrived in U.S. from SFI ports, 
fiscal year 2008: 1.9. 

SFI port: Southampton[B]; 
Average percentage of U.S.-bound containers scanned during SFI program: 
RPM[A]: 54; 
Average percentage of U.S.-bound containers scanned during SFI program: 
NII: 56; 
Number of U.S.-bound containers exported from SFI ports, fiscal year 
2008: 20,687; 
Rank of SFI ports in terms of volume of containers exported to the 
U.S., fiscal year 2008: 63rd; 
Percentage of all cargo containers that arrived in U.S. from SFI ports, 
fiscal year 2008: 0.2. 

SFI port: Hong Kong[C]; 
Average percentage of U.S.-bound containers scanned during SFI program: 
RPM[A]: 3; 
Average percentage of U.S.-bound containers scanned during SFI program: 
NII: 3; 
Number of U.S.-bound containers exported from SFI ports, fiscal year 
2008: 894,080; 
Rank of SFI ports in terms of volume of containers exported to the 
U.S., fiscal year 2008: 3rd; 
Percentage of all cargo containers that arrived in U.S. from SFI ports, 
fiscal year 2008: 9.2. 

SFI port: Busan[D]; 
Average percentage of U.S.-bound containers scanned during SFI program: 
RPM[A]: 5; 
Average percentage of U.S.-bound containers scanned during SFI program: 
NII: 5; 
Number of U.S.-bound containers exported from SFI ports, fiscal year 
2008: 720,582; 
Rank of SFI ports in terms of volume of containers exported to the 
U.S., fiscal year 2008: 4th; 
Percentage of all cargo containers that arrived in U.S. from SFI ports, 
fiscal year 2008: 7.4. 

SFI port: Salalah; 
Average percentage of U.S.-bound containers scanned during SFI program: 
RPM[A]: Not yet operational; 
Number of U.S.-bound containers exported from SFI ports, fiscal year 
2008: 55,053; 
Rank of SFI ports in terms of volume of containers exported to the 
U.S., fiscal year 2008: 37th; 
Percentage of all cargo containers that arrived in U.S. from SFI ports, 
fiscal year 2008: 0.6. 

Source: GAO analysis of data provided by CBP. 

[A] The radiation detection equipment used to scan containers are 
referred to as radiation portal monitors (RPM). 

[B] Scanning percentages at Port Qasim, Puerto Cortes, and the Port of 
Southampton reflect operations conducted from November 2007 through May 
2009. 

[C] Scanning percentages at the Port of Hong Kong reflect operations 
conducted from February 2008 through April 2009. 

[D] Scanning percentages at the Port of Busan reflect operations 
conducted from April 2009 through May 2009. 

[End of table] 

The Feasibility of 100 Percent Scanning Remains Largely Unproven as 
Efforts to Implement and Operate the SFI Program at Participating Ports 
Have Confirmed Previously Identified Challenges: 

To date, attempts to implement 100 percent scanning at foreign ports 
have confirmed challenges, some of which we and CBP have previously 
reported.[Footnote 23] For example, challenges associated with the 
perceived safety of the NII scanning equipment, scanning cargo 
containers arriving at a port by rail, or scanning transshipment cargo 
containers, among other things, have prevented CBP from achieving 100 
percent scanning at participating ports.[Footnote 24] Specifically: 

* Safety Concerns: Port officials at five of the seven ports that 
initially agreed to participate in the SFI program expressed concerns 
regarding the safety of drivers and port operators who work near NII 
scanning equipment, which generates radiation in order to generate an 
image of a container's contents. CBP provided information or conducted 
town hall meetings on the safety of the equipment to officials and 
workers at participating ports. However, to address these concerns and 
allow for the equipment to be used, port officials required that 
passage through the NII equipment at the ports of Hong Kong and Busan 
be voluntary, thus limiting efforts to test the feasibility of using 
the NII equipment, as well as the SFI program's overall effectiveness. 

* Logistics: Logistics issues and costs associated with moving cargo 
containers to scanning areas at the Port of Southampton resulted in the 
cessation of scans of cargo containers arriving by rail. Initially, CBP 
and the terminal operator agreed that the terminal operator would 
absorb the costs to place cargo containers arriving by rail onto trucks 
so that those containers could pass through SFI scanning systems, at a 
cost of approximately $60 per container, but this arrangement ended in 
April 2008. 

* Transshipment: Transshipment cargo containers--those taken off of one 
vessel to be placed on a U.S.-bound vessel--present significant 
challenges to scanning because of logistical difficulties associated 
with transporting these containers.[Footnote 25] Transshipment cargo 
containers are only available for scanning for a comparatively short 
period of time and may be difficult to access. For example, UK customs 
officials stated that it was not possible to route transshipment 
containers that arrived by sea through the SFI equipment. As a 
consequence, the scanning of transshipment containers was delayed at 
the Port of Southampton, United Kingdom. Further, in April 2009, the 
Acting Commissioner of CBP testified that there is no proven technology 
that can scan these containers. 

* Equipment Breakdowns: Scanning and communication equipment breakdowns 
have occurred at several ports. For example, two of the three seaports 
fully participating in the SFI pilot program experienced weather- 
related mechanical breakdowns of scanning equipment. Specifically, at 
the Port of Southampton, a piece of radiation scanning equipment failed 
because of rainy conditions and had to be replaced, resulting in 2 
weeks of diminished scanning capabilities. Additionally, Port Qasim in 
Pakistan has experienced difficulties with scanning equipment because 
of the extreme heat. Because of the range of climates at the more than 
600 foreign ports that ship cargo to the United States, these types of 
technological challenges could be experienced elsewhere. 

Additionally, while cargo containers may be scanned at SFI ports, the 
images obtained through these scans may not always be sufficiently 
clear to determine the potential presence of WMD. For example, we 
observed that some trucks carrying cargo containers at the Port of Hong 
Kong passed through imaging equipment too quickly to obtain a clear 
enough image to verify the contents of the container. This problem is 
not isolated to scans that were taken at the Port of Hong Kong, as CBP 
officials at the Port of Long Beach also showed us images taken at 
other SFI ports that were not clear enough to read because the driver 
drove through the NII equipment too quickly. The CBP officials also 
showed us an image in which one-third of the container was not 
captured. The CBP officials further explained that if the container was 
determined to pose a risk for terrorism by CBP through targeting 
activities, it would need to be examined again with imaging equipment 
upon arrival in the United States because of the inadequacy of the 
image scan at the SFI port. 

CBP Plans to Improve Container Security Through Two Initiatives, but 
These Plans Will Not Achieve 100 Percent Scanning and Will Require a 
Process to Grant Extensions to Noncompliant Ports: 

CBP plans to implement SFI at select ports it believes would help 
mitigate the greatest risk. CBP officials maintain that this strategy, 
combined with a plan to gather additional cargo container information, 
would enhance container security. However, DHS and CBP acknowledge that 
not all foreign ports will be in a position to scan 100 percent of U.S.-
bound cargo containers by July 2012. While CBP has expressed concerns 
about the feasibility of scanning 100 percent of U.S.-bound cargo 
containers, it has not conducted a feasibility analysis of expanding 
100 percent scanning to nonpilot ports, as required by the SAFE Port 
Act. Also, because of concerns about the feasibility of the scanning 
requirement, DHS plans to issue a blanket extension for all ports 
pursuant to the extension provisions of the 9/11 Act. 

DHS Plans to Improve Container Security by Expanding SFI to Strategic 
Corridors and Gathering Additional Data for Assessing Risks: 

DHS Plans to Improve Security by Expanding SFI to Strategic Trade 
Corridors: 

In April 2009, the Secretary of DHS endorsed the strategic trade 
corridor strategy as the path forward for implementing the SFI program. 
The Secretary was presented with three options ranging from 
implementing SFI at 70 ports that account for shipping over 90 percent 
of U.S.-bound containers to seeking repeal of the 100 percent scanning 
requirement. The strategic trade corridor strategy selected by the 
Secretary focuses cargo container scanning efforts on a limited number 
of ports where CBP has determined SFI will help mitigate the greatest 
risk of potential WMD from entering the United States.[Footnote 26] CBP 
determined which ports were strategic by working with DOE to develop a 
joint analysis of the potential risk of cargo containers from all 
foreign seaports that ship directly and indirectly to the United 
States. This analysis focused on issues such as known smuggling routes, 
volume of container traffic, proximity to special nuclear material 
sources, and known presence of terrorist cells operating in the country 
and according to CBP, had been validated by the intelligence community. 
DHS has endorsed the strategic trade corridor concept, recognizing DHS 
will fund the majority of costs if not all, but has not yet finalized 
decisions regarding the specific number of strategic ports to be 
included or developed a time frame for implementation. However, it is 
unclear whether DHS intends for the strategic trade corridor strategy 
to be implemented in lieu of the 100 percent scanning requirement or 
whether it is an initial step towards full implementation at all ports. 
While DHS is still developing specific details, CBP is working on 
expanding the SFI program to strategic ports. 

CBP Plans to Improve Security by Gathering Additional Data through its 
10+2 Program for Assessing Risks: 

CBP officials stated that the strategic trade corridor strategy, 
combined with additional information on U.S.-bound cargo containers it 
receives through the recently implemented "10+2" program, will enhance 
container security. The Importer Security Filing and Additional Carrier 
Requirements (also known as "10+2") is a regulation issued pursuant to 
the SAFE Port Act that requires importers and vessel carriers to 
provide additional data elements for U.S.-bound cargo containers to 
CBP. As of January 2009,[Footnote 27] the importer is responsible for 
supplying CBP with 10 shipping data elements, including shippers' 
addresses and cargo destinations, 24 hours prior to lading. 
Additionally, the vessel carrier is required to provide 2 data 
elements, the vessel stow plan, which is used to identify the location 
of containers onboard a vessel, and container status messages, which 
are used to track the movement of containers through the supply chain. 
The data supplements the advanced cargo data CBP receives through the 
24-hour rule. CBP believes the additional data provided through 10+2 
will enhance security by improving the targeting process used to 
identify containers that may pose a risk for terrorism. 

While DHS and CBP Question Ability to Achieve 100 Percent Scanning, 
They Have Not Conducted a Feasibility Analysis: 

While security may be enhanced through the strategic trade corridor 
strategy and 10+2 program, these efforts will not achieve the 9/11 Act 
requirement to scan 100 percent of U.S.-bound cargo containers by July 
2012. Furthermore, DHS and CBP do not have a plan on how they will work 
with foreign ports to ensure that 100 percent of U.S.-bound cargo 
containers are scanned by July 2012 to meet the requirements set forth 
in the 9/11 Act. According to DHS and CBP officials, they have not 
developed a plan to achieve 100 percent scanning by July 2012 because 
challenges encountered thus far in implementing the SFI program 
indicate that implementation of 100 percent scanning worldwide by the 
2012 deadline will be difficult to achieve. While both DHS and CBP 
question the security value and feasibility of achieving 100 percent 
scanning by 2012, they have yet to conduct an analysis of the 
feasibility of scanning all U.S.-bound containers to demonstrate 
whether the 9/11 Act requirement can be met. The SAFE Port Act requires 
an analysis of the feasibility of expanding scanning to other foreign 
ports participating in the Container Security Initiative. [Footnote 28] 
Furthermore, standard practices for project management call for the 
feasibility of programs to be considered early on, which can be done 
through evaluating alternatives.[Footnote 29] CBP should determine 
whether 100 percent scanning is feasible and if so what is the best way 
to achieve it, or if it is not feasible, what are the other 
alternatives. The analysis should consider the scope, objectives, time 
line, and resources needed to achieve 100 percent scanning or the 
alternatives, if appropriate. Such an analysis would ensure that a 
complete assessment of feasibility is conducted and the results are 
communicated so that DHS and Congress could determine key challenges, 
ways they can be addressed, and potential courses of action for 
enhancing container security. 

