Background

The Australian Customs Service (Customs) recognised the need to re engineer its cargo management processes in 1996 and published its Cargo Management Strategy (CMS) in 1997. The strategy sought to fully integrate the people, processes and technology associated with cargo management. The CMS was further progressed in the Cargo Management Re-engineering (CMR) Business Model. The model outlined the CMR project's objective to introduce new cargo management processes and systems to improve the effective delivery of services to Government, industry and the community.

The CMR project was a large and complex Information Communication Technology (ICT) project that spanned many years. It was to improve import and export processes, increase cargo management efficiency for industry and improve targeting of high-risk cargo. Key aspects of the project were:

• re-engineering Customs' business processes;
• legislative change to support this new business environment; and
• developing the Integrated Cargo System (ICS) to replace Customs' transaction processing systems.¹

The project also included the Customs Connect Facility (CCF) and the Cargo Risk Assessment (CRA) system. The CCF is the secure communication gateway that allows internal users and external clients to interact with the ICS. The CRA system is used to identify and assess potentially high risk cargo.

The Trade Modernisation Legislation (TML) package was intended to modernise the way Customs managed the movement of cargo. It was also to provide the legal basis for an electronic business environment. Because of the substantial changes facing industry and Government, provisions in the legislation allowed Customs up to two years to introduce the ICS following the International Trade Modernisation Act being passed. This meant that the ICS was to be implemented by 20 July 2003.

Electronic Data Systems (EDS) Australia began developing the CMR applications² in 1998 under Customs' existing information technology (IT) outsourcing arrangements. In October 2001, Customs and EDS agreed that EDS would continue to manage the infrastructure, desktop and voice and data aspects of the project, with remaining analysis and development to be done by one or more third parties. In early 2002, the Computer Associates Consortium (the Consortium) was engaged to develop the ICS and separate contracts were established with IBM and SecureNet to develop the CCF. Given the scope of the work to be undertaken, Customs was under considerable pressure to meet the legislative implementation date of July the following year.

The CMR project encountered delays and significant cost increases. In 1999, Customs estimated the project would cost $30 million. The total reported cost of the CMR project as at the end of February 2006 was $205 million. Between February and June 2006, Customs made additional payments of $7.7 million for further developments and support of the ICS and CCF. The ICS was implemented in three releases: Release 1a was a trial with industry during March and April 2003; Release 2, the exports component, was implemented on 6 October 2004; and Release 3, imports processing, was implemented on 12 October 2005.

The implementation of ICS Exports (Release 2) was relatively successful. This was in contrast to the implementation of ICS Imports (Release 3), which had a significant impact on Australia's supply chain and international trading environment. Problems with the functionality and performance of the ICS and CCF resulted in substantial disruption to the movement of cargo, particularly in the sea cargo environment. As widely reported, Australia's major ports were congested with a backlog of containers awaiting clearance and delivery for many weeks.

Audit objective scope

The objectives of the audit were to:

• examine Customs' management of the CMR project; and
• determine whether the ICS and CCF met:
  • project and operational objectives; and
  • user capability and functionality requirements.

Particular emphasis was given to the following areas:

• the project management framework that supported the CMR project;
• implementation arrangements for the ICS; and
• ongoing operational arrangements.

After this audit commenced, Customs engaged Booz Allen Hamilton to undertake a separate review of the ICS. The purpose of that review was to provide Customs with a forward looking report on the lessons to be learned from the implementation of the ICS, its current status and the opportunities to enhance benefits for both Government and industry. The ANAO consulted closely with the Booz Allen Hamilton team and is supportive of the recommendations in their report, which was released in May 2006. The review made thirteen recommendations relating to the ongoing management and governance of the Cargo Management Re-engineering Program at both strategic and tactical levels.⁵

Audit findings and overall conclusion

Overall conclusion

Customs operates within Australia's international trading environment and must balance its border protection responsibilities with the need to facilitate legitimate trade. To successfully develop and implement a project of the size and complexity of the CMR project within this environment was a major challenge for Customs. The project encountered considerable delays, cost overruns and the implementation of the imports component of the ICS caused substantial disruption to the movement of cargo at Australia's major ports and airports.

The management framework that Customs had in place to support this project lacked many of the basic fundamentals necessary to successfully implement a large ICT project. The outcomes to be achieved and the expected benefits from the project were never clearly defined. There was no overall CMR project plan, financial management plan, project budget or proper assessment of the risks facing the project. There was also a lack of supporting documentation surrounding contractual arrangements. Delays in the early years of the project had major repercussions for the latter stages of the project. Project teams were continually under pressure to meet tight deadlines, which were not achieved. Delays with the project necessitated three amendments to the legislated implementation date.

Customs underestimated the complexity and the risks associated with the project and failed to properly respond to emerging issues and changes in risks. The implementation was not supported by a coordinated implementation strategy or adequate business continuity planning. Insufficient time was allowed for system testing, particularly end-to-end testing. Customs did not have quality assurance mechanisms to assess the readiness of third party software providers, the quality of their software or the preparedness of industry participants. Problems with the Cargo Risk Assessment system also impacted on Customs' ability to clear cargo and to target and assess high risk cargo, increasing the risks to Australia's border security and Customs' revenue collection responsibilities.

The CMR project involved significant changes in system design, operating procedures, working relationships, business processes, skill levels and attitudes. The extent of these changes also meant that the impact on industry stakeholders would be substantial. Although Customs imposed these changes on industry, it did not manage the change process well and did not fully appreciate industry's capacity to meet these changes. A lack of understanding of industry's business processes contributed to the problems that occurred in October 2005 when ICS Imports was introduced.

Customs acknowledges that the CMR project could have been better managed and has learnt lessons from the project. It has initiated a number of reviews to improve its processes, revised its organisational structure and is modifying the ICS to more closely align with user and business requirements. It is also taking steps to more actively engage industry. Successfully implementing the outcomes of these reviews and initiatives and rebuilding its relationship with industry will be critical if Customs, industry and the community are to realise the full benefits of the CMR project.

Recognising the difficulties facing agencies undertaking large ICT projects, the Government recently introduced its Responsive Government policy⁶, including the ICT Investment Framework and the Gateway Review Process.⁷ These initiatives provide a project management and evaluation framework to assist agencies. It is still incumbent on agencies, however, to put in place the management structures, systems and processes necessary to effectively manage these projects.

Initial Development of the CMR project-Chapter 2

Engagement with industry

Customs put in place a number of strategies to involve and consult industry. However, it did not have a large proportion of industry's ‘buy in' for the CMR Business Model or project. This was a potential risk to the successful implementation of the project. Throughout the development of the Business Model, industry raised concerns about a number of issues and these were never resolved to their satisfaction. For example, onerous cargo reporting requirements, a strict sanction regime for non compliance and concerns with the underbond movement process⁸. In considering these issues, Customs advised that it had to balance industry's concerns with its border protection responsibilities. This notwithstanding, if some of the issues raised by industry had been more thoroughly examined by Customs early in the project, a number of the problems faced in October 2005 may have been minimised. Customs is now working with industry to address these issues.

Legislative change

Customs advised that the import and export processing provisions of the Customs Act do not align with all existing business rules and ICS processes. Customs is examining options to address these inconsistencies. Because there are implications for Customs when trying to enforce compliance with the legislative requirements, it is important that Customs resolve these inconsistencies as a matter of priority.

Project Management Framework-Chapter 3

The CMR project business cases

Customs developed a business case for the project that it subsequently revised. Neither business case adequately identified costs, benefits, risks, deliverables or timelines. No consolidated financial business case or detailed cost estimates were prepared and signed off at the commencement of the CMR project. There was no identified source of funding in either business case and no strategy for determining whether the project had achieved its overall objectives or outcomes. This means that Customs was poorly placed to determine whether the project was both affordable and achievable.

The decision to fund the CMR project internally

Customs funded the project internally from existing resources. This decision was based on the initial cost estimate of $30 million and that it had considerable cash reserves at the time. Customs has been unable to provide documentation to support this key decision. The ongoing internal funding of the increased costs associated with the CMR project eroded Customs' available cash reserves and put pressure on operating resources. In 2003–04, Customs sought and received a conditional equity injection⁹ of $43 million and was subject to a review of its financial position by the Department of Finance and Administration.

Integrated Cargo System project management framework

The Consortium responsible for developing the ICS established a Project Charter as the basis for effectively managing this project. The Charter clearly outlined the scope of the project, deliverables and timelines as well as respective roles and responsibilities. Variations to the original requirements were negotiated and agreed to by all parties and all deliverables were signed off by Customs. To meet the timeframes stipulated in the Charter, the Consortium required that Customs turnaround comments on Detailed Design Specifications and Detailed Business Analyses within three days for interim chapter level reviews. Customs acknowledges that the short period for review adversely affected the quality of its input.

Customs Connect Facility project management framework

Customs was unable to provide a CCF business case and could only provide the CCF Project Charter for Release 1. On assuming responsibility for the CCF project in January 2003, Customs' Information Technology Branch advised the CCF Steering Committee that there was: no endorsed project management plan; a lack of clarity surrounding the current and future financial position of the project; and no clear input from industry stakeholders. Customs initiated two reviews, which resulted in changes to improve the management and governance arrangements for the CCF project.

CMR project governance arrangements

Customs established a governance framework for the development of the ICS and CCF. Customs' Executives were informed of the project's status through steering committee meetings, Executive Group meetings, Deputy Chief Executive Officer briefings and reports to the Audit Committee. The reports prepared for a number of these meetings consistently rated the risks associated with the ICS (and particularly the Imports Release) as ‘extreme' or ‘high'. However, the minutes of these meetings do not indicate that Customs monitored the project's risks and costs or the follow-up action to be taken to address emerging risks.

There was no financial management plan or project budget prepared for the CMR project overall or the CCF and ICS individually. Also, the minutes of meetings did not reflect discussions surrounding project costs. Given the number and value of contracts associated with the project, the ongoing monitoring of costs should have been an integral part of the project's governance arrangements. The ANAO recognises that, from 2004–05, financial reporting in relation to the CMR project was more comprehensive. Costs were reported and monitored annually but not against an overall project budget or considered within a project management context.

Implementation planning

Customs did not prepare an implementation strategy to cover the introduction of the ICS Imports Release. Customs may have considered many of the factors impacting on, and the risk associated with, the introduction of this Release. However, these were not incorporated into a consolidated implementation strategy that was reviewed and agreed to by all parties involved. The lack of an implementation strategy meant that many decisions immediately following the implementation were made in a ‘crisis' environment.

Managing the CMR Contracts-Chapter 4

The payments against all CMR contracts totalled $141 million.¹⁰ The ANAO reviewed the contracts associated with the four major contractors involved in developing the CMR applications. This included a total of 13 contracts and 65 variations to the contracts.
Customs was unable to provide any documentation outlining the method of procurement or approval for the expenditure of public money in 39 instances. These included six contracts and 33 contract variations, with a combined contracted value of $29.9 million. Without these core documents, Customs is unable to demonstrate that it complied with its Chief Executive's Instructions, the Commonwealth Procurement Guidelines and the financial management framework. Although Customs has taken steps in recent years to improve its procurement processes, the ANAO has recommended that Customs review its contract management arrangements for major ongoing projects.

CMR System Development-Chapter 5

The ANAO reviewed the development of the CMR applications, including requirements management, change management, problem and incident management, testing processes and application security. Data integrity testing was also undertaken by the ANAO.¹¹

Requirements management

The user requirements for the CMR applications were not well defined and Customs did not have a structured approach to managing and monitoring their delivery. A high proportion of the additional contract costs ($22.5 million) were due to the need for changes to the user requirements. The majority of the functionality specified in the requirements documentation was implemented by October 2005. However, the ICS is continuing to undergo significant system enhancement and modification. There are system releases scheduled for at least 24 months post October 2005.

CMR testing

The CMR project did not have a defined testing methodology and testing was not always executed in accordance with test plans. In addition, the majority of ICS releases experienced a high number of defects and change requests at the conclusion of acceptance testing. Insufficient time was allowed for testing of earlier ICS and CCF releases. The quality and management of testing improved considerably for ICS Versions 5 to 7, with fewer tests failing.¹²

Industry (and Customs) had insufficient time to successfully complete the planned business simulation testing prior to implementation. The testing undertaken showed that industry and some external software developers were experiencing problems in integrating with the ICS. Industry testing was contingent on a stable test environment and this was not always available. A production version of ICS Imports was available from December 2004. However, Customs continued to make changes to improve the quality of the system until one week prior to the system going live on 12 October 2005 and this contributed to the problems that occurred. By contrast, the Exports implementation allowed a longer coordinated period to test a considerably less complex implementation.

Problem and incident management

An effective problem and incident management process records the issues impacting on system performance or usability, and provides information on the resolution and timeframe required to resolve these problems. The ANAO concluded that Customs' processes for problem and incident management were not sufficient to support the ICS implementation. This adversely impacted on Customs' ability to support users.

External interfaces

The ICS application exchanges data with a range of external Government entities.¹³ The ANAO found that Customs' existing Memoranda of Understanding with these agencies do not reflect the implementation of the ICS. In particular, they do not clearly specify each party's responsibilities for system changes, data management and user training.

Data integrity

The ANAO identified that a number of system issues post ICS Imports implementation affected the payment and receipt of revenue. Customs' approach to remedying some of these issues was to implement data changes to the production environment (‘data fixes'). There were a large number of data fixes implemented during the period October 2005 to March 2006.
Customs and the ANAO undertook data integrity testing that focused on client registration information to determine the extent to which transactions and information exchanges could be relied upon. The ability to test the integrity of Customs' data was severely limited by the lack of available documentation. The ANAO considers that to maintain the completeness, accuracy and validity of data stored in the ICS, business and system rules need to clearly specify the requirements for data management.

ICS security controls

The ANAO reviewed Customs' management of access to information and data in the ICS application. A number of weaknesses in the access controls were identified. A particular concern was the ineffective segregation of security profiles, increasing the risk of inappropriate access to information or data. Customs is taking steps to address these issues.

Risk Assessing Cargo-Chapter 6

All cargo information reported in the ICS is processed through the CRA system, which has two components: risk profiling and work management. The risk profiling component is designed to identify potentially high risk cargo and uses SSA-NAME3 (SSA) as its profile matching tool.¹⁴ There are approximately 100 export profiles and several thousand import profiles in the system. When cargo information matches a profile or alert, the cargo is automatically held and the cargo report or declaration is referred to a workgroup for further action. Evaluators within the workgroup decide whether the cargo is released or held for further examination.

CRA profiles

The CRA system was to significantly improve Customs' risk assessment capability. However, this has not occurred. Target identification and selection processes are now less efficient and some areas of Customs consider them to be less effective than the legacy systems they replaced. This is primarily because of the restrictions placed on the criteria used to construct profiles. The expected reporting and research functionality, which is crucial to Customs' intelligence function, was also not available when the system went live.

SSA is a powerful tool for searching and matching data but it requires a significant amount of tuning to suit the specific requirements of the data it is searching. The tuning of SSA software presented problems. Two major issues were the demands on processing power (CPU burn) and the poor quality of the matches produced. In March 2005, Customs began to tune SSA in an attempt to obtain a data population that produced a desirable level of matching for ICS Imports. A version upgrade was also installed in the CRA system in August 2005. Rather than the expected improvement, the upgrade, combined with the poor quality SSA population, resulted in a significant reduction in the quality of profile matching and high CPU burn. This caused significant problems when the system went live on 12 October 2005 and is yet to be fully resolved.

Implementation of ICS Imports

Deactivation of risk profiles

Shortly after the system went live it became apparent that there were serious problems with the risk profiling functionality. Cargo was being held because of excessive profile matching on cargo reports and import declarations. System performance was also affected because of the extensive processing time required. To facilitate the movement of cargo and to reduce the backlog of profiled transactions, air and sea cargo profiles were deactivated. Over 4 000 profiles were deactivated and gradually re-instated over a period of 12 days following the implementation. This included 1 300 AQIS profiles. The ANAO was advised that, although this decision was taken in consultation with the business areas in Customs' Central Office, the owners of these profiles such as Customs' regions, AQIS and law enforcement agencies were not consulted.

Targeting risk cargo

The deactivation of risk profiles presented a considerable risk to Australia's border security and Customs' revenue collection responsibilities. These profiles covered areas such as counter terrorism, illicit drugs, revenue, prohibited items and compliance. During this period 778 554 air and sea cargo reports and 252 129 import declarations were processed by the ICS. Although not all reports/import declarations were high risk, there is a high probability that some ‘at risk' cargo was not identified while profiles were inactive. During this time, Customs could not assess the potential risks associated with this cargo and, if necessary, inspect it prior to its release from Customs' control.

Customs is taking steps to improve the CRA system and its risk assessment of cargo. It has initiated and is giving priority to four projects to review data quality, risk selection, reporting and useability of the CRA system. It is also undertaking a review of its intelligence operations that will focus on improved risk assessment processes and technology in the cargo environment.

Implementation of the Systems-Chapter 7

The ICS Exports Release was initially planned to go live in September 2002. It was not introduced until 6 October 2004. Customs and industry considered the Exports Release was relatively successful although some problems required Customs to provide a higher than expected level of support to industry. The exports component is considerably less complex than the Imports Release and has fewer industry participants.

ICS Imports was initially scheduled to go live in April 2003. It was not implemented until 12 October 2005. Almost immediately there was disruption to the movement of cargo—initially in the air cargo environment closely followed by sea cargo.

Readiness for Imports

The implementation date of 12 October 2005 was determined by consensus at a Ministerial Roundtable meeting on 5 July 2005.¹⁵ Participants at this meeting included the Minister, Customs senior managers, AQIS officers, peak industry bodies, stevedores, third-party software developers and business organisations. ICS Imports was to be available from 19 July 2005 as this date would give industry a three month transition period, supported by a stable system. It would allow software developers to undertake thorough end to end testing and also provide the opportunity for industry to train staff and become familiar with the new system.

The system made available in July had a large number of outstanding incidents and Customs continued to make software changes up to one week prior to the cutover date. Third party software developers advised the ANAO that this impacted on their ability to update their software, undertake testing and release software packages to their customers. Some customers received their software updates only days before the 12 October 2005 cutover and, in some cases, after this date. This meant that these clients were unable to interact with the ICS and CCF.

Industry's lack of readiness was demonstrated in a survey completed on 10 October 2005 by the industry ICS User Representative. Only 13 per cent of the 211 respondents advised they were fully operational and less than 10 per cent supported the decision to go live. The major concerns raised were that software had not been delivered and, where it had been delivered, applications were not working and staff had not had adequate training. Customs agreed on 10 October to allow service providers who were unable to communicate with the ICS to continue to report import declarations in the existing COMPILE system (this became known as the COMPILE Extension).

The COMPILE Extension arrangement was extremely resource intensive and seriously disrupted normal operations in most Customs' regions for many weeks. It involved staff matching the COMPILE entry with the corresponding cargo report in the ICS and, in some cases, faxing the appropriate clearance to clients. In New South Wales alone this project initially involved 10 staff and increased to 60 officers at its peak.

Impact on industry

The introduction of ICS Imports had a severe impact on all sectors of Australia's importing industry over many weeks. This impact was far greater for some than others, depending on their level of preparedness. Those organisations that either did not receive their software packages or their software was incompatible with the ICS experienced considerable difficulty. For many organisations, staff were required to work very long hours over several weeks.

Some of the issues facing industry following the implementation included:

• data integrity issues as the ICS required a far higher standard of data accuracy than the legacy systems it replaced;
• a high number of workarounds, which created considerable confusion;
• cascade reporting and sequencing of reports¹⁶, which caused considerable problems for containerised sea cargo and resulted in cargo being held;
• difficulties in determining cargo status because of a lack of adequate system diagnostics;
• cargo terminals and depots that were not receiving electronic notification of cargo status, which meant that cargo could not be released;
• problems associated with the clearance of part shipment consignments as the current design of the ICS does not reflect how the air freight business operates; and
• difficulties in gaining permission to move cargo that was underbond.

There was a general view from industry that the training provided by Customs was inadequate. The information sessions were not interactive and provided little opportunity for industry to fully appreciate the breadth of change. Although the industry test environment was available for training, it did not replicate the production environment, changes were continually being made to the system and there was insufficient ‘real' data to enable proper training.

Customs Connect Facility

Problems with third-party software and the need for additional online searching to determine cargo information forced many customs brokers and freight forwarders to use the online Customs Interactive (CI) facility. Despite being seen as a contingency if the electronic data interchange (EDI) was not available, the CI facility was not designed to accommodate such a high number of concurrent users or the type of activity they were undertaking. Under the additional load, the CI became increasingly hard to use and its response time slowed to frustrating levels.

Help desk arrangements

The overloading of the CI facility had a considerable impact on Customs Information and Support Centre (Level 1 Help Desk). The Help Desk was the first place industry turned to for assistance. Customs advised that, in the initial days of the implementation, the Help Desk coped well with the increased volume of calls. However, as the problems associated with ICS were complex and could not be resolved quickly and the delays in clearing cargo increased, the wait time and queues grew to unsatisfactory levels, particularly during peak times.

Business continuity arrangements

Customs developed business continuity plans (BCP) for exports and imports processing. The Exports BCP was comprehensive and had worked effectively when needed. The Imports BCP was only released to industry in August 2005 and was based on an ICS outage greater than two hours (or a series of equivalent minor outages). It did not address the functionality deficiencies or poor system performance that occurred. The BCP did not include a Business Impact Analysis or any consideration of disaster recovery or backup of information. Customs is currently reviewing the Imports BCP and expects this project to be completed by early 2007.

Impact on Customs

The implementation of ICS Imports had a significant impact on Customs' own business operations. The ANAO was advised that from 12 October to mid December 2005 very little (if any) compliance activity was undertaken as part of the Compliance Assurance Strategy.¹⁷ The majority of Compliance Assurance staff were involved in ICS implementation activities and responding to clients' requests.

Contingency arrangements were inadequate. The majority of Customs' regions advised the ANAO that they had developed contingency arrangements as part of their business continuity planning. However, these plans were not relevant for what occurred on 12 October 2005 and several weeks thereafter. The regions were not prepared for the length of the contingency period, the high level of ongoing support required by industry and the many intervention strategies that had to be implemented as part of system workarounds ‘to just move the cargo'.

Ongoing Arrangements-Chapter 8

Customs has been working to resolve the many issues identified during the ICS implementation period. In addition to the Booz Allen Hamilton review, Customs has undertaken a number of other reviews and is implementing initiatives to improve its systems and processes and relationship with industry. These include:

• establishing the Industry Action Group, which is jointly chaired by Customs and industry to address technology, business and procedural issues for external ICS users;
• establishing a new Program Management Branch (Trade Facilitation) and governance arrangements;
• reviewing its Imports Business Continuity Plan;
• developing new training products and manuals; and
• reviewing its User Support Framework.

The ANAO has taken into consideration these reviews and initiatives when developing our audit recommendations. The recommendations are designed to complement improvements already being implemented by Customs. The implementation of the audit recommendations will assist Customs to improve the ongoing management of both the ICS and CCF and the management of major projects more generally.

The rebuilding of Customs' relationship with industry and the successful implementation of the recommendations flowing from recent reviews and initiatives will place Customs in a better position to realise the benefits offered by the CMR project.

Agency response

Through the implementation of the Cargo Management Re-engineering (CMR) Project, Customs has delivered a robust platform for business re engineering, replaced our legacy cargo management systems and introduced the Trade Modernisation Legislation to support the new security and trade facilitation environment.

At the same time, Customs acknowledges that there are some things that could have been done to make the implementation smoother and that there are lessons for Customs that will arise not only in the continuing development of the Integrated Cargo System (ICS) but also in future major systems developments. Customs has made significant progress in addressing the shortcomings identified by the ANAO in this report and taking action to ensure they do not re-occur.

Our staff responded quickly to address the immediate problems experienced by industry following the implementation of the imports processing component of the ICS in October 2005 and the system has functioned reliably during the past 14 months. However, it is clear that much remains to be done to realise the potential benefit of the ICS for both Customs and industry. Industry is now actively engaged with Customs in undertaking this work. Over the past year, Customs has implemented significant changes to the ICS to address the difficulties faced by industry and worked hard to build a more effective industry relationship for the future.

Recognising the serious impact on Customs and industry, Customs commissioned external reviews of the ICS implementation and intelligence processes. Additionally, Customs has undertaken internal reviews of key business processes including the Cargo Risk Assessment component of the ICS.

In early 2006, Customs engaged independent experts to assist it to identify the business improvements required to address any shortfalls of the ICS, and to deliver any unrealised benefits for government or industry.

The review of the ICS proposed a number of recommendations, addressing improvements to governance arrangements; tactical improvements providing for increased functionality, usability and system stability; and strategic transformation actions. A number of actions have been completed, including:

• Implementation of a range of enhancements to the ICS addressing functionality issues. Work on further enhancements continues in line with a work program agreed with industry;
• Establishment of the Cargo Processing Executive Steering Committee, chaired by the CEO of Customs and comprising senior representatives from industry and Customs, to provide on-going strategic direction to Customs Trade Facilitation Program;
• Development of a Trade Facilitation program management structure to ensure sound governance of the work program;
• Implementation of the first stage of new organisational accountabilities that better align operational outcomes with agency objectives, including the creation of a dedicated focus on end-to-end cargo management processes;
• Establishment of new cargo management business re-engineering projects, including projects examining Alternative Cargo Reporting, Supply Chain Security and Standardised Data Sets – co-design with industry and other stakeholders is a feature of these projects;
• Revision of software development procedures governing release of software;
• Implementation of a revised ICS Business Continuity Plan.

Action continues to ensure all recommendations of the independent review are addressed. Monitoring of implementation is occurring through Customs Executive Management and the Customs Audit Committee.

The external review of the intelligence function reported findings in December 2006. This review will provide a sound vision for the future development of Customs intelligence capability and to provide recommendations on how this can be achieved. To provide a stronger alignment of intelligence activity with agency outputs a new Intelligence and Targeting Division has been established.

Action was undertaken in late 2005 and 2006 to address internal user issues associated with the Cargo Risk Assessment component of the ICS. Four working groups were established to consider issues in relation to usability, information quality, reporting and cargo selection. A number of CRA system enhancements have been implemented and an ongoing work program is being progressed as a high priority.

Footnotes

1 These systems included: Export Integration; Air Cargo Automation; Sea Cargo Automation and Customs Online Method of Preparing from Invoices Lodgeable Entries (COMPILE).

2 The CMR applications included the Integrated Cargo System and the Customs Connect Facility.

3 The expected cost took into consideration the external build of the ICS software component. It excluded costs such as project management, training, implementation, communication, staffing and the CCF.

4 Customs considered the project to be completed as at 28 February 2006, with ongoing costs for further development and support of the ICS and CCF.

5 Booz Allen Hamilton, Review of the Integrated Cargo System, 16 May 2006, pp. 47-49.

6 The Responsive Government - a New Service Agenda policy was introduced in March 2006 and outlines the Government's aim of effectively utilising ICT to assist in providing better service delivery, improving efficiency and reducing costs.

7 The Australian Government has introduced the Gateway Review Process for projects assessed as being of medium or high risk and over specific financial thresholds. Gateway is a project assurance methodology that involves short, intensive reviews at critical points in the project's lifecycle by an independent review team.

8 Customs may give permission to move underbond cargo between approved premises. This cargo remains subject to Customs' control until it is cleared for home consumption.

9 Equity injections are provided to agencies to, for example, enable investment in new capacity to produce departmental outputs when normal cash flow is insufficient.

10 This does not include the cost of any work undertaken by EDS between December 1997 and October 2001 (when EDS was released from its obligation to deliver the ICS). Customs advised that the method of recording EDS payments makes it very difficult to determine costs incurred specifically for CMR as these were incorporated into the total expenses of Customs' Information Services Agreement.

11 The Australian and New Zealand Standard AS/NZS 7799.2.2003, Information Management defines data integrity as ‘safeguarding the accuracy and completeness of information and processing methods'.

12 Release 3 of the ICS was split into Versions 3 and 4. Version 5 was approved change requests that were unable to be completed for Versions 3 and 4. Version 6 was implemented into production on 6 November 2005 and included the first major release of ICS code after Imports go live. Version 7 included 10 major releases and, as at August 2006, was in production.

13 These entities include: Australian Quarantine Inspection Service (AQIS); the Australian Taxation Office; the Australian Bureau of Statistics; the Department of Defence; and Department of Industry, Tourism and Resources.

14 The CRA system contains alerts, profiles, events and community protection and permit queries. Alerts are entity specific such as names and addresses. Profiles include broader clusters of risk indicators. Events detect behaviours in industry that may indicate non compliance and potential risks. Community protection and permit queries notify the reporter that there are requirements for certain goods to be accounted for and authorised for entry into Australia.

15 Because of the problems being experienced with the CMR project the Minister for Justice and Customs had convened a number of roundtable discussions so that he could listen to industry's concerns. The first meeting was held in January 2004.

16 Cascade reporting required the ocean bill of lading to match lower level bills before clearance could be given and cargo reports had to be sequentially reported.

17 This includes post transaction audit activity, compliance activity in relation to licensed premises and the audits undertaken as part of the Compliance Benchmark Testing Program to measure revenue leakage.