oversight

Combating Terrorism: Spending on Governmentwide Programs Requires Better Management and Coordination

Published by the Government Accountability Office on 1997-12-01.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                  United States General Accounting Office

GAO               Report to Congressional Requesters




December 1997
                  COMBATING
                  TERRORISM
                  Spending on
                  Governmentwide
                  Programs Requires
                  Better Management
                  and Coordination




GAO/NSIAD-98-39
             United States
GAO          General Accounting Office
             Washington, D.C. 20548

             National Security and
             International Affairs Division

             B-277824

             December 1, 1997

             The Honorable Ike Skelton
             House of Representatives

             The Honorable John Glenn
             Ranking Minority Member
             Committee on Governmental Affairs
             United States Senate

             We recently reported to you on the U.S. efforts to combat terrorism.1 As
             noted in that report, we are reporting separately on your request that we
             identify interagency processes intended to ensure the efficient allocation
             of funding and resources for such efforts across the federal government.
             Specifically, we (1) identified federal funding for unclassified programs
             and activities to combat terrorism2; (2) determined whether any agency or
             entity has been designated to coordinate budget proposals, establish
             priorities, manage funding requirements, and help ensure the efficient
             allocation of federal resources for combating terrorism across federal
             agencies; (3) explored opportunities for agencies to expand coordination
             of terrorism-related programs and activities under the Government
             Performance and Results Act principles and framework; and (4) assessed
             issues concerning the reimbursement of support provided to agencies with
             lead counterterrorism responsibilities.


             Under Presidential Decision Directive (PDD) 39 (U.S. Policy on
Background   Counterterrorism, June 1995), the National Security Council (NSC) is to
             coordinate interagency terrorism policy issues and review ongoing crisis
             operations and activities concerning foreign terrorism and domestic
             terrorism with significant foreign involvement. An NSC-chaired
             coordinating group is to ensure the PDD is implemented but does not have
             authority to direct agencies’ activities.

             Among its general mission responsibilities, the Office of Management and
             Budget (OMB) is to evaluate the effectiveness of agency programs, policies,
             and procedures; assess competing funding demands among agencies; set
             funding priorities; and develop better performance measures and

             1
              Combating Terrorism: Federal Agencies’ Efforts to Implement National Policy and Strategy
             (GAO/NSIAD-97-254, Sept. 26, 1997). (A list of related GAO products is on p. 39.)
             2
              For purposes of this report, programs and activities to combat terrorism include antiterrorism, or
             defensive activities such as security measures and counterterrorism, or offensive activities and
             countermeasures.



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coordinating mechanisms. Further, according to PDD 39, OMB is to analyze
the adequacy of funding for terrorism-related programs and ensure the
adequacy of funding for research, development, and acquisition of
counterterrorism-related technology and systems on an ongoing basis.

Under PDD 39, the State Department and the Department of Justice,
through the Federal Bureau of Investigation (FBI), have lead federal agency
responsibility for dealing with terrorist incidents overseas and
domestically, respectively. Numerous federal departments, agencies,
bureaus, and offices also have terrorism-related programs and activities
that are funded through annual and supplemental appropriations.
(See app. I for a list of federal entities with terrorism-related programs and
activities.) Terrorism-related funding requests include nearly $290 million
provided under the 1995 Emergency Supplemental Appropriations Act
(P.L. 104-19) in the aftermath of the domestic terrorist attack in Oklahoma
City and $1.1 billion proposed for counterterrorism programs within a
number of agencies in fiscal year 1996 supplemental appropriations and
fiscal year 1997 budget amendments.

The Government Performance and Results Act (Results Act) of 1993 is
intended to improve the management and accountability of federal
agencies.3 The Results Act seeks to shift the focus of federal management
and decision-making from activities that are undertaken to the results of
activities as reflected in citizens’ lives. Specifically, it requires federal
agencies to prepare multiyear strategic plans and annual performance
plans, establish program performance measures and goals, and provide
annual performance reports to the Congress. Agencies submitted the first
strategic plans to OMB and the Congress by September 30, 1997; the first
annual performance plans, covering fiscal year 1999, are to be submitted
to the Congress after the President’s budget submission in 1998.

In recent years, several efforts have been undertaken to coordinate federal
programs that cut across agencies to help ensure that national needs are
being effectively targeted. These efforts have shown that coordinating
crosscutting programs takes time and sustained attention and, because of
the statutory bases of crosscutting programs, may require congressional
involvement to integrate the federal response to national needs. With the
large number of government entities involved, the federal effort to combat


3
 For a full discussion of the act and its implementation, see The Government Performance and Results
Act: 1997 Governmentwide Implementation Will Be Uneven (GAO/GGD-97-109, June 2, 1997) and
Managing for Results: The Statutory Framework for Improving Federal Management and Effectiveness
(GAO/T-GGD/AIMD-97-144, June 24, 1997).



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                       terrorism is one example of a crosscutting program to which Results Act
                       principles and measures might be applied.


                       The amount of federal funds being spent on programs and activities to
Results in Brief       combat terrorism is unknown and difficult to determine. Identifying and
                       tracking terrorism-related governmentwide spending with precision is
                       difficult for several reasons, such as the lack of a uniform definition of
                       terrorism and the inclusion of these expenditures within larger categories
                       that do not readily allow separation. For example, building security
                       measures protect against criminals as well as terrorists. Some agencies
                       maintain data on their spending for efforts to combat terrorism, while
                       others have only fragmented information or estimates. Information from
                       key agencies involved in combating terrorism shows that nearly $7 billion
                       was spent for unclassified terrorism-related programs and activities during
                       fiscal year 1997. The Department of Defense (DOD)—which plays a key
                       supporting role to the lead federal agencies in combating terrorism and is
                       also responsible for protecting its personnel and facilities from terrorist
                       attack worldwide—budgeted about $3.7 billion in fiscal year 1997, or
                       about 55 percent of the estimated spending.