DHS Plans to Grant Blanket Extensions to Ports Unable to Meet the 2012 
Deadline: 

DHS acknowledged it will not be able to meet the July 2012 deadline for 
full-scale implementation of the 9/11 Act's scanning requirement and 
will need to grant extensions to those foreign ports unable to meet the 
scanning deadline in order to maintain the flow of trade and comply 
with the 9/11 Act prohibition on allowing containers that have not been 
scanned to enter the United States. To grant an extension, the 9/11Act 
requires DHS to certify that at least two of six conditions 
exist.[Footnote 30] The act also requires DHS to report to Congress 60 
days before any extension takes effect on the container traffic 
affected by the extension, the evidence supporting the extension, and 
the measures DHS is taking to ensure that scanning can be implemented 
as early as possible at the ports covered by the extension.[Footnote 
31] DHS has the authority to grant extensions to any number of foreign 
ports for which at least two of the six conditions exist, which could 
mean granting a blanket extension to all ports where such conditions 
exist or on a port-by-port basis. Granting extensions on a port-by-port 
basis could, according to international organizations we spoke with, 
potentially give a competitive advantage to some ports and lead to 
trade disruptions. They cited a possible example where one port that 
invests in scanning equipment would be able to meet the scanning 
requirement, but another port that does not invest in scanning 
equipment could not meet the requirement. If the latter port gets an 
extension, it could have a temporary competitive advantage over the 
former port because its costs of operations do not include the costs of 
investments in scanning equipment. Similarly, officials from Industrial 
Economics, Inc.--a firm contracted by CBP to assess the economic impact 
of 100 percent scanning--told us that if multiple ports in an area are 
accessible and one port does not have a scanning system but is 
temporarily exempt from the 100 percent requirement, it may get a 
competitive advantage in the region because the private industry would 
likely choose to ship containers from ports where it believes it will 
experience the fewest delays. 

During the course of our review, DHS was developing its approach for 
granting extensions. CBP program officials told us that DHS had been 
considering granting extensions on port-by-port basis, which they 
stated would be a lengthy process. According to these officials, site 
surveys would be needed to assess each of the ports that ship 
containers directly to the United States to determine the feasibility 
of establishing a scanning system. CBP program officials estimated each 
site survey would take approximately 2 weeks to complete, plus the 
additional time needed to draft the report to Congress justifying the 
extension. In September 2009, DHS officials told us that the department 
had determined that port-by-port site visits were not required to 
invoke a condition to claim an extension. According to DHS officials, 
at least some of the conditions listed in the 9/11 Act as a basis for 
granting extensions can be applied systemically to all ports rather 
than on a port-by-port basis. At a minimum, DHS believes the last two 
conditions--use of the equipment to scan all U.S.-bound containers 
would significantly impact trade capacity and the flow of cargo, and 
scanning equipment does not adequately provide automatic notification 
of an anomaly in a container--could apply to all foreign ports and, 
thus, may warrant the use of a blanket extension. DHS officials 
acknowledged that their current position could change if there are 
significant changes (e.g., advancements in scanning technology) before 
the July 2012 deadline. 

CBP Has Not Identified Total Program Costs of SFI Implementation or 
Conducted a Cost-Benefit Analysis to Assist in Evaluating Alternatives 
to Achieving the 100 Percent Scanning Requirement: 

CBP and DOE have identified costs borne by the U.S. government for 
implementing SFI--about $100 million to date--but CBP has not developed 
a cost estimate for future U.S. program costs, or conducted a cost- 
benefit analysis that compares the costs of the scanning requirement 
with other alternatives, such as the strategic trade corridor strategy. 
In addition, CBP has not estimated costs to stakeholders, such as 
foreign governments and terminal operators; or nonfinancial costs, such 
as trade disruptions, which could be greater than operating and 
maintaining the scanning systems. 

9/11 Act Does Not Specify Funding Responsibilities, but the United 
States Has Paid Most SFI Costs to Date: 

CBP and DOE Have Funded Much of the Costs at SFI Ports: 

The SAFE Port Act requires CBP to report on U.S. government costs of 
deploying integrated scanning equipment at foreign ports as part of the 
SFI program, and CBP and DOE have identified costs borne by the United 
States of about $100 million for implementing and operating the SFI 
program at six participating ports through June 2009. While CBP and DOE 
have purchased cargo container scanning equipment thus far for foreign 
ports that have participated in the SFI program, it is unclear who will 
pay for additional resources--including increased staff, equipment, and 
infrastructure to continue the program--or who will be responsible for 
operating and maintaining the equipment used for the 100 percent 
scanning statutory requirement. While DHS has the authority to provide 
nonintrusive inspection and radiation detection equipment to foreign 
ports, neither the SAFE Port Act nor the 9/11 Act specifies who is to 
pay for the scanning of U.S.-bound cargo containers at foreign ports. 
[Footnote 32] While the Congressional Budget Office assumed that 
foreign ports would pay for installing and maintaining the systems at 
their ports as a means for continuing trade with the United States, the 
U.S. government has borne a majority of the SFI program costs to date. 
[Footnote 33] DHS officials stated that they anticipate that the U.S. 
government will continue to pay the majority of the costs for 
implementing the SFI program. Table 4 provides additional details on 
SFI costs by port and department. 

Table 4: Costs Incurred by DHS and DOE to Implement and Operate SFI 
Program, through June 2009 (Dollars in thousands): 

SFI Port: Port Qasim, Pakistan; 
DHS: $5,295; 
DOE: $2,315. 

SFI Port: Puerto Cortes, Honduras; 
DHS: $1,048; 
DOE: $4,393. 

SFI Port: Port of Southampton, United Kingdom; 
DHS: $4,091; 
DOE: $10,125. 

SFI Port: Port of Hong Kong; 
DHS: $3,555; 
DOE: $1,414. 

SFI Port: Port of Busan, South Korea; 
DHS: $3,643; 
DOE: $9,384. 

SFI Port: Port Salalah, Oman; 
DHS: $5,520; 
DOE: $12,940. 

SFI Port: Port of Singapore; 
DHS: $305; 
DOE: $2,826. 

SFI Port: Costs not attributable by port; 
DHS: $29,860; 
DOE: $0. 

SFI Port: Total; 
DHS: $53,313; 
DOE: $43,396. 

Source: Cost data provided by DHS and DOE. 

[End of table] 

Foreign Governments and Terminal Operators Have Also Funded Costs, but 
Expressed Unwillingness to Do So Going Forward: 

Government officials from Europe, Asia, and the Middle East that we 
spoke with have stated that the SFI program and 100 percent scanning 
are primarily for the security benefit of the United States and, as 
such, they are unwilling to pay for this security initiative. However, 
while the U.S. government has paid a majority of the costs for 
implementing the SFI program at participating ports, foreign 
governments have incurred personnel, infrastructure, and other costs to 
implement the program. For example, the Customs service in the United 
Kingdom dedicated 12 officers to work on the SFI program for 6 months, 
and the Hong Kong Customs service dedicated a team of 18 officers to 
work on the SFI program and pulled officers from other teams, as 
necessary, to conduct more thorough examinations of container cargo 
using equipment to determine whether radiation being emitted from a 
container is dangerous. Terminal operators have also incurred costs for 
implementing the SFI program. For example, one terminal operator at the 
Port of Hong Kong set up a control room and an information technology 
infrastructure to support the SFI program at a cost of approximately 
$260,000. Additionally, the terminal operator at the Port of 
Southampton paid approximately $60 per container to move cargo 
containers arriving by rail to the scanning facility. Further, European 
customs officials stated that to fully implement the 100 percent 
scanning requirement at large ports with complex operations would 
likely result in the need for a fundamental redesign of several ports, 
entailing substantial costs to terminal users. 

Terminal Operators Propose a Separate Model to Purchase, Operate, and 
Maintain Scanning Equipment at SFI Ports: 

In January 2009, a consortium of four international terminal operators 
formed the Terminal Operator Security Study Group to examine the 100 
percent scanning requirement and outline potential collaborative 
approaches to expand the SFI program in partnership with the U.S. 
government.[Footnote 34] The group proposed, among other things, that 
the U.S. government reach out to host governments to determine the 
extent to which terminal operators could be involved in running 
portions of the SFI program in foreign countries. According to an 
official from the group, if foreign governments do not want to conduct 
scans of U.S.-bound containers, terminal operators would purchase, 
operate, and maintain the SFI equipment for scanning cargo containers 
entering the port on trucks. Transshipment cargo containers would not 
be included in the program, however, since no technical solution 
currently exists for scanning these containers. The terminal operators 
would also be responsible for adjudicating scanning equipment alarms 
with local government officials. Terminal operators would recoup their 
costs for purchasing, operating, and maintaining the equipment by 
charging a fee to users of the terminals. An official from the 
consortium stated that at ports where the volume of cargo containers is 
such that fees would not cover the cost of purchasing, operating, and 
maintaining the scanning equipment, the U.S. government would be 
responsible for covering the cost of SFI program operations. In 
addition, the U.S. government would be responsible for purchasing and 
operating equipment to conduct secondary inspections--more involved 
inspections of cargo containers determined to pose a risk--as well as 
be responsible for providing personnel to review scanned images of the 
cargo containers. According to the terminal operators' representative, 
this model would lessen the financial burden on the U.S. government and 
allow for scanning equipment to be deployed to the terminals where 
these terminal operators are located in about 18 months. 

DHS has indicated that it is open to the possibility of working with 
terminal operators to receive scan data; however, CBP officials stated 
that they do not approve of the plan proposed by the Terminal Operator 
Security Study Group because terminal operators have an incentive to 
move cargo containers through their facilities quickly and there is 
little assurance that they will adequately review scanning equipment 
outputs. The officials also stated that this proposal is not consistent 
with CBP's strategic trade corridor strategy--which aims to focus 
scanning efforts at those ports where doing so would provide the 
greatest benefit--because it includes ports outside the proposed 
corridor. 

