C-TPAT program to revalidate 1,200 companies in 2007

C-TPAT program to revalidate 1,200 companies in 2007 The agency that manages the Customs-Trade Partnership Against Terrorism will revalidate 1,200 companies in 2007, the first year that participants in the voluntary program will have their supply chain security practices verified for a second time by on-site visits to foreign suppliers.
   U.S. Customs and Border Protection will start the on-site audits of a second separate supply chain with the 183 companies that were first validated in 2003 and the 287 firms that received checkups in 2004 because those security assessments were performed in the program's early years before CBP upgraded eligibility standards from suggested guidelines to minimum criteria, said Todd Owen, executive director of cargo and conveyance security.
   CBP plans to re-audit companies every three years as required by Congress in the Department of Homeland Security appropriations act.
   But Owen said during a Jan. 30 presentation at the American Association of Exporters and Importers winter conference in New Orleans that all Mexican highway carriers — nearly 300 in total — will be revalidated on an annual basis because of the risk that cargo or employees could be compromised by drug traffickers.
   The final operational figures for 2006 showed 201 companies have been suspended or removed for security breaches since the program's inception, including 128 motor carriers.
   Another 453 companies were recently booted from the program for not complying with the Oct. 1 deadline for updating corporate security profiles on the new C-TPAT Web portal, Owen said. CBP made extensive efforts to reach out and help companies file the necessary security information, but ultimately pulled the benefit of reduced exams from those that failed to meet their commitment, he added.
   CBP, on the strength of additional staffing, completed 2,380 security assessments of corporate supply chains in 2006, compared to 183 when the program first started in 2003, 287 in 2004 and 1,080 in 2005, Owen said.
   More than 3,904 companies combined, or about 66 percent of the membership, have been validated during C-TPAT's first four years. The agency said it expects to make up the difference this year so that every certified applicant has been vetted against its security plan at least once.
   The agency expects to conduct 3,000 validations this year, including 1,800 first-time checks of companies with certified security plans, he said. Under the 2006 SAFE Port Act, all first-time validations must be completed within one year of certification so that importers can receive credit for faster security clearances.
   Overall, there are 6,200 C-TPAT members in good standing and Owen predicted C-TPAT's ranks would grow beyond 7,000 companies in 2007.
   Owen reiterated that CBP would probably enter into a handful of bilateral mutual recognition agreements with other countries that have similar supply chain partnership programs with the private sector. During CBP's Trade Symposium in December, he indicated likely candidates for the reciprocal handling of trusted shippers include New Zealand, Australia, Sweden, Jordan, Canada and Sweden. By recognizing each other's programs, government and industry officials hope to extend the benefits of reduced inspections without requiring companies to go through redundant reviews of their global security programs, and meet divergent requirements, in each country in which they do business. The challenge is for customs administrations to have confidence in the other side's security criteria and ability to verify corporate compliance.
   Owen, for example, said Canada's Partners in Protection (PIP) program is still not equal to C-TPAT.
   CBP wants Canada to strengthen the program by dedicating more staff to verify that corporate security plans meet basic criteria, more clearly define its security criteria as CBP has done the past two years, and conduct on-site assessments to check that supply chain security practices are followed according to the corporate plan.
   'We're hoping this is the year PIP becomes a much stronger program more in line with C-TPAT,' Owen told the AAEI audience. 'If that happens it will help with mutual recognition and we can start to discuss what membership in one program equates to the other. It's in the hands of the Canadians to tighten up that program.'
   CBP is on track this month to begin posting its contract requirements for a limited pilot program using third-party validators, Owen said. The agency is under a congressional mandate to test the concept of outsourcing some validation work to the private sector, in part because of problems at the start with a huge backlog of audits and the amount of time it took for companies to start receiving expedited treatment of their shipments.
   Officials say they have enough personnel in the program now to quickly process C-TPAT applicants and view contractors only as a solution in China, which is the only country that won't allow CBP officers entry to perform validations of local companies. There are about 300 U.S. importers that source at least 75 percent of their products from China and are trapped in the first rung of the program without benefit of further reducing security exams because CBP cannot verify that their suppliers are trustworthy.
   CBP has traditionally been opposed to third-party validations because of the proprietary nature of the information businesses share with the program, the agency's desire to build a rapport with each company, and because officials want to see for themselves that a supply chain is low risk before giving shipments a green lane across the border.
   Owen stressed that the use of private contractors to conduct overseas inspections in China is purely voluntary. Companies that want to have their China supply chains audited will have to pay for the validation. CBP will oversee the process, electronically collect the findings and use them to determine the member's C-TPAT status.
   'Outside of that limited group of people that are stuck in Tier 1, I don't see a lot of you stepping up and saying, 'Hey, let me write a check to CBP even tough you're gonna validate me for free.' That's the only way I see this pilot working,' Owen said.
   CBP has completed its draft blueprint for a third-party validation program and it is under review by officials at the Department of Homeland Security, Owen said.
   Owen announced the list of countries that in 2007 will receive 'blitzes' ' CBP's term for sending its 23 teams of supply chain specialists to countries for a concentrated period to check the supply chains of multiple companies. Last year the agency visited suppliers in 74 countries, focusing on logistics networks in high-risk areas. CBP will send teams for the first time to Slovakia, Hungary, Bulgaria and the Czech Republic, Owen said.
   During the past two years CBP elevated C-TPAT standards on a rolling basis for importers, carriers, brokers and other industry sectors. Owen said the minimum criteria for marine terminal operators are undergoing final review.
   CBP electronically distributed in January its return on investment survey developed by the University of Virginia to quantify the costs companies have incurred to beef up their internal security controls and meet C-TPAT requirements. A few recent industry studies have claimed that companies realize significant operational improvements from deploying many types of security measures and technology, but hard conclusions about the benefits of security investments are hard to draw because the sample size of the studies has been extremely small.
   Owen said he hopes enough people respond to the survey so that CBP and industry can learn whether extra handling costs, delays, technology investments and other steps are paying off in enhanced security as well as indirect benefits from greater supply chain efficiency and visibility.
   'If we get a 10 percent return it will be the largest sampling response to date of any survey,' he said.
   CBP held four C-TPAT enrollment seminars last year that helped increase the number of Mexican manufacturers and motor carriers in the program. Upcoming signup fairs are scheduled for Mexico City in May, Monterey in July and Guadalajara in September.
   The annual C-TPAT membership conference to be held in New Orleans in early April has already capped out at 700 registrants, with another 300 people on the waiting list, Owen reported. During last year's conference in Costa Mesa, Calif., CBP officers walked private sector representatives through the proper way to do a seven-point inspection of an empty, dry container to make sure there are no false compartments or other types of tampering by criminals of terrorists interested in smuggling contraband or weapons.
   Owen said this year's conference will feature similar training on how to inspect a refrigerated container, and CBP may also have a unit load device for air cargo on site as well for demonstration purposes.