                       Although NSC is to coordinate counterterrorism policy issues and OMB is to
                       assess competing funding demands, neither agency is required to regularly
                       collect, aggregate, and review funding and spending data relative to
                       combating terrorism on a crosscutting, governmentwide basis. Further,
                       neither agency establishes funding priorities for terrorism-related
                       programs across agencies’ budgets or ensures that individual agencies’
                       stated requirements have been validated against threat and risk criteria
                       before budget requests are submitted to the Congress. Because
                       governmentwide priorities for combating terrorism have not been
                       established and funding requirements have not necessarily been validated
                       based on an analytically sound assessment of the threat and risk of
                       terrorist attack, there is no basis to have reasonable assurance that

                   •   agencies’ requests are funded through a coordinated and focused
                       approach to implement national policy and strategy,
                   •   the highest priority requirements are being met,
                   •   terrorism-related activities and capabilities are not unnecessarily
                       duplicative or redundant, and
                   •   funding gaps or misallocations have not occurred.




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                        The Results Act principles and framework can provide guidance and
                        opportunities for the many federal agencies involved in the crosscutting
                        program to combat terrorism to develop coordinated goals, objectives, and
                        performance measures and to enhance the management of individual
                        agency and overall federal efforts related to combating terrorism. In the
                        next phase of Results Act implementation, agencies are to develop annual
                        performance plans that are linked to their strategic plans. These plans are
                        to contain annual performance goals, performance measures to gauge
                        progress toward achieving the goals, and the resources agencies will need
                        to meet their goals. The development of annual plans may provide the
                        many federal agencies involved in combating terrorism the next
                        opportunity to develop coordinated goals, objectives, and performance
                        measures for programs and activities that combat terrorism and to
                        articulate how they plan to manage this crosscutting program area.

                        Reimbursement of agencies’ expenses for support activities related to
                        terrorist incidents has been a matter of concern to the FBI, the lead agency
                        for responding to a terrorist incident in the United States. PDD 39 directs
                        that agencies will provide support for terrorism-related activities at their
                        own expense unless the President directs otherwise. However, the
                        Economy Act generally requires reimbursement for goods and services
                        provided to another agency.4 The difference between the PDD and the
                        Economy Act concerning reimbursement has caused disagreements
                        between agencies in some cases. For example, the FBI has cited PDD 39 to
                        seek DOD support for counterterrorism activities on a nonreimbursable
                        basis, whereas DOD has cited the Economy Act as requiring
                        reimbursement, unless another statute specifically allows DOD to provide
                        nonreimbursable support. DOD’s position is that PDD 39 is not sufficient for
                        this purpose. This issue remained unresolved at the time of our review.



                        Federal agencies are not required to account separately for their
Total                   terrorism-related programs and activities. Because most federal agencies
Terrorism-related       do not isolate or account specifically for terrorism-related funding, it is
Spending Is Uncertain   difficult to determine how much the government budgets and spends to
                        combat terrorism. Key agencies provided us their estimates of
                        terrorism-related spending, using their own definitions. These estimates
                        totaled nearly $7 billion for unclassified programs and activities for fiscal

                        4
                         The Economy Act of 1932 (31 U.S.C. 1535, as amended) authorizes federal agencies to order goods
                        and services from other federal agencies when funds are available, it is in the best interest of the
                        government, and the goods and services cannot be provided as conveniently and cheaply by private
                        industry.



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year 1997, and should be considered a minimum estimate of federal
spending for unclassified terrorism-related programs and activities.

The amounts for governmentwide terrorism-related funding and spending
are uncertain because (1) definitions of antiterrorism and
counterterrorism vary from agency to agency; (2) in most cases agencies
do not have separate budget line items for terrorism-related activities;
(3) some agency functions serve more than one purpose, and it is difficult
to allocate costs applicable to terrorism alone (e.g., U.S. embassy security
measures protect not only against terrorism but also against theft,
compromise of classified documents, and violent demonstrations);
(4) some agencies, such as the Departments of Energy and Transportation,
have decentralized budgeting and accounting functions and do not
aggregate terrorism-related funding agencywide5; (5) programs and
activities may receive funding from more than one appropriation within a
given agency, which makes it difficult to track collective totals; and
(6) appropriations legislation often is not clear regarding which amounts
are designated to combat terrorism.

At our request, the primary agencies leading or supporting operational
crisis response and management activities under PDD 39 provided spending
data for fiscal years 1994 to 1996 (not all agencies were able to provide
historical data prior to fiscal year 1996) and estimates for fiscal year 1997
(see table 1).




5
 For example, individual organizational units within the Department of Transportation’s modal
administrations are responsible for their own budgeting and accounting. Further, to obtain the Federal
Aviation Administration’s (FAA) terrorism-related funding, we requested and compiled estimates from
three FAA entities.