CBP Has Not Developed an Estimate of Complete U.S. Program Costs or 
Performed a Cost-Benefit Analysis that Includes Other Economic Costs: 

While CBP has reported costs of the SFI program to date, it has not 
developed a comprehensive life-cycle cost estimate for full 
implementation of 100 percent scanning of U.S.-bound cargo containers. 
CBP reported in December 2008 that establishing a single scanning lane 
costs approximately $9.7 million for infrastructure, construction, and 
equipment and roughly 2,100 scanning lanes would be needed at foreign 
ports to fully implement the program at all ports that ship cargo to 
the United States. CBP acknowledged that this $20 billion estimate of 
program implementation costs was rough and based on the costs of 
implementing SFI thus far. CBP officials also developed rough 
implementation cost estimates for potential deployment options for SFI 
consistent with its secure trade corridor strategy. These estimates 
range from $500 million (with most SFI costs paid by the trade 
community or foreign governments) to $1.6 billion (with SFI costs at 70 
ports paid by DHS). However, the officials acknowledged that none of 
these estimates were developed in a manner consistent with the DHS cost 
estimation guidelines. CBP officials stated that they have not 
developed a more comprehensive cost estimate because DHS has not 
specified a clear path forward for the program. CBP officials added, 
though, that it is difficult to estimate the cost for implementing SFI 
at a single port without conducting a thorough assessment of the port 
and obtaining the input of local government officials. Given the 
agency's limited resources they stated that they cannot conduct these 
types of detailed assessments at all ports that ship cargo containers 
to the United States. These officials added that any estimates of costs 
for full implementation would be of limited use given the complexity 
and variability of operations at individual ports. Additionally, 
officials from Industrial Economics, Inc. concurred that cost 
estimating would be difficult because of the different factors beyond 
CBP's control that would need to be considered, including whether the 
port was publicly or privately held, whether port operations are 
centralized or spread out over a large geographic area, the willingness 
of the host government to accommodate the scanning program, and whether 
and to what extent the port had communications and information 
technology infrastructure available. 

While U.S. program cost of implementing the SFI program at individual 
ports will likely vary based on factors beyond CBP's control, 
commonalities exist among ports that allow for assumptions to be made 
regarding costs for program implementation. Examples of such 
commonalities include the need for inspection equipment at foreign 
ports participating in the program--which has generally been paid for 
by the U.S. government--and the need for personnel to review images 
produced by imaging equipment. DHS's guidance on cost estimation states 
that program managers need to keep analysis of costs moving forward, 
even in periods of ambiguous, partial, or even missing information, and 
that this is best managed by making assumptions to resolve uncertainty 
and allow analysis to continue.[Footnote 35] Further, as we have 
previously reported, having a realistic cost estimate makes for 
effective resource allocation and increases the probability of a 
program's success.[Footnote 36] Additionally, a cost estimate can serve 
as a basis for establishing and defending budgets and driving 
affordability analyses. A cost estimate also helps agencies determine 
whether a program is feasible and the resources needed to support it. 
While we recognize that CBP may have difficulty developing cost 
estimates because of the uncertainties and assumptions that will have 
to be made, having a more comprehensive cost estimate could provide CBP 
with valid cost information to share with Congress to allow it to make 
sound and prudent decisions regarding SFI program implementation, and 
could better position CBP and Congress to evaluate alternatives for SFI 
program configuration and implementation. 

In addition to not identifying estimates of U.S. program costs, CBP has 
not developed estimates of economic costs to other stakeholders such as 
costs that would result from lowering terminal efficiency. For example, 
Industrial Economics, Inc. concluded that 100 percent scanning will 
likely reduce port and terminal efficiency as well as increase costs. 
Officials from Industrial Economics, Inc. stated that these increased 
costs would be due to costs to accommodate scanning--additional land, 
labor, and equipment--as well as to delays caused by 100 percent 
scanning. These officials also stated that while the precise degree to 
which costs may increase is uncertain, some costs could be substantial, 
particularly for larger volume ports or ports with significant amounts 
of transshipment cargo containers as operations at these ports would 
need to be more significantly altered to accommodate 100 percent 
scanning. Further, officials from the World Bank and the WCO with whom 
we spoke stated that implementing 100 percent scanning would likely 
create additional shipping costs in certain parts of the world because 
of changes in trade routes that would be necessary. In particular, the 
officials stated that U.S.-bound cargo containers may have to be 
funneled through hub ports that could accommodate and operate the 
scanning equipment before the containers are then shipped to the United 
States. They noted that these additional logistics costs would have a 
disproportionately negative economic impact on developing economies and 
countries with comparatively small ports. 

Furthermore, CBP has not performed a cost-benefit analysis to assess 
alternatives to achieving 100 percent scanning, such as its proposed 
strategic trade corridor strategy and, as appropriate, other 
alternatives for enhancing container security. According to CBP 
officials, they have not performed this type of analysis because it is 
not legally required since the 100 percent scanning requirement was 
mandated and not initiated by CBP. Although we recognize the 100 
percent scanning requirement was mandated by law, development of a 
systematic cost-benefit analysis, which incorporates more comprehensive 
cost estimates, could better inform CBP and Congress of the relative 
costs and benefits of different alternatives for achieving 100 percent 
scanning of U.S.-bound goods from all ports that ship directly to the 
United States as well as alternatives for a path forward to enhance 
container security. This type of analysis could, in turn, help DHS and 
Congress identify whether and to what extent other viable options exist 
to implementing the 100 percent scanning requirement. 

The Office of Management and Budget states that any cost-benefit 
analysis that serves as a basis for evaluating government programs or 
policies should identify and measure overall societal costs and 
benefits, not solely costs and benefits to the federal 
government.[Footnote 37] For example, as discussed later in this 
report, the implementation of the 100 percent scanning requirement 
could potentially create challenges to the continued operation of CBP's 
existing layered security programs and hinder their implementation by 
reducing the willingness of foreign countries and industry to 
participate. If participation is diminished, this could constitute a 
cost (e.g., reduced implementation and effectiveness of other 
programs), which would be one element to consider in any cost-benefit 
analysis. As noted earlier, other costs beyond the federal government 
are those incurred by foreign governments, the shipping industry, and 
consumers. 

Further, OMB cites as a key element of cost-benefit analysis the 
consideration of alternative means of achieving program objectives by 
examining different program methods of provision and different degrees 
of government involvement. Additionally, DHS's Cost-Benefit Analysis 
Guidebook states that cost-benefit analysis is designed to identify the 
superior financial solution amongst competing alternatives, and that it 
is a proven management tool to support planning and managing costs and 
risks.[Footnote 38] By utilizing cost-benefit analysis to compare the 
current implementation requirements of SFI with other alternatives, 
which might include its proposed strategic trade corridor strategy or 
CBP's existing layered strategy, CBP could more fully ensure that it is 
efficiently allocating and prioritizing its limited resources, as well 
as those of individual ports, in a way that maximizes the effectiveness 
of its cargo container security efforts. This analysis could also 
provide information on other potential alternatives for achieving the 
100 percent scanning requirement. 

Requirement for 100 Percent Scanning Creates Potential Challenges for 
CBP that May Hinder the Continued Operation of Existing Container 
Security Programs and Raises Concerns with International Partners: 

The 100 percent scanning requirement is a departure from several 
existing container security programs, which creates potential 
challenges for CBP as it may hinder the programs' continued operation. 
The scanning requirement differs from existing container security 
programs because it requires CBP to scan all containers before 
performing analysis to determine their potential risk level. Our work 
also indicates that the 100 percent scanning requirement could hinder 
implementation of some existing container security programs by reducing 
the willingness of some foreign governments to work with CBP to 
identify and examine containers at their ports, and the willingness of 
some private companies to partner with CBP to improve their internal 
security programs. Some foreign governments have expressed concern that 
the 100 percent scanning requirement is being put forth solely by the 
United States, in contrast to existing container security programs that 
were negotiated multilaterally or bilaterally with willing partners. In 
addition, some foreign governments have expressed the possibility of 
imposing a reciprocal scanning requirement on the United States. 

The 100 Percent Scanning Requirement May Hinder the Continued Operation 
of CBP's Existing Container Security Programs: 

Our work has indicated that the 100 percent scanning requirement is a 
departure from existing container security programs built on bilateral 
partnerships with foreign governments and the private sector. This 
situation may hinder continued operation of these existing programs, 
depending on how the SFI program is expanded and how the 100 percent 
scanning requirement is implemented. 

Automated Targeting System (ATS): 

The 100 percent scanning requirement is a departure from CBP's use of 
ATS and the 24-hour rule to first determine risk before scanning 
containers. Through ATS and the 24-hour rule, CBP gathers advanced 
information on U.S.-bound cargo containers provided by carriers and 
importers and makes determinations as to the risk level associated with 
the cargo containers before using imaging equipment to examine 
containers' contents. At CSI ports, when it is determined through 
advanced information that a U.S.-bound container poses some potential 
risk of WMD, CBP typically requests that the host government scan the 
container with radiation detection and NII equipment. If these scans 
indicate the potential presence of WMD, CBP requests that the host 
government conduct physical examination of the container, which could 
involve physically removing the container's contents for inspection. If 
the host government declines a request to give the container additional 
scrutiny, CBP can issue a "do not load" order for the container--so it 
is refused entry onto the vessel--or flag the container for further 
inspection upon arrival at a domestic port. In contrast, under the 100 
percent scanning concept required by the 9/11 Act, all U.S.-bound 
containers are required to be scanned with radiation detection and NII 
equipment before any analysis of risk. At the three operational SFI 
pilot ports we visited, we observed CBP officers reviewing scanning 
equipment outputs without the use of ATS targeting information. 
Information is generally not available in ATS at the time of scanning 
since containers are being scanned upon arrival at the foreign port 
before the container's information is received by CBP under the 24-hour 
rule. Thus, depending on how SFI and the 100 percent scanning 
requirement are implemented, CBP may face challenges in integrating the 
scans into its existing ATS program to identify high risk containers. 

Container Security Initiative (CSI): 

Depending on how it is implemented, SFI or other efforts to achieve 100 
percent scanning may potentially replace the CSI program at foreign 
ports. CBP built the CSI program on bilateral partnerships with foreign 
governments that allow CBP to place its staff at 58 foreign ports to 
work with host country customs officials to identify and scan high-risk 
cargo before it is shipped to the United States. CSI allows for a 
reciprocal arrangement in which foreign governments may also place 
staff at U.S. ports.[Footnote 39] According to CBP, the strength of the 
CSI program is the information gained from host government officials 
that CBP would otherwise not have access to. We have also previously 
reported instances where the CSI program establishes trust and 
collegiality, leading to increased information sharing, as well as more 
effective targeting and examination of high-risk cargo containers. For 
example, CBP officers noted instances in which host government customs 
officials would notify them of cargo containers they thought could be 
high risk so that CBP could take a closer look at the information 
available in ATS related to the containers. However, our work at three 
of the four operational pilot ports indicates that implementing the SFI 
program at foreign ports could result in reduced collaboration between 
CBP and host government customs officials or the end of the CSI 
program. For example, at the Port of Southampton, United Kingdom, 
customs officials previously worked side by side to share information 
with CBP officers as part of the CSI program and during the initial 
transition from CSI to SFI. However, United Kingdom customs officials 
no longer participate in SFI, as they withdrew their support for the 
program after the first 6 months of operation, which was the agreed- 
upon time frame for their participation. CBP officials stationed at the 
Port of Southampton stated that it has been more difficult to have 
containers they determine may pose some risk physically inspected by 
their British counterparts because of this reduced interaction caused 
by the transition from CSI to SFI. This reduced interaction and 
challenges in having U.S.-bound containers physically inspected may be 
because the port's participation in the program was viewed by the 
British government as a pilot and would not necessarily occur when 
implementing SFI or another form of 100 percent scanning on a more 
permanent basis. If the SFI program is implemented in such a way that 
CBP officials are stationed overseas, and if host nation officials work 
with them to jointly research shipping data on containers, then this 
type of information sharing could continue under the 100 percent 
scanning requirement. However, foreign government officials from 
Singapore and South Korea we spoke with said that given the many 
security programs the United States has adopted, the United States 
should choose whether it wants to continue CSI or implement SFI, but 
that it cannot do both. 

