U.S. GOVERNMENT PRINTING OFFICE

67–017 CC WASHINGTON : 2000

COMBATING TERRORISM: MANAGEMENT OF

MEDICAL SUPPLIES

HEARING

BEFORE THE

SUBCOMMITTEE ON NATIONAL SECURITY,

VETERANS AFFAIRS, AND INTERNATIONAL

RELATIONS

OF THE

COMMITTEE ON

GOVERNMENT REFORM

HOUSE OF REPRESENTATIVES

ONE HUNDRED SIXTH CONGRESS

SECOND SESSION

MARCH 8, 2000

Serial No. 106–159

Printed for the use of the Committee on Government Reform

(

Available via the World Wide Web: http://www.gpo.gov/congress/house

http://www.house.gov/reform

(II)

COMMITTEE ON GOVERNMENT REFORM

DAN BURTON, Indiana, Chairman

BENJAMIN A. GILMAN, New York

CONSTANCE A. MORELLA, Maryland

CHRISTOPHER SHAYS, Connecticut

ILEANA ROS-LEHTINEN, Florida

JOHN M. MCHUGH, New York

STEPHEN HORN, California

JOHN L. MICA, Florida

THOMAS M. DAVIS, Virginia

DAVID M. MCINTOSH, Indiana

MARK E. SOUDER, Indiana

JOE SCARBOROUGH, Florida

STEVEN C. LATOURETTE, Ohio

MARSHALL ‘‘MARK’’ SANFORD, South

Carolina

BOB BARR, Georgia

DAN MILLER, Florida

ASA HUTCHINSON, Arkansas

LEE TERRY, Nebraska

JUDY BIGGERT, Illinois

GREG WALDEN, Oregon

DOUG OSE, California

PAUL RYAN, Wisconsin

HELEN CHENOWETH-HAGE, Idaho

DAVID VITTER, Louisiana

HENRY A. WAXMAN, California

TOM LANTOS, California

ROBERT E. WISE, JR., West Virginia

MAJOR R. OWENS, New York

EDOLPHUS TOWNS, New York

PAUL E. KANJORSKI, Pennsylvania

PATSY T. MINK, Hawaii

CAROLYN B. MALONEY, New York

ELEANOR HOLMES NORTON, Washington,

DC

CHAKA FATTAH, Pennsylvania

ELIJAH E. CUMMINGS, Maryland

DENNIS J. KUCINICH, Ohio

ROD R. BLAGOJEVICH, Illinois

DANNY K. DAVIS, Illinois

JOHN F. TIERNEY, Massachusetts

JIM TURNER, Texas

THOMAS H. ALLEN, Maine

HAROLD E. FORD, JR., Tennessee

JANICE D. SCHAKOWSKY, Illinois

———

BERNARD SANDERS, Vermont

(Independent)

KEVIN BINGER, Staff Director

DANIEL R. MOLL, Deputy Staff Director

DAVID A. KASS, Deputy Counsel and Parliamentarian

LISA SMITH ARAFUNE, Chief Clerk

PHIL SCHILIRO, Minority Staff Director

SUBCOMMITTEE ON NATIONAL SECURITY, VETERANS AFFAIRS, AND INTERNATIONAL

RELATIONS

CHRISTOPHER SHAYS, Connecticut, Chairman

MARK E. SOUDER, Indiana

ILEANA ROS-LEHTINEN, Florida

JOHN M. MCHUGH, New York

JOHN L. MICA, Florida

DAVID M. MCINTOSH, Indiana

MARSHALL ‘‘MARK’’ SANFORD, South

Carolina

LEE TERRY, Nebraska

JUDY BIGGERT, Illinois

HELEN CHENOWETH-HAGE, Idaho

ROD R. BLAGOJEVICH, Illinois

TOM LANTOS, California

ROBERT E. WISE, JR., West Virginia

JOHN F. TIERNEY, Massachusetts

THOMAS H. ALLEN, Maine

EDOLPHUS TOWNS, New York

BERNARD SANDERS, Vermont

(Independent)

JANICE D. SCHAKOWSKY, Illinois

EX OFFICIO

DAN BURTON, Indiana HENRY A. WAXMAN, California

LAWRENCE J. HALLORAN, Staff Director and Counsel

KRISTINE MCELROY, Professional Staff Member

JASON M. CHUNG, Clerk

DAVID RAPALLO, Minority Professional Staff Member

(III)

C O N T E N T S

Page

Hearing held on March 8, 2000 .............................................................................. 1

Statement of:

Bascetta, Cynthia, Associate Director, Veterans Affairs and Military

Health Care Issues, General Accounting Office, accompanied by Ronald

Guthrie and Martin Eble .............................................................................. 4

Murphy, Frances, M.D., Acting Deputy Under Secretary for Policy and

Management, Department of Veterans Affairs, accompanied by John

Ogden; Robert F. Knouss, M.D., Office of Emergency Preparedness,

Public Health Service, Department of Health and Human Services;

Stephen M. Ostroff, M.D., Associate Director for Epidemiologic Science,

National Center for Infectious Diseases, Centers for Disease Control

and Prevention, accompanied by Steven Bice; and Colonel Carlos

Hollifield, U.S. Marine Corps, Chemical Biological Incident Response

Force, accompanied by Captain Warren (Rich) Dalton, M.D., U.S. Navy 12

Letters, statements, et cetera, submitted for the record by:

Hollifield, Colonel Carlos, U.S. Marine Corps, Chemical Biological Incident Response Force, prepared statement of .............................................. 42

Knouss, Robert F., M.D., Office of Emergency Preparedness, Public

Health Service, Department of Health and Human Services, prepared

statement of ................................................................................................... 22

Murphy, Frances, M.D., Acting Deputy Under Secretary for Policy and

Management, Department of Veterans Affairs, prepared statement of ... 16

Ostroff, Stephen M., M.D., Associate Director for Epidemiologic Science,

National Center for Infectious Diseases, Centers for Disease Control

and Prevention, prepared statement of ....................................................... 30

Shays, Hon. Christopher, a Representative in Congress from the State

of Connecticut, prepared statement of ........................................................ 3

(1)

COMBATING TERRORISM: MANAGEMENT OF

MEDICAL SUPPLIES

WEDNESDAY, MARCH 8, 2000

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON NATIONAL SECURITY, VETERANS

AFFAIRS, AND INTERNATIONAL RELATIONS, COMMITTEE ON GOVERNMENT REFORM, Washington, DC.

