to ensure the security and resilience of the global supply chain and recognizes the critical importance of the system to our economy and security and lays out an approach to help us foster a transformation from just in time to just in case. this country's safety and security will always remain paramount concern. we have taken a number of significant efforts to vepg then the global supply chain which we can talk about today. and to specifically on the administration strategy it incorporates and builds upon these prior efforts. there are two principal goals promoting the timing and efficient flow of legitimate commerce while protecting and securing the supply chain from exploitation and two fostering a global supply chain system that is prepared for and can withstand evolving threats and also recover rapidly. the strategy aligns u.s. international security and resilience efforts to foster a

gchlt ile systems and reduce vulnerabilities. we do it through managing risks new layered quenlss. we'd like to thank the congress for its foresight and this committee in particular and the need for this work. which formed the basis of a strategy under the safe port act in 2006. again, safety and security of the american people paramount importance to the department, the strategy is a significant step forward in this process and evolution. over the next six months, significant outreach will be conducted on foreign and domestic stakeholders as part of our implementation efforts. this builds on a number of ongoing efforts, in particular it's worth notes that result of the secretary's supply chain security initiative last year, we have already made significant progress implementing the strategy through new efforts and in some cases new partnerships such as with the world customs organization, enter national

maritime organization, international civil and aviation organization, and the universal post union. we're helping lead efforts to secure operations, to raise international standards and foster systems for trade recovery globally. the written testimony outlines these efforts in greater detail. let me close with a final thought. the global supply chain system is an interconnected multimodal system, highly complex. it encompasses foreign and domestic courts, transportation systems, conveyances and infrastructure. its strength is its ability to whichever goods and sustain our daily lives on a real time basis. that system will continue to grow this scale and importance and so we must recognize that without a doubt disruptions will happen and we must think a new on how to best build in not just efficiency, but security and resilience, as well.

on you newer national strategy present as blueprint for change while building on efforts and enpractie enpractice structure that have been in place for some time. we encourage other countries to adopt similar efforts. we thank you again for the opportunity to testify and look forward to answering the questions you may have. >> appreciate that testimony and the chair now recognizes mr. mca lee in an for his testimony. >> it's a privilege and honor to appear before you today to discuss u.s. customs and border protections work. protecting the country from dangerous shipments and enhancing the security of the global supply chain while expediting legitimate commerce. customs and border protection or cbp is charged with managing access at ports of entry. at the core of that, we're on the front lines of proelgting our nation from threats

including those that could be potentially be introduced in cargo shipments. just as importantly, we're on the front line of protecting our economic future by facilitating legitimate trade through our ports. through the use of better information, technology, partnerships, we've been able to perform the most effective in the world help to go reduce transaction cost for u.s. business and provide an environment where u.s. security and business interests can work together toward our common mission. to meet our responsibilities, we work to identify and address potential threats before they arrive at our ports. this requires that we secure the flow of cargo at each stage of the supply chain, the point origin, while in transit and when it arrives in the united states. to accomplish this, cbp pursues a mumity layer approach. segments cargo by potential risk and examining it as early as possible in the process. although often presented as being intention or conflict, our security and trade facilitation

missions are mutually supporting. we can focus our time and resources on a small percentage of goods that are higher risk which in turn allows us to expedite raids at low risk or about which we already know a great deal. our multilayered approach is based on the following elements. obtaining information as early in the process as possible. using sophisticated targeting techniques to assess each shipment for risk before partnering with the private sector. secure supply chains from the manufacturer to the importer. working with foreign governments and international organizations to harmonize and enhance approaches to supply chain security. and pamaintaining a robust examination at our ports of entry. i'm sure these are familiar to the subcommittee. open the past several years,

often working closely with you and your staff, we've achieved significant advances on both cargo security and raid facilitation. allow me to highlight a 2350u. with your support, we've implemented the import of security filing or 10 plus 2. building on the 24 hour rule, this provides additional insight into the supply chain allowing us to identify potential risks more accurately and allowing our trade partners to identify inefficiencies in their processes. we have developed and enhanced the capabilities proactively analyzed advanced targeting system which allows us to take action before shipments are noded on to vessels and aircraft. the customs trade partnership have long been recognized as a model for true collaboration between government and business. today there are over 10,000 members representing over 55% of