C-TPAT and AEO Programs: 

The willingness of private companies to voluntarily enhance their 
security practices to join C-TPAT may be diminished if a key benefit of 
membership is reduced by 100 percent scanning. Through the C-TPAT 
program, members of the trade community (e.g., importers, vessel 
carriers, and others) voluntarily enter into an agreement with CBP to 
improve their security programs in return for various trade-related 
benefits, such as reduced scrutiny of their cargo containers upon 
arrival in the United States. [Footnote 40] As part of this voluntary 
agreement, C-TPAT participants share sensitive, corporate security 
plans with CBP and provide CBP with access to their facilities. This 
level of information sharing would otherwise not be available to CBP 
for companies that are not C-TPAT members. 

According to a survey conducted in 2007 by the University of Virginia, 
the most important motivation for businesses joining C-TPAT was 
reducing the time and cost of getting cargo released by CBP. [Footnote 
41] However, this benefit could be diminished by the 100 percent 
scanning requirement since, under such a requirement all cargo is to be 
scanned regardless of membership in C-TPAT. While the six C-TPAT 
members we interviewed generally expressed their intent to remain in 
the program, three stated that there would be less incentive to 
maintain membership, or for other companies to join C-TPAT if the 100 
percent scanning requirement is fully implemented. If companies drop 
out of or do not join C-TPAT, it could be difficult for CBP to 
determine what, if any, security initiatives have been undertaken by 
the companies, unless other programs or methods were developed to do 
so. CBP officials have stated that they do not believe 100 percent 
scanning will affect membership in the C-TPAT program, and that the C- 
TPAT program has some benefits that will continue to exist regardless 
of container scanning. For example, they note that C-TPAT members that 
transfer cargo by truck to the United States from Canada or Mexico will 
not be affected by the requirement. However, given that other companies 
who use maritime shipping may lose an incentive for joining C-TPAT or 
maintaining membership, the potential security benefit associated with 
the program could be diminished to the extent that C-TPAT membership 
does not grow or decreases. 

AEO programs--programs similar to C-TPAT run by other countries--may be 
hindered by 100 percent scanning because it may be viewed as a 
deterrent to private companies to join AEO programs. A core concept of 
the SAFE Framework is a system of mutual recognition, whereby two 
nations' AEO programs are mutually recognized by the respective customs 
administrations. Mutual recognition of AEO programs occurs when customs 
administrations agree to recognize one another's AEO programs and 
security features and to provide comparable benefits to members of the 
respective programs. As of June 2009, CBP had signed mutual recognition 
arrangements with New Zealand, Canada, Jordan, and Japan. Furthermore, 
the United States is discussing entering into a nonbinding arrangement 
with the European Union. According to data from the WCO, as of July 
2009, about 70 countries had implemented or had begun developing their 
own national AEO programs. Foreign government, World Bank, and WCO 
officials we interviewed expressed concern that implementation of SFI 
or other efforts to achieve 100 percent scanning may hinder mutual 
recognition efforts because, under such a program, if all U.S.-bound 
cargo is to be scanned, there is little incentive for companies to join 
such partnerships, or governments to develop these partnership 
programs, without one of the common benefits--reduced scrutiny of cargo 
containers. 

The 100 Percent Scanning Requirement Is a Departure from Multilateral 
Partnerships, Raising Concerns with Key Trading Partners and Leading to 
Calls for Reciprocal Scanning Requirements: 

CBP has traditionally worked with its international partners to enhance 
the security of the supply chain. The International Outreach and 
Coordination Strategy, one of eight supporting plans for The National 
Strategy for Maritime Security, establishes the goal of developing a 
coordinated policy for U.S. government maritime security activities 
with foreign governments, international and regional organizations, and 
the private sector. According to the strategy, the United States must 
forge cooperative partnerships and alliances with other nations, as 
well as with public and private stakeholders in the international 
community, to achieve effective maritime security. As CBP has 
recognized in security matters, the United States is not self- 
contained, either in its problems or in its solutions. The growing 
interdependence of countries requires policy makers to recognize the 
need to work in partnerships across international boundaries to achieve 
vital national goals. As such, CBP has taken a lead role in working 
with the WCO and foreign customs administrations to establish and 
implement international customs security standards that benefit all 
participants. For example, CBP was a principal author of the 
multilateral SAFE Framework of Standards--based on CBP's existing 
layered security strategy--unanimously adopted by the members of the 
WCO, and CBP officials have stated that its existing layered strategy 
constitutes U.S. efforts to implement the elements of the SAFE 
Framework. 

However, the 100 percent scanning requirement is a departure from these 
existing efforts to enhance cargo container security through 
partnerships. Existing CBP efforts to enhance cargo container security, 
such as collaboration with the WCO to develop the SAFE Framework, have 
been based on a bilateral and multilateral approach meant to enhance 
security for all participants. Foreign government and international 
organization officials with whom we met have also expressed concern 
that the 100 percent scanning requirement is inconsistent with 
multilaterally adopted customs security standards, may negatively 
impact trade, and could diminish container security. For example, 
customs and other officials from foreign governments, including the 
European Union, South Korea, Hong Kong, and Singapore, as well as 
international organizations, including the WCO, have expressed their 
belief that scanning 100 percent of U.S-bound containers is 
inconsistent with the risk-based strategy agreed to in the SAFE 
Framework because it treats all containers as having the same risk 
level before any analysis of the risks they may pose is 
performed.[Footnote 42] Foreign government and international 
organization officials we spoke with added that, given limited 
resources, 100 percent scanning could provide a lower level of 
security, as the focused attention on specific high-risk shipments is 
replaced by a blanket approach applying to all containers. 

Because the100 percent scanning requirement was initiated solely by the 
United States, government officials in Europe, Asia, and the Middle 
East with whom we met have stated that the requirement is perceived as 
being for the sole security benefit of the United States. The European 
Union has formally stated that the 100 percent scanning requirement was 
imposed unilaterally and implies extraterritoriality. In June 2008, WCO 
members unanimously endorsed a resolution expressing concern that 
implementation of 100 percent scanning would be detrimental to world 
trade and could result in unreasonable delays, port congestion, and 
international trading difficulties.[Footnote 43] Similarly, in May 
2008, the European Parliament issued a resolution calling for the 
United States to repeal the 100 percent scanning requirement. Further, 
in June 2009, the governments of five developing countries submitted a 
position paper to the WCO opposing 100 percent scanning due to the 
disproportionate impact it will have on their developing economies. 
[Footnote 44] 

According to State Department officials with whom we met, the 100 
percent scanning requirement has negatively impacted interactions with 
other countries on various issues.[Footnote 45] State Department 
officials overseas have acknowledged that the 100 percent scanning 
requirement has already impacted or could have impact on future U.S. 
interests. For example, according to these officials, they have 
experienced difficulty making progress on U.S. concerns related to 
agricultural exports and registration of chemical products because they 
cannot discuss these issues without foreign governments raising their 
concerns with 100 percent scanning. 

Related to these international concerns, some foreign government 
officials with whom we spoke are considering requiring a reciprocal 
scanning requirement for cargo coming from the United States. 
Specifically, government officials in Honduras and the European 
Commission--which represents the 27 member states of the European 
Union--have indicated that they may consider a reciprocal container 
scanning requirement in which containers from the United States that 
are being shipped to these countries would have to be scanned. Although 
the European Commission indicated it does not think scanning will 
enhance security, it added it would be difficult not to ask for 
reciprocity if their member states are initiating cargo scanning 
programs for the security benefit of the United States. 

According to CBP and domestic port terminal officials, and our 
observations at the domestic ports we visited, scanning outbound 
containers to meet a reciprocity requirement would be challenging and 
require additional resources. CBP officials noted that the difficulty 
negotiating and obtaining space from terminal operators to install 
scanning equipment for inbound containers would also apply to 
installing equipment needed to scan outbound containers should 
reciprocity be required. CBP officials also noted additional staff 
would be needed to review container images and adjudicate identified 
anomalies. Further, it would be difficult to identify the destination 
of outbound cargo containers, according to CBP and port officials. 
Therefore, even if a few countries asked that goods bound from their 
countries be examined, it might be necessary for CBP to examine all 
outbound goods. CBP officials stated scanning outbound containers could 
come at the expense of their ability to secure the United States from 
inbound containers that might contain WMD. 

Given the situation, foreign governments and the trade industry are 
awaiting information on how CBP plans to implement 100 percent 
scanning. Although the scanning requirement is a U.S. law, officials 
from the European Commission stated that they are aware that DHS and 
CBP have stated that implementing the law by July 2012 is likely not 
feasible, which has created a sense of uncertainty regarding future 
implementation of the scanning requirement. DHS acknowledged this 
concern, noting that without a clear path forward for SFI, partnerships 
with foreign governments would be put at risk. Although the Secretary 
of DHS consequently endorsed the strategic trade corridor strategy as 
the path forward, the department has not specified whether 
implementation of 100 percent scanning at strategic corridors would 
constitute the entirety of CBP's efforts to implement 100 percent 
scanning or was an initial phase of a broader effort to implement 100 
percent scanning. 

Foreign terminal operators have also expressed concerns regarding the 
lack of a clear path forward for the SFI program. During our discussion 
with the Federation of European Private Port Operators, the terminal 
operator representatives noted the July 2012 deadline was quickly 
approaching, but there was a lack of information as to how the 
requirement would be achieved. The terminal operator representatives 
added that decisions needed to be made regarding who is required to pay 
for and operate the scanning equipment, among other things. The 
officials noted that they did not want to purchase scanning equipment 
without standards being established because they did not want to bear 
this expense and later learn that the scanning equipment they purchased 
is not considered sufficient. 

Conclusions: 

Challenges in scanning U.S.-bound cargo containers at participating 
ports to date, as well as challenges in getting additional ports to 
participate, have raised questions about the feasibility of scanning 
100 percent of U.S.-bound cargo containers. While CBP officials have 
stated that they may not be able to overcome these challenges based on 
the experiences of the SFI program to date, the agency has not 
conducted an analysis of the feasibility of implementing 100 percent 
scanning. Such an analysis could assist both the agency and Congress by 
providing important information regarding CBP's ability to fully 
implement the 100 percent scanning requirement and determining a path 
forward to enhance container security. 

As CBP attempts to expand the SFI program, it will need more 
comprehensive cost estimates. Such cost estimates could provide CBP 
with valid cost information to share with Congress to allow it to make 
sound and prudent decisions regarding SFI program implementation. CBP 
and Congress could also benefit from a cost-benefit analysis (that 
includes costs to international maritime stakeholders) to evaluate the 
relative costs and benefits of various alternatives for implementing 
the 100 percent scanning requirement, to include its strategic trade 
corridor strategy. Such an analysis could help to guide CBP and 
Congress in attempting to implement the 100 percent scanning 
requirement, as well as assessing other alternatives short of 100 
percent scanning for enhancing container security. 