The subcommittee met, pursuant to notice, at 10 a.m., in room

2154, Rayburn House Office Building, Hon. Christopher Shays

(chairman of the subcommittee) presiding.

Present: Representatives Shays and Tierney.

Staff present: Lawrence J. Halloran, staff director and counsel;

J. Vincent Chase, chief investigator; Kristine McElroy, professional

staff member; Jason M. Chung, clerk; David Rapallo, minority

counsel; and Jean Gosa, minority assistant clerk.

Mr. SHAYS. Good morning. I’d like to call this hearing to order.

Pharmaceutical and vaccine stockpiles constitute a vital and

growing element of the national domestic preparedness effort

against terrorism. In the event of a chemical, biological or nuclear

incident, local hospitals will need extraordinary quantities of antidotes, antibiotics and sera to treat the victims. If the right medicines do no arrive quickly, thousands could die.

Today, the Department of Health and Human Services’ four National Medical Response Teams are available to deploy with medical supplies to treat up to 5,000 casualties each. The Marine Corps’ Chemical/Biological Incident Response Force also maintains a supply of pharmaceuticals and equipment that could be used to support local first responders. A larger National Pharmaceutical Stockpile is being assembled by the Centers for Disease Control.

To be useful, medical stockpiles must be carefully maintained

and well managed. So we asked the General Accounting Office to

assess the accuracy of current inventory tracking and the adequacy

of internal controls over critical stockpile assets.

GAO found inventory shortfalls, recordkeeping discrepancies and

security lapses that compromised the ability to respond to the

chemical or biological incidents.

The fundamental cause of the problems was not the complexity

of the terrorism threat, or the logistics of a multi-event response

scenario, but the lack of the most basic management controls. GAO

found a critical national program running on little more than PostIt notes and a spreadsheet. The Marine Corps isn’t even willing to

concede their cache is a ‘‘stockpile’’ that needs to be managed like

the others.

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Terrorism poses any number of extremely difficult challenges to

our national security. Accounting for medical stockpiles should be

the easy part. Well recognized principles of program design, inventory management and internal control should be applied immediately to transform the current cottage industry of stockpile management into the national enterprise Congress intended.

The threat of domestic terrorism demands we amass, and preposition, costly medical supplies we hope never to use. We hope the

very existence of stockpiles will deter terrorists. But in the tragic

event we are called upon to open the national medicine cabinet, it

must contain the types and amounts of supplies needed to save

lives.

In addition to testimony from GAO, we will hear today from

those responsible for management of the Nation’s stockpiles. To

varying degrees, each has acknowledged GAO’s findings and

pledged reforms. We look forward to their testimony.

[The prepared statement of Hon. Christopher Shays follows:]

3

4

Mr. SHAYS. Our first panel, and we have two, is GAO, Ms. Cynthia Bascetta, Associate Director, Veterans Affairs and Military

Health Care Issues, U.S. General Accounting Office, accompanied

by Mr. Ronald Guthrie, Assistant Director. And Martin Eble, Senior Evaluator, Accounting and Information Management Division of

GAO.

If you would rise, we’ll swear you in and we’ll get started.

[Witnesses sworn.]

Mr. SHAYS. Ms. Bascetta, it’s my understanding you will give testimony and then we’ll ask questions and all three will respond to

the questions we might ask.

Ms. BASCETTA. That’s correct.

Mr. SHAYS. Great to have you here. Thank you.

Ms. BASCETTA. Thank you.

Mr. SHAYS. And also let me say to you, what we’ll do is we’ll do

5 minutes but we’ll roll it over. So you’ll see the first 5 minutes

red light and then we’ll roll you over again.

STATEMENT OF CYNTHIA BASCETTA, ASSOCIATE DIRECTOR,

VETERANS AFFAIRS AND MILITARY HEALTH CARE ISSUES,

GENERAL ACCOUNTING OFFICE, ACCOMPANIED BY RONALD

GUTHRIE AND MARTIN EBLE

Ms. BASCETTA: Mr. Chairman, thank you for inviting us to discuss our report on the Federal medical stockpiles that would be

used to treat civilian victims of a chemical or a biological terrorist

attack. My testimony today will highlight weaknesses in management at the stockpiles, the results of our count of stockpiled supplies, and the progress the agencies have made since we issued our

report about 3 months ago.

At that time, we reported that OEP, VA, and the Marine Corps

unit known as CBIRF did not have basic internal controls in place

to manage their stockpiles. As a result when we counted the inventory, we identified discrepancies between what should have been on

hand and what was actually there. We found excesses of supplies

such as sterile gloves, as well as shortages of some antidotes and

antibiotics. For example, in one location we found 1,000 fewer

diazepam injectors than required. Diazepam, also known as Valium, would be administered to calm victims and control convulsions. Although VA contends that it stockpiled a substitute for

these injectors, it could not produce written documentation of

OEP’s approval at the time of the substitution. At another location,

the entire supply of amyl nitrate—an antidote for cyanide poisoning—had been expired for 8 months. We also found incorrectly recorded expiration dates and lot numbers, which are necessary to

keep supplies current and to respond to potential manufacturer recalls. At one location this information was wrong for 250

doxycycline tablets and 100 cipro tablets, two antibiotics used to

prevent the onset of symptoms in people exposed to anthrax.

To improve stockpile management, we recommended that VA,

OEP and CBIRF each establish fundamental internal controls,

which serve as the first line of defense in safeguarding assets like

these stockpiles. Incorporated in OMB Circular A–123, internal

control is essential to managing an organization and it compromises the plan, methods and procedures used to meet missions,

5

goals and objectives—in this case, the critical mission to save lives

in the event of biochemical terrorism.

We identified the lack of internal control as the root cause of the

inventory discrepancies we found in our review. Until this is corrected, the responsible agencies cannot provide reasonable assurance that all the stockpiled items will be current, accounted for,

and available for use. For example, at the time of our review, the

systems lacked basic information required for sound recordkeeping,

including documentation of back orders, replacements, and the

shipment and receipt of pharmaceuticals and medical supplies.

Further, none of the agencies conducted periodic inventories of the

stocks they had on hand to compare them with required amounts.

