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Our challenge as a Nation lies in reconciling those aspects of the terrorist threat, and calibrating the appropriate response.

How do we do that? According to a series of studies undertaken through the subcommittee by the General Accounting Office [GAO], the answer has to be better but not good enough. Fragmentation and duplication persist in a number of military and civilian response units, and in confusing and disjointed equipment programs and training efforts.

While some progress has been made in coordinating crisis management and consequent management missions, GAO still sees the need for a more risk-based strategy, defined program goals and governmentwide budget criteria to ensure the effectiveness and efficiency of the effort against terrorism.

Two years ago, to improve coordination and accountability, Congress directed the President and the Office of Management and Budget, OMB, to track terrorism-related spending governmentwide and report annually on priorities and duplication.

The second annual report issued March 3d describes a far-reaching and balanced program on which the administration proposes to spend $10 billion next year, $10 billion next year.

According to GAO, the report gives us the first strategic insight into the magnitude and direction of Federal funding for this priority nationally, security and law enforcement concerns. But the report says little about priorities guiding the effort, and says less about duplication.

Early today the subcommittee received a classified briefing from Mr. Richard Clark, the National Security Council's National Coordinator for Security Infrastructure, Protection and Counter-Terrorism. And from Michael Deish, the program Associate Director for General Government, Bob Kyle, program Associate Director for National Security, both with the Office of Management and Budget. It was the first administration briefing on the March 3d report and offered us the opportunity to discuss both procedural and substantive issues candidly.

The battle against terrorism may be a major focus of this subcommittee's work over the next 2 years. Not may be, but will be. Today and in future hearings we will say much about duplication, about the successes and failures of current programs, and about the need for clear priorities in meeting terrorist threats.

Mr. Hinton, Mr. Rabkin and Ms. D'Agostino, welcome. The subcommittee values your work on these important issues and looks forward to your testimony.

At this time, if you would stand, I'll administer the oath.

[Witnesses sworn.]

Mr. SHAYS. For the record, all three of our witnesses responded in the affirmative. I think Mr. Hinton, you have a statement and then all three of you respond to questions?

Mr. HINTON. Correct, Mr. Chairman.

Mr. SHAYS. Thank you. You have the floor.

Mr. HINTON. Thank you, sir.

Mr. SHAYS. And given that you are our only witness, just feel free to make your statements as you think you need to.

Mr. HINTON. Thank you very much.

STATEMENT OF HENRY L. HINTON, JR., ASSISTANT COMPTROLLER, NATIONAL SECURITY AND INTERNAL AFFAIRS DIVISION, U.S. GENERAL ACCOUNTING OFFICE, ACCOMPANIED BY NORMAN J. RABKIN, DIRECTOR OF ADMINISTRATION OF JUSTICE ISSUES, GENERAL GOVERNMENT DIVISION, U.S. GENERAL ACCOUNTING OFFICE, AND MS. DAVI M. D'AGOSTINO, ASSISTANT DIRECTOR OF NATIONAL SECURITY ANALYSIS, NATIONAL SECURITY AND INTERNATIONAL AFFAIRS DIVISION, U.S. GENERAL ACCOUNTING OFFICE

Mr. HINTON. Mr. Chairman, we're pleased to be here to discuss our past and ongoing work and observations on Federal funding to combat terrorism. To my right is Ms. Davi D'Agostino. She's a key person in leading all the work that we have been doing, looking across the government programs to combat terrorism. And to my left is Mr. Norm Rabkin who is the Director for our justice issues group at GAO.

As you know, over the past 3 years we have studied and reported on a number of issues concerning Federal agencies, programs and activities to combat terrorism for this subcommittee. We previously reported that key Federal agencies with responsibilities to combat terrorism spent about $6.7 billion in fiscal year 1997 for unclassified activities and programs.

That report led to legislation requiring OMB to establish a system for collecting and reporting information on executive agencies' spending and budgets for combating terrorism. Legislation also required the President to annually report this information to Congress.

OMB's recent report identified $10 billion requested for programs to combat terrorism in fiscal year 2000.

My testimony this afternoon, Mr. Chairman, will address three issues. First, I will briefly describe the threat as we understand it from intelligence analyses. Second, I will provide some of our overall observations based on our work. And finally I will discuss some steps the executive branch has taken for improving cross cutting management and coordination and our preliminary observations on OMB's reports to Congress.

Let me turn to the threat, Mr. Chairman. The U.S. intelligence community has continually assessed the foreign origin and domestic terrorist threats to the United States. According to intelligence agencies, conventional explosives and firearms continue to be the weapons of choice for terrorists.

Terrorists are less likely to use chemical and biological weapons, at least partly because they are more difficult to weaponize and the results are unpredictable. However, some groups and individuals of concern are showing interest in chemical and biological weapons.

With the elevated concerns about terrorism that you mentioned, Mr. Chairman, let me focus on the Federal response and our observations about it.

The Federal response has been significant and is evolving. As I mentioned earlier, we reported that certain Federal agencies spent about $6.7 billion in 1997. For 1999, the Congress authorized $9.7 billion, and for 2000, the President's budget proposes $10 billion.

Among the major recipients of this money is the National Security community including DOD and intelligence agencies and the Departments of Justice, Treasury, Energy and State.

At the agency level, this growth in the budget has translated into rapid increases in funding for selected programs and activities to combat terrorism. For example, HHS has increased its spending from $7 million in 1996 to about $160 million for 1999, and has requested $230 million for 2000 for its bio-terrorism initiative.

This initiative is intended to improve disease surveillance and communication systems, establish laboratories and continue to establish a national pharmaceutical stockpile, conduct research into new vaccines and drugs and expand the number of local emergency medical teams.

Justice has also experienced rapid growth in funds budgeted for its State and local domestic preparedness programs. Funds have increased from zero in 1997 to $21 million in 1998 to $120 million in 1999, to a fiscal year 2000 budget request of $162 million to provide training and equipment to local first responders and to fund national training centers.

The FBI more than doubled its resources for combating terrorism from about $256 million in 1995 to about $581 million in 1998.

Mr. Chairman, one of our key observations is that the rapid program growth has occurred in the absence of, one, a governmentwide strategy that includes a defined end-state; two, soundly established and prioritized program requirements; and three, cross-cutting analyses of agencies' budget proposals to ensure that unnecessary duplication and waste are avoided and existing Federal, State and local capabilities are fully leveraged.

In this connection, Mr. Chairman, threat and risk assessments are widely recognized as sound decision support tools to help define and prioritize requirements of a properly focused program of investments in combating terrorism.

Let me highlight the rapid growth in two program areas for you that has taken place in the absence of sound threat and risk assessment. They are domestic preparedness programs and public health initiatives.

Domestic preparedness funding increased from $42 million in 1997 to about $1.3 billion requested for a number of agencies' preparedness activities in fiscal year 2000. For example, the 2000 budget proposes an additional $611 million for training, equipment and exercising cities' first responders in preparation for a potential terrorist attack and for strengthening public health infrastructure. There are many similar program initiatives across several agencies to train and equip local emergency response personnel, such as those in fire, police and emergency medical services to deal with the consequences of an attack.

For example, Justice has sponsored training programs and implemented equipment programs for State and local responders. It is also establishing a center for domestic preparedness at Ft. McClellan, AL. FEMA and its National Fire Academy have longstanding resident and non-resident training programs in emergency management and hazardous materials. FEMA has requested about $31 million for fiscal year 2000, a $13 million increase over its 1999

funding; $29 of the $31 million in fiscal year 2000 is to train and equip State and local responders.

HHS has been establishing metropolitan medical response systems with trained and equipped local emergency teams in 27 cities that also participate in the domestic preparedness training and equipment program. HHS has requested 2000 funding to include 25 more cities in the program.

We have also noted growth and potential overlap in Federal agencies' response capabilities to support State or local incident management. The National Guard's Rapid Assessment and Initial Detection teams, also commonly known as RAIDS teams, are being created to supplement numerous local, State and Federal organizations that can perform similar functions.

For example, there are over 600 existing local and State hazardous materials response teams that can respond to terrorist events, including those involving highly toxic industrial chemicals.

Included in the fiscal year 1999 appropriations are $52 million to establish, train and equip the first 10 of potentially 54 RAID teams. We are currently reviewing the roles and missions of these teams in response to a request from this subcommittee.

In the public health area, HHS has received about $160 million in 1999 appropriations and a request of $230 million in 2000 for a number of initiatives related to the possibility of a terrorist event using biological agents.

HHS expects that creating a national stockpile of millions of doses of vaccines for smallpox and anthrax, antidotes for chemical agents, antibiotics for other diseases and respirators will cost $51 million in 1999 and $52 million in 2000.

Our preliminary observations are that HHS did not perform a complete and formal risk assessment to derive and prioritize in accordance with the most likely threats the Nation will face, the specific items it plans to procure.

Several of the items HHS plans to procure do not match the intelligence community's judgments on the more likely chemical and biological agents a terrorist group or individual might use. For example, smallpox and plague are not among the intelligence community's list of biological agents that are most likely to be used by terrorists, but HHS plans to stockpile against these agents and

threats.

Also we are currently reviewing the scientific and practical feasibility of a terrorist chemical/biological threat for this subcommittee, Senator Spector and Senator Rockefeller, and Congressman Skelton, and we will be reporting on the results of that review later this summer.

Last, Mr. Chairman, let me highlight some of the steps the administration is taking to address the management and coordination of these programs and activities.

We believe that the OMB reports on governmentwide spending and budgeting to combat terrorism are a significant step toward improved management and coordination for the complex and rapidly growing programs and activities. For the first time, the executive branch and Congress have strategic insight into the magnitude and direction of Federal funding for this priority national security and law enforcement concern.

The 1999 report provided additional analyses and more detailed information than the 1998 report on budgeting for programs that deal with weapons of mass destruction.

In discussing the reports, OMB officials told us that a critical piece of the budget and spending in this picture, threat and risk assessment that would suggest priorities and appropriate counter

measures.

We have not fully evaluated the processes or the methodologies the executive branch agencies used to derive the information in these reports. As a result, we're not in a position to comment on whether or to what extent the reports reflect the best possible estimate of costs associated with programs and activities to combat terrorism.

However, notably absent from the report was any discussion about established priorities or efforts to reduce or eliminate duplicate programs or activities across government.

Another important step toward improving inter-agency management and coordination was the Attorney General's December 1998 classified 5-year inter-agency plan on counter-terrorism and technology crime.

The plan includes goals, objectives, performance indicators and recommends that specific actions be taken to resolve inter-agency problems and issues that are identified, and assigns relative priorities to the actions.

The classified plan represents a substantial inter-agency effort, and was developed and coordinated with 15 Federal agencies with counter-terrorism roles.

As with the OMB report, Mr. Chairman, the plan generally does not lead to recommended actions and priorities to budget resources, although the document states that the agencies hope to improve the link between the plan and resources and subsequent updates.

In May 1998, last year, the President designated a National Coordinator for Security Infrastructure Protection and Counter-Terrorism. We heard this morning, he was not to direct agencies' activities, but is to integrate the government's policies and programs on unconventional threats to the homeland and Americans abroad, including terrorism.

The National Coordinator is also to provide advice in the context of the annual budget process regarding the budgets for counter-terrorism. We understand he has established a number of working groups, Mr. Chairman, but we have been unable to obtain any further information about their roles.

In summary, the Federal agencies have been moving out with a variety of initiatives to create new Federal response elements, new training and equipment programs and facilities for State and local responders, and a number of the preparedness programs.

The Congress has been supporting these initiatives and activities to prepare for a possible terrorist incident with regular, supplemental and emergency authorizations and appropriations.

Our message today is not that the government should not be spending funds on programs that combat terrorism. Our message is that we see some very important things missing from the picture.

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