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Table 1: Estimated Spending for Key
Agencies’ Unclassified                Current dollars in millions
Terrorism-related Programs and                                                                  Fiscal year
Activities (fiscal years 1994-97)
                                      Department/agency                       1994              1995              1996                1997
                                                                                    a                 a
                                      Defense                                                                 $3,244.2           $3,671.1b
                                                                                    a                 a
                                      Energy                                                                   1,324.7c             1,420.0c
                                      Justice                                $94.2            $171.0              332.0              451.0
                                          (FBI)                               (79.3)           (118.3)           (287.0)             (393.0)
                                      Transportation (FAA)d                    98.3              95.9             115.6              296.8
                                      State                                  166.5             169.4              161.5              162.5
                                                                                    a
                                      Treasury                                                    7.8a            552.1              682.5
                                                                                    a                 a
                                      Health and Human                                                              7.0                13.8
                                      Services
                                                                                    a                 a
                                      Total                                                                   $5,737.1           $6,697.7
                                      a
                                      Complete data on terrorism-related spending were not available for fiscal years 1994 and 1995.
                                      b
                                       This amount comprises about 1.5 percent of the total DOD budget and includes force protection
                                      and other security measures.
                                      c
                                      Includes security at Department of Energy facilities and nonproliferation program costs.
                                      d
                                       Includes only the FAA. Totals represent estimates from three FAA entities with programs to
                                      prevent terrorism.

                                      Source: Data provided by selected departments and agencies.



                                      Figure 1 indicates that DOD spent the largest share of estimated
                                      terrorism-related funds for fiscal year 1997, followed by the Department of
                                      Energy.




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Figure 1: Estimated Spending for Key
Agencies’ Unclassified
Terrorism-related Programs and
                                                    Defense   54.8%
Activities (fiscal year 1997)




                                                                                                         HHS     0.2%

                                                                                                         State    2.4%
                                                                                                             HHS 0.2%
                                                                                                             State 2.4%
                                                                                                        Transportation    4.4%


                                                                                                   Justice    6.7%

                                       Energy   21.2%
                                                                                    Treasury    10.2%




                                       Source: Data provided by departments and agencies included in table 1.




                                       While DOD and the Department of Energy estimated spending accounted
                                       for 76 percent of the unclassified fiscal year 1997 terrorism-related funds,
                                       other agencies’ resources dedicated to combating terrorism have
                                       significantly increased in recent years. For example, FAA resources tripled
                                       (in current dollars) during fiscal years 1994-97, and FBI resources increased
                                       five-fold. FAA increased equipment purchases and aviation security
                                       operations, and the FBI nearly tripled the authorized staffing level
                                       dedicated to combating terrorism, with the largest staff increase occurring
                                       in fiscal year 1997.


                                       There is no interagency mechanism to centrally manage funding
Key Interagency                        requirements and requests to ensure an efficient, focused governmentwide
Management                             application of federal funds to numerous agencies’ programs designed to
Functions Are Not                      combat terrorism. Given the high national priority and magnitude of this
                                       nearly $7-billion federal effort, sound management principles dictate that
Clearly Required or                    (1) governmentwide requirements be prioritized to meet the objectives of
Performed                              national policy and strategy and (2) spending and program data be



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collected from the federal agencies involved to conduct annual,
crosscutting evaluations of their funding requests based on the threat and
risk of terrorist attack and to avoid duplicated efforts or serious funding
gaps. Neither NSC nor OMB currently performs these functions for the
governmentwide program to combat terrorism. Rather, each agency is
responsible for identifying and seeking funding for its priorities within its
own budget allocation, and OMB reviews the budget requests on an
agency-by-agency basis. Because individual agencies continue to propose
new programs, activities, and capabilities to combat terrorism, annual
crosscutting evaluations of agency budget requests for such programs
would be prudent to help avoid duplicated efforts.

Under PDD 39, NSC is to ensure the federal policy and strategy for
combating terrorism is implemented. Although PDD 39 establishes
interagency coordinating and working groups under the auspices of NSC to
handle policy and operational issues related to combating terrorism, these
groups operate on a consensus basis, do not have decision-making
authority, and do not establish governmentwide resource priorities for
combating terrorism. Moreover, PDD 39 does not assign responsibility to
NSC to ensure that terrorism-related requirements and related funding
proposals (1) are analyzed and reviewed to ensure they are based on a
validated assessment of the terrorism threat and risks of terrorist attack,
(2) provide a measured and appropriate level of effort across the federal
government, (3) avoid duplicative efforts and capabilities, and (4) are
prioritized governmentwide in a comprehensive strategy to combat the
terrorist threat.

PDD 39 requires OMB to analyze the adequacy of funding for
terrorism-related programs, technology, and systems. Further, OMB’s
general mission responsibilities include evaluating the effectiveness of
federal programs and policies, assessing competing funding demands, and
setting funding priorities. However, PDD 39 does not specifically require
OMB to prioritize terrorism-related requirements governmentwide or to
gather funding data across agencies and perform the crosscutting analyses
of agencies’ funding proposals necessary to ensure the efficient use of
federal resources.

OMB examiners who review individual agencies’ terrorism-related funding
requests explained that although they do not review activities and
programs to combat terrorism on a crosscutting basis as such, they often
discuss funding issues with each other during their reviews. Further, they
bring issues they identify during their reviews to the attention of senior



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OMB  officials. For example, OMB said it reviewed the FBI’s funding requests
for a hazardous materials laboratory capability and for increased staffing
to combat terrorism. However, because OMB did not provide evidence of its
reviews, we could not verify the extent to which OMB considered the
capabilities of other federal laboratories or analyzed the FBI’s request for
increased staffing based on workload data and on the threat and risk of
terrorism. Further, because terrorism-related funding requirements and
proposals have not been prioritized across agencies, OMB could not have
fully considered tradeoffs among competing demands. For this reason, it is
unclear, for example, whether OMB’s denial of an FBI request for an aircraft
that the FBI said was required for counterterrorism and other operations
was based on an assessment of terrorism-related priorities across the
government or of only the FBI’s funding requests.