Moreover, security was lax at some locations. We found commingling of stockpiled items with other VA Medical Center pharmaceuticals, sometimes in unsecured refrigerators. While CBIRF’s

overall security was much better, it could not ensure that proper

access was maintained because no logs were kept for recording access to its warehouse and trucks where the working stock is stored.

Mr. Chairman, we’re encouraged that OEP, VA, and CBIRF concurred with all our recommendations and have committed to improving stockpile management. In fact, the current memorandum

of agreement between VA and OEP appears to incorporate much of

our advice for improving stockpile management. So does VA’s new

agreement with CDC, which as you know is responsible for a new

and vastly larger pharmaceutical stockpile. Specifically, CDC’s

agreement includes provisions for unannounced inspections and

specific remedial actions with timeframes for completion if VA’s

performance is unsatisfactory. In addition, VA told us that it has

prepared a plan indicating its commitment to conduct risk assessment of its vulnerabilities, to arrange for annual inventories, to implement the tracking system for the complete documentation of all

transactions, and to rotate supplies properly. CBIRF is working on

a list of required items but it needs to expedite this because it is

pivotal to implementing our recommendations.

In conclusion, we believe the agencies should be able to turn this

situation around and, because of the criticality of this mission they

should do so expeditiously. Since this is not, in my view, an expensive problem to fix, how quickly and effectively they will be able

to depends less on resources and more on their commitment to implement an organized and disciplined response to our findings.

Placing higher priority on this effort at the highest management

levels will be essential to ensuring better stewardship of the stockpiles and, as a result, mitigating as best as possible the potential

consequences of a terrorist attack.

This concludes my remarks. We’d be happy to answer any questions you might have.

Mr. SHAYS. Thank you. It’s my understanding that your investigation didn’t look at what supplies should be there, but how the

supplies were being maintained.

Ms. BASCETTA. That’s correct.

Mr. SHAYS. Did one of the three of you, or all of you, visit all four

sites?

Ms. BASCETTA. We visited five sites.

Mr. SHAYS. Right.

6

Ms. BASCETTA. The four NMRT sites.

Mr. SHAYS. Four VAs?

Ms. BASCETTA. Yes. And also the CBIRF site.

Mr. SHAYS. Describe to me what the—I don’t even know what the

site would look like.

What is the—describe to me, I mean is it a small room, is it a

large room? Do we have trucks with supplies? Just describe to me

what it looks like.

Ms. BASCETTA. There is some variability. I have been at one of

the sites and it’s located at a VA Medical Center. I’m not sure,

but——

Mr. SHAYS. Which State?

Ms. BASCETTA. Washington, DC. I’m not sure of the dimensions

of the stockpile, but it’s a secured area. It’s called a cage, and inside this cage are a number of pallets that have boxes on the pallets, and they’re all shrink-wrapped. They’re on pallets so that they

can be moved easily.

I don’t know if Ron or Marty would like to describe what some

of the conditions are like in some of the other areas.

Mr. SHAYS. I’d like to have it all. I’d like you to contrast some

of the sites and so on.

Ms. BASCETTA. OK.

Mr. EBLE. Mr. Chairman, I visited the Hines location. This is

also a VA facility. This is in Chicago, just outside of Chicago at

Hines, IL. And it’s set up very much like Ms. Bascetta is describing

within—in this case within a pharmaceutical facility, a large,

caged, locked room. And the pharmaceuticals for this purpose are

segregated from the other items there and locked.

Mr. SHAYS. I’m just trying to get some basic area of what you’re

talking about. It seems to me like that this is not a big deal in

terms of being able to store this and to keep records, and it strikes

me that obviously there are some of the pharmaceuticals that may

expire and you have to replace them.

Mr. EBLE. Right.

Mr. SHAYS. I would imagine some would have to be cooled.

Ms. BASCETTA. That’s correct.

Mr. SHAYS. And I just want to know if you saw a consistency in

all five sites. I want to know if we’re talking about a small room,

10x10, if we’re talking about a very large place, with some already

on trucks. I just want to have a sense of what——

Mr. EBLE. This would be small location, perhaps 10X10 or 15X15.

Mr. SHAYS. I mean, you could almost store it in one of these public storage spaces?

Mr. EBLE. In a garage. Right, that’s correct.

Ms. BASCETTA. That’s about the dimension.

Mr. GUTHRIE. Essentially, Mr. Chairman, there are essentially

six to eight pallets. And pallets are typically 4x4 or 5x5 and the

goods are stacked perhaps 3 to 5 feet high on each one of these pallets. So if you can envision an area that’s perhaps as large as the

space in front of us here, it’s a caged area usually with solid masonry walls behind and a screen, like a screen fencing, a fairly rigid

fencing with a locked screen door. That’s rather typical. It’s kind

of a warehouse feeling environment to it. And it typically would

7

have a small refrigerator inside that space to house pharmaceuticals that must be refrigerated.

Mr. SHAYS. We don’t need to know the exact location of these

sites since, actually, security is important. But I want to also get

a feeling for the number of different types of things that we have

to record. Are we talking about 100 items, are we talking about

5,000 items, what are we talking about?

Ms. BASCETTA. About 200,000 items is the denominator in the

counts that we did, in the inventory counts that we did.

Mr. SHAYS. And 200,000 items and there are groupings within

each so are you——

Ms. BASCETTA. Three of the sites have 35,000 items of primarily

medical supplies. Not antidotes or antibiotics. Those are in smaller

quantities.

Mr. SHAYS. I’m just trying to now get a sense of what your major

concern is and then what your second biggest concern would be and

just go down.

What’s your first—and let me ask you, when you were doing your

investigation, are we talking about things in the margin, or are we

talking about some very serious problems?

Ms. BASCETTA. In terms of the specific significance of the shortages that we found, we didn’t make a judgment as to the criticality

of those specific shortages to the mission. Our concern was that because of the failure in the underlying systems to be able to track

what’s in the stockpiles and to be able to assure currency and their

availability for use, that we wouldn’t be able to tell from time to

time how adequately maintained those stockpiles were.

That’s our major message. It’s less a message that focuses on the

specific findings of our inventory count, which we consider symptomatic of the more serious underlying problem of the need to have

systems in place that can track the stockpiled items.

Mr. SHAYS. Are you saying that we were not—did they have

records of what they have, but they simply didn’t have the quantities they needed? Or did they not even have the records to say

what was actually in the cage?