DHS and CBP officials have acknowledged that they will likely not be 
able to achieve 100 percent scanning of U.S.-bound cargo containers by 
2012, and expressed concerns over the feasibility, costs, and security 
benefits associated with the requirement. However, without conducting 
feasibility and cost-benefit analyses, DHS and CBP will not be able to 
fully evaluate various alternatives for implementing the 100 percent 
scanning requirement or other alternatives that enhance cargo container 
security in a cost-efficient manner. 

Recommendations for Executive Action: 

To better position DHS to implement the cargo container scanning 
provisions of the SAFE Port and 9/11 Acts, improve container security 
programs, and better inform Congress, we recommend that the Secretary 
of Homeland Security, working with the CBP Commissioner, in 
consultation with the Secretaries of Energy and State as appropriate, 
take the following actions: 

* conduct a feasibility analysis of implementing the 100 percent 
scanning requirement of all U.S.-bound cargo containers in light of the 
challenges faced at the initial SFI ports; 

* develop more comprehensive cost estimates for achieving the 
requirement to scan 100 percent of U.S.-bound cargo containers, 
consistent with best practices for implementing, operating, and 
maintaining U.S. government programs; 

* conduct a cost-benefit analysis (to include all significant economic 
costs) of different alternatives for achieving the 100 percent scanning 
requirement, to include as appropriate, other alternatives short of 
achieving 100 percent scanning, to enhance container security, and to 
address the impact that 100 percent scanning may have on other 
container security programs; and: 

* provide the results of the feasibility analysis, U.S. program cost 
estimates, and cost-benefit analysis outlined above to Congress, along 
with various cost-effective alternatives to implementing the 100 
percent scanning requirement, as appropriate. 

Agency Comments and Our Evaluation: 

We provided a copy of this report to the State Department, the 
Department of Energy (DOE), and the Department of Homeland Security 
(DHS) for comment. The State Department did not provide written 
comments to include in the report, but provided technical comments that 
have been incorporated into the report, where appropriate. DOE provided 
comments on October 19, 2009, that cite the need to distinguish between 
challenges regarding the use of radiation versus nonintrusive image 
scanning equipment. We have modified the report to include this 
distinction. DOE made no comments on the recommendations since they 
were directed towards DHS and CBP. A copy of DOE's comments are 
reprinted in appendix II. DHS and CBP provided technical comments that 
have been incorporated into the report, where appropriate. 

DHS also provided written comments--that incorporated comments from 
CBP--on October 19, 2009. A copy of DHS's comments are reprinted in 
appendix III. In commenting on a draft of this report, DHS noted that 
it concurred with three recommendations and concurred in part with one. 
It also commented that CBP views these recommendations as having been 
largely achieved through its publication of previous reports to 
Congress. We disagree with this for the reasons discussed in the 
paragraphs below. 

Regarding our first recommendation to conduct a feasibility analysis 
for implementing the 100 percent scanning requirement for all U.S.- 
bound cargo containers, DHS noted that CBP concurred with our 
recommendation. The agency further stated that the recommendation had 
been achieved in its June 2008 report to Congress, "Report to Congress 
on Integrated Scanning Systems Pilot (Security and Accountability for 
Every Port Act of 2006), Section 231," where it discussed challenges to 
implementing the requirement at participating seaports. Specifically, 
CBP noted that its report concluded that the 100 percent scanning of 
U.S.-bound maritime container is possible on a limited scale in 
locations with an array of accommodating and supportive conditions, 
such as host nation cooperation, low cargo volumes, low transshipment 
rates and technology and infrastructure costs covered primarily by the 
U.S. government. It also noted that its report determined that these 
conditions would not likely exist at all ports shipping to the United 
States. During our review, we analyzed the June 2008 report and while 
it discusses these and other challenges that exist at participating 
ports, we do not believe that it constitutes a feasibility analysis of 
the 100 percent scanning requirement, as required by the SAFE Port Act. 
In particular, as we have noted in this report, the SAFE Port Act 
requires certain specific elements to be included when evaluating the 
feasibility of expanding 100 percent scanning to other ports, including 
an analysis of the infrastructure requirements to implement 100 percent 
scanning and an analysis of requirements, including costs, to install 
and maintain an integrated scanning system at ports participating in 
the Container Security Initiative. These analyses were not included in 
the 2008 report and CBP has acknowledged that they have not been 
conducted. 

Regarding our second recommendation to develop more comprehensive cost 
estimates for achieving the requirement to scan 100 percent of U.S.- 
bound cargo containers, consistent with best practices, DHS commented 
that CBP concurred with the recommendation and had already achieved it 
through issuance of its June 2008 report to Congress. In particular, 
CBP stated that it believes that it is incumbent upon the agency to 
develop realistic cost estimates for the overall operational elements 
associated with implementing legislative mandates, such as the 100 
percent scanning requirement. However, as acknowledged by CBP, the cost 
estimates generated by CBP to date were not developed in a manner that 
is consistent with cost estimation guidelines. For example, estimates 
developed by CBP to date cover implementation of the program as it 
currently exists, but do not examine costs over the life of the 
program, which is a best practice identified by GAO and accepted by 
DHS. As a result, total costs for the life of the SFI program could be 
significantly greater than CBP's current cost estimates. As we have 
noted in this report, having more comprehensive cost estimates could 
provide CBP with valid cost information to share with Congress to allow 
it to make sound and prudent decisions regarding SFI program design and 
implementation. 

Regarding our third recommendation to conduct a cost-benefit analysis 
(to include all significant economic costs) of different alternatives 
for achieving the 100 percent scanning requirement, to include as 
appropriate, other alternatives short of achieving 100 percent 
scanning, DHS commented that CBP concurred in part with our 
recommendation. In its response CBP acknowledged that a cost-benefit 
analysis would be helpful to frame the discussion and better inform 
Congress; however, it noted that such a comprehensive study would place 
significant burdens on its limited resources. Given the potential costs 
to the United States, foreign governments and trade industry of 
implementing 100 percent scanning, we believe a cost-benefit analysis 
is warranted to evaluate other alternatives. CBP added that neither the 
SAFE Port Act nor the 9/11 Act require CBP to conduct such an analysis 
and suggests that the Congressional Budget Office is the most 
appropriate entity to conduct such an analysis. While CBO does prepare 
cost estimates for pending legislation, as we mention in this report, 
CBO has evaluated the 9/11 Act and assumed that foreign governments 
would pay for implementing scanning systems at their port, which has 
generally not been the case thus far. We believe that, given its daily 
interaction with foreign customs services and its direct knowledge of 
port operations, CBP is in a better position to conduct any cost- 
benefit analysis and bring results to Congress for consideration. 
Further, as noted in this report, DHS cites cost-benefit analysis as a 
proven management tool to support planning and manage costs. We believe 
that the challenges faced in implementing the program thus far, and the 
potential costs of implementing and operating the 100 percent scanning 
requirement--particularly non-financial costs such as reductions in the 
effectiveness of existing container security programs like CSI and C- 
TPAT--emphasize the importance of such an analysis. This analysis could 
assist both the agency and Congress in understanding CBP's ability to 
implement the 100 percent scanning requirement as well provide Congress 
more complete understanding of the scanning requirement's advantages 
and disadvantages. Congress could then use this information in its role 
providing oversight over the program or in considering alternatives for 
enhancing cargo container security in a cost-efficient manner. 

Finally, regarding our fourth recommendation to provide results of the 
feasibility analysis, U.S. program costs estimates, and cost-benefit 
analysis to Congress, along with various cost-effective alternatives to 
implementing the 100 percent scanning requirement, DHS commented that 
CBP concurred with our recommendation, had already achieved it, and 
outlined its intent to continue to explore the full range of costs 
associated with scanning efforts at foreign ports. Specifically, CBP 
stated that in June 2008, it submitted to Congress the findings of the 
feasibility study required under Section 231 of the SAFE Port Act. It 
added that this report and the number of subsequent reports provided at 
6-month intervals detailed CBP and DOE expenditures under SFI, 
including the cost of scanning equipment, as well as personnel 
expenditures for each potential scanning site. While these reports have 
contained useful information, as mentioned previously, our view is that 
they do not contain comprehensive analyses of the feasibility or costs 
of the 100 percent scanning requirement or evaluate potential program 
alternatives to determine which may be most feasible and cost 
effective. We believe that feasibility and cost-benefit analyses are 
critical to help ensure that DHS and CBP have the necessary information 
to assist the Congress as it considers options for implementing the 100 
percent scanning requirement or other alternatives to enhancing cargo 
container security. This information should include more definitive 
information on the feasibility of the scanning requirement--to include 
the factors discussed in the SAFE Port Act such as infrastructure 
requirements, impact on processing times, ability to meet forecasted 
container volume, costs, and personnel needs--across different 
alternative implementation scenarios. 

As arranged by your offices we plan no further distribution until 30 
days after the date of this report. At that time, we will send copies 
of this report to the Secretaries of Energy, Homeland Security, and 
State; and other interested parties. In addition, the report will be 
available on GAO's Web site at [hyperlink, http://www.gao.gov]. 

If you or your staff have any questions about this report, please 
contact me at (202) 512-9610 or at caldwells@gao.gov. Key contributors 
to this report are listed in appendix IV. This report will also be 
available at no charge on the GAO Web site at http://www.gao.gov. 

Signed by: 

Stephen L. Caldwell: 
Director, Homeland Security and Justice Issues: 

List of Requesters: 

The Honorable John D. Rockefeller IV: 
Chairman: 
Committee on Commerce, Science, and Transportation: 
United States Senate: 

The Honorable Joe Lieberman: 
Chairman: 
The Honorable Susan Collins: 
Ranking Member: 
Committee on Homeland Security and Governmental Affairs: 
United States Senate: 

The Honorable Bennie G. Thompson: 
Chairman: 
Committee on Homeland Security: 
House of Representatives: 

The Honorable John Dingell: 
Chairman Emeritus: 
Committee on Energy and Commerce: 
House of Representatives: 

The Honorable George V. Voinovich: 
United States Senate: 

[End of section] 

Appendix I: Objectives, Scope, and Methodology: 

Our objectives were to identify (1) what progress U.S. Customs and 
Border Protection (CBP) has made toward implementing 100 percent 
scanning at the initial ports participating in the Secure Freight 
Initiative (SFI) program; (2) what planning efforts CBP has made to 
address the requirement to scan all U.S.-bound cargo containers by July 
2012; (3) the estimated costs to date of the SFI program, and to what 
extent future implementation costs have been estimated; and (4) what 
challenges, if any, CBP faces in integrating the 100 percent scanning 
requirement with its existing container security programs. 