OMB  stated that in addition to its examination of agencies’ funding
requests, it has met its responsibilities under PDD 39 by reviewing DOD’s
counterterrorism program baseline funding and program submission,
participating in interagency meetings designed to better identify
terrorism-related budget functions that are imbedded in broader funding
accounts, and reviewing specific technology proposals (such as FAA
proposals for explosives detection technology). Also, consistent with its
role, OMB prepared the President’s $1.1-billion request for terrorism-related
programs and activities. We submitted a letter of inquiry to OMB to obtain
information about OMB’s role in reviewing federal agencies’ budget
requests and spending to combat terrorism. Our questions and OMB’s
written response appear in appendixes II and III, respectively.

While OMB said that it analyzes individual agencies’ funding requests—and
some examiners say they share information during their
examinations—OMB does not regularly perform crosscutting analyses of
requirements, priorities, and funding for the overall federal effort to
combat terrorism. Consequently, OMB cannot provide reasonable
assurance that specific federal activities and programs to combat
terrorism (1) are required based on a full assessment of the threat and risk
involved, (2) avoid unnecessary duplication of effort or capability with
other agencies, and (3) meet governmentwide priorities for effectively and
efficiently implementing the national strategy on combating terrorism.

Section 1501 of the recently enacted National Defense Authorization Act
for Fiscal Year 1998 requires OMB to establish a reporting system for
executive agencies on the budgeting and expenditure of funds for
counterterrorism and antiterrorism programs and activities. The section



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                         also requires OMB, using the reporting system, to collect agency budget and
                         expenditure information on these programs and activities. Further, the
                         President is required to submit an annual report to the Congress
                         containing agency budget and expenditure information on
                         counterterrorism and antiterrorism programs and activities. The report is
                         also to identify any priorities and any duplication of efforts with respect to
                         such programs and activities.


                         The Results Act requires each executive branch agency to define its
Results Act Principles   mission and desired outcomes, measure performance, and use
Provide Guidance for     performance information to ensure that programs meet intended goals.
Crosscutting             However, the national policy, strategy, programs, and activities to combat
                         terrorism cut across agency lines. The act’s emphasis on results implies
Programs to Combat       that federal programs contributing to the same or similar outcomes should
Terrorism                be closely coordinated to ensure that goals are consistent and that
                         program efforts are mutually reinforcing. Effective implementation of the
                         act governmentwide should eventually help prevent uncoordinated
                         crosscutting program efforts that can waste funds and limit the overall
                         effectiveness of the federal effort.

                         The principles underlying the Results Act provide guidance that the many
                         federal agencies responsible for combating terrorism can use to develop
                         coordinated goals, objectives, and performance measures and to improve
                         the management of individual agency and overall federal efforts to combat
                         terrorism. For example, the act focuses on clarifying missions, setting
                         program goals, and measuring performance toward achieving those goals.
                         In our work examining implementation of the Results Act, we identified
                         several critical issues that need to be addressed if the act is to succeed in
                         improving management of crosscutting program efforts by ensuring that
                         those programs are appropriately and substantively coordinated.6 As their
                         implementation of the Results Act continues to evolve, agencies with
                         terrorism-related responsibilities may become more aware of the potential
                         for and desirability of coordinating performance plans, goals, and
                         measures for their crosscutting activities and programs.

                         The next phase of implementation of the Results Act requires agencies to
                         develop annual performance plans that are linked to their strategic plans.

                         6
                          See, for example, Managing for Results: Critical Issues for Improving Federal Agencies’ Strategic
                         Plans (GAO/GGD-97-180, Sept. 16, 1997); Managing for Results: Using the Results Act to Address
                         Mission Fragmentation and Program Overlap (GAO/AIMD-97-146, Aug. 29, 1997); and Managing for
                         Results: Building on Agencies’ Strategic Plans to Improve Federal Management
                         (GAO/T-GGD/AIMD-98-29, Oct. 30, 1997).



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                      These plans are to contain annual performance goals, performance
                      measures to gauge progress toward achieving the goals, and the resources
                      agencies will need to meet their goals. The development of annual plans
                      may provide the many federal agencies responsible for combating
                      terrorism the next opportunity to develop coordinated goals, objectives,
                      and performance measures for programs and activities that combat
                      terrorism and to articulate how they plan to manage this crosscutting
                      program area.


                      The Economy Act of 1932 (31 U.S.C. 1535, as amended) generally requires
Reimbursement for     federal agencies to reimburse other federal agencies that provide them
Agency Support Is a   with support. However, PDD 39 states that federal agencies providing
Matter of Concern     support to lead agencies’ counterterrorist operations or activities must
                      bear the cost unless otherwise directed by the President. Because the
Between the FBI and   Economy Act and PDD 39 differ in their treatment of reimbursement, DOD
DOD                   and the FBI have disagreed on whether the FBI must reimburse DOD for its
                      support of counterterrorist operations. Primary examples of DOD support
                      involve air transportation to return terrorists from overseas locations or
                      other deployments of FBI personnel and equipment for special events or
                      for the investigation of terrorist incidents. DOD officials stated that PDD 39
                      does not have the force of statutory authority regarding whether or not
                      DOD’s support to another agency is reimbursable. These officials believe
                      the Economy Act requires DOD to provide the requested support on a
                      reimbursable basis unless another statute allows for nonreimbursable
                      support.7 Every request for DOD support requires a legal determination of
                      which statutes are applicable and whether the Economy Act applies. DOD
                      believes that PDD 39 does not control the legal determination of
                      reimbursement.

                      The issue of reimbursement has caused two concerns within the FBI:
                      (1) the potential impairment of its operations under PDD 39 or other
                      authorities and (2) the availability of funding for operations under PDD 39 if
                      DOD does not provide nonreimbursable support. According to the FBI, DOD
                      ultimately provides nonreimbursable support in most cases, but delays
                      and uncertainties involved in DOD’s decision process on reimbursement
                      frequently threaten timely FBI deployments.


                      7
                       For example, 10 U.S.C. 377 requires reimbursement for any DOD assistance provided under 10 U.S.C.
                      371 and 372 unless the support is provided in the normal course of military training or operations or
                      results in a benefit to the DOD element providing the support that is substantially equivalent to that
                      which would otherwise be obtained from military operations or training. Also, DOD may provide
                      nonreimbursable support under certain circumstances to the Secret Service under the 1976
                      Presidential Assistance Act.



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              DOD officials cited an example of the process it follows when the FBI,
              through the Attorney General, requests support under PDD 39. In response
              to an Attorney General request that DOD provide air transportation for FBI
              personnel and equipment to prepare for the June 1997 Summit of the Eight
              in Denver, Colorado, DOD identified a statute that allowed nonreimbursable
              support regarding the provision of security to foreign dignitaries.
              Otherwise, the Economy Act would have required the FBI to reimburse DOD
              for the transportation costs.

              In an attempt to alleviate concern and confusion over reimbursement of
              support activities, NSC tasked a special working group on interagency
              operations to explore solutions. According to NSC, possible solutions
              include legislation to provide DOD with special authority to provide
              nonreimbursable support or to set aside contingency funds for domestic
              emergency support team activities. The Department of Justice commented
              that DOD-provided transportation services and assistance provided in
              response to terrorist activities involving a weapon of mass destruction
              should be exempt from the requirements of the Economy Act. DOD
              commented that it is also considering various legislative options to permit
              nonreimbursable support for counterterrorism operations. At the time of
              our review, the issue remained unresolved.


              Billions of dollars are being spent by numerous agencies with roles or
Conclusions   potential roles in combating terrorism, but because no federal entity has
              been tasked to collect such information across the government, the
              specific amount is unknown. Further, no governmentwide spending
              priorities for the various aspects of combating terrorism have been set,
              and no federal entity manages the crosscutting program to channel
              resources where they are most needed in consideration of the threat and
              the risk of terrorist attack and to prevent wasteful spending that might
              occur from unnecessary duplication of effort. Recent legislation requires
              that OMB establish a reporting system for executive agencies on the
              budgeting and expenditure of funds for counterterrorism and
              antiterrorism programs and activities and that the President report this
              information annually to the Congress, along with program priorities and
              any duplication of effort.




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                     We recommend that consistent with the responsibility for coordinating
Recommendations      efforts to combat terrorism, the Assistant to the President for National
                     Security Affairs, NSC, in consultation with the Director, OMB, and the heads
                     of other executive branch agencies, take steps to ensure that
                     (1) governmentwide priorities to implement the national counterterrorism
                     policy and strategy are established; (2) agencies’ programs, projects,
                     activities, and requirements for combating terrorism are analyzed in
                     relation to established governmentwide priorities; and (3) resources are
                     allocated based on the established priorities and assessments of the threat
                     and risk of terrorist attack.

                     To ensure that federal expenditures for terrorism-related activities are
                     well-coordinated and focused on efficiently meeting the goals of U.S.
                     policy under PDD 39, we recommend that the Director, OMB, use data on
                     funds budgeted and spent by executive departments and agencies to
                     evaluate and coordinate projects and recommend resource allocation
                     annually on a crosscutting basis to ensure that governmentwide priorities
                     for combating terrorism are met and programs are based on analytically
                     sound threat and risk assessments and avoid unnecessary duplication.

                     In a draft of this report we also recommended that the Director, OMB,
                     establish a governmentwide mechanism for reporting expenditures to
                     combat terrorism. We deleted that recommendation in view of the
                     requirements of the recently enacted legislation. Our remaining
                     recommendations are consistent with and complement this legislation.


                     In written comments on a draft of this report, the Department of Defense
Agency Comments      concurred with our findings. DOD noted that we identified a significant
and Our Evaluation   issue involving reimbursement for and providing DOD support to other
                     federal agencies under PDD 39. DOD commented that although PDD 39 states
                     that support provided by a federal agency to the lead federal agency in
                     support of counterterrorist operations is borne by the providing agency,
                     PDD 39 is not a statute, and does not provide authority to waive
                     reimbursement that is required by the Economy Act. DOD also discussed in
                     its comments specific legislative options it is considering to resolve the
                     issue. (DOD’s comments and our response are in app. IV.)

                     In its written comments, the State Department pointed out that, although
                     interagency funding requirements for combating terrorism are not
                     managed by any single mechanism, overall counterterrorism and
                     antiterrorism spending is discussed by NSC’s Coordinating Sub-Group and



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interagency coordination occurs in other contexts. We agree that
interagency coordination occurs at various forums in the counterterrorism
community but such coordination mechanisms do not perform the
functions we are recommending to NSC and OMB. State also highlighted the
difficulties of determining the amount of funds spent to combat terrorism
with a certain level of precision. We agree that it would be difficult and
possibly not cost-effective to account for programs and activities that
combat terrorism with a high degree of precision. Nevertheless, at the time
of our review, information on federal spending to combat terrorism had
not been gathered in any form or at any level of specificity, and we believe
that a reasonable methodology could be devised to allow OMB to capture
this data governmentwide. State also noted that efforts to coordinate
programs and activities and prevent duplication are further complicated
by the authorization and appropriations process in the Congress, because
various committees have jurisdiction over the federal agencies involved in
combating terrorism. State finally noted that it is important to have good
working relations with other countries to effectively counter international
terrorism. (State’s comments and our response are in app. V.)

OMB noted in its written comments that although our recommendations are
consistent with policies and responsibilities established by statute and the
President, the budget process would not be improved by mandating
annual, formal crosscutting reviews of budget requests and spending for
federal programs that combat terrorism. OMB also stated that, because of
the significant investment in combating terrorism over the past few years,
it will include a crosscutting review of these programs in the formulation
of the fiscal year 1999 budget. We are encouraged by OMB’s crosscutting
evaluation of programs to combat terrorism for the fiscal year 1999 budget
submission. Because of the high national priority, the significant federal
resources allocated, and the numerous federal agencies, bureaus, and
programs involved, we continue to believe that annual crosscutting
reviews would provide a mechanism for OMB to better assure that federal
resources are aligned with governmentwide program priorities and that
funds are not allocated to duplicative activities and functions to combat
terrorism. Annual reviews would be particularly important because federal
agencies continue to propose funding of new programs, activities, and
capabilities to combat terrorism.

OMB  expressed concern that our report suggests that there currently is no
effective process to review spending for combating terrorism. We
acknowledge OMB’s reviews of individual agencies’ funding requests, but as
noted in our report, OMB did not provide evidence of its reviews, in



Page 14                                    GAO/NSIAD-98-39 Combating Terrorism
              B-277824




              particular of the $1.1-billion fiscal year 1997 amended budget request for
              combating terrorism. OMB also commented that it carefully considers
              funding levels for activities to combat terrorism. During the course of our
              review, OMB could not provide data on funding levels across the federal
              government for combating terrorism. During the agency comment period
              on a draft of this report, officials from the Treasury and Justice
              Departments noted that OMB recently issued a budget data request to
              gather budgetary and expenditure data from executive agencies for fiscal
              years 1996-99, which in part satisfies our recommendation to OMB. OMB
              would not provide a copy of the budget data request because we are not
              part of the executive branch and it was in the process of being
              implemented. As a result, we could not verify that the request was issued
              or determine its content. (OMB’s written comments are in app. VI.)

              The Departments of Treasury; Justice, including the FBI; and
              Transportation provided technical comments, which we have reflected in
              our report, as appropriate. NSC and the Departments of Energy and Health
              and Human Services did not comment on the draft report.


              We reviewed PDD 39 to determine agencies’ roles and responsibilities in
Scope and     managing and coordinating resources for combating terrorism. Because
Methodology   data on agencies’ spending for U.S. efforts to combat terrorism are not
              available from a central source, we obtained from the Departments of
              Defense; Energy; Justice, including the FBI; State; Transportation (FAA);
              Treasury; and Health and Human Services data on spending that the
              agencies categorized as related to their unclassified efforts to combat
              terrorism. We did not verify the data for accuracy, completeness, or
              consistency. We discussed with NSC and OMB their respective roles in
              managing the crosscutting federal effort to combat terrorism, and we also
              submitted questions to the Director, OMB, on OMB’s role under PDD 39. We
              discussed reimbursement issues with the FBI and DOD.

              We conducted our work from November 1996 to October 1997 in
              accordance with generally accepted government auditing standards.


              As agreed with your offices, unless you publicly announce the contents of
              this report earlier, we plan no further distribution of this report until
              7 days after its issue date. At that time, we will send copies to the
              appropriate congressional committees; the Director, Office of
              Management and Budget; other federal agencies discussed in the report;



              Page 15                                    GAO/NSIAD-98-39 Combating Terrorism
B-277824




and other interested parties. If you have any questions about this report,
please contact me at (202) 512-3504. Major contributors to this report were
Davi M. D’Agostino, Richard A. McGeary, H. Lee Purdy, and
Raymond J. Wyrsch.




Richard Davis
Director, National Security
  Analysis




Page 16                                   GAO/NSIAD-98-39 Combating Terrorism
Page 17   GAO/NSIAD-98-39 Combating Terrorism
Contents



Letter                                                              1


Appendix I                                                         20

Federal Entities With
Terrorism-related
Programs and
Activities
Appendix II                                                        22

Letter of Inquiry From
GAO to the Office of
Management and
Budget
Appendix III                                                       24

OMB Response to
GAO Letter of Inquiry
Appendix IV                                                        26

Comments From the
Department of
Defense
Appendix V                                                         29

Comments From the
Department of State
Appendix VI                                                        34

Comments From the
Office of Management
and Budget



                         Page 18   GAO/NSIAD-98-39 Combating Terrorism
                       Contents




Related GAO Products                                                                            39


Table                  Table 1: Estimated Spending for Key Agencies’ Unclassified                6
                         Terrorism-related Programs and Activities

Figure                 Figure 1: Estimated Spending for Key Agencies’ Unclassified               7
                         Terrorism-related Programs and Activities




