U.S. Customs Service:

OR&R Needs to Resolve Timeliness and Data Problems Involving Headquarters Rulings

GGD-00-181: Published: Sep 7, 2000. Publicly Released: Oct 10, 2000.

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Pursuant to a congressional request, GAO examined the timeliness with which the Customs Service Office of Regulations and Rulings (OR&R) issues rulings on such things as the proper classification and valuation of imported goods focusing on: (1) OR&R's response time for issuing headquarters rulings on imported goods, and, if delays occurred, reasons why they occurred; and (2) whether the Legal Case Inventory System (LCIS) is an effective tool for measuring the timeliness of OR&R's headquarters rulings.

GAO noted that: (1) OR&R did not issue the majority of its prospective rulings in a timely manner; (2) GAO's review of a random sample of 70 hard-copy case files representing approximately 610 rulings showed that about two-thirds of the rulings that were requested and issued between January 1, 1997, and October 26, 1999, were not completed within OR&R's 120-day benchmark for those rulings; (3) GAO estimated that about 16 percent of the rulings took longer than 365 days to process and issue; (4) available records and discussions with OR&R officials did not always enable GAO to determine why OR&R's turnaround time exceeded 120 days, but some rulings may have taken longer to issue than the benchmark time frame because: (a) OR&R sent the product to a laboratory for analysis or obtained additional information; or (b) the request was not properly handled by OR&R or the requesting importer; (5) OR&R acknowledged problems with the timeliness of headquarters rulings, and attributed many of these problems to staffing shortages and competing workload demands; (6) although OR&R uses LCIS to track the progress of its prospective rulings, LCIS is not an effective tool for measuring the timeliness of headquarters rulings because it does not contain accurate and reliable data; (7) GAO's comparison of data from the hard-copy case files with data on those files in LCIS showed that most of the cases had missing or incorrect data in LCIS; (8) GAO was not always able to determine why LCIS data was inaccurate, but factors that affected accuracy included data entry errors and differences in the way OR&R staff interpreted guidance for data entry and used the system to track cases; (9) in the past, OR&R has acknowledged problems with LCIS and, in May 1998, redesigned the system and revised system guidance; and (10) however, problems with LCIS continue because, in addition to the previously cited factors, users cannot readily distinguish between different types of cases, such as prospective rulings and internal advice memorandums, among other problems.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: As part of GAO's review to determine whether OR&R had improved the timeliness of its prospective rulings (U.S. CUSTOMS SERVICE: Prospective Rulings More Timely, But Database Reliability Questions Remain; GAO-03-828, August 2003), GAO found that the Customs Commissioner issued, in January 2002, a mandate to issue rulings within 90 days, and noted that timeliness of the guidance contained in rulings is essential in ensuring compliance with the law. Related to this action, OR&R managers are now required to use monthly LCIS reports of opened and closed cases to determine case status and resolve barriers to completion. According to OR&R officials, headquarters managers and attorneys have been instructed to give ruling requests the highest priority. For example, OR&R rejects ruling requests more frequently than in the past when needed information is not provided by importers. In addition, to speed up the process, OR&R attorneys now use teleconferencing instead of face-to-face meetings to discuss ruling requests.

    Recommendation: The Assistant Commissioner, OR&R, should take steps to evaluate data on the timeliness of headquarters rulings.

    Agency Affected: Department of Homeland Security: Directorate of Border and Transportation Security

  2. Status: Closed - Implemented

    Comments: As part of GAO's review to determine whether OR&R had improved the timeliness of its prospective rulings (U.S. CUSTOMS SERVICE: Prospective Rulings More Timely, But Database Reliability Questions Remain; GAO-03-828, August 2003), GAO found that OR&R had developed a Standard Operating Procedure (SOP) designed to ensure a consistent process for receiving, acknowledging, assigning, recording, tracking, updating, signing, and closing rulings in LCIS. The SOP also explains how case data is to be entered, reviewed, and updated in LCIS, and instructs OR&R Attorneys to verify LCIS data. Also, in July 2003, the Assistant Commissioner, OR&R issued a memorandum requiring (1) quarterly verification of the accuracy of LCIS data, and (2) establishment of a uniform approach to coding certain ruling requests. In addition, OR&R managers are required to verify the accuracy of LCIS data for each case as it is closed, and document their review so that it can be retained in the case file.

    Recommendation: The Assistant Commissioner, OR&R, should take steps to establish an ongoing LCIS monitoring system to ensure the quality and integrity of the data entered and maintained in the system.

    Agency Affected: Department of Homeland Security: Directorate of Border and Transportation Security

  3. Status: Closed - Implemented

    Comments: As part of GAO's review to determine whether OR&R had improved the timeliness of its prospective rulings (U.S. CUSTOMS SERVICE: Prospective Rulings More Timely, But Database Reliability Questions Remain; GAO-03-828, August 2003), GAO found that OR&R had conducted training of employees to ensure that they are familiar with LCIS requirements and capabilities. A training session was conducted in November 2002, and two more sessions were planned for fiscal year 2003. According to OR&R officials, informal training of new employees and employees transferring among OR&R units has been provided on a one-to-one basis. In April 2002, OR&R issued a Standard Operation Procedure (SOP) to outline a consistent process for receiving, acknowledging, assigning, recording, tracking, updating, and closing ruling cases in LCIS. In December 2003, OR&R issued a related SOP detailing a standardized approach for reviewing, researching, finalizing, and publishing rulings.

    Recommendation: The Assistant Commissioner, OR&R, should take steps to provide clear and complete guidance to ensure that staff that use LCIS understand and consistently interpret the guidance, as well as train staff on any modifications to LCIS.

    Agency Affected: Department of Homeland Security: Directorate of Border and Transportation Security

  4. Status: Closed - Implemented

    Comments: As part of GAO's review to determine whether OR&R had improved the timeliness of its prospective rulings (U.S. CUSTOMS SERVICE: Prospective Rulings More Timely, But Database Reliability Questions Remain; GAO-03-828, August 2003), GAO found that OR&R had developed a Standard Operating Procedure (SOP) designed to ensure a consistent process for receiving, acknowledging, assigning, recording, tracking, updating, signing, and closing rulings in LCIS. The SOP also explains how case data is to be entered, reviewed, and updated in LCIS, and instructs OR&R Attorneys to verify LCIS data. Also, in July 2003, the Assistant Commissioner, OR&R issued a memorandum requiring (1) quarterly verification of the accuracy of LCIS data, and (2) establishment of a uniform approach to coding certain ruling requests. In addition, OR&R managers are required to verify the accuracy of LCIS data for each case as it is closed, and document their review so that it can be retained in the case file.

    Recommendation: The Assistant Commissioner, OR&R, should take steps to modify LCIS to enable the system to record and retain key data so that managers can more readily monitor and track the history of cases.

    Agency Affected: Department of Homeland Security: Directorate of Border and Transportation Security

  5. Status: Closed - Implemented

    Comments: In January 2002, the U.S. Customs Commissioner established a new benchmark, instructed OR&R to issue its rulings within 90 days (instead of 120 days), and noted that the timeliness of the guidance contained in the rulings is essential in ensuring compliance with the law. The Commissioner further instructed the OR&R Assistant Commissioner to take appropriate measures to eliminate the backlog of ruling requests that existed. Among other management actions, such as providing increased oversight to the processing of rulings, OR&R increased the amount of attorney time spent on rulings to accomplish these new goals. OR&R has started to provide monthly reports to the Customs Commissioner regarding the status of its efforts to implement procedural changes to issue rulings within 90 days and eliminate the backlog, indicative of the high priority the Commissioner placed on the timeliness of rulings.

    Recommendation: The Assistant Commissioner, OR&R, should take steps to establish reasonable goals, benchmarks, and performance measures for improving OR&R's performance.

    Agency Affected: Department of Homeland Security: Directorate of Border and Transportation Security

 

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