Ladies and gentlemen, sometimes we just need to take a moment and relish the good news. And the good news is that, nearly nine years after the Congress passed the Modernization Act, the first fielding of ACE capabilities is fast approaching. Next month we will see Customs employees start to use the first new features of ACE.

They will begin using the Intranet-based portal for speedy access to Harmonized Tariff Schedules. And by the time we meet again in February, ACE's first capabilities will be ready to roll out to the first forty importers, many of whom are represented here today.

So I think it's appropriate for us to take a moment to give ourselves a pat on the back? Customs couldn't have done it without you and your continuing commitment to ACE has been deeply appreciated. Every time you come to a TSN meeting, participate in a conference call or talk to your lawmakers, you're making an investment of time and money and we really do value your efforts.

Very few federal organizations have as collaborative a relationship with the public as Customs does with the trade community. This has truly been a creative, productive, partnership between government and industry.

That partnership now needs to move into a new stage. As we discussed at the June TSN, modernization of Customs technology and business processes will drive significant changes in organizational relationships, both for you and for Customs. Modernization itself will be a 15-year process and much broader than the IT component. It will involve a comprehensive review of our technology, practices, policies, and procedures. In fact, the only way we can benefit from ACE and other technological advances is to make sure that our organizations and the legal framework are ready. Otherwise, our best intentions may never become the tangible benefits we are seeking through modernization.

ACE, the first modernization project, will be transforming everyday operations and this will affect employees in your companies and at Customs. We have the obligation to provide effective training and tools that will leverage the skills of our workforces and prepare them to take advantage of these new tools. As ACE increments come on line, there will be cultural changes happening right alongside the business process changes. These changes will need to be pro-actively managed. They will require leadership and investment in implementation.

And finally, as we prepare to do things differently, we'll need to continue to listen carefully to each other. Customs, other participating government agencies and the trade community have worked hard to understand each other's challenges and responsibilities. Planning, resolve, patience, and hopefully at times, a sense of humor will pay off so that all of us will be ready to take full advantage of the benefits ACE will bring. What we are doing is no mean feat. It is a mammoth undertaking, so as we move toward this vision of a modernized trade system, we are bound to see bumps along the road. But I believe we have the right people with the right expertise to get us over those bumps. And I want to emphasize Customs commitment to the TSN. We will continue to use TSN as a forum to keep the dialogue going and keep working together.

At Customs, we've recognized that the 15-year scope of modernization and the immediate impact of ACE are demanding a higher level of cooperation, engagement, and accountability. We need a broad-ranging effort to cut across the existing lines of communication and authority. So, at this stage of ACE development, when we are just beginning to introduce operational capabilities, we are shifting our focus towards the implementation of ACE and the transformation of the agency.

As the very first release of ACE comes on line this Fall, we need to intensify the contributions of all the offices at Customs. Since the roles of people throughout the organization will be affected, all the Assistant Commissioners are becoming more involved. The reason is simple. We need their advice on the business that Customs performs to ensure that the ACE we build meets the needs of the environment and makes sense to the users.

The Office of Information and Technology under Woody Hall's leadership has done an excellent job of laying the foundation, both technically and programmatically. Charlie Armstrong, as Executive Director of the Customs Modernization Office, has worked hard with the e-Customs Partnership to bring us to this point. ACE is now at the operational starting line. Charlie, the CMO and the eCP are building the technical infrastructure that will serve not only as the foundation for ACE; it will also support future modernization projects throughout Customs, including those planned for the Enforcement and Administrative mission areas.

Now we need to capitalize as much as possible on their good work because, as I have said before, Customs Modernization is more than an IT project. We will be looking to enhance all elements of the agency through business process and technological improvements. We also need to take full advantage of operational perspectives as we prepare the Customs workforce to adopt ACE.

That is why I'm announcing today the creation of the position of Modernization Business Executive. Larry Rosenzweig will fulfill this role and he will be, along with Charlie Armstrong, part of the management team in the CMO. Larry will report directly to me. His role is a pivotal one because it will bring together the operational and technical efforts on ACE. He'll focus on the people side of the transformation of Customs, which includes business transformation, training, and implementation. Larry will also focus on all legal and policy issues pertaining to modernization. As some of you are aware, he has been the Assistant Area Director, Trade Operations, in both the New York/Newark and JFK areas since October 1995. He has also served as Regional Director for Commercial Operations and, in that role, he provided oversight in commercial and operational areas. So he brings a wealth of experience in the commercial arena and an excellent reputation to this challenge.

We are also re-orienting our governance structure in two ways to prepare for the implementation of ACE. The Customs Modernization Board of Directors has replaced the Trade Compliance Board of Directors and will consist of the Assistant Commissioners of Field Operations, Finance, Information and Technology, International Affairs, Investigations, Regulations and Rulings and Strategic Trade. Its charter has been directed to ensuring organizational coordination throughout Customs. The Board will oversee modernization of trade security operations, commercial trade, passenger operations, law enforcement and mission support functions. In addition, the Board will oversee the development and execution of the Customs Strategic Plan, which is being revised.

We have also created a new Legal and Policy Committee, comprised of representatives from the Offices of Regulations and Rulings; Chief Counsel; Field Operations; and the CMO. The Committee is carefully studying issues that might drive changes in policy, law and regulations. This Committee is also coordinating closely with the TSN’s Legal and Policy Committee. Inevitably, there will be differences of perspective and opinion, but we hope to resolve many of them through forthright, creative, and productive dialog.

And lastly, I'd like to confirm that the directive issued by the Office of Management and Budget on July 19 to halt IT projects does not apply to ACE. I repeat. It does not apply to ACE. Customs understands the rationale behind the OMB's directive. We see it as a necessary first step to ensure careful analysis of current systems and the development of future systems. OMB's directive paves the way for the eventual integration of systems for agencies under the proposed Department of Homeland Security. However, based on guidance Customs has received from Treasury and OMB, the freeze doesn't apply to ACE. Work on ACE has not stopped or even slowed.

Nonetheless, in keeping with the intent of the OMB directive to eliminate duplication and ensure the effective integration of systems, Customs will submit our current ACE Expenditure Plan to the Homeland Security IT Investment Review Group. We will seek the Review Group's formal approval before proceeding with the design and build phase of the second major block of work on ACE. Rather than an impediment, Customs believes OMB's directive will help ensure that ACE will be a truly coordinated effort between border security agencies and industry. Your support has been key to making ACE a model Modernization program in the eyes of OMB, Congress and over 100 agencies.

OMB's directive, therefore, is a very good sign. It indicates the federal government is preparing to tear down information stovepipes and build a central information-sharing clearinghouse. Even before September 11 of last year, the Customs Modernization Program had already begun developing a single, interoperable IT platform designed for precisely this purpose. The Federal government can use this platform to strengthen our nation's borders. From Customs perspective, we know what that platform is. It is ACE, the ACE we are creating together.