Customs Has Moved to a Two-Tiered System for Certain C-TPAT Benefits (Certified/Validated vs. Certified)

(See ITT's Online Archives or 05/31/05 news, 05053115 for initial BP summary of this hearing.)

CBP Reduces C-TPAT Security Inspection Benefit for Those Not Yet Validated

In his oral testimony, Commissioner Bonner stated that as a result of certain recommendations of the General Accounting Office (GAO) and Congress, at the end of April 2005 CBP moved to a 2-tiered system of benefits for C-TPAT participating companies, by reducing the security inspection benefits for companies that have been certified (paper review) but have not yet been validated.

(Prior to the implementation of this two-tier system, importers that were certified as C-TPAT participants, but not yet validated, received the same security inspection benefits as those that had been validated - i.e., their containers were six times less likely to be subject to a security inspection.

This reduction in security inspections was accomplished by assigning the containers of both certified and certified/validated participants (i.e., participants that are both certified and validated) a scoring credit against CBP's Automated Targeting System (ATS) of about 125¹. (Containers with scores of 190 or above are deemed high risk by this targeting system, and are inspected in the U.S. if they were not previously inspected at the outbound foreign port.))

Under the new 2-tiered system, C-TPAT companies that are certified but not yet validated (Tier 1), receive reduced participation benefits, as compared to what they received prior to CBP's change to a 2-tiered system of benefits.

This has been accomplished by reducing the certified participant's scoring credit against CBP's ATS to 75, while certified and validated participants still receive an ATS scoring credit of 125.)

According to the Commissioner, as this change is relatively new, CBP has not yet calculated the "multiplier" for this new "certified only" first tier (i.e., that these Tier I C-TPAT participants are "X" less likely to be subject to a security inspection.)

CBP to Increase Some Benefits for Validated C-TPAT Members

The Commissioner also stated at the hearing that CBP may also implement some increased C-TPAT benefits for validated (Tier II) C-TPAT participants. According to his written testimony, among the added benefits for validated C-TPAT partners will be moving their shipments to the front of the inspection line when the shipment needs to go to secondary, either for a random inspection or due to other agency requirements.

(The Commissioner stated in this written testimony that Tier III is CBP's vision for the highest level of C-TPAT, and would consist of those fully certified, validated C-TPAT partners who exceed the minimum security criteria, and have adopted C-TPAT best practices; for example, those that use C-TPAT container security devices such as the Smart Box. Tier III companies would be subject to relatively infrequent random inspections.

Minimum security criteria have already been created for importers. See ITT's Online Archives or 03/31/05 news, 05033105, for BP summary. In his written testimony, the Commissioner states that CBP plans to clearly define the minimum security criteria for each enrollment sector shortly.)

CBP is Hiring More Supply Chain Security Specialists to Speed Validation Process

According to the Commissioner, 12% of C-TPAT participants are validated, while 40% of the membership is in the validation process. As a result, over 50% of C-TPAT participants are either validated or in the process of being validated.

The Commissioner also stated that CBP is hiring more and ramping up the number of CBP supply chain security specialists in order to speed the validation process. According to his written testimony, as of May 17, 2005, there were 66 permanent Supply Chain Specialists, and CBP anticipated having 100 on board by the end of fiscal year 2005 (FY 05, which ends September 30, 2005.)

(In his written testimony, the Commissioner also states that CBP has enhanced its ability to record and measure validation results by developing the Automated Validation Assessment Tool, which is an electronic questionnaire that automatically scores and weighs the findings of the Supply Chain Specialist to produce an overall assessment of the supply chain security measures in place. Validation site visits are also documented in validation reports that contain sections on Findings, Recommendations, and Best Practices. Identified weaknesses must be corrected in order for the member to retain benefits.)

C-TPAT Validations Now Emphasizes Importer and Carrier Enrollment Sectors

In his written testimony, Commissioner Bonner stated that it became evident that not all C-TPAT enrollment sectors exhibit the same risk to the international supply chain, nor do they possess the same ability to strengthen their supply chains throughout all components of their international supply chains.

For example, U.S. based customs brokers have minimal ability to ensure sufficient supply chain security at the foreign place of stuffing, compared to U.S. based importers who have a strong business influence over a foreign manufacturer or supplier.

Accordingly, the enrollment sectors with the greatest ability to leverage their corporate strength and demand more security enhancement from foreign entities are the importers, and to a lesser extent, the carriers. CBP is now emphasizing these two sectors, and has modified its validation approach to maximize resources and increase efficiencies, such as validating multiple foreign suppliers within a geographic proximity.

¹ According to the Commissioner, there is also the potential for the scoring credit to be more than 125.

(See ITT's Online Archives or 06/16/05 news, 05061610, for BP summary of CBP Q&A on the January 2005 Trade Symposium which discusses C-TPAT and other issues.

See ITT"s Online Archives or 04/27/05 news, 05042710, for Commissioner's speech on the three tiers of C-TPAT benefits.)

(See future issue for BP summary of others who testified at the hearing.)

CBP Commissioner's written testimony (dated 05/26/05), available at http://hsgac.senate.gov/_files/STMTBONNERCBP.pdf.

Links to the hearing webcast and other witness written testimony available at

http://hsgac.senate.gov/index.cfm?Fuseaction=Hearings.Detail&HearingID=229.