To determine the progress CBP has made in implementing the requirement 
to scan 100 percent scanning of U.S.-bound cargo containers, we 
conducted site visits at six of the seven foreign ports that have been 
involved in SFI, and spoke with foreign government, U.S. customs, and 
terminal operator officials during these visits. While the results of 
these site visits and interviews cannot be generalized across all ports 
that ship cargo containers to the United States, by observing 
operations at six of the seven ports involved with the SFI program to 
date--Busan, South Korea; Puerto Cortes, Honduras; Salalah, Oman; 
Southampton, United Kingdom; Hong Kong; and Singapore--we gained a 
critical understanding of the factors and challenges associated with 
implementing SFI at these ports. Due to ongoing security concerns, we 
did not conduct a site visit at Port Qasim, Pakistan. Instead, we 
observed CBP's remote operation of the SFI program in Qasim from the 
National Targeting Center-Cargo in Virginia. To assess CBP's progress 
implementing SFI at individual ports, we compared data on the number of 
containers scanned to the total volume of U.S.-bound containers at each 
SFI port, to the requirement set forth in the 9/11 Act. CBP was unable 
to provide container scan data based on container arrival mode (e.g., 
truck, rail, and transshipment) due to system limitations. After 
reviewing possible limitations of all the data sources, we determined 
that the data provided were sufficiently reliable for the purposes for 
which we have used them in this report. 

To identify the planning efforts CBP has undertaken to achieve the 
requirement to scan 100 percent of U.S.-bound cargo containers, we 
reviewed relevant documents, including the SFI program management plan, 
the coordinating strategy and operations plan, and the concept of 
operations/standard operating procedures documents for the SFI ports 
visited. We supplemented our document reviews and analyses with 
interviews of CBP officials in the SFI program office to determine 
future plans for expansion of 100 percent scanning through the 
strategic trade corridor strategy. Furthermore, we discussed the extent 
to which the Department of Homeland Security (DHS) and CBP have 
developed criteria, and a methodology and time line for granting 
extensions to ports that cannot meet the 2012 deadline for scanning 
U.S.-bound containers. We compared CBP's planning efforts to best 
practices in A Guide to the Project Management Body of Knowledge. 

To examine the estimated costs of implementing 100 percent scanning of 
U.S.-bound cargo containers at foreign ports, we interviewed CBP and 
Department of Energy (DOE) officials, international organization 
personnel, foreign government officials, and terminal operators to 
obtain their views as to the types of costs associated with 
implementing 100 percent scanning. To determine the costs to the U.S. 
government of implementing, operating, and maintaining the SFI program, 
we reviewed documentation on CBP's and DOE's expenditures to date. 
After reviewing possible limitations of the cost data provided, we 
determined that the data provided were sufficiently reliable for the 
purposes for which we have used them in this report. We compared CBP's 
methods for developing cost estimates to further implement 100 percent 
scanning with the best practices outlined in the GAO Cost Estimating 
and Assessment Guide. We examined DHS's Cost-Benefit Analysis 
Guidebook, as well as Office of Management and Budget (OMB) Circular 
No. A-11 Preparation, Submission, and Execution of the Budget, OMB 
Circular No. A-94 Guidelines and Discount Rates for Benefit-Cost 
Analysis of Federal Programs, and OMB Circular A-4 Regulatory Analysis 
to identify the need for, and elements of a comprehensive cost-benefit 
analysis. To understand the costs to entities other than the U.S. 
government, we spoke with terminal operators and officials from foreign 
governments participating in the SFI program. We also interviewed the 
World Customs Organization (WCO) and the World Bank to further 
understand other costs that may result from 100 percent scanning, such 
as changes in trade flow and impacts on developing economies. We 
reviewed economic studies conducted on the issue, including those 
conducted by the University of Le Havre and Industrial Economics, Inc. 
Furthermore, we discussed with officials from foreign governments, 
representatives of the European Commission, and terminal operators, 
including the Federation of European Private Port Operators, their 
willingness to share the costs of container scanning with the United 
States at SFI ports. 

To determine any challenges CBP faces in integrating 100 percent 
scanning with existing container security programs, we assessed the 
potential impact of scanning on the core elements of CBP's current 
security programs, DOE's Megaports Initiative, and the security 
strategy advocated by the WCO through the SAFE Framework. As 
appropriate, we also relied on our extensive body of work on container 
security conducted over the last several years (see list of Related GAO 
Products at the end of this report). To determine the impact of 
scanning on the use of the Automated Targeting System in conjunction 
with the 24-hour rule, we interviewed CBP officers working at the ports 
of Baltimore, Maryland and Los Angeles/Long Beach, California--domestic 
ports with access to SFI data--to discuss how the availability of SFI 
data affects adjudication of high-risk containers. We observed how 
domestic CBP officers access and review SFI scan data. To determine the 
impact of scanning on the Container Security Initiative (CSI), we 
interviewed foreign government officials at ports participating in both 
CSI and SFI on how the programs operate simultaneously, and the 
resulting impact on collaboration between U.S. and host government 
customs officials. We interviewed CBP's Customs-Trade Partnership 
Against Terrorism (C-TPAT) office and six members of C-TPAT to 
determine what impact 100 percent scanning may have on the benefits of 
membership and how this will affect participation in C-TPAT. Our 
interviews with these trade industry representatives were based on a 
nonprobability sample, so while their views are not generalizable to 
the entire maritime trade industry, they provide knowledgeable insight 
into the relationship between the SFI and C-TPAT programs. We spoke 
with DOE officials responsible for implementing the Megaports 
Initiative to understand the impact of 100 percent scanning on efforts 
to expand the Megaports Initiative. We interviewed representatives of 
the WCO, International Maritime Organization, International Chamber of 
Shipping, European Commission, and foreign government officials to 
obtain their views on the consistency of 100 percent scanning with 
multilateral and bilateral efforts to promote supply chain security. 
With these entities, we discussed how scanning may affect core 
principles of the SAFE Framework, including the establishment of 
customs-to-business partnerships and mutual recognition between 
countries of these partnerships. While we obtained the perspective of 
all foreign governments participating in the SFI program that intend to 
implement the SAFE Framework, with the exception of Pakistan, these 
views are not necessarily representative of all foreign governments 
intending to implement the SAFE Framework. We interviewed State 
Department officials in Washington D.C.; at the U.S. Mission to the 
European Union; and the U.S. Embassy in Seoul, to discuss how the 100 
percent requirement affects the ability of the State Department to 
defend U.S. interests. With foreign government officials and 
representatives of the European Commission we discussed their 
intensions to require a reciprocal 100 percent container scanning 
requirement of the United States. We also discussed the impact of 
reciprocity on domestic ports with CBP officials at the Ports of 
Baltimore, Houston, and Los Angeles/Long Beach; as well as the Houston 
and Miami Port Authorities. 

We conducted this performance audit from August 2008 through October 
2009 in accordance with generally accepted government auditing 
standards. Those standards require that we plan and perform the audit 
to obtain sufficient, appropriate evidence to provide a reasonable 
basis for our findings and conclusions based on our audit objectives. 
We believe that the evidence obtained provides a reasonable basis for 
our findings and conclusions based on our audit objectives. 

[End of section] 

Appendix II: Comments from the Department of Energy: 

Department of Energy: 	
National Nuclear Security Administration: 	
Washington, DC 20585: 

October 19, 2009: 

Mr. Stephen L. Caldwell: 
Director, Homeland Security and Justice Team: 
Government Accountability Office: 
Washington, D.C. 20548: 

Dear. Mr. Caldwell: 
The National Nuclear Security Administration (NNSA) appreciates the 
opportunity to review the Government Accountability Office's (GAO) 
draft report, GAO-10-20, Supply Chain Security: Feasibility and Cost-
Benefit Analysis Would Assist DHS and Congress in Assessing and 
Implementing the Requirement to Scan 100 Percent of U.S.-Bound 
Containers. We understand that this work was done at the request of the 
Senate Committees on Commerce, Science and Transportation; and Homeland 
Security and Governmental Affairs; and the House Committees on Energy 
and Commerce; and Homeland Security. GAO was asked to determine (1) the 
extent Customs designed and implemented the Secure Freight Initiative 
pilot program to demonstrate the feasibility of 100 percent scanning of 
cargo containers at foreign ports; (2) the extent Customs is obtaining 
comprehensive cost data to conduct cost benefit analyses; (3) the 
extent Customs is able to integrate the various technologies; and (4) 
the extent that 100% scanning is consistent with existing domestic and 
international programs to enhance container security and the impact on 
overall U.S. cargo security. Based on your conclusions, recommendations 
were made to the Department of Homeland Security (DHS), to work with 
Energy and State as appropriate. 

NNSA does not take exception to the contents or conclusions of the 
draft report, but we do have a comment: Page 25, 1st paragraph it 
states, "CBP officials added that because of the lack of current 
technology to effectively scan transshipped containers that are moved 
from one vessel to another with comparatively little time at the 
port..." 

NNSA suggests GAO distinguish between the challenge of radiation versus 
Non-Intrusive Imaging image scans of transshipped containers as 
reflected in the Transshipment write-up on page 27 which speaks to the 
issue on transship containers ...only cargo containers that trigger 
radiation alarms are to be scanned with imaging equipment." 

Since the recommendations are directed to DHS, we have no further 
comment. 

If you have any questions about this response, please contact JoAnne 
Parker, Acting Director, Policy and Internal Controls Management, at 
202-586-1913. 

Sincerely, 

Signed by: 

Michael C. Kane: 
Associate Administrator for Management and Administration: 

[End of section] 

Appendix III: Comments from the Department of Homeland Security: 

U.S. Department of Homeland Security: 
Washington, DC 20528: 

October 19, 2009: 

Mr. Steve Caldwell: 
Director: 
Homeland Security and Justice Issues: 
U.S. Government Accountability Office: 
Washington, DC 20548: 

Dear Mr. Caldwell: 

Thank you for providing us with a copy of the draft report entitled 
"Supply Chain Security: Feasibility and Cost-Benefit Analysis Would 
Assist DHS and Congress in Assessing and Implementing the Requirement 
to Scan 100 Percent of U.S.-Bound Containers" (GAO-10-12). For this 
review GAO assessed 1) U.S. Customs and Border Protection's
(CBP) progress at the initial ports participating in the Secure Freight 
Initiative (SFI) program, 2) CBP plans to implement SFI, 3) the extent 
to which CBP has estimated costs and conducted a cost-benefit analysis 
of 100% scanning, and 4) any challenges to integrating SFI with 
existing container security programs. 

Overall, CBP concurs with GAO's recommendations on the need for a 
feasibility study, cost estimate, and cost-benefit analysis of the SFI 
program. CBP has analyzed the feasibility of implementing 100% scanning 
of all U.S.-bound containers by conducting the 100% scanning pilot 
study, which was mandated by the Security and Accountability for Every 
(SAFE) Port Act. Moreover, CBP went beyond this legislative mandate and 
deployed scanning technologies to additional locations to test the 
feasibility of scanning containers in high-volume and transshipment 
ports. CBP reported its findings to Congressional requesters in June 
2008. 

In addition, CBP created detailed cost estimates based on the best 
available information regarding the cost of scanning equipment, 
communications, hardware and software, as well as personnel 
expenditures for each potential scanning site that were provided to 
GAO. 

The recommendation to complete a cost-benefit analysis creates 
additional burdens on the agency's resources and invites the 
establishment of precedents that question the roles of the legislative 
and executive components. As an alternative, CBP believes that the 
Congressional Budget Office is the responsible party to conduct this 
analysis when assessing the feasibility and impact of implementing such 
legislation. 

Responses to the recommendations follow. 

To better position DHS to implement the cargo container scanning 
provisions of the SAFE Port and 9/11 Acts, improve container security 
programs, and better inform Congress, we recommend that the Secretary 
of Homeland Security, working with the CRP Commissioner, in 
consultation with the Secretaries of Energy and State as appropriate, 
take the following actions: 

Recommendation 1: Conduct a feasibility analysis of implementing the 
100 percent scanning requirement of all U.S.-bound cargo containers in 
light of the challenges faced at the initial SFI ports. 

Response: Concur. This recommendation has been achieved with CBP's 
report entitled "Report to Congress on Integrated Scanning Systems 
Pilot (Security and Accountability For Every Port Act of 2006, Section 
231" submitted to Congress in June 2008. In this report, CBP has 
analyzed the feasibility of implementing 100% scanning of all U.S.-
bound containers by conducting the 100% scanning pilot study which was 
mandated by the SAFE Port Act. 

CBP met the legislative requirement to establish a 100% scanning pilot 
program in three foreign ports (Port Qasim, Pakistan; Puerto Cortes, 
Honduras; and the Port of Southampton, UK) as mandated by the SAFE Port 
Act. Additionally, CBP went beyond this legislative mandate and 
deployed scanning technologies to three additional locations (Modern 
Terminal, Hong Kong; Port Salalah, Oman; and Gamman Terminal, Susan, 
South Korea) to test the feasibility of scanning containers in high-
volume and transshipment ports. As required in Section 231(d) of the 
SAFE Port Act, CBP submitted a report to Congress detailing the 
operational lessons learned as well as the technical, operational, and 
diplomatic challenges identified from the 100% scanning pilots. CBP 
analyzed the results of the pilot study and concluded that 100 percent 
scanning of U.S.-bound maritime containers is possible on a limited 
scale in locations with an array of accommodating and supportive 
conditions, such as considerable host nation cooperation, low cargo 
volumes, low transshipment rates, and technology and infrastructure 
costs covered primarily by the United States Government. As noted in 
the 2008 report to Congress, CBP determined that these conditions would 
not likely exist in all ports shipping to the United States. However, 
as the data obtained by the scanning technology does have the potential 
to enhance targeting, CBP will focus future scanning deployments to 
locations of strategic importance where the additional data will be the 
most beneficial. 

Recommendation 2: Develop more comprehensive cost estimates for 
achieving the requirement to scan 100 percent of U.S.-bound cargo 
containers, consistent with best practices for implementing, operating 
and maintaining U.S. government programs. 

Response: Concur. This recommendation has been achieved with CBP's 
report entitled "Report to Congress on Integrated Scanning Systems 
Pilot (Security and Accountability For Every Port Act of 2006, Section 
231" submitted to Congress in June 2008. 

CBP believes that it is incumbent upon the agency to develop realistic 
cost estimates for the overall operational elements associated with 
implementing legislative mandates such as the 100% container scanning 
requirement in the 9/11 Commission Recommendation Act. In developing 
possible strategic options to meet the law's mandate, CBP created 
detailed cost estimates based on the best available information 
regarding the cost of scanning equipment, communications, hardware and 
software, as well as personnel expenditures for each potential scanning 
site. While the cost estimates were based on CBP's experience with the 
SFI pilots and not on site assessments of hundreds of ports, the agency 
believes that the data presents valid possibilities on costs. 

Recommendation 3: Conduct a cost-benefit analysis (to include all 
significant economic costs) of different alternatives for achieving the 
100 percent scanning requirement, to include as appropriate, other 
alternatives short of achieving 100 percent scanning, to enhance 
container security, and to address the impact that 100 percent scanning 
may have on other container security programs. 

Response: Concur in part. While CBP acknowledges that a version of the 
recommended cost-benefit analysis would be helpful to frame the 
discussion and better inform Congress, such a comprehensive study would 
place significant burdens on agency resources. Further, neither the 
SAFE Port Act of 2006 nor the 9/11 Act of 2007 require CBP to conduct a 
cost-benefit analysis. CBP suggests that the Congressional Budget 
Office is the most appropriate entity to conduct such an analysis when 
assessing the feasibility and impact of implementing legislation. 

Recommendation 4: Provide the results of the feasibility analysis, U.S. 
program cost estimates, and cost-benefit analysis outlined above to 
Congress, along with various cost-effective alternatives to 
implementing the 100 percent scanning requirement, as appropriate. 

Response: Concur. As mentioned in the response to the second GAO 
recommendation, CBP submitted to Congress in June 2008 the findings of 
the feasibility study required under Section 231 of the SAFE Port Act. 
This report, and the number of subsequent reports provided at six-month 
intervals detailed CBP and Department of Energy (DOE) expenditures 
under the Secure Freight Initiatives, including the cost of scanning 
equipment, communications, hardware and software, as well as personnel 
expenditures for each potential scanning site. CBP will continue to 
explore the full range of costs associated with scanning abroad and 
will work to ensure that scanning complements the layered and risk-
based approach to security currently in place. However, as a 
comprehensive cost-benefit analysis, CBP suggests that the 
Congressional Budget Office is the responsible entity to conduct such 
an analysis when assessing the feasibility and impact of implementing 
legislation. 

Thank you for the opportunity to provide comments to the draft report. 

Sincerely, 

Signed by: 

Jerald E. Levine: 
Director:
Departmental GAO/OIG Liaison Office: 

[End of section] 

Appendix IV: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

Stephen L. Caldwell, (202) 512-9610 or caldwells@gao.gov: 

Acknowledgments: 

In addition to the contact named above, Christopher Conrad, Assistant 
Director, and Robert Rivas, Analyst-in-Charge, managed this review. 
Lisa Canini and Julia Coulter made significant contributions to the 
work. Chuck Bausell, Richard Hung, Stanley J. Kostyla, and Timothy M. 
Persons assisted with design, methodology, and data analysis. Frances 
Cook, Geoffrey Hamilton, and Jan Montgomery provided legal support. 
Katherine Davis and Sally Williamson provided assistance in report 
preparation. Avrum Ashery and Pille Anvelt helped develop the report's 
graphics. 

[End of section] 

Related GAO Products: 

Combating Nuclear Smuggling: DHS Improved Testing of Advanced Radiation 
Detection Portal Monitors, but Preliminary Results Show Limits of New 
Technology. [hyperlink, http://www.gao.gov/products/GAO-09-655]. 
Washington, D.C.: May 21, 2009. 

Combating Nuclear Smuggling: DHS's Phase 3 Test Report on Advanced 
Portal Monitors Does Not Fully Disclose the Limitations of the Test 
Results. [hyperlink, http://www.gao.gov/products/GAO-08-979]. 
Washington, D.C.: September 20, 2008. 

Supply Chain Security: CBP Works with International Entities to Promote 
Global Customs Security Standards and Initiatives, but Challenges 
Remain. [hyperlink, http://www.gao.gov/products/GAO-08-538]. 
Washington, D.C.: August 15, 2008: 

Supply Chain Security: Challenges to Scanning 100 Percent of U.S.-Bound 
Cargo Containers. [hyperlink, http://www.gao.gov/products/GAO-08-533T]. 
Washington, D.C.: June 12, 2008. 

Supply Chain Security: Examinations of High-Risk Cargo at Foreign 
Seaports Have Increased, but Improved Data Collection and Performance 
Measures Are Needed. [hyperlink, 
http://www.gao.gov/products/GAO-08-187]. Washington, D.C.: January 25, 
2008. 

Maritime Security: The SAFE Port Act: Status and Implementation One 
Year Later. [hyperlink, http://www.gao.gov/products/GAO-08-126T]. 
Washington, D.C.: October 30, 2007. 

Maritime Security: One Year Later: A Progress Report on the SAFE Port 
Act. [hyperlink, http://www.gao.gov/products/GAO-08-171T]. Washington, 
D.C.: October 16, 2007. 

Maritime Security: The SAFE Port Act and Efforts to Secure Our Nation's 
Seaports. [hyperlink, http://www.gao.gov/products/GAO-08-86T]. 
Washington, D.C.: October 4, 2007. 

Combating Nuclear Smuggling: Additional Actions Needed to Ensure 
Adequate Testing of Next Generation Radiation Detection Equipment. 
[hyperlink, http://www.gao.gov/products/GAO-07-1247T]. Washington, 
D.C.: September 18, 2007. 

Maritime Security: Observations on Selected Aspects of the SAFE Port 
Act. [hyperlink, http://www.gao.gov/products/GAO-07-754T]. Washington, 
D.C.: April 26, 2007. 

Customs Revenue: Customs and Border Protection Needs to Improve 
Workforce Planning and Accountability. [hyperlink, 
http://www.gao.gov/products/GAO-07-529]. Washington, D.C.: April 12, 
2007. 

Cargo Container Inspections: Preliminary Observations on the Status of 
Efforts to Improve the Automated Targeting System. [hyperlink, 
http://www.gao.gov/products/GAO-06-591T]. Washington, D.C.: March 30, 
2006. 

Combating Nuclear Smuggling: Efforts to Deploy Radiation Detection 
Equipment in the United States and in Other Countries. [hyperlink, 
http://www.gao.gov/products/GAO-05-840T]. Washington, D.C.: June 21, 
2005. 

Container Security: A Flexible Staffing Model and Minimum Equipment 
Requirements Would Improve Overseas Targeting and Inspection Efforts. 
[hyperlink, http://www.gao.gov/products/GAO-05-557]. Washington, D.C.: 
April 26, 2005. 

Homeland Security: Key Cargo Security Programs Can Be Improved. 
[hyperlink, http://www.gao.gov/products/GAO-05-466T]. Washington, D.C.: 
May 26, 2005. 

Maritime Security: Enhancements Made, but Implementation and 
Sustainability Remain Key Challenges. [hyperlink, 
http://www.gao.gov/products/GAO-05-448T]. Washington, D.C.: May 17, 
2005. 

[End of section] 

Footnotes: 

[1] For the purpose of this report, WMD generally refers to 
radiological or nuclear materials. 

[2] See M. Gerencser, J. Weinberg, and D. Vincent, Port Security War 
Games: Implications for U.S. Supply Chains, (Booz, Allen, and Hamilton, 
2002) and C. Meade and R. Molander, Considering the Effects of a 
Catastrophic Terrorist Attack, (Rand Center for Terrorism Risk 
Management Policy, 2006). 

[3] The WCO is an independent international organization whose mission 
is to enhance the efficiency and effectiveness of customs 
administrations. 

[4] Pub. L. No. 109-347, 120 Stat. 1884. 

[5] 6 U.S.C. § 981. A similar requirement was enacted that same year by 
the Department of Homeland Security Appropriations Act, 2007 (Pub. L. 
No. 109-295, 120 Stat. 1355 (2006)) and is codified at 6 U.S.C. § 981a. 
Both statutes specify scanning as examination with both radiation 
detection equipment and non-intrusive imaging (NII) equipment. 6 U.S.C. 
§§ 981(a), 981a(a)(1). This scanning is done in order to identify 
radiation being emitted from a container and anomalies in a container's 
image which could indicate the presence of shielding material, 
respectively. 

[6] To address the requirements of the SAFE Port Act, the SFI program 
became operational in October 2007 at three ports: Qasim, Pakistan; 
Puerto Cortes, Honduras; and Southampton, United Kingdom. 

[7] Pub. L. No. 110-53, § 1701(a), 121 Stat. 266, 489-90 (amending 6 
U.S.C. § 982(b)). 