                       Abbreviations

                       DOD        Department of Defense
                       FAA        Federal Aviation Administration
                       FBI        Federal Bureau of Investigation
                       NSC        National Security Council
                       OMB        Office of Management and Budget
                       PDD        Presidential Decision Directive


                       Page 19                                  GAO/NSIAD-98-39 Combating Terrorism
Appendix I

Federal Entities With Terrorism-related
Programs and Activities

               Department of State
               Department of Justice
                 Federal Bureau of Investigation
                 Immigration and Naturalization Service
                 U.S. Marshals Service
                 Drug Enforcement Agency
               Department of Defense (DOD)
               Office of the Secretary of Defense
               Joint Chiefs of Staff
                  U.S. Army
                  U.S. Navy
                  U.S. Marine Corps
                  U.S. Air Force
                  U.S. Special Operations Command
                  U.S. Central Command
                  Defense Intelligence Agency
                  Advanced Research Projects Agency
                  Defense Information Systems Agency
                  Defense Special Weapons Agency
               Department of Energy
               Department of Health and Human Services
               Department of Treasury
                  U.S. Customs Service
                  Bureau of Alcohol, Tobacco, and Firearms
                  U.S. Secret Service
               Department of Transportation
                  Federal Aviation Administration
                  U.S. Coast Guard
               Department of Commerce
               Environmental Protection Agency
               Federal Emergency Management Agency
               Nuclear Regulatory Commission
               U.S. Postal Service
               White House Military Office
               White House Communications Agency
               U.S. Supreme Court Marshal’s Office
               U.S. Capitol Police
               Office of the Vice President
               U.S. Information Agency
               National Security Council (NSC)
               Central Intelligence Agency
               National Security Agency



               Page 20                                 GAO/NSIAD-98-39 Combating Terrorism
Appendix I
Federal Entities With Terrorism-related
Programs and Activities




National Reconnaissance Office




Page 21                                   GAO/NSIAD-98-39 Combating Terrorism
Appendix II

Letter of Inquiry From GAO to the Office of
Management and Budget




               Page 22           GAO/NSIAD-98-39 Combating Terrorism
Appendix II
Letter of Inquiry From GAO to the Office of
Management and Budget




Page 23                                       GAO/NSIAD-98-39 Combating Terrorism
Appendix III

OMB Response to GAO Letter of Inquiry




               Page 24        GAO/NSIAD-98-39 Combating Terrorism
Appendix III
OMB Response to GAO Letter of Inquiry




Page 25                                 GAO/NSIAD-98-39 Combating Terrorism
Appendix IV

Comments From the Department of Defense




Now on pp. 11-12.




See comment 1.




                    Page 26   GAO/NSIAD-98-39 Combating Terrorism
Appendix IV
Comments From the Department of Defense




Page 27                                   GAO/NSIAD-98-39 Combating Terrorism
              Appendix IV
              Comments From the Department of Defense




              The following is GAO’s comment on DOD’s letter dated November 7, 1997.


              1. We did not evaluate DOD’s options for proposed legislative changes that
GAO Comment   would permit nonreimbursable support to law enforcement agencies.




              Page 28                                    GAO/NSIAD-98-39 Combating Terrorism
Appendix V

Comments From the Department of State




Now on p. 7.




               Page 29       GAO/NSIAD-98-39 Combating Terrorism
                 Appendix V
                 Comments From the Department of State




See comment 1.



Now on p. 8




See comment 2.




                 Page 30                                 GAO/NSIAD-98-39 Combating Terrorism
                 Appendix V
                 Comments From the Department of State




See comment 3.




See comment 4.




See comment 5.




                 Page 31                                 GAO/NSIAD-98-39 Combating Terrorism
                 Appendix V
                 Comments From the Department of State




See comment 5.




                 Page 32                                 GAO/NSIAD-98-39 Combating Terrorism
               Appendix V
               Comments From the Department of State




               The following are GAO’s comments on the Department of State’s letter
               dated November 3, 1997.


               1. While we acknowledge the existence of various interagency
GAO Comments   coordinating mechanisms within the NSC structure, these mechanisms do
               not perform the functions we are recommending to NSC and OMB. For
               example, the interagency Technical Support Working Group coordinates
               only certain terrorism-related research and development projects, and it
               does not function to eliminate duplicative or redundant terrorism-related
               research and development across government agencies.

               2. We modified the text to reflect the Department’s point that embassy
               guards help protect against a variety of threats.

               3. We agree that it would be difficult and possibly not cost-effective to
               account for spending to combat terrorism with a high degree of precision.
               Our report discusses this matter on p. 14.

               4. The Department’s concern about reimbursement for the cost of facilities
               security in U.S. missions abroad was not brought to our attention during
               our review of funding issues for combating terrorism. As a result, we are
               not in a position to comment on this matter.

               5. The report discusses the State Department position on p. 14.




               Page 33                                   GAO/NSIAD-98-39 Combating Terrorism
Appendix VI

Comments From the Office of Management
and Budget




See comment 1.




See comment 2.




                 Page 34     GAO/NSIAD-98-39 Combating Terrorism
                 Appendix VI
                 Comments From the Office of Management
                 and Budget




See comment 3.




                 Page 35                                  GAO/NSIAD-98-39 Combating Terrorism
               Appendix VI
               Comments From the Office of Management
               and Budget




               The following are GAO’s comments on OMB’s letter dated November 18,
               1997.


               1. The report acknowledges that OMB reviews agencies’ individual budget
GAO Comments   requests, and suggests that this process would be enhanced if federal
               funding proposals were reviewed on a crosscutting, governmentwide
               basis. The report also points out that additional steps could be taken to
               prioritize federal programs and activities to combat terrorism at a strategic
               level to better ensure priority programs are funded and avoid duplicative
               and overlapping activities.

