Chairman Price, Ranking Member Rogers, Members of the Subcommittee, it is a privilege and an honor to appear before you today to discuss the Secure Border Initiative (SBI), the Department of Homeland Security’s (DHS) comprehensive strategy for securing America’s borders and reducing illegal immigration and specifically SBInet.

I want to begin by expressing my gratitude to the Committee for the strong support you provided for important initiatives implemented by CBP last year. Your support has enabled CBP to make significant progress in securing our borders and protecting our nation against the terrorist threat. As the Commissioner of CBP, I look forward to working with you to build on these successes.

My testimony today focuses on SBI, how the SBInet contract structure was developed and how CBP intends to execute the program to help accomplish the goal of achieving control of our borders, both at and between the ports of entry by acquiring, deploying, and sustaining an integrated solution comprised of the appropriate mix of technology, tactical infrastructure, and personnel.

CBP has made great strides toward securing America’s borders while facilitating legitimate trade and travel, and ensuring the vitality of our economy. CBP is the single agency responsible for securing, controlling and managing the U.S. borders. As America’s frontline border agency, CBP employs highly trained and professional personnel, resources, and law enforcement authorities to discharge our priority mission of preventing terrorists and terrorist weapons from entering the United States. Carrying out our extraordinarily important mission entails not only improving security at and between our ports of entry along the entire length of our land and maritime borders, but also extending our zone of security beyond our physical borders.

As we work toward gaining control of our borders, we must also continue to perform our traditional missions, which include apprehending individuals attempting to enter the United States illegally, stemming the flow of illegal drugs and other contraband, protecting our agricultural and economic interests from harmful pests and diseases, protecting American businesses from theft of their intellectual property, regulating and facilitating international trade, collecting import duties, and enforcing United States trade laws. In FY 2006, CBP processed more than 422.8 million pedestrians and passengers, 131 million conveyances, 28.8 million trade entries, examined 5.6 million sea, rail, and truck containers, intercepted 1.1 million illegal aliens between our ports of entry intercepted more than 2.7 million prohibited plant and animal products, and seized more than 2.2 million pounds of narcotics.

My testimony will also discuss the CBP Fiscal Year 2008 budget request, which totals $10.2 billion, including $8.78 billion in appropriated resources and $1.38 billion from user fees. This represents an increase of $2.43 billion, a 31.4 percent increase over Fiscal Year 2007 (adjusted for resources provided as “emergency funds”) and a 9 percent increase over total Fiscal Year 2007 resources. This increase is critical to help CBP to fulfill its priority mission of preventing terrorists and terrorist weapons from entering the United States. We must perform our important security and trade enforcement work without stifling the flow of legitimate trade and travel that is so important to our nation’s economy. These are our “twin goals”: border security and facilitation of legitimate trade and travel.

Mr. Chairman, while my testimony will focus on the Secure Border Initiative and the $1.5 billion program increase associated with that initiative, I would also like to highlight the other program increases in the CBP Fiscal Year 2008 budget request:

• $252 million for the Western Hemisphere Travel Initiative (WHTI) to allow CBP to design, develop, and implement a new land border application and information technology infrastructure to read, validate and process WHTI documents. The funding will provide the equipment to read the State Department’s planned new “PASS” card using radio frequency identification (RFID) at 225 primary vehicle lanes in 13 high-volume land border ports of entry, software changes and infrastructure, tools to inform the public of the new requirements, allow for program management, and provide an additional 205 CBP Officers for vetting, enrollment, and increased workload processing. This new technology and operational policies will greatly enhance our ability to prevent land border backups and facilitate verification of WHTI requirements.
• $25 million for the Treasury Enforcement Communications System (TECS) modernization program that will replace the 18 year-old mainframe components with a sustainable technical architecture. TECS is an umbrella system that is used for processing passengers at air, land, and sea ports of entry and includes watchlist data from over 30 federal agencies; a case management system for Immigration and Customs Enforcement (ICE) agents; connectivity to the FBI and the State Law Enforcement agencies; the Advanced Passenger Information System (APIS); incident processing for CBP Officers; and special enforcement functions for other federal agencies. This funding will begin as a multi-year project planned through Fiscal Year 2014.
• $15 million for the Secure Freight Initiative. This initiative builds upon CBP’s Container Security Initiative and the Department of Energy’s (DOE) Megaport Initiative by incorporating more data sets into an advanced targeting system to enhance cargo risk assessment. These programs are complementary, with both serving as elements of a comprehensive maritime security strategy. The initiative also makes this information accessible to a much wider array of program partners both domestically and abroad. This funding will support 9 CBP Officers and 8 support positions and allow CBP to acquire and deploy equipment and technology, and merge existing and new information on containers in the supply chain to create a next-generation model for global supply chain security.
• $10 million for the creation of a Conduct and Integrity Oversight program to develop capability within CBP to investigate serious misconduct cases involving CBP personnel that are not being pursued by the DHS Office of the Inspector General or Immigration and Customs Enforcement Office of Professional Responsibility. With the rapid expansion of the Border Patrol and increases in CBP Officer staffing planned for Fiscal Years 2007 and 2008, this program is critical to ensure that proper oversight efforts keep pace with the expansion. The funding will provide for 50 investigators and 8 support staff and provide a strong internal affairs capability within CBP.
• $6 million to staff Radiation Portal Monitors with 55 new CBP Officers to enhance CBP’s ability to detect illicit radiological materials concealed within shipments, conveyances or containerized cargo entering the United States.

While I will discuss each of these programs and initiatives and outline our future plans, I would like to begin by briefly updating the Subcommittee on some of CBP’s accomplishments over the past fiscal year.

II. Customs and Border Protection – The Fourth Year

PREVENTING TERRORIST WEAPONS FROM ENTERING THE UNITED STATES

CBP has made tremendous progress in ensuring the supply chains that bring goods into the United States from around the world are more secure against exploitation by terrorist groups as a means to deliver weapons.