[8] The 9/11 Act scanning provision includes possible extensions for a 
port or ports for which DHS certifies that at least two out of a list 
of specific conditions exist. Among others, these conditions include 
(1) adequate scanning equipment is not available or cannot be 
integrated with existing systems, (2) a port does not have the physical 
characteristics to install the equipment, or (3) use of the equipment 
will significantly impact trade capacity and the flow of cargo. See 6 
U.S.C. § 982(b)(4). The entire set of conditions is discussed in more 
detail later in this report. 

[9] In addition to the three initial ports selected for the SFI 
Program, CBP also pursued four additional ports, the Port of Hong Kong; 
the Port of Busan, Korea; the Port Salalah, Oman; and the Port of 
Singapore for participation in the program. 

[10] The United States abstained from the vote. 

[11] The Project Management Institute, A Guide to the Project 
Management Body of Knowledge©, (Newton Square, Pa.: 2008). 

[12] GAO Cost Estimating and Assessment Guide: Best Practices for 
Developing and Managing Capital Program Costs, [hyperlink, 
http://www.gao.gov/products/GAO-09-3SP] (Washington, D.C.: March 2009). 

[13] Department of Homeland Security, Cost-Benefit Analysis (CBA) 
Guidebook, Version 2.0 (February 2006). 

[14] See Circular No. A-11 Preparation, Submission, and Execution of 
the Budget (August 2009); Circular No. A-94 Guidelines and Discount 
Rates for Benefit-Cost Analysis of Federal Programs (October 1992); and 
Circular A-4 Regulatory Analysis (September 2003). 

[15] Due to ongoing security concerns, we did not conduct a site visit 
at Port Qasim, Pakistan. Instead, we observed CBP's remote operation of 
the SFI program in Qasim from the National Targeting Center-Cargo (NTC- 
C) in Virginia. 

[16] Through C-TPAT, CBP develops voluntary partnerships with members 
of the trade community where private companies agree to improve the 
security of their supply chains in return for various benefits, such as 
a reduced likelihood that their containers will be examined. 

[17] DHS, through its Domestic Nuclear Detection Office (DNDO), is 
currently sponsoring testing of the Advanced Spectroscopic Portal (ASP) 
monitors, which are designed to both detect and identify the specific 
type of source material. We have previously identified deficiencies 
associated with testing the ASP. For additional details see Combating 
Nuclear Smuggling: DHS Improved Testing of Advanced Radiation Detection 
Portal Monitors, but Preliminary Results Show Limits of New technology, 
GAO-09-655 (Washington, D.C.: May 21, 2009). 

[18] The act required CBP to identify three distinct ports through 
which containers pass or are transshipped to the United States with 
unique features and differing levels of trade volume. 6 U.S.C. § 
981(a). 

[19] GAO, Supply Chain Security: Challenges to Scanning 100 Percent of 
U.S.-Bound Cargo Containers, [hyperlink, 
http://www.gao.gov/products/GAO-08-533T] (Washington, D.C.: June 12, 
2008). 

[20] ATS is a computerized decision support tool to review electronic 
documentation, including electronic manifest information submitted by 
ocean carriers to help identify shipments requiring additional 
scrutiny. 

[21] According to CBP, the National Targeting Center (NTC) was 
established in response to the need for proactive targeting aimed at 
preventing acts of terror and to seize, deter, and disrupt terrorists 
and implements of terror. NTC originally combined both passenger and 
cargo targeting in one facility. It was later divided into the NTC-C 
and the National Targeting Center-Passenger. For purposes of this 
report, we use NTC-C in our references since its mission is to support 
CBP cargo-targeting operations. 

[22] Under the CSI program, CBP personnel work with host country 
customs officials to identify high-risk cargo before it is loaded on a 
U.S.-bound vessel. CBP officials then request that their foreign 
counterparts examine the contents of the container. 

[23] [hyperlink, http://www.gao.gov/products/GAO-08-533T]. In this 
testimony we cited the following potential challenges to conducting 100 
percent scanning: workforce planning, host nation examination 
practices, measuring performance, resource responsibilities, logistics, 
technology and infrastructure, use and ownership of data, consistency 
with risk management, and reciprocity and trade concerns. 

[24] Some examples of these challenges cannot be included in this 
report due to the security sensitive nature of the information. Rather, 
we have included examples from public documents. 

[25] According to DOE, while scanning transshipment containers remains 
a significant challenge, DOE has modified current radiation detection 
technologies to scan a high percentage of transshipped containers at 
some foreign ports. For example, in Freeport, Bahamas, DOE mounted 
radiation detection panels on straddle carriers to scan transshipped 
containers while stacked in the container yard. 

[26] According to CBP officials, the agency's plan is to scan those 
containers arriving by truck at strategic ports, until the technology 
is available to scan transshipment containers without disrupting the 
flow of trade. 

[27] Although 10+2 went into effect in January 2009, CBP has 
implemented a 'flexible enforcement period' until January 2010, or 
later, to allow industry an opportunity to become familiar with and 
adjust to the new requirements. 

[28] 6 U.S.C. § 981(d)(5). Neither the SAFE Port Act nor its 
legislative history contains an explicit definition of the term 
"feasibility" with respect to the scanning requirement. However, the 
act indicates that the pilot-related "need and feasibility analysis" 
should include some of the following factors: (1) infrastructure 
requirements, (2) effect on average processing time for containers, (3) 
scalability to meet current and future forecasted trade flows, (4) 
ability of system to maintain and catalog appropriate data for 
reference and analysis, (5) cost to install and maintain an integrated 
scanning system, (6) ability of administering personnel to efficiently 
manage and utilize the data, (7) the ability to safeguard commercial 
data generated, and (8) an assessment of the reliability of currently 
available technology to implement an integrated scanning system. 

[29] The Project Management Institute, A Guide to the Project 
Management Body of Knowledge. 

[30] The 9/11 Act scanning requirement authorizes DHS to grant 
extensions for a port or ports if at least two of the following six 
conditions exist: (1) equipment to scan all U.S.-bound containers is 
not available for purchase and installation; (2) equipment to scan all 
U.S.-bound containers does not have a sufficiently low false alarm 
rate; (3) equipment to scan all U.S.-bound containers cannot be 
purchased, deployed, or operated at a port or ports (including where 
this is due to the physical characteristics of the port); (4) equipment 
to scan all U.S.-bound containers cannot be integrated with existing 
systems; (5) use of the equipment to scan all U.S.-bound containers 
would significantly impact trade capacity and the flow of cargo; or (6) 
the scanning equipment does not adequately provide automatic 
notification of an anomaly in a container. 6 U.S.C. § 982(b)(4). 

[31] 6 U.S.C. § 982(b)(6). 

[32] See 6 U.S.C. § 983. 

[33] Congressional Budget Office Cost Estimate, H.R. 1 Implementing the 
9/11 Commission Recommendations Act of 2007 (Feb. 2007). 

[34] The four member terminal operators are APM Terminals, PSA 
International, Hutchison Port Holdings, and Dubai Ports World. 

[35] Department of Homeland Security, Cost-Benefit Analysis (CBA) 
Guidebook. 

[36] A realistic cost estimate is developed using four characteristics: 
well-documented, comprehensive, accurate, and credible. For additional 
information see [hyperlink, http://www.gao.gov/products/GAO-09-3SP]. 

[37] See Circular No. A-94 Guidelines and Discount Rates for Benefit- 
Cost Analysis of Federal Programs. 

[38] Department of Homeland Security, Cost-Benefit Analysis (CBA) 
Guidebook. 

[39] Currently Japan and Canada have customs staff placed at U.S. ports 
to help determine the risk of cargo bound for their respective 
countries. 

[40] The security guidelines for C-TPAT program members address a broad 
range of topics including personnel, physical, and procedural security; 
access controls; education; training and awareness; threat awareness; 
and others. Companies that apply to C-TPAT must sign an agreement with 
CBP that commits their organization to the program's security 
guidelines. 

[41] University of Virginia, Customs-Trade Partnership Against 
Terrorism (C-TPAT) Cost/Benefit Survey (August 2007). 

[42] Foreign governments and international organizations we spoke with 
stated that they are generally not opposed to the use of radiation 
detection equipment, such as that used as part of the Megaports 
Initiative, but to the use of nonintrusive imaging equipment because of 
the likelihood that it may hinder trade and reduce security by 
consuming a large amount of scarce customs resources for little 
benefit. 

[43] The United States abstained from the vote. 

[44] The position paper was submitted by the governments of Ecuador, 
Bolivia, the Dominican Republic, Uruguay, and Cuba. 

[45] In addition to noting concerns from international partners, the 
State Department also indicated its own concerns regarding the scanning 
of diplomatic shipments. According to the State Department, it intends 
to work with DHS to ensure that, consistent with section 6 U.S.C. § 
982(b)(9), implementation of the scanning requirement does not violate 
the international conventions that prohibit scanning of diplomatic 
pouches, as well as the presumption against inspection of personal 
baggage of diplomats, as set forth in the Vienna Convention on 
Diplomatic Relations. 

[End of section] 

GAO's Mission: 

The Government Accountability Office, the audit, evaluation and 
investigative arm of Congress, exists to support Congress in meeting 
its constitutional responsibilities and to help improve the performance 
and accountability of the federal government for the American people. 
GAO examines the use of public funds; evaluates federal programs and 
policies; and provides analyses, recommendations, and other assistance 
to help Congress make informed oversight, policy, and funding 
decisions. GAO's commitment to good government is reflected in its core 
values of accountability, integrity, and reliability. 

Obtaining Copies of GAO Reports and Testimony: 

The fastest and easiest way to obtain copies of GAO documents at no 
cost is through GAO's Web site [hyperlink, http://www.gao.gov]. Each 
weekday, GAO posts newly released reports, testimony, and 
correspondence on its Web site. To have GAO e-mail you a list of newly 
posted products every afternoon, go to [hyperlink, http://www.gao.gov] 
and select "E-mail Updates." 

Order by Phone: 

The price of each GAO publication reflects GAO’s actual cost of
production and distribution and depends on the number of pages in the
publication and whether the publication is printed in color or black and
white. Pricing and ordering information is posted on GAO’s Web site, 
[hyperlink, http://www.gao.gov/ordering.htm]. 

Place orders by calling (202) 512-6000, toll free (866) 801-7077, or
TDD (202) 512-2537. 

Orders may be paid for using American Express, Discover Card,
MasterCard, Visa, check, or money order. Call for additional 
information. 

To Report Fraud, Waste, and Abuse in Federal Programs: 

Contact: 

Web site: [hyperlink, http://www.gao.gov/fraudnet/fraudnet.htm]: 
E-mail: fraudnet@gao.gov: 
Automated answering system: (800) 424-5454 or (202) 512-7470: 

Congressional Relations: 

Ralph Dawn, Managing Director, dawnr@gao.gov: 
(202) 512-4400: 
U.S. Government Accountability Office: 
441 G Street NW, Room 7125: 
Washington, D.C. 20548: 

Public Affairs: 

Chuck Young, Managing Director, youngc1@gao.gov: 
(202) 512-4800: 
U.S. Government Accountability Office: 
441 G Street NW, Room 7149: 
Washington, D.C. 20548: