The U.S. Customs Service has launched an ambitious, four-year effort to replace its automated system for monitoring imported goods and collecting billions of dollars in duties and fees, because it relies on outdated computers that increasingly break down.

Customs Commissioner Raymond W. Kelly and his top deputies gathered about 400 computer vendors, import-export businessmen and consultants at a Crystal City hotel Friday to sketch the agency's modernization plans and to gauge the interest of companies in bidding to build a new computer system, estimated to cost at least $1.3 billion.

But the "pre-solicitation briefing" was unusual by one important standard: The Customs Service does not have the money for a down payment on a new computer.

The Clinton administration did not push for modernization funding this year, even though it knew Customs needed a technology upgrade. Congress provided $35 million for maintenance to keep the old computers on what Kelly calls "life support" for the next year.

Kelly, however, has decided to push ahead with a modernization project, hoping to sway Congress and the administration into helping him find start-up funding. Kelly, who took charge in August 1998, wants to begin the project by June, his aides said.

In an interview, Kelly said Customs needs a new, nationwide computer network to keep pace with changing trade patterns and to provide timely service to the business community.

The Customs Service's computer network, called Automated Commercial System (ACS), is 16 years old and runs on software that can no longer keep up with the amount of information entered at the agency's 301 ports of entry, Kelly said.

The volume of data frequently causes "brownouts," or localized breakdowns. Instead of the computer reacting to a single key punch in nanoseconds, it can take up to an hour during a brownout.

"We are concerned about the viability of this system for the next four or five years," Kelly said. "We will try to keep it running as best we can. But it is a system that needs replacement. It is hard to find people to repair it, and the people who have worked on it have retired."

Most indicators collected by the Customs Service show that its workload will increase at rates far faster than the agency's staffing and funding. The nation's trade volume is projected to double its 1999 level by 2004. In recent years, Customs has collected about $22 billion annually in duties, taxes and fees, making it the U.S. Treasury's second-largest source of revenue, after the Internal Revenue Service.

ACS monitors the clearance of imported cargo, valued at almost $1 trillion a year. ACS receives the requests from companies to import goods and estimates the duties owed. Customs inspectors use it to spot smugglers or companies that have shown a pattern of evading trade laws.

When brownouts occur, the release of cargo can be delayed. Customs officials said that at seaports such as Charleston, S.C., and Savannah, Ga., a six-hour brownout can add three days to the time it takes to clear merchandise.

"We need to replace our whole infrastructure," said S. W. "Woody" Hall, the Customs Service's assistant commissioner for information and technology.

The parts that make up ACS cannot communicate with one another and collect trade data on a port-by-port basis, making it difficult for Customs to produce reports on national and international trade trends. ACS also is not suited for the Customs Service's growing responsibilities in electronic commerce, such as protecting trademarks and other intellectual property rights of U.S. corporations.

Customs plans to replace ACS with a system known as the Automated Commercial Environment. A prototype operates in Detroit, Port Huron, Mich., and Laredo, Tex., and appears to be meeting the needs of automakers, which depend on Customs to speed foreign-made parts across the borders.

To avoid blunders that other agencies have made in starting modernization projects and to win congressional confidence, Kelly said Customs will follow General Accounting Office guidelines, strictly track project costs and hire a "prime contractor" to oversee the engineering of the system.

But Kelly's biggest battle may come from within the administration. Earlier this year, the Office of Management and Budget proposed that a "user fee" be levied on the trade community to help finance any computer modernization. Congress immediately rejected the idea and scolded the White House for failing to fund the Customs Service adequately.