• The Customs-Trade Partnership Against Terrorism (C-TPAT) made great strides in strengthening its program by clearly defining the minimum security requirements for all categories of participants wishing to participate in the program and thereby gain trade facilitation benefits. As of February 2007, there are 6,375 companies certified into the C-TPAT program and 3,916 have been validated. To meet the requirements of the SAFE Port Act, CBP’s goal is to validate all partners within one year of certification, revalidate all companies not less than once every three years. In addition, the Third Party Validator Pilot program is scheduled to begin shortly.
• In Fiscal Year 2007, CBP plans to expand the Container Security Initiative (CSI) to eight additional ports, bringing the total number of CSI ports to 58. Through bilateral partnerships with governments that share our strong commitment to improving supply chain security, CSI allows us to pre-screen and target high-risk cargo containers before they are loaded on vessels destined for the United States. With the planned expansion, approximately 85 percent of maritime containerized cargo destined to the United States will be screened through the CSI program.
• The Secure Freight Initiative is an unprecedented effort to build upon existing port security measures by enhancing the United States government’s ability to scan containers for nuclear and radiological materials in seaports worldwide and to better assess the risk of inbound containers. The initial phase of the initiative involves the deployment of radiation detection technology, radiography equipment and optical character recognition equipment to conduct integrated scanning at participating ports. Fulfilling another SAFE Port Act mandate, this project will be fully implemented in the ports of Qasim, Pakistan; Cortes, Honduras; and, Southampton, U.K. with some limited capacity in four additional ports. This initiative is the culmination of our work with other Government agencies, foreign governments, the trade community, and vendors of leading edge technology. And, like all our security initiatives, this increased information will help facilitate trade because questions about shipments that appear to be high risk can be resolved quickly and effectively.
  The scanning project is a first step toward realizing a greater vision of Secure Freight, a fully integrated global network for risk assessment. The key elements of this network are real time imagery and radiation detection, together with a fusion center that receives and analyzes advanced trade data from numerous international supply chain sources.
  This Secure Freight concept envisions a private sector-based approach to obtaining information on global cargo movements, beyond currently regulated submissions. It represents the next generation of global supply chain security tools, and we are very excited about taking the initial steps toward this new capability.
• SAFE Port Act

The SAFE Port Act contained several requirements that have a direct impact on CBP and I am pleased to report that we are making great progress in meeting these requirements. Following is a brief discussion of CBP’s progress to date:

• Section 121 requires CBP, in coordination with DNDO, to deploy Radiation Portal Monitors (RPM) to the top 22 seaports by the end of 2007. CBP is on track to meet this requirement and currently has deployed RPMs to 20 of the top 22 seaports.
• Section 203 requires CBP to improve the Automated Targeting System (ATS) by requiring additional data elements. CBP is currently working on Proposed Rulemaking to require the additional data elements from importers 24 hours prior to cargo being laden on vessels overseas.
• Section 205 sets forth various requirements for the Container Security Initiative (CSI) program. CBP has incorporated the additional requirements to improve the CSI program.
• Section 211 requires various improvements and requirements for the Customs-Trade Partnership Against Terrorism (C-TPAT) program. CBP has incorporated the required changes and improvements such as lowering the ATS risk score for Tier One certified members, beginning a process to revalidate C-TPAT members once every 3 years, and beginning a third-party validator pilot program.
• Section 231 requires CBP to conduct an overseas integrated scanning pilot program. DHS announced phase I of the Secure Freight Initiative (SFI) in December 2006 at 6 locations where the scanning systems will be tested.

• RPM and NII Technologies

Over the last several years, non-intrusive inspection (NII) technology has been the cornerstone of CBP’s layered enforcement strategy. Technologies deployed to our nation’s air, sea, and land border ports of entry include large-scale X-ray and gamma-imaging systems as well as a variety of portable and hand-held technologies to include radiation detection technology. These technologies are an invaluable force multiplier that enables CBP to scan or examine a significantly larger portion of the stream of commercial traffic while facilitating the flow of legitimate trade, cargo, and passengers. These technologies give CBP the capability to perform thorough examinations of cargo without having to resort to the costly, time-consuming unloading of cargo for manual searches or intrusive examination of conveyances by other methods such as drilling or dismantling.

As of February 2007, 182 large-scale NII systems have been deployed and over 982 Radiation Portal Monitors (RPMs) have been deployed nationwide with the ultimate goal of scanning 100 percent of containerized cargo and conveyances for illicit materials. These RPMs permit CBP to scan for illicit nuclear or radiological materials for 100% of all arriving international mail and/or express courier parcels; 91% of all truck cargo and 81% of all personally owned vehicles arriving from Canada; 96% of all truck cargo and 91% of all personally owned vehicles arriving from Mexico; and 89% of all containerized sea-borne cargo. In addition, CBP has deployed over 735 Radiation Isotope Identifier Devices (RIID) and 15,000 Personal Radiation Detectors (PRD). Used in combination with our layered enforcement strategy, these tools currently provide CBP with a significant capability to detect nuclear and radiological materials.

The Fiscal Year 2008 budget request includes $6 million to staff 55 new CBP Officers for the deployment of RPMs funded by Congress last fiscal year.

PREVENTING TERRORISTS FROM ENTERING THE UNITED STATES

Last year CBP welcomed more than 422.8 million people at our nation’s 311 land, air, and seaports while denying entry to more than 209,000 inadmissable visitors. Thanks to the investments Congress has made in programs like the Immigration Advisory Program, technology like the Advanced Passenger Information System (APIS) and improved capabilities to detect fraudulent documents, CBP’s ability to stop potential terrorists at, and even before they reach, our borders has never been greater.

• As a result of the requirements of Section 7209 of the Intelligence Reform and Terrorism Prevention Act of 2004, the Department of Homeland Security and the Department of State developed the Western Hemisphere Travel Initiative (WHTI). The initiative is being implemented in two phases: the development of a set of regulations for travelers arriving by air into the U.S. that had been previously exempted from having travel documents under the Immigration and Nationality Act, and the development of a second set of regulations for passengers entering the U.S. at sea and land border ports of entry. The air traveler phase became effective on January 23, 2007 and the sea and land border phase is targeted for implementation by January 2008.
• To enhance security through a “layered border”, CBP established the Immigration Advisory Program (IAP) at select major international airports that have direct and connecting flights to the United States. The IAP enhances the safety of air travel by preventing terrorists from boarding commercial aircraft destined for the U.S. and reduces the number of improperly documented passengers traveling from or through a country to the U.S. Since the initial deployment of IAP in June 2004, IAP officers have assisted foreign governments and airline personnel in preventing 1423 improperly documented or watch-listed persons from boarding flights for the United States, discovered 85 fraud cases, identified 172 terrorist targets, saved CBP $2.1 million in processing costs, and saved airlines more than $2.1 million in fines.

III. Control of the Border

SECURE BORDER INITIATIVE

CBP is taking dramatic steps to gain control of our borders through the Secure Border Initiative (SBI), a comprehensive approach to border security and immigration enforcement designed to end the centuries old problem of immigrants entering the country illegally. The $1 billion requested in Fiscal Year 2008 for the Secure Border Initiative, Border Security Fencing, Infrastructure and Technology, will provide for the completion of 370 cumulative miles of fence (using existing and Fiscal Year 2008 funds) and allow CBP to begin to install the required tactical infrastructure for lighting, roads, and land clearing, vehicle barrier systems and other enforcement support systems. The funds also support some procurement of surveillance technology which includes mobile and fixed towers, and unattended ground sensors and the ongoing upgrades to command and control systems.

Secretary Chertoff created the Secure Border Initiative to galvanize Department of Homeland Security (DHS) actions across agencies in support of the President’s three core objectives for comprehensive border security and immigration reform:

• Gain effective control of the borders,
• Strengthen interior enforcement and compliance with immigration and customs laws,
• Support passage of a temporary worker program.

Within this comprehensive DHS effort, CBP will execute the SBI program to accomplish the first SBI objective – achieving control at and between the nation’s ports of entry by acquiring, deploying, and sustaining a targeted combination of technology, tactical infrastructure, and personnel.

Gaining effective control of the borders will come through ending “catch and release” practices, and developing and deploying an optimal mix of personnel, infrastructure, technology and response capabilities to the border that will allow DHS to identify, classify, and interdict cross-border violators. A critical component of SBI is SBInet, a program focused on transforming border control through infrastructure, technology, and communication platforms. Under SBInet, proven technologies are woven together to provide a robust system that supports CBP in its mission of protecting our homeland by establishing safe and secure borders.

CBP is the executive agent for the contracting and implementation of SBInet, which is a piece of the holistic approach of SBI. CBP acts as the guardian of our nation’s borders, safeguarding the homeland against the entry of terrorists and the instruments of terrorism and enforcing the laws of the United States while fostering the nation’s economic security through lawful travel and trade. Within CBP’s larger mission, the Office of Border Patrol and the Office of Field Operations’ time-honored duty of interdicting illegal aliens and contraband and those who attempt to smuggle them across our borders at and between the ports of entry remains a priority. The CBP post-September 11th mission is clear: we must guard against the terrorists and violent criminals who may exploit our border to enter the United States unlawfully and do us harm.

There is no stretch of border in the United States that can be considered completely inaccessible or lacking in the potential to provide an entry point for a terrorist or terrorist weapon. Therefore, securing every mile of diverse terrain is an important and complex task that cannot be resolved by a single solution, such as installing fencing alone. To secure each unique mile of the border requires a balance of technology, infrastructure, and personnel that maximizes the government’s return on investment and is tailored to each specific operational environment. SBInet will provide a mixture of fencing, vehicle barriers, technology, sensors, lighting, and communication along the entire Southern border that is optimized for the most efficient and effective deployment for each border mile. As part of the SBInet program, and as authorized by the Secure Fence Act, the FY 2008 budget includes funding to construct 295 miles of mostly single-layer fencing, for a total of 370 miles by December 31, 2008. Design and planning for this fencing is complete. As dictated by operational protocol, double-layer fencing will be built only in urban or extremely high traffic areas.

CBP will use the SBInet contract to acquire, deploy, and sustain the technology and tactical infrastructure necessary to achieve control at and between the ports of entry. The SBInet Program incorporates acquisition best practices and lessons learned from previous border technology procurements to provide the best value and most operationally effective solution for securing the border. CBP selected an indefinite delivery, indefinite quantity (IDIQ) contract vehicle because the vastly different terrain, threats, and evolving nature of the operational environment require a solution that is flexible, adaptable, and tailored to specific needs.

The SBInet acquisition was conducted using full and open competition and resulted in a performance-based IDIQ contract.

An IDIQ contract allows DHS to structure the acquisition into discrete, workable phases implemented through task and delivery orders, without committing the government to acquire additional capability from the SBInet integration contractor. This approach will provide the greatest amount of flexibility to respond to ever-changing conditions while minimizing risk to the Government.

Further, the SBInet contract allows DHS to use other contract vehicles for the goods and services required for the SBInet Program. Thus, the government reserves the right to compete some SBInet requirements through the use of other contract vehicles or methods when it is in the best interest of the government. This includes the right to use other DHS contracts or government-wide acquisition contracts, as appropriate. All such requirements will be carefully reviewed for small business set-aside potential.

Several large businesses participated in the full and open competition, submitting proposals that detailed the partnering relationships they intended to use to meet the government’s program objectives and that provided solutions to securing the borders. The award of the SBInet contract to the Boeing Company (Boeing) was announced on September 21, 2006.

The awarded SBInet contract has a base period of three years and three one-year option periods for a total of six years. The government’s minimum obligation under the contract is $2 million over the term of the contract. The government’s maximum obligation is the full range of supplies and services necessary to provide 6,000 miles of secure border. The supplies and services required for this integration effort are, for the most part, commercially available. Major components consist of integration services, sensors, communication technologies and equipment, command and control systems and subsystems, and infrastructure and response capabilities.

Accountability

Drawing from previous experience, CBP used the IDIQ contract structure to select the company that offered the best overall strategy and value to the government for SBInet while allowing direct government oversight and decision-making authority to oversee implementation. The technical proposals submitted by each company were required to include:

• Overall concept of operations for the SBInet solution.
• Quality assurance plan, measures, and metrics for the overall concept, as well as those that will apply to task orders/individual deliverables.
• Detailed management plan, including a defined conflict of interest mitigation plan.
• Detailed subcontracting plan.
• Past performance information.
• Application of the concept, from both technical and cost perspectives, to the Tucson Sector.
• Differences in the application of the solution to the Swanton Sector.
• Defined deliverable to award with the master contract.

DHS has applied to SBInet a number of additional lessons learned from other major acquisitions. For example:

• To mitigate performance risk, performance metrics, targets, and goals at the system and task order level will be individually negotiated. Through these negotiations the government will evaluate realism and reasonableness as to metric development methodology and logic, and their impact on cost and price.
• To mitigate future cost risk, evaluations of teaming agreements and subcontracts will be conducted. This approach will provide DHS with the opportunity to ensure the agreements do not bind the government to long term pricing contracts that may not be competitive in future years. Comprehensive cost and price evaluations will be conducted on each task order to ensure competitive and current market rates.
• The contract and program management plans must give DHS visibility into make-or-buy decisions and ability to approve or disapprove those proposals made by the contractor.
• DHS will retain the right and flexibility to separately compete work to support systems implementation.
• DHS does not envision developing large capital assets to support the solution. The SBInet Program will generally procure commercial and/or currently available technologies.
• The absence of major capital asset development, acquisition, and deployment reduces the overall risk level to the program.
• The SBInet Program does not have the same likelihood of requirements and cost growth inherent in a developmental technology, system, or asset.

To ensure a clear scope for the over-arching SBInet contract, CBP selected stable top-level requirements, and we believe the selection of the Boeing proposal validates the approach for acquiring a low-risk technological solution. The requirements for the SBInet solution are:

• Detect an entry when it occurs;
• Identify what the entry is;
• Classify its level of threat (who the entrant is, what the entrant is doing, how many, etc.); and
• Respond effectively and efficiently to the entry, bringing the situation to an appropriate law enforcement resolution.

These requirements are enduring and fundamental to the task of securing the border at and between ports of entry.

Additionally, the government will evaluate each task order with measures and metrics. CBP will negotiate specific technical, operational, and performance requirements for each task order. This approach to task order management will provide CBP greater visibility into the overall success of the SBInet solution, not only from a budget and schedule perspective, but most importantly from a performance perspective. The SBInet Program Management Office (PMO) within CBP has developed a detailed Task Order Initiation process that incorporates Make/Buy decisions prior to project milestones. In particular, the design phase for each project presents alternative analyses that include Make/Buy evaluations to ensure that the government is receiving optimal value and that mission requirements are met. Each task order will be monitored with accredited Earned Value Measurement processes and will have a qualified and accountable Project Manager.

SBInet Oversight and Management

Quite simply, there is no risk-free approach to an acquisition of this size and scope. To minimize the risk, CBP is employing a risk-based management approach. As part of the aforementioned lessons learned from past acquisition programs, CBP is managing the SBInet contract in-house for greater connectivity to the operators and control through direct oversight. CBP has established a robust program management structure to oversee the successful implementation of the solution and is rapidly building upon this foundation. The SBInet project team includes seasoned certified program managers and senior contract specialists. The DHS Joint Requirements Council and Investment Review Board will oversee deployment of the system throughout its life cycle.

CBP has established an Executive Steering Committee (ESC) that meets weekly to discuss program progress against SBInet goals and objectives. Along with myself and the Deputy Commissioner, six Assistant Commissioners meet in this weekly forum to measure success and set policy.

As is appropriate with an acquisition of this value and importance, the Government Accountability Office (GAO) and DHS Office of the Inspector General (OIG) have already begun evaluating SBInet and offering recommendations. Independent insight is essential for making continuous progress in improvements to program structure and management. GAO and OIG insight is helpful in identifying risks and in managing those risks accordingly. The recommendations received to date have provided useful and collaborative improvements in SBInet program management and contract execution. Attention to enhancing organizational capacity, increasing requirement definition tailored to specific task orders as the program matures, and diligent oversight of cost, schedule, and performance are all essential elements of program management embraced by DHS and CBP.

In conjunction with the recommendations from the GAO and OIG, CBP is pursuing the following areas of improvement to strengthen government program management and contractor oversight:

• Defining Program Management Structure;
• Providing Appropriate Staffing and Human Capital;
• Enhancing Definition of Operational Requirements; and
• Measuring Contractor Performance.

Defining Program Management Structure: The PMO finalized its Program Management Plan (PMP) in January 2007. The PMP applies a plan of action with performance milestones so as to develop the capacity to manage SBInet, administer its contracts and agreements, and ensure effective oversight and implementation. The PMP serves as the overall plan for managing SBInet. Included within the PMP are delineations of Program Organization and Responsibilities, an explanation of the CBP Program and Technical Management Approach, and Key Program Management Processes.

To solidify its capacity to manage SBInet and administer its contracts and agreements, CBP is employing best practices in project management. The organizational structure set up by CBP allows for the concentration of subject-matter expertise into appropriate directorates, creating a ready resource pool to staff Integrated Project Teams (IPTs) to execute projects under SBInet.

IPTs are cross-functional teams under the leadership of an accountable government manager. IPTs use the tenets of integrated process and product development to get the right people and skills involved in managing a project. Each IPT in SBInet will be formed with appropriate representatives to ensure a common understanding of the activities involved and to secure input from all relevant entities.

SBI is a comprehensive, integrated program involving several DHS contributing components. The Secretary has created a Secure Border Coordination Council that is chaired by the Deputy Secretary and includes six senior DHS executives responsible for border security. The Council was formed at the start of FY2007 and reports directly to the Secretary. Its permanent members include the Deputy Secretary (chair); ranking officials from CBP, ICE, USCIS, and USCG; the DHS Chief Intelligence Officer; and the Assistant Secretary for Policy. Other DHS officials participate as appropriate. The Council focuses DHS’s leadership team on the progress required within SBI to achieve the comprehensive immigration reform and homeland security priorities described in the SBI Strategic Plan.

CBP continues to develop an SBInet Program Plan that describes and documents the work breakdown structure, the Integrated Master Schedule, and the program budget. This plan is expected to be completed by the end of March 2007. SBInet continues to build program, project, and acquisition management competencies through the definition and institutionalization of core processes that provide predictability, repeatability, and consistency in program operations. The PMO has been vigilant in creating a process management infrastructure that supports the definition, measurement and control over key acquisition business processes to include Project Pre-Award and Project Execution. Using best practices from the Project Management Institute (PMI), the Software Engineering Institutes (SEI) Capability Maturity Model Integration® (CMMI), and the Defense Acquisition University (DAU), CBP continues to build a strong oversight capability for the SBInet contract.

Providing Appropriate Staffing and Human Capital: To achieve established staffing goals for 2007, the SBI program offices within CBP continue to actively recruit and hire qualified candidates. To date, 124 staff positions have been filled (55 government and 69 contractors) out of a planned total of 270 for 2007. As the CBP Commissioner, I continue to be apprised of resource gaps through the weekly SBI Executive Steering Committee (ESC) meetings and weekly meetings with the SBI Executive Director and SBInet Program Manager.

Current staffing levels are adequate to manage the current program workload, administer task orders under contract, and ensure effective oversight and implementation. As the program matures and future task orders are awarded, CBP will continue to increase staffing levels appropriately.

Enhancing Definition of Operational Requirements: To continue definition of the top-level requirements provided during the contract solicitation, the PMO developed a Mission Needs Statement that was approved on October 1, 2006. The Mission Needs Statement identifies capability gaps and certain needs of the SBInet Program.

In support of SBInet, the PMO completed a comprehensive requirements workshop with CBP operational stakeholders on October 13, 2006. The resulting Operational Requirements Document (ORD) will be finalized and approved by February 28, 2007. This document will be used to derive contract requirements and establish the appropriate performance metrics for each future task order.

In addition to the ORD, a System Engineering Management Plan (SEMP) has been developed to outline the technical management and processes for program requirements, design, and development. Testing will include an Independent Validation and Verification (IV&V) contractor who will test software and systems development. Test and Evaluation will also include Operational Test and Evaluation (OT&E), using an independent government organization to evaluate performance, effectiveness, and operational suitability of the installed solution.

Additionally, the PMO held a System Requirements Review in January 2007. Follow-on meetings will be held to baseline system requirements.

Measuring Contractor Performance: The Plan of Action and Milestones (POA&M) currently in development will include measurable and meaningful performance metrics and controls. Additionally, SBInet will use Earned Value Management (EVM) as a technique to integrate cost, schedule, and technical accomplishments for SBInet task orders where appropriate. EVM is a best practice method for measuring performance, reporting and analyzing project status, and comparing actual costs and accomplishments to a baseline. EVM serves as an early warning indicator for effective management decisions and corrective actions. It supports effective “what-if,” tradeoff and trend analyses; helps to highlight potential risks; and provides more accurate forecasts of cost and schedule performance. Using EVM on SBInet satisfies the acquisition requirements of OMB Circular A–11, Part 3, and the Government Performance and Results Act of 1993.

In November 2006, Boeing submitted to the PMO its Cost Management Plan, which describes Boeing’s EVM reporting approach for SBInet. The Program Management Plan describes the PMO’s approach to oversight of the EVM performance reporting for the SBInet Program. This oversight consists of PMO review of the monthly Contract Performance Reports (CPRs) submitted by the prime contractor; analysis of the CPR data and performance trends at monthly project reviews; and monthly Program Management Reviews (PMRs) in which cost and schedule performance trends are addressed by the PMO. Further, EVM data are also reported quarterly to CBP and DHS in the Periodic Performance Reports.

Boeing will provide regular implementation status reports and reviews on the SBInet task orders. Specific requirements for reports and reviews will be detailed in the individual task orders and may include cost performance reports; schedule and planning reports and reviews; technical performance reports and reviews; management reports and reviews; Integrated Baseline Reviews; and project cost estimates.

CBP is currently working with Boeing to prepare the POA&M. It will be reviewed by the CBP Executive Management and the Chief Procurement Officer, per the recommendation of the OIG, and recommended actions will be instituted and tracked to completion. To ensure continued attention and adequate provision of resources, the PMO will provide periodic updates to both CBP and DHS CPO leadership.

Regular Program Management Reviews (PMRs), which include the status of risks, action items and issues, key milestones, budget, and deliverables, are provided to the CBP Executive Management and Chief Procurement Officer. The PMRs provide a forum to facilitate timely decision-making by presenting leadership with a thorough status of the SBInet Program while raising issues that need management attention. The last PMR was held on February 1, 2007, in Arlington, VA.

SBInet project managers will be responsible for assessing and reporting project status and the likelihood of meeting the scope, cost, schedule, and technical performance objectives through weekly reports to the SBInet Program Manager, PMO Directors, and other project stakeholders. Status reporting will begin as soon as a new project is initiated and will continue on a regular basis.

Without a dramatic shift in the way that we as a nation protect our borders, we leave ourselves and our citizens vulnerable. We recognize the challenges that lie ahead. By defending our borders with the latest technology and infrastructure, as part of a comprehensive solution that also includes additional well-trained personnel, and by maintaining a vigilant interior enforcement of our nation’s immigration laws, we will fulfill our mission of protecting our country and its citizens.

AIR AND MARINE OPERATIONS AND INVESTMENTS

Over the last year, our newly combined Air and Marine organization has made dramatic progress toward acquiring and deploying a wide-range of capabilities needed to control our borders and support the objectives of the SBI. Congressional support for the Unmanned Aircraft System (UAS) Program has ensured sufficient resources are now available for six complete systems that can be deployed across all of our borders. These remotely-controlled aircraft have already provided us critical intelligence, helped us gain better situational awareness, and directly supported ground interdiction operations along the Southwest Border. With the six systems already funded, CBP will expand operations to the Northern Border and evaluate the use of the system to support maritime surveillance and interdiction operations in the Caribbean and along the Pacific approaches to the United States. The initial deployment of a system to the Northern Border is planned for the late summer of this year, and CBP is working with the U.S. Air Force and North Dakota Air National Guard to conduct joint operations using USAF Global Hawk and CBP Predator-B systems. We are also working to deploy another system to Southeast Coastal region this fall under a cooperative effort with the U.S. Coast Guard. In addition to providing much-needed intelligence, these deployments will help shape SBI solutions and determine our requirements for future investments. Eventually, all UAS operations will be controlled from the Air and Marine Operations Center (AMOC) in Riverside, California, and CBP intends to use a portion of the funds contained in the FY 2008 request to begin centralizing UAS command and control.

Thanks to continued support from Congress, we are aggressively shaping a service life extension program (SLEP) for our valuable P-3 Maritime Patrol Aircraft. As you are aware, the entire CBP P-3 fleet of 16 aircraft was grounded for part of FY 2006 with wing box stress cracks. In spite of the time needed to effect repairs, the CBP P-3s achieved 93% of their mission commitments last year. It was clear, however, that a long-term solution was needed to keep these 40-year-old assets safely in service for another 20 years. Congress responded with a $70 million initiative in FY 2007 that will enable us to start purchasing entire new wing and tail assemblies for the SLEP and long-lead structural components needed to sustain aircraft operations until all of the aircraft can be overhauled. Since we expect the SLEP to be achieved over an 8-10 year period, the FY 2008 request contains $47 million in base operations and maintenance funding for this safety-critical effort.

We are also aggressively moving out on our air recapitalization effort, as detailed in the CBP Air Strategic Plan delivered to the Committees last year. Again, Congressional support for key elements of the plan have enabled us to achieve a great deal in a short time. We are on schedule to establish the fourth Northern Border air branch in Great Falls, North Dakota, in September of this year, and to increase staffing in Plattsburgh, New York, and Bellingham, Washington. Our FY 2008 request, if granted by Congress, will contain sufficient funds to establish our fifth and last primary Northern Border air branch in Detroit, Michigan, one year later. To support the Northern Border operations and the expansion of operations across our Southern Border, we are taking delivery of 15 new Light Observation Helicopters, and acquiring new Multi-role Patrol Aircraft, new Light Enforcement Helicopters, and new UH-60 “Black Hawk” Medium Lift Helicopters. We are also pursuing a partnership with the U.S. Army to upgrade existing Medium Lift Helicopters in order to extend their service lives and reduce annual operating costs. In a cooperative effort with the U.S. Coast Guard, two new convert surveillance aircraft are being acquired for delivery in FY 2009. For the first time in several years, we are purchasing new marine interceptors, and with the initiative funding provided by Congress, we will acquire and deploy five new interceptors for the Great Lakes region by the end of this year. As you may be aware, the Office of Air and Marine assumed administrative control of all legacy marine vessels late last year and is concluding its evaluation of future mission needs in conjunction with the Border Patrol. Once this is completed, CBP will provide an update to its Air and Marine strategic plan to include marine end-state objectives as promised to the Committees last year.

The FY 2008 request, if approved, will enable CBP to continue its recapitalization effort with an emphasis on acquiring and upgrading its UH-60 “Black Hawk” Helicopters, upgrading the 20-year-old sensors systems in its interceptor aircraft, and purchasing additional marine interceptor vessels. In addition, it will fully fund new aviation maintenance contracts for all of CBPs legacy aircraft at about $37 million above base funding. These new contracts are being crafted to increase our mission readiness from 60-70 percent to 85 percent or greater, improve supply chain effectiveness, gain configuration control of all legacy aircraft, and enhance logistics and maintenance data collection and cost reporting. And to support the increase in operating tempo expected with the deployment of 3,000 new Border Patrol agents, Air and Marine plans to hire 151 new pilots, air crew, operations support, administrative, and Headquarters personnel. Included in this number are additional personnel for AMOC UAS command and control development, as well as the first government UAS pilots. Investments in new facilities are also included in the FY 2008 request with the relocation of the Fort Huachuca/Sierra Vista, Arizona, air and UAS branches and the Yuma, Arizona, air branch topping CBP’s list of priorities.

BORDER PATROL STAFFING AND FACILITIES

To secure effective control of our borders, President Bush announced a plan to increase the number of Border Patrol agents by 6,000 by the end of 2008. We are grateful that the 2006 Supplemental and the 2007 DHS Appropriation have provided 2,500 agents as part of this plan. We are additionally grateful, that, as part of this plan, the President’s FY2008 budget requests $647.8 million for 3,000 more Border Patrol agents, 151 pilots, air crew and specialists; and 688 operations support and CBP mission support personnel. This plan, when completed, will bring the total number of Border Patrol agents to over 18,000, doubling the number of agents since the President took office in 2001. These additional agents will serve as a tremendous resource in combating border violence and the organizations that prey on innocent people on both sides of the border.

The budget request also includes $100 million to provide for the construction of four new facilities to accommodate the increase in Border Patrol staffing and the expansion of existing facilities to facilitate agent mobility and rapid deployment to areas of heaviest illegal activity.

ARIZONA BORDER CONTROL INITIATIVE (ABCI)

The Arizona Border Control Initiative is a DHS multi-year initiative that supports the priority mission of anti-terrorism along with the tradition mission of the Border Patrol of detection, arrest, and deterrence of all cross-border illicit traffic. ABCI-IV will detail 287 Border Patrol agents to the Tucson Sector beginning in February to enable assets to be in place prior to the traditional spikes in alien apprehensions in the months of March and April.

ABCI-IV builds on past efforts which resulted in enhanced partnerships with the Government of Mexico, other DHS agencies, the United States Attorney’s Office, and state, local and tribal law enforcement agencies. In addition, ABCI led to the implementation of the first Interior Repatriation Program. Current funding will provide for the deployment of agents through September 2007.

IV. Trade and Security

OFFICE OF INTERNATIONAL TRADE

In September 2006 the Office of International Trade was formed within CBP. The establishment of this office will serve to strengthen our ability to carry out our important mission of facilitating the flow of legitimate trade across U.S. borders while securing our borders and protecting the American economy from unfair trade practices and illicit commercial enterprises.

The Office of International Trade consolidates trade policy, program development, and compliance measurement functions into a single office, providing greater consistency within CBP with respect to its international trade programs and operations. In addition, CBP’s close working relationship with the trade community – already a hallmark of CBP’s operations and programs - has been further enhanced.

I am pleased to report that the new Office of International Trade is providing CBP and the Trade community with an organization that can effectively address the growing volume and complexities of international trade and is enabling us to successfully meet the challenges inherent in managing the balance of trade and security.

ADVANCE INFORMATION (10+2)

CBP operates at the nexus of national security and American economic security. Designing approaches to ensure that CBP contributes fully to these imperatives is critical to fulfilling the agency’s mission to secure the nation’s borders while facilitating the flow of international trade. Finding the right balance is a challenge that requires CBP to consistently monitor and evaluate the processes and systems the agency employs to screen and clear the millions of import ocean cargo containers that arrive at U.S. seaports ports of entry every year.

In this environment Congress recognized the need for more robust security targeting and recently passed the SAFE Port Act. One important provision in that Act requires the electronic transmission of additional data elements for improved high-risk targeting. Working with the Commercial Operations Advisory Committee (COAC), CBP has proposed a new security filing to ensure compliance with the Act’s provisions and enhance our ability to perform risk-based targeting prior to cargo being laden on a vessel overseas. The CBP proposal covers the following key areas:

• Security filing consisting of ten unique data elements not currently provided to CBP prior to foreign loading of cargo,
• Vessel stow plan currently utilized by the vessel industry to load and discharge containers and Container Status Messaging currently utilized by the vessel industry to track the location of containers and provide status notifications to shippers, consignees and other related parties.

CBP is currently developing a Notice of Proposed Rulemaking (NPRM), which will be published in the Federal Register along with a request for comments on the NPRM. Obtaining data earlier in the process will increase the transparency of the global supply chain enabling the refinement of CBP’s targeting processes and will provide information to make a more fully informed decision with respect to the risk of individual shipments.

ACE AND ITDS

A central component of CBP’s strategy to protect the American people and the American economy is a robust and innovative information technology program. The Automated Commercial Environment (ACE) is the next generation of technology designed to enhance national border security and expedite lawful trade. The ACE Secure Data Portal is a customized web-based system that connects CBP, the trade community and participating government agencies in one centralized, on-line access point.

Participation in ACE continues to expand. ACE periodic monthly statement receipts grew to $845 million in November 2006, representing 34.8 percent of total adjusted collections. Overall, there are more than 4,100 ACE Secure Data Portal accounts, and more than 4,500 corporate entities (based on Importer of Record Number) are approved to pay duties and fees monthly.

The successful implementation of ACE continues to be one of CBP’s top priorities. Support for ACE from Congress has been essential to the continued development and expanded operational deployment of ACE capabilities. CBP continues to work diligently to finish deployment at all 99 land-border ports of entry and eventually to all air, rail, and sea ports. The entire list of ACE accomplishments during 2006 is too extensive to mention here; however, following are some highlights:

• Announced the requirement for truck carriers to file electronic manifests (e-Manifests). On October 27, 2006, CBP announced via the Federal Register the first group of land border ports where truck carriers will be required to file e-Manifests. Beginning January 25, 2007, the agency now requires e-Manifests to be filed at all land border ports in Washington and Arizona, as well as the following ports in North Dakota: Pembina, Neche, Walhalla, Maida, Hannah, Sarles, and Hansboro. Over 20,000 eManifests are now being submitted each week in response to this requirement.
• Completed deployment of ACE truck processing capabilities to New York, Vermont, Idaho, Montana, and North Dakota. ACE truck processing capabilities are now operational in 78 land border ports, covering all states except for Maine, Minnesota and Alaska. Those two remaining states will be completed in June of 2007. ACE is now processing over 190,000 trucks each week.
• Deployed Targeting Framework (TF) capabilities. CBP is working with the Department of Homeland Security (DHS) Chief Information Officer (CIO) to achieve certification of the DHS Production Readiness Review (PRR). The DHS CIO review of the DHS PRR was conducted on November 28, 2006. Due to critical homeland security capabilities included in TF, CBP completed the TF Operational Readiness Review (ORR) on October 26, 2006, and deployed TF to the National Targeting Center (NTC) on October 29, 2006.
• Held second ACE Exchange outreach conference for the trade community. CBP hosted approximately 500 brokers, importers, carriers, and software developers at the second ACE Exchange conference in Tucson, Arizona, October 30- November 1, 2006. The event, which featured addresses by the CBP Commissioner and Assistant Commissioner, Office of Field Operations, included a wide-ranging discussion of current and future ACE capabilities, including the new requirements for filing electronic truck manifests.
• Expanded the number of Participating Government Agencies (PGAs). In November 2006, the Consumer Product Safety Commission became an ITDS PGA, bringing to 30 the number of PGAs in ACE/ITDS.
• Held Trade Support Network (TSN) conference. The CBP Commissioner and Deputy Commissioner addressed TSN members during the December 11-13, 2006, TSN conference in Arlington, Virginia. The conference provided TSN members an opportunity to discuss with CBP representatives the status of current and future ACE capabilities, as well as how these capabilities will affect both CBP operations and trade community business processes.
• Initiated implementation planning for the Security and Accountability for Every Port Act of 2006 (SAFE Port Act). Collaboration is in progress between CBP and the ITDS Board of Directors to establish a plan for implementing the SAFE Port Act, which mandates participation in ITDS by all Federal agencies that require documentation for clearing or licensing the importation and exportation of cargo.

ACE funding also supports the International Trade Data System (ITDS). ITDS is our mechanism for coordinating intergovernmental support for ACE and ensuring that ACE meets the needs of government agencies that need trade data and have a stake in border security.

I want to thank Congress again for its past support of ACE. We continue to work closely with the Government Accountability Office (GAO) to support their review of the FY2007 expenditure plan. Congressional approval of this expenditure plan will allow the release of $216.8 million in FY 2007 funding for continued ACE development and ITDS support CBP appreciates the prior release of $100 million in FY 2007 funding for operations and maintenance of the existing ACE capabilities and sustainment of the program.

CONSOLIDATION OF SIMILAR FEES INTO ONE UNIFIED FEE

CBP collects several fees from various sources including Immigration Inspection User Fees, Land Border Inspection Fees, Animal and Plant Health Inspection Service Inspection Fees, and Small Airport User Fees. These fees are available to fund specified operations of CBP. Many of these fees are charged for processing the same passengers, conveyances, and commodities. In the coming fiscal year, CBP intends to propose to consolidate these fees so that each party is charged only once. Simplifying the fee structure in this way would streamline administrative operations for CBP and the travel and trade industry by reducing the burden of collecting and recording multiple fees and the costs associated with each of them.

V. Other Traditional Missions

DRUG INTERDICTION

CBP’s anti-terrorism and counternarcotics missions are not mutually exclusive. The initiatives we have put in place to prevent terrorists and terrorist weapons from entering the United States have enabled us to be more effective in seizing other illegal contraband, including illegal drugs. Similarly, each of the lessons we have learned in our battle against international drug trafficking has helped us in the fight against international terrorism.

The heightened focus on securing our borders against the threat of terrorism has resulted in an intensified effort and presence along the nation’s borders that has actually strengthened, not weakened, our counternarcotics mission. Every effort made to increase inspection technology, refine our questioning of travelers and intensify our inspections of passengers in support of our anti-terrorism mission, has resulted in increased illegal drug seizures. In Fiscal Year 2006, over 2.2 million pounds of narcotics were seized by CBP Officers, Pilots and Border Patrol Agents.

PREVENT INDIVIDUALS FROM ENTERING ILLEGALLY AT PORTS OF ENTRY

CBP continues to stop hundreds of thousands of people a year who are inadmissible into the United States for a variety of reasons, including prior immigration violations, criminal history, or the possession of false or fraudulent documents, and potential terrorists.

We are helped in this effort by our close work with the Department of State to ensure CBP officers have the tools they need to verify the identity of visa holders and the authenticity of visas issued by the Department of State. Data on holders of immigrant visas is transferred electronically to ports of entry. When the electronic record is updated to reflect an immigrant’s admission at a port of entry, that data is transferred electronically to Citizenship and Immigration Services (CIS) for production of a permanent resident card and creation of the immigrant file.

PROTECTING U.S. AGRICULTURAL INTERESTS

Within the Department of Homeland Security, CBP provides leadership, expertise and innovation to defend the United States against the threats of bio and agro-terrorism and to meet the traditional goals of safeguarding and protecting American agriculture from risks associated with the entry, establishment or spread of animal and plant pests and diseases, as well as noxious weeds. Inspecting potentially high-risk travelers and cargo is critical to keeping the prohibited items that present agricultural risks out of the United States, monitoring for significant agricultural health threats, encouraging compliance with regulations, and educating the public and importers about agricultural quarantine regulations.

CBP is part of the global network of surveillance working to prevent a potential avian flu or other contagious diseases from entering the United States. As the frontline agency for facilitating legitimate trade and travel, CBP has the authority and responsibility to detain individuals and cargo that may possess a potential threat of carrying a deadly virus. CBP Agriculture Specialists, following regulations, are not allowing the importation of live poultry, commercial birds, pet birds, and/or “hatching eggs” from countries affected by the avian flu. CBP is working closely with Centers for Disease Control and Prevention (CDC) under a DHS/HHS memorandum of understanding.

CBP has expanded its agricultural mission to include its new mission of preventing potential terrorist threats involving agriculture. Indeed, the threat of intentional introductions of pests or pathogens as a means of biological warfare or terrorism is an emerging concern. To address this threat and to enhance its traditional agricultural missions, CBP is using the Automated Targeting System, and the agency’s collective expertise and technology regarding terrorism and agriculture, to strengthen our ability to identify shipments that may pose a potential risk to our agricultural interests.

In addition, working closely with the Food and Drug Administration (FDA), CBP has implemented the Bioterrorism Act to guard against threats to the food supply. Under the Bioterrorism Act, food products shipped by truck require two hours advance notice; by rail and air, four hours; and by sea, eight hours. Enforcement of the provisions of the Bioterrorism Act is designed to protect the food that is on every table of every American household and to detect potential incidents of bio- and agro-terrorism involving food. These efforts have built on our priority and traditional missions to make the food supply more secure.

IPR ENFORCEMENT

Intellectual Property Rights (IPR) enforcement is a priority trade issue for CBP and DHS. CBP enforces trademarks, trade names, and copyrights on its own statutory authority, and also enforces patents and other forms of intellectual property pursuant to exclusion orders issued by the International Trade Commission and court orders.

CBP has made several advances in IPR enforcement during FY 2006. The value of IPR seizures rose dramatically compared to previous fiscal years with an increase of 67 percent from FY 2005. More impressively, our CBP frontline officers were responsible for seizing 82 percent more violative shipments than in FY 2005. International cooperation and information sharing has grown through Administration initiatives such as the Strategy for Targeting Organized Piracy (STOP), and CBP continues to conduct outreach and training with industry groups and our foreign customs counterparts around the world. The economic impact of infringing imports on the U.S. economy drives CBP efforts as much as the potential harm caused to the general public by counterfeit products violating health and safety standards.

VI. Conclusion

Mr. Chairman, Members of the Subcommittee, I have outlined a broad array of initiatives today that, with your assistance, will help CBP continue to protect America from the terrorist threat while fulfilling our other important traditional missions. Because of your support, we are far safer today than we were on September 11, 2001. But our work is not complete. With the continued support of the President, DHS, and the Congress, CBP will succeed in meeting the challenges posed by the ongoing terrorist threat and the need to facilitate ever-increasing numbers of legitimate shipments and travelers.

Thank you again for this opportunity to testify. I will be happy to answer any of your questions.

* Commissioner Basham reserves the right to edit his written remarks during his oral presentation and to speak extemporaneously. His actual remarks, as given, therefore, may vary slightly from the written text.