the imported value into this country. and while trechl will remain the primary focus, we will explore ways to address other threat has have the potential to compromise the supply chain including drugs 134uging, weapons trafficking. under the container security might be difference, we continue to work with international partnerses to mitigate the threat that high risk maritime cargo presents before it leaves the foreign ports. today we maintain operations at 58 ports and 32 countries, screening approximately 80% of the maritime cargo being shipped to the united states. and we are continuing ouring a gles sif deployment and use of advanced imaging systems and radiation detection system at our ports. this allows us to work smarter and more efficiently. these highlights demonstrate that we remain at the forefront of supply chain management and i'm confident the approach had out represents an effective way

forward building on these existing programs. thank you again for the opportunity to testify about our commitment to enhance cargo security and raid resilience. we look nord to continuing on work with the subcommittee on these issues and i'll be happy to take 3any of your questions. >> the chair how recognizes admiral zukunft. >> betwe >> i'm honored to appear before you to speak about the layered approach to protect our ports, maritime commerce and securing the goal of the maritime supply chain. the united states has been a maritime nation considering in high concentrations of our population live in and around port areas, a 95 prgs of our international trade is done via the sea, the consequences of any attack or disruption on our maritime transportation system are potentially severe. packed by the maritime

transportation security act of 2002 and of 2006, the coast guard has led a joint federal, state, local private sector and international charge. it starts in ports abroad, carries across the high seas and culminates in our domestic water ways designed to identify and stop any threat long before it reaches our shores. our efforts start abroad under the auspices of the international ship and port facility security code which guides the coast guard's over a overseas assessment at more than 900 port facilities and 153 of the 157 countries that could potentially conduct maritime commerce with the united states. for example, in 2010, two companies commence the shipment of liquified natural gas from yeme yemen. due to the increased terrorist

risk, the coast guard conducted additional port assessments and are now using technologies to screen arriving crew members before they depart yemen. those vessels are also inspected with an undersea inspection well before they make arrival in u.s. ports. offshore, a major cutter fleet maintains a vigilant presence conducting fisheries enforcement, counter drug, alien migrant operations and has 41 bilateral agreements and maintaining a posture to respond to humanitarian disasters and threats to maritime security and the global supply chain. the coast guard's planned fleet of national security cutters and offshore patrol cutters augmented by our long range sea 130s and working with customs and wouborder control are essential. additionally the coast guard

ensures that u.s. bound vessels that pose a potential risk are identified and inspected before they reach u.s. shores. specifically the coast guard and cbp share and jointly square manifests 96 hours prior to a vessel's arrival in the u.s. to identify crew, cargo, vessel documentation, and route anomalies. this there by providing an appropriate lead time to marshall a response to any threat well offshore. in 2011 the program screened 28.5 million people and more than 121,000 ship arrivals as well as their business practices and associations and generated 120 advanced warnings on arriving ships, cargos and persons posing a potential security or criminal net. the coast guard leads the interfer national maritime organizations work group three which focuses on combatting piracy on the high seas.

this effort has resulted in several best practices such as the use of private armed security teams on board commercial vessels transiting the high risk waters. in 2011, these teams repelled over 120 attacks that would have otherwise impacted the global supply chain. our final level of security resides in our domestic ports and water ways. since 2004, we have reviewed, approved and verified compliance of security plans for more than 11,000 u.s. vessels, 3200 domestic port facilities, and through the use of area maritime security committees have fostered an extensive collaboration to bolster the security of our critical infrastructu infrastructure. this approach was highlighted in 2010 when the motor vessel sun sea carrying almost 500 illegal my grant smugglers with ties to the sir lanka was entintercepte.

this demonstrated our capability on mitigate risks to our homeland. it was also a prime utilization of our maritime operational threat response plan, a presidential directed process that establishes protocols for real time communication, coordination and decision making among inner agency principles. thank you for the opportunity to appear before you today and for your continued support of the coast guard. i'll be pleased on answ to answ questions. >> thank you very much. the chair recognizes will caldwell. >> thank you very much for having us up here. i think it's important to recognize that the issues and program has we're talking about today didn't start with the president's strategy from last week. he's things go back ten years. they go back to 9/11. they go back to the maritime transportation security act which was passed in november

about ten years ago. the maritime transportation security act among other things called for a secure system of international inter-modal transportation including standards and procedures for screening, evaluating and monitoring car go while in transit. since 9/11, g.o. conducted about two dozen reports.go while in transit. since 9/11, g.o. conducted about two dozen reports. everything from the programs discussed to a lot of the technologies that have been used. many of these programs wereofaf. g.o. made a number of recommendation through the years to improve extra edge tooic planning, workforce management, internal controls, cost estimates and performance measures. and as these programs developed, a lot of g.o.'s recommendations wereko implemented and they've certainly improved over the years. i'll be happy to discuss any of