Ms. BASCETTA. Sometimes they didn’t have the correct quantities, but the bigger problem was that they didn’t have, for example, historical documentation of what had been replaced. And so

there was no way over time to track how the stockpile had been

maintained.

Mr. SHAYS. Just tell me the method you used to examine the inventory in the stockpile material. What was the method?

Ms. BASCETTA. Sure. I’d be happy to and this might help give you

a sense of how manageable these stockpiles are in terms of their

size and dimensions.

I’m also glad that you asked this question because the agencies,

although they concur with our recommendations, do take issue

with our count.

What we did was, of course, because of our timeframes, we wanted to go onsite immediately, but VA was uncomfortable with that.

They wanted a few weeks to do some pre-inventories before we arrived.

8

Mr. SHAYS. I don’t understand that at all. Why wouldn’t the best

way of knowing the condition have been to go in right away and

just check it out?

Ms. BASCETTA. Well, it would have been and that certainly would

have been our preference, although we were concerned more about

the systems again then the actual counts. So we were willing to accommodate them on their request to give them a little bit more

time.

When we arrived onsite we did a 100 percent count of every single item in the stockpile. We did not use a sampling approach so

that——

Mr. SHAYS. In all five sites?

Ms. BASCETTA. Yes, that’s correct. So, there you know that if we

were able to do it in a matter of days, it’s a manageable task.

Mr. SHAYS. Right.

Ms. BASCETTA. We also ensured that VA program staff were

present at every location while we were counting. And when we

noted discrepancies, we brought them to the attention of the VA

personnel onsite with us. And in all cases they recounted except in

California, where toward the end of our work they chose not to recount.

In no instance did they inform us that we had counted incorrectly while we were onsite. It was only after our report was issued

that they raised some questions about substitutions and nomenclature issues that they think might have caused us to miscount.

And the final issue that I want to clarify for the record is that

while the agencies believe that our count of errors is inflated, we

want to explain that that is truly the accurate way to measure deficiencies in the systems. What we did was count multiple errors for

a single item. And that’s because if an item had, for example, a

wrong expiration and a wrong lot number, that would require two

corrective actions to make the system accurate.

So, our discrepancy rate does account for multiple errors for a

single item, but we believe that’s the correct way to measure the

systems.

Mr. SHAYS. Now, for the record just tell me how the lack of management controls affects management of the stockpiles.

Ms. BASCETTA. How a lack of management—— Mr. SHAYS. How the lack of the internal controls affects the management of the stockpile.

Ms. BASCETTA. Well, there are several dimensions of internal

controls that need to be in place to give stockpile management the

appropriate attention. First, you need to establish an environment

in which the staff who are involved place an appropriate priority

on stockpile management and not in a singular fashion, but in a

continuous fashion. It’s an iterative process that needs to have a

high level of attention over an extended period of time.

In addition, all of the policies and procedures that you would

have in place, such as those that are reflected in our Standards for

Internal Control and in OMB Circular A–123, pretty much spell

out what you need to do to ensure that your inventories are accurately maintained.

Mr. SHAYS. This may seem like somewhat of a digression, but I’m

having a hard time understanding why it is we would have any

9

problems whatsoever. I mean, when I go and get my car repaired,

I go the parts desk of the automobile dealer and they can, on their

computer, tell me what they have. They can show me pictures of

it. They can decide they only have three left or two left or they’re

going to order it and they’re going to get it in a few days. I mean,

so this is not rocket science-kind of management skills, is it?

Ms. BASCETTA. No, it’s pretty straightforward inventory control.

I agree with you.

Mr. SHAYS. To what extent have the agencies tried to implement

your recommendations?

Ms. BASCETTA. Well, right now what we have is their letters to

us concurring with our recommendations. And our best evidence of

their actions are the agreements that they’ve signed with VA. And

those appear to be much better than the previous agreement that

VA had with OEP. As you know, this is CDC’s first agreement with

VA and they quite proactively incorporated many of our recommendations to prevent the kind of problems that we had identified in the VA OEP situation. I’d say that if they implement what

is in those current agreements and they give it appropriate management attention, they ought to be able to fix the problems that

we identified.

Mr. SHAYS. What internal controls did you find in place to ensure

that the requests and draw-downs for the medical supplies from

national stockpiles were properly authorized?

Ms. BASCETTA. I don’t think we—— Mr. GUTHRIE. Mr. Chairman, I don’t know that there have been

draw downs per se. These are pretty static stockpiles and it would

be the rare event where they would draw down on these stockpiles.

Mr. SHAYS. If a draw down were to occur, how would they record

it?

Mr. GUTHRIE. I don’t know that we covered that during the

course of our review, sir.

Mr. SHAYS. Is this the same—I’ve asked you about the four VA

facilities, but how about the Marine facility, describe to me how it

would compare.

Ms. BASCETTA. The Marine—— Mr. SHAYS. Do they stockpile the same basic pharmaceuticals,

and so on?

Ms. BASCETTA. They have similar types of items in their stockpile, emergency supplies and a variety of antidotes that would be

used. They refer to their stockpile—they refer to their supplies as

a working stock. They object to the word ‘‘stockpile.’’ But it seems

to us—— Mr. SHAYS. Why would they object to that?

Ms. BASCETTA. Well, we’re not sure, to be honest. It seems to us

to be a semantic difference. And to us the important part is that

whether they call it a working stock or a stockpile, they agree that

it needs to be managed in accordance with the standards that we

laid out.

Mr. SHAYS. Does a working stock mean they continually roll over

and take things out? I mean, what’s the significance of that? I’ll

ask them, but what is your sense of the significance?

Ms. BASCETTA. The way we understand it, the supplies would be

handled similarly to the NMRT sites in that they’re deployable

10

supplies. So we really don’t see much of a distinction. The other

issue that they raise is that their working stock is internal to their

unit. They have primarily a military mission rather than a civilian

mission. But on the other hand they do acknowledge that in the

event of an emergency, if they show up onsite and the locals don’t

have supplies, they will treat civilians in those situations.

Mr. SHAYS. Do they have supplies that are just for, say, children?

Ms. BASCETTA. They do.

Mr. SHAYS. So that would strike me—as they don’t have children

in the Marines, so they obviously have some supplies for civilians.

And that makes sense.

