D.C. - Treasury Dept's Customs Bureau on "life support"; $1.3 billion needed to upgrade old computer system

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$3 Million Buys Time For Customs Computers

By Stephen Barr, Washington Post Staff Writer

Sunday, March 5, 2000; Page A04

Just days before a cash shortfall would have forced the shutdown of a computer prototype system used to speed imports through three border stations, the Treasury Department has found $3 million to keep the system operating until October.

The prototype, which Detroit automakers rely on to quickly obtain parts and supplies from Canadian suppliers, was launched by the U.S. Customs Service in 1998 as a first step toward a large-scale computer modernization project. Customs suspended work last month on the overall project because of funding problems.

The delay in the computer upgrade at Customs, a bureau of the Treasury Department, has drawn protests from a trade coalition that includes many of the nation's largest retailers.

Rep. Jim Kolbe (R-Ariz.), the House Appropriations subcommittee chairman who oversees Treasury Department accounts, said he was disappointed with the service's decision to delay the modernization project and urged the Clinton administration to put it back on track. The computers at Customs collect about $20 billion annually in duties and fees on imports, making the agency the second largest source of income for the government after the Internal Revenue Service. But the computers are 17 years old, suffer from breakdowns and have difficulty keeping pace with the nation's ever-increasing volume of imports.

Last year the Treasury Department and the Office of Management and Budget proposed a "user fee" to finance an upgrade of the Customs computers--an approach rejected by the trade community and Congress. Despite a lack of funds, Customs pressed ahead on a replacement system, using money left over from fiscal 1999. Officials later determined that money would be gone by March 13.

On March 1, the Treasury Department notified Kolbe in a letter that $3 million would be made available to keep the prototype running for the rest of this fiscal year. Treasury proposed taking $1.8 million in "unobligated balances" from Customs accounts and $1.2 million from other budget accounts in the department.

The letter, from Lisa Ross, the acting assistant secretary for management at Treasury, called the modernization program "of great importance to the department and the administration."

Customs estimates a new system will take four years and $1.3 billion to install. Until a replacement comes on line, Customs faces an annual scramble to obtain adequate appropriations to keep the current system on what Customs Commissioner Raymond W. Kelly calls "life support."

But Treasury, the OMB and Kolbe still appear to disagree on how to finance the modernization. The administration again has proposed a "user fee" as part of the fiscal 2001 budget, and Congress seems certain to reject the idea for a second year.

In her letter, Ross said the department has been "reviewing different funding sources," indicating that negotiations are underway to resolve the impasse.


-- Lee Maloney (leemaloney@hotmail.com), March 13, 2000

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