those individual programs during the q&a session. regarding the 100% scanning, the new strategy itself is not mentioned. the existing statutory requirement, we completed a thorough review of the 100% scanning back in 2009. we cited a number of challenges which did bring into question the feasibility of mr. whether can do that. we made a number will of recommendation. for example, we recommended that dhs develop more beingaccurate estimates,will of recommendation. for example, we recommended that dhs develop more accurate cost estimates,ill of recommendation. for example, we recommended that dhs develop more accurate cost estimates,ll of recommendation. for example, we recommended that dhs develop more accurate cost estimates, of recommendation. for example, we recommended that dhs develop more accurate cost estimates, could nnduct a feasiy analysis, and provide alternatives to congress. unfortunately and despite the issuance of the recent strategy, be really little has changed in terms of our recommendations in the last two or three years. while dhs partially concurred with our recommendations at that time, they haven't implemented most of those and they now indicate that these recommendations are largely

overcome by events. we think had dhs had implemented these recommends a while back, the department would be in a much stronger position on and you can about what those alternatives should be. it would also be in a stronger position to justify the waivers that the department will have to be providing and notifying congress about relatively soon. intact i think if these recommendations had been implemented two to three years ago, we might already have some kind of legislative compromise and be quite a bit ahead from where we are right how. so here we are. we are still at kind of an impact in terms of the legislative requirement. our industry and trade partners are still concerned. dhs will soon have to implement their chosen path in terms of doing a blanket waiver for all

ports. and employ congress with advanced motive indication of that. there are substantial reporting requirements to that waiver and those will continue as long as it uses it as the preferred tools to meet the requirements of the 9/11 act. we is an ready on tip to provide analysis to congress on these issues and i thank you and i'll be happy to answer questions along with the rest of the panel. >> thank you very much, mr. caldwell. that was an interesting testimony and leads for the obvious question and the roeaso for this entire hearing as we listen to the first three witnesses talk about all the various things that have been ongoing and the efforts to make sure that we secure that global supply chain and giving us statistics, et cetera, which are very impressive based on the workload and the resources available to be able on

accommodate 100% mandate that this congress has passed. i guess i would just start by you were mentioning, mr. caldwell, by saying that you had made the recommendations for them on do cost benefit, risk analysis, et cetera, that perhaps that they would have taken some of those recommendations and actually done some of those kinds of things, we'd be further ahead. but overtaken by events. and believe me, we all understand that. and the purpose of it hearing is just to have a better idea of what kind of events have overtaken us, but whether or not we have any realistic expectation of ever getting to the 100% or if it's even somethinable as the secretary has made testimony to this subcommittee on a number of occasions, where do we actually go from here. i guess i'm first of all just trying to understand from a

cost -- recognize it may be optimal, but perhaps not realistic, from a cost perspective, we have 55 ports in our country of which there are i think about 700 ports, country of origin, goods coming into our country. do we have any idea of all at what kind of costs we may be looking at, any ballpark figure? anynot sure i'm directing this dea at all of what kind of costs we're actually looking at understanding the budgetary consthat our nation is facing? but the goal of securing our nation being our priority, well. who might start with answering that question. >> let me start by just talk about what the costs have to be included and then go to specific operational. there are a number of things that we've looked at in terms of the entirety from end to end

questions about security and resilience. the inmplementation of going bak to the supply chain manufacturers and things like c-tpat require auditing of facilities and partners to insure that they are adhering to the security requirements.c-tpat. the ports of embark indication required the coast guard to go and insure that the international codes have adhered to the safety and security procedures are in place. the counter-terrorism programs are in place. the actual scanning of material in cargo containers that cbp has and other programs in the federal government requires thas

with foreign governments. it requires advanced targeting capability and then also we have the capability at home for screening. so there's technology costs, operational costs and all of those things are -- have -- are so broad and so large that estimates have been not as accurate as people would like. >> i'm not looking for an accurate answer. just a ballpark. >> this is in the billions of dollars. led me turn to my cbp colleague hog go into some of the operational costs. >> from an operational perspective, we do have some significant experience in terms of the cost of these programs from the six pilots that we ran. over the course of the two and a half to three years that those pilots, one additional location in pakistan, the dhs alone spent about $68 million on the scanning equipment, on the

deployment of it, on software upgrades and all the relevant costs associated with that. at the same time, our partners at doe who are responsible for the radiation and nuclear detection capability aspect of the sfi program, they spent over $50 million. so the total government expenditures was almost $120 million on those six ports for the short time it was in operation. based on our estimates from that experience, we estimate about $8 million per lane to establish the 100% scanning screening suite of technology. that technology might be improving over time and we're still studying that, but if you multiply that by the 2100 lanes at the 700 ports globally that ship direct to the united states, that is quite a cost prohibitive up to the $20 billion range. the other aspect of that. >> $20 billion? >> correct.

16.8. the other aspect of that that the secretary mentioned is the cost to trade, and those estimates have been very high both in studies from our private sector partners as well as the european union and others. >> okay. i guess i would also ask you, mr. mcal leanen, i was taking notes when you were talking about your risk assessment and the modeling you're doing. algorithms is the types of things you're all looking at. one of the things you were mentioninging is how you gather the information and then you're looking at targeting technologies from the port of origin, et cetera. what could you talk a little bit more about what kinds of things targeting technologies you utilize to make the risk assessment? >> yes, i'd be happy to cover that. that's an area of excellence we think that they have in coordination with our intelligence community and other

law enforcement partners and dhs. we take information on cargo shipments as early as possible in the process both through the 24-hour rule established after the trade act of 2002, as well as the isf, the importer security filing. we take that information on shipments combined with what we know about the supply chain, the shippers involved from our c-tpat as well as historical on shipments on certain routes from certain countries and manipulate that data as youing our automated targeting system in a series of sophisticated ways. one of the most common is our intelligence based rules. these are specific rule sets that are designed to address each mode. they very different rule sets for maritime versus land, air, and the other -- and rail to identify potential security risks. we also are using advanced analytic techniques. what's typically called machine

learning in the field to help us model risk more effectively beyond just the intelligence-based process. of course, what weep know about the supply chain with trusted partners to help reduce the potential for risk on those shipments as well as the procedures used at the foreign port. all of that is factored in in an automated fashion to give us a sense of the risk of individual shipments. we do that both at our national center for cargo and with our csi teams deployed abroad. >> thank you. i appreciate your candid information about your best guesstimate about what kind of costs we're looking at because really it is our job as congress to ask you how much does it cost for you to implement mandates that we are passing. we need to have a clear understanding of what it is and understanding the budgetary constraints we are all dealing with here. then it's for us to determine from a priority standpoint where are we going with our budget here for national security perspective, as well.

with that, i would recognize our ranking member. >> thank you, mr. madame chair. plaintiff card well, you've been studying the maritime security issue for some time and you know both the legislative requirement as well as the challenges scanning 100% of impound containers. in hindsight, what different courses could dhs osh cb have taken to comply with the law? >> i think in terms of actually setting up the pilot there could have been more metric setup to actually measure how long it was taking, the cost, what impact it was having to trade at those individual ports. related to this, they could have come up perhaps with better and validated data on cost which is still an issue as we just discussed. i think again a feasibility analysis, cost benefit analysis had been done earlier in the process, and it's unclear whether it's ever going to be done at this point, i think it

fld provide specific legislative changes and engaged with congress perhaps earlier. it's very awkward obviously to do this right before this deadline is approaching in july 2012. >> the gao communicate those recommendations to the department of homeland, to cbp, coast guard? >> yes, we did, particularly with the dhs. but they were mainly geared toward cbp. these were recommended in our october 2009 report. beat had starred talking to dhs earlier perhaps spring of 2009 about the need for these. >> okay. both cbp and homeland, what do you all doll with recommendations from gao? do you just get the recommendations and put them aside? i'm sure you're going to say that you do something with them. but it seems like you know, i always gao or an entity like that, that they come up with

ideas to improve. then you look at and say well, this will work. this won't work and you have that dialogue, but sometimes i get the feeling with all due respect that you all know better than anybody else and if you get from gao some theoretical academic report comes out, what do you all actually do with those? mr. caldwell just mentioned there were some recommendations. what did you all do with those specific recommendations in 2009? there's a deadline coming up in july of this year. we're coming up to that. what did you all actually do with those recommendations in keep in mind as we're going through you this discussion, you know, i'm a former businessman. certainty is important. and in the international business community, not knowing what cbp is going to do, what's going to happen, it affects the certaintity and that affects our economy. what did you all do specifically with the recommendations?

>>. >> let me answer the general question first which ao reports of the process of adhering to them or not. we actually have instituted about 2 1/2, 3 years ago a very synchronized dance in effect with gao where we're tryingoy'r to get in early to understand the problem so we're working very closely together. there's a whole lead-in process. we're all working with them to get as much data as possible. and the back end of it when the gao is dpshing its recommendation, we've given an opportunity to concur or not in how we'll do it. we do that in every report. we usually provide what kind of corrective action or steps we'll be taking. gao follows up often with whether we've done that or not. in terms of the cost estimates, the specific question about the cost estimates f