Ms. BASCETTA. It seems that way. And they also appear to have

thousands more of certain items than they would need for their

own internal use.

Mr. SHAYS. Great.

Mr. Tierney, nice to have you here.

Mr. TIERNEY. I want to thank the members of the panel for coming forward today. And I apologize for my tardiness. I have read

your testimony in addition to listening to what you have to say,

and I don’t have very many questions in addition to the chairman’s.

I think he covered the ground pretty well.

But I am curious to know, when you were dealing with the folks

that are responsible for these measures, did you find any glaring

lack of training or glaring lack of unfamiliarity with your standards?

Ms. BASCETTA. Yes, I’d say that we did. We’re not certain whether the reason is that there simply wasn’t enough attention put on

the kinds of skills that a person would need to have to handle this

kind of an effort, but we did notice that people with financial background or with any kind of accounting were not in the picture and

that had those skill sets been brought to bear, we don’t think that

this would have happened or certainly not to this degree.

Mr. TIERNEY. And was that right across the board, VA, the Marines?

Ms. BASCETTA. Yes.

Mr. TIERNEY. How about the management skills on that, did you

find that the people that were responsible overall for it had the

skills and just lacked the individuals beneath them having those

appropriate skills and training, or do you think the management

skills needed to be improved?

Ms. BASCETTA. I don’t think that it was a problem of management skills as much as a problem of lack of attention. I simply

think this wasn’t given high enough priority. It just didn’t seem to

be on everybody’s radar screen at an appropriate level.

Mr. TIERNEY. I was a little concerned about what appeared to be

in your testimony, a lack of internal oversight or mechanisms to assure that they were doing what they ought to be doing. And so nobody was watching anybody else and sometimes somebody was

doing all the functions instead of dividing them so that you make

sure errors would be caught.

Ms. BASCETTA. Right.

Mr. TIERNEY. Have you noticed any marked improvement in

those areas since your report in dealing with those companies?

11

Ms. BASCETTA. We see that they have policies and procedures in

place to follow those standards, but we haven’t been back to verify

that, in fact, that’s what’s happening.

Mr. TIERNEY. When will you go back for that?

Ms. BASCETTA. We haven’t been asked.

Mr. TIERNEY. OK, fair enough. Thank you very much.

Mr. SHAYS. I just have one other question in terms of the draw

downs. I understand they haven’t drawn down, but did you look the

procedures of how they draw them down? Did you ask them what

they would do and how they would do it or did you just not?

Ms. BASCETTA. We really focused only on what was actually

physically in the stockpile. I suppose that if there had been those

kinds of procedures in place we would have reviewed them as well.

And certainly they should be spelled out in their new policies and

procedures.

Mr. SHAYS. You weren’t asked to do this, but were you—I mean,

these are four sites in the country that then may go somewhere

else.

Ms. BASCETTA. Right.

Mr. SHAYS. Did you have a sense intuitively when you saw these

sites that they were in a reasonable location, near an airport, so

that we could get these to where they needed to go in a few hours,

not days?

Ms. BASCETTA. I think that’s fair to say, yes. That they were appropriately positioned.

Mr. SHAYS. OK. Thank you very much. You’ve given us an opportunity now to meet with the next panel. Thank you.

Our second panel is Dr. Frances Murphy, acting Deputy Under

Secretary for Policy at the Department of Veterans Affairs, accompanied by Mr. John Ogden, Chief Consultant, Pharmacy Benefits

Management Strategic Health Group, Department of Veterans Affairs; testimony from Dr. Robert Knouss, Office of Emergency Preparedness, Public Health Service, Department of Health and

Human Services; Dr. Steven Ostroff, Associate Director for Epidemiologic Science, National Center for Infectious Diseases, Center

for Disease Control and Prevention, accompanied by Mr. Steve

Bice, Branch Chief, National Pharmaceutical Stockpile Branch, Department of Health and Human Services, and our fourth testimony

is from Colonel Carlos Hollifield, Chemical Biological Incident Response Force, U.S. Marine Corps, Department of Defense, accompanied by Captain Warren Rich Dalton, M.D.—so, Doctor, Biological Incident Response Force, with the Marines as well.

Do you have everybody at the table?

Now, let me just say, I’m going to swear you all in, but I just

have to first take care of some procedural things from the committee, unanimous consent, and we’re going to welcome your testimony

and have it basically be as long as you need it to be.

I ask unanimous consent that all members of the subcommittee

be permitted to place an opening statement in the record and that

the record remain open for 3 days for that purpose. Without objection, so ordered.

And I ask further unanimous consent that all witnesses be permitted to include their written statements in the record. And without objection, so ordered.

12

Again, we’ll do the 5-minutes, we’ll roll it over again for another

5 minutes, but if you feel that you need to say something and can’t

do it within the 10-minutes I want it part of the record and am

happy to have you do that.

Dr. Murphy, we’re just going to start with you and then we’ll go

to Dr. Knouss and go right down the line, Dr. Ostroff, and then

Colonel Hollifield.

You’re on.

STATEMENTS OF FRANCES MURPHY, M.D., ACTING DEPUTY

UNDER SECRETARY FOR POLICY AND MANAGEMENT, DEPARTMENT OF VETERANS AFFAIRS, ACCOMPANIED BY JOHN

OGDEN; ROBERT F. KNOUSS, M.D., OFFICE OF EMERGENCY

PREPAREDNESS, PUBLIC HEALTH SERVICE, DEPARTMENT

OF HEALTH AND HUMAN SERVICES; STEPHEN M. OSTROFF,

M.D., ASSOCIATE DIRECTOR FOR EPIDEMIOLOGIC SCIENCE,

NATIONAL CENTER FOR INFECTIOUS DISEASES, CENTERS

FOR DISEASE CONTROL AND PREVENTION, ACCOMPANIED

BY STEVEN BICE; AND COLONEL CARLOS HOLLIFIELD, U.S.

MARINE CORPS, CHEMICAL BIOLOGICAL INCIDENT RESPONSE FORCE, ACCOMPANIED BY CAPTAIN WARREN

(RICH) DALTON, M.D., U.S. NAVY

Dr. MURPHY. Mr. Chairman and members of the subcommittee,

I am pleased to have this opportunity to address GAO’s recent report concerning managements of chemical and biological medical

supplies. I am accompanied by Mr. John Ogden, Chief

Consultant—— Mr. SHAYS. We swear in everyone who testifies, even Members

of Congress. Actually I didn’t, Senator Byrd came and we didn’t administer the oath to him. I chickened out, but everyone else who

has come before us has.

I’m sorry, I’m going to have you start over again. My apology.

[Witnesses sworn.]

Dr. MURPHY. I’d like to enter my entire testimony in the record

if that would be possible, but to shorten the statement this morning if I could.

As you know, VA’s primary mission is to provide health care and

benefits to veterans; however an additional VA role is to ensure

health care for eligible veterans, military personnel, and the public

during Department of Defense contingencies, natural, man-made,

and technological emergencies. VA has assigned lead responsibility

for this mission to the Emergency Management Strategic Health

Care Group, which is headquartered in Martinsburg, WV. The primary responsibilities and authorities governing VA’s program implementation are to serve as a VA/DOD Contingency Hospital System backup, which requires VA to serve as the primary backup to

DOD medical services in times of national emergencies.

We also act as part of the National Disaster Medical Defense

System. VA operates to provide capability for treating large numbers of patients who are injured in major peacetime disasters in

the United States and its territories, or to treat casualties resulting

from conventional military conflict overseas.

In addition, Presidential Review Decision Directive 62, Combating Terrorism, which was issued in May 1998, tasked the U.S. PubVerDate 11-MAY-2000 13:39 Dec 28, 2000 Jkt 000000 PO 00000 Frm 00016 Fmt 6633 Sfmt 6633 C:\DOCS\67017.TXT HGOVREF1 PsN: HGOVREF1
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lic Health Service to work with VA in ensuring that adequate

stockpiles of antidotes and other necessary pharmaceuticals are

maintained nationwide and to have the ability to train medical personnel in NDMS hospitals.

Under the provisions of this plan over the past 9 years, VA has

deployed over 1,000 health care personnel, and provided medical

supplies, and equipment, including mobile health clinics, and facilities.

In addition, under the Presidential Decision Directive and as

part of the NDMS system, VA has an agreement with the U.S.

Public Health Service to maintain the four caches that were talked

about in the GAO testimony this morning, at strategic locations

throughout the United States, that may be needed for treatment of

victims of an event involving weapons of mass destruction. If such

an event occurs, these caches would be deployed to the site of the

incident. These pharmaceuticals would be used and could provide

supplemental capability to local medical caregivers and facilities to

treat the victims of the weapons of mass destruction.

VA also has entered into a recent agreement with the Centers for

Disease Control and Prevention to assist with procurement and

maintenance of the National Pharmaceutical Stockpile that would

also be located in specific cities throughout the United States. In

both of these instances VA receives funds from the agencies involved to procure and maintain these stockpiles for those respective

agencies.

In response to the GAO Report on Management of Medical Supplies, I am pleased to have an opportunity to discuss with you VA’s

role and activity as a partner with HHS in procurements, inventory

storage and maintenance and delivery of medical supplies that are

needed for these responses.

The development and maintenance of these stockpiles are integral parts of the Nation’s ability to provide needed health care following an emergency. We recognize the key and strategic nature of

this mission.

OEP officials determine the contents of those inventories; they

provide the funding for the procurement, maintenance and deployment of the medical supplies; and they determine the locations of

the stockpile at these sites across the Unites States. The partnership with the Office of Emergency Preparedness and VA began in

late 1995 and evolved into a formal agreement by 1997.

This partnership has been extended now to a partnership with

CDC to maintain the National Pharmaceutical Stockpile program.

With that background, I’d like to give you a sense of how VA has

responded to the GAO report recommendations. As you’ve already

heard, Mr. Chairman, we concurred with the GAO recommendations and have taken action to correct the problems that they identified. GAO recommended that OEP, CDC, and the Marine Corps,

and VA establish sufficient systems of internal control over their

chemical and biological stockpiles of medical supplies and pharmaceuticals maintained for responding to a terrorist incident. Management needs to reasonably make certain that personnel conduct risk

assessments to ensure efficient and effective administration of the

stockpiles and to organize those program activities to identify and

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mitigate any risks. That way, when needed, the stockpiles can be

provided as planned.

To implement this recommendation, OEP has contracted with

the Logistics Management Institute to evaluate the program, to

conduct a risk assessment, and to advise VA on areas for improvement. We look forward to utilizing their expertise and input and

are moving ahead briskly to get this evaluation done.

Second, the GAO recommended that the agencies arrange for

periodic, independent inventories of the stockpiles. I’m happy to report to you that VA has already conducted full inventories of all of

the stockpiles at every location. Complete stockpile inventory will

be done on a quarterly basis from this time forward. And at completion of the December 2000 inventory, the team will review the

lessons learned and make any further improvements that we feel

are necessary in looking at the processes in place during that year.

Third, GAO recommended that VA implement a tracking system

that retains complete documentation for all supplies which are ordered, received or destroyed. While a tracking system was in place

at the time, obvious deficiencies were noted. We recognized that

improvement needed to be made and we arranged for a more comprehensive and consistent tracking system to be in place on a continuous real-time basis that will be accessible to VA, OEP, and

CDC staff.

Fourth, the GAO recommended that supplies be properly rotated.

It is important that the system be updated and provide reports

about future expiration dates, and that the ordering, receiving,

shipping and rotating of stock at each site be done on a timely

basis. We’ve put systems in place to ensure that this will occur.

Mr. Chairman, I would like to close with a quick description of

some additional actions that have been taken since the GAO review

process took place, and that is that, as you’ve heard, we have new

memorandums of agreement with both OEOP and with CDC which

address all of these issues. We feel that we have moved forward

very rapidly to correct the problems that were identified.

Second, VA employees who were responsible for managing this

program previously did this as an ancillary duty. Obviously, while

the resource need is not great, it is important to have dedicated

staff to maintain these stockpiles and to carry out the periodic activities that are necessary to ensure that these functions are being

performed in a consistent and reproducible way. Those full-time

personnel have been put in place. There is now a permanent fulltime director of the emergency pharmacy activities, and a total of

six full-time staff will be assigned to this activity.

Third, all the refrigeration issues have been dealt with.

Fourth, some communication issues were raised. The communication between our partners and VA has been improved. There have

been numerous meetings and conference calls and we intend to

continue that schedule of routine meetings and activities into the

future.