               2. As discussed on p. 14 of the final report, we are encouraged by OMB’s
               crosscutting review of programs to combat terrorism as part of the fiscal
               year 1999 budget process.

               3. As discussed on pp. 14-15, in view of the national importance and
               priority, the significant federal resources allocated, and the numerous
               federal agencies, bureaus, and programs involved, we continue to believe
               that governmentwide priorities should be set and annual crosscutting
               reviews be performed on programs to combat terrorism. As agencies
               continue to propose new programs, activities, and capabilities, priorities
               and annual crosscutting reviews are particularly important to better assure
               that funds are not allocated to duplicative activities and functions to
               combat terrorism.




               Page 36                                    GAO/NSIAD-98-39 Combating Terrorism
Appendix VI
Comments From the Office of Management
and Budget




Page 37                                  GAO/NSIAD-98-39 Combating Terrorism
Appendix VI
Comments From the Office of Management
and Budget




Page 38                                  GAO/NSIAD-98-39 Combating Terrorism
Related GAO Products


              Combating Terrorism: Federal Agencies’ Efforts to Implement National
              Policy and Strategy (GAO/NSIAD-97-254, Sept. 26, 1997).

              Combating Terrorism: Status of DOD Efforts to Protect Its Forces Overseas
              (GAO/NSIAD-97-207, July 21, 1997).

              Chemical Weapons Stockpile: Changes Needed in the Management
              Structure of Emergency Preparedness Program (GAO/NSIAD-97-91, June 11,
              1997).

              State Department: Efforts to Reduce Visa Fraud (GAO/T-NSIAD-97-167, May 20,
              1997).

              Aviation Security: FAA’s Procurement of Explosives Detection Devices
              (GAO/RCED-97-111R, May 1, 1997).

              Aviation Security: Commercially Available Advanced Explosives Detection
              Devices (GAO/RCED-97-119R, Apr. 24, 1997).

              Terrorism and Drug Trafficking: Responsibilities for Developing
              Explosives and Narcotics Detection Technologies (GAO/NSIAD-97-95, Apr. 15,
              1997).

              Federal Law Enforcement: Investigative Authority and Personnel at 13
              Agencies (GAO/GGD-96-154, Sept. 30, 1996).

              Aviation Security: Urgent Issues Need to Be Addressed
              (GAO/T-RCED/NSIAD-96-151, Sept. 11, 1996).

              Terrorism and Drug Trafficking: Technologies for Detecting Explosives
              and Narcotics (GAO/NSIAD/RCED-96-252, Sept. 4, 1996).

              Aviation Security: Immediate Action Needed to Improve Security
              (GAO/T-RCED/NSIAD-96-237, Aug. 1, 1996).

              Passports and Visas: Status of Efforts to Reduce Fraud (GAO/NSIAD-96-99,
              May 9, 1996).

              Terrorism and Drug Trafficking: Threats and Roles of Explosives and
              Narcotics Detection Technology (GAO/NSIAD/RCED-96-76BR, Mar. 27, 1996).




              Page 39                                    GAO/NSIAD-98-39 Combating Terrorism
                  Related GAO Products




                  Nuclear Nonproliferation: Status of U.S. Efforts to Improve Nuclear
                  Material Controls in Newly Independent States (GAO/NSIAD/RCED-96-89,
                  Mar. 8, 1996).

                  Aviation Security: Additional Actions Needed to Meet Domestic and
                  International Challenges (GAO/RCED-94-38, Jan. 27, 1994).

                  Nuclear Security: Improving Correction of Security Deficiencies at DOE’s
                  Weapons Facilities (GAO/RCED-93-10, Nov. 16, 1992).

                  Nuclear Security: Weak Internal Controls Hamper Oversight of DOE’s
                  Security Program (GAO/RCED-92-146, June 29, 1992).

                  Electricity Supply: Efforts Underway to Improve Federal Electrical
                  Disruption Preparedness (GAO/RCED-92-125, Apr. 20, 1992).

                  Economic Sanctions: Effectiveness as Tools of Foreign Policy
                  (GAO/NSIAD-92-106, Feb. 19, 1992).

                  State Department: Management Weaknesses in the Security Construction
                  Program (GAO/NSIAD-92-2, Nov. 29, 1991).

                  Chemical Weapons: Physical Security for the U.S. Chemical Stockpile
                  (GAO/NSIAD-91-200, May 15, 1991).

                  State Department: Status of the Diplomatic Security Construction Program
                  (GAO/NSIAD-91-143BR, Feb. 20, 1991).

                  International Terrorism: FBI Investigates Domestic Activities to Identify
                  Terrorists (GAO/GGD-90-112, Sept. 9, l990).

                  International Terrorism: Status of GAO’s Review of the FBI’s International
                  Terrorism Program (GAO/T-GGD-89-31, June 22, 1989).

                  Embassy Security: Background Investigations of Foreign Employees
                  (GAO/NSIAD-89-76, Jan. 5, 1989).

                  Aviation Security: FAA’s Assessments of Foreign Airports (GAO/RCED-89-45,
                  Dec. 7, 1988).

                  Domestic Terrorism: Prevention Efforts in Selected Federal Courts and
                  Mass Transit Systems (GAO/PEMD-88-22, June 23, 1988).



(701122/701103)   Page 40                                    GAO/NSIAD-98-39 Combating Terrorism
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