Fifth, all the stockpiles have been replenished. And in addition,

during the week of December 27, 1999, full inventories were conducted and the amount of diazepam on hand at each stockpile was

revalidated. We do feel that we need to take issue with the statement that 1,000 doses of diazepam were missing. In fact, they were

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not missing, they were replaced with substitutes when the original

auto-injectors were not available for purchase. And I am pleased to

report that we can account for all of the Valium/Diazepam stores

that were necessary for that stockpile.

Mr. Chairman, I believe that the efforts of both the HHS staff

and the VA staff to develop, maintain, and deploy emergency supplies, while they have had limitations in the past, have been improved significantly over the last several months. And we believe

we now have systems in place that address the GAO concerns and

will ensure that these stockpiles are available should they be necessary in the event of a national emergency.

I’d be happy to answer questions for the committee.

Mr. SHAYS. Thank you very much. We appreciate it a lot.

[The prepared statement of Dr. Murphy follows:]

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Mr. SHAYS. Dr. Knouss.

Dr. KNOUSS. Thank you very much, Mr. Chairman. I want to

thank you again for the opportunity to appear before the committee

and for previous appearances where we’ve discussed the whole of

the National Disaster Medical System and our approach as to trying to be prepared to assist the civilian population should one of

these awful events occur. But I would like to put into context these

teams and these stockpiles because these are just a part of the

total system of the National Disaster Medical System in which we

partner with the Department of Veterans Affairs and the Department of Defense and the Federal Emergency Management Agency.

I’d like to spend a few minutes this morning just highlighting my

testimony. I’ve provided my complete statement for the record.

Today I’m here to discuss the recently released GAO report of the

complete audit of four of our specialized pharmaceutical caches

that are used by our special National Medical Response Teams.

These stockpiles were designed to be deployed with these four

specialized teams in responding to a weapons of mass destruction

event and providing medical care to its victims. Of course, we use

our system for many other things. And in fact, we’re just now today

completing some of our work with the Air Alaska crash out in California in identifying the victims that died in that accident. The

stockpiles that we maintain for the National Medical Response

Teams contain specialized pharmaceuticals to treat up to 5,000 victims of a chemical exposure to nerve agents, among other medicines and medical supplies.

The NMRT stockpiles are designed primarily to provide additional supplies to local areas that have depleted their own pharmaceutical resources in the initial hours after a chemical attack, when

time is of the essence. The NMRT stockpiles have also been used

to preposition supplies for designated special events, including here

in Washington, DC, for State of the Union addresses and other activities.

The Department of Veterans Affairs is one of the four partners

in the National Disaster Medical System and manages one of the

largest pharmacy systems in the country. Consequently, we approached VA with our proposal for the purchase, management and

deployment of these stockpiles. VA was able to purchase the pharmaceuticals and supplies through their purchasing system and

store the stockpiles in locations from which they can be deployed

with our teams.

The report recently issued by GAO raises important concerns

about the manner in which these stockpiles were managed and the

oversight provided by our office. We’ve taken GAO’s efforts and report seriously, and we’re taking immediate steps to ensure proper

internal controls are in place and that we are in compliance with

all regulations. I want to note that we have carefully reviewed the

results of GAO’s audit and do not believe that any of the issues

cited degraded our ability to respond to a chemical attack should

it have occurred over the last 2 years.

Based on the result of the GAO audit, however, we have signed

a new interagency agreement with the VA that spells out each

agency’s responsibilities and activities, including assurance of appropriate storage and physical security of the stockpiles; strengthVerDate 11-MAY-2000 13:39 Dec 28, 2000 Jkt 000000 PO 00000 Frm 00024 Fmt 6633 Sfmt 6633 C:\DOCS\67017.TXT HGOVREF1 PsN: HGOVREF1
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ening of internal controls, including audits by both our staff and

VA staff, as well as independent reviews; establishment of a schedule of regular communications, inventory updates and reports; and

regular and recurring management oversight by our office.

We certainly understand GAO’s concerns that insufficient management and oversight controls do not provide any assurance that,

even if the audit had been 100 percent correct on 1 day, there are

no absolute assurances the same would be true the next day, or at

the time of deployment. However, we do not agree with the implication that we would not have been able to respond effectively to

a WMD incident. A ‘‘12 percent error rate’’ has to be put in the context of the type of items that were included in the calculation, and

how the error rate was determined. An excess of large gloves is not

a significant problem and it is our understanding that an individual item could have been produced up to three errors if it was over

or under the count, if the lot number was recorded incorrectly, and

if the expiration date was not the same as the inventory listing.

But since being provided the audit results we have been working

with the VA to assure that these errors, regardless of level of significance, are corrected. Our office and VA will ensure implementation of a far more effective control environment, including stricter

inventory control and monitoring and regular reporting and feedback; ensuring that information is recorded properly and the inventory is kept up to date; ensuring additional and regular onsite monitoring of the stockpiles, including announces and no-notice inspections of each stockpile; and ensuring that risk assessments and

control activities are implemented.

In conclusion, I want to reiterate that we are working very diligently within our own office and with our VA partners to correct

the problems that GAO found, to do a 100 percent inventory, to ensure that current stocks and recordkeeping are accurate and up to

date, and to develop and implement the proper management controls and oversight to ensure that the stockpiles are ready to deploy

and that we are in compliance with all laws and regulations.

Mr. Chairman, that concludes my testimony. I will be pleased to

answer any questions that you may have later on.

Mr. SHAYS. Thank you very much. We’ve heard from the VA and

from HHS and now we’ll hear from CDC.

[The prepared statement of Dr. Knouss follows:]

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Mr. SHAYS. Dr. Ostroff.

Dr. OSTROFF. Thank you, Mr. Chairman.

We appreciate the opportunity to discuss the development of the

National Pharmaceutical Stockpile or NPS, which is one of the

components of our overall public health response to the threat of

bioterrorism.

Today I am accompanied by Mr. Steven Bice, who is Chief of our

CDC National Pharmaceutical Stockpile Branch located in the National Center for Environmental Health.

In 1998, CDC issued Preventing Emerging Infectious Diseases: A

Strategy for the 21st Century, our plan for preventing emerging

diseases. It focuses on four goals, each of which has direct relevance to preparedness for bioterrorism: disease surveillance and

outbreak response; applied research; infrastructure and training;

and disease prevention and control. This plan emphasized the need

to be prepared for the unexpected—whether it be a naturally occurring West Nile Virus outbreak or the deliberate release of anthrax

by a terrorist.

A 5-year strategic plan for bioterrorism that CDC has been developing with its partners will soon be published. It defines activities

necessary to ensure that the public health community is prepared

to recognize and respond to a threat or actual act of bioterrorism.

However, CDC has already moved forward in multiple critical

areas using funds appropriated by Congress beginning in fiscal

year 1999. One of these areas was the development of a National

Pharmaceutical Stockpile which can be called upon in response to

an episode caused by a biological or chemical agent. The mission

of CDC’s NPS is to ensure the availability of life-saving pharmaceuticals and other medical supplies for prompt delivery to the site

of a biological or chemical terrorist event anywhere in the United

States. While the first response to an incident will come from local

and State emergency medical and public health personnel, few local

governments have the resources to create sufficient stockpiles on

their own.

CDC has used an ongoing deliberative process to guide purchasing decisions for the NPS. Fiscal year 1999 decisions were based

on the recommendations of two multispeciality expert working

groups and the Department’s operating plan, which was submitted

to Congress.

A subcommittee of the Advisory Committee to the Director of

CDC also is involved in this review process. Because acquisition

priorities may change over time as threats change, these committees will continue to provide input and oversight. CDC has also established relationships with the national security agencies to ensure that the stockpile reflects current concerns and information.

The expert working groups convened by CDC prioritized the following six biological agents and diseases as concerns in civilian settings: smallpox, anthrax, pneumonic plague, tularemia, botulinum

toxin and viral hemorrhagic fevers. Because anthrax, plague and

tularemia can be treated with currently available antibiotics, purchasing these products for the NPS formulary was given top priority for fiscal year 1999. Presently there is no additional smallpox

vaccine or botulism antitoxin to procure. However, efforts to rectify

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this situation are a high priority for the Department and our partners in the Department of Defense.

The working groups also identified chemical agents that could be

used in a terrorist incident, including nerve agents such as sarin,

and respiratory irritants and vesicants such as sulfur mustard and

cyanide. Obtaining antidotes for these agents was also given high

priority in fiscal year 1999.

The NPS has two basic components. One consists of four pre-assembled sets of supplies which are called ‘‘12-hour push packages,’’ ready for quick delivery and use in the field. And in response to

your questions to the previous panel, we’ve brought pictures so that

you can see what one of these actually looks like in the warehouse.

There are also Vendor Managed Inventory packages [VMI], which

will be activated if the incident requires a continued response. The

VMI packages will be shipped to arrive at 24 and 36 hours after

activation and will comprise material that would be delivered from

one or more pharmaceutical manufacturers or prime vendors with

whom we will contract to hold inventory that can be released at the

time of an emergency.

The decision to deploy the stockpile will be based on the best epidemiologic, laboratory and public health information regarding the

nature of the threat. This is one of the reasons the development of

the public infrastructure for bioterrorism response is so important.

When a biological or chemical terrorist incident is suspected, CDC

will enhance surveillance activities, laboratory confirmation procedures, notification of the Office of Emergency Preparedness and appropriate Federal agencies and provide pertinent technical support.

With regard to the stockpile, the Director of CDC, in consultation

with the Assistant Secretary for Health, will direct its mobilization.

If CDC stockpile components are needed, 12-hour push packages

will be rapidly deployed. CDC will then begin the process of tailoring subsequent deliveries of stockpile components from the Vendor

Managed Inventory as indicated by the specific biological or chemical threat.

In regard to the GAO-identified weaknesses in internal controls

and management structure, there are three aspects of our NPS

which are critical in addressing these concerns. First, there is direct coordination and management by CDC staff. CDC is an active

partner in all aspects of the NPS. This includes providing guidance,

oversight, operational control, and evaluation. After an intensive

systematic deliberative process, which included valuable input and

support from GAO and others, CDC chose the VA as the acquisition partner to work with on the NPS and feels that carefully

planned management steps and close oversight will prevent future

problems such as those identified by GAO.

The second point is that there will be continuous monitoring,

quality assurance, and evaluation. We’ve taken steps to assure that

the memorandum of agreement between CDC and the VA is explicit, comprehensive and precise. And CDC’s tradition of oversight,

technical assistance, and onsite presence is an integral part of the

NPS. Through its real-time access to the VA’s electronic inventory

record system, CDC will monitor the purchase of stockpile pharmaceuticals and medical equipment, rotation of stock, and disposal of

items for which there is not comparable civilian use.

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CDC will physically verify the records of stock maintenance and

transactions as part of its periodic unannounced site visits. Since

the memorandum of agreement was signed CDC has already made

multiple visits to inspect the 12-hour push packages, including two

visits which were unannounced. Security measures will also be in

place to safeguard NPS pharmaceutical supplies and equipment.

The third aspect of our management plan is partnerships, collaboration and communication. The responsibility for managing the

NPS requires that we partner with OEP, other Federal agencies

and State and local governments. CDC is planning training to fully

prepare our State and local partners and will provide technical assistance to State and local governments that wish to purchase

pharmaceuticals, chemical antidotes, other medical supplies and

medical equipment to augment their current emergency response

capabilities.

In summary, we believe that these components of the NPS will

address the management concerns identified by GAO and assure

provision of medical supplies, pharmaceuticals and other stockpiled

equipment in a timely fashion.

This concludes my comments and we, too, will be happy to answer any questions.

Mr. SHAYS. Thank you. This is very interesting and it will be interesting for me to see how all of you interface with each other.

[The prepared statement of Dr. Ostroff follows:]

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Mr. SHAYS. Colonel, it is so wonderful to have you here and you

have the floor.

Colonel HOLLIFIELD. Thank you, sir. I’m very pleased to be here.

I have the opportunity today to address the management of medical supplies within the Chemical/Biological Incident Response

Force. With me today is Commander Warren R. Dalton. Commander Dalton is a U.S. Navy Medical Officer and board-certified

emergency medical physician and serves as my Senior Medical Officer.

Commander Dalton dealt directly with the GAO representatives

who visited our command and is here to provide any additional insight you may desire relative to that visit or the management of

our medical supplies.

As you’re aware, sir, during the summer of 1999 the GAO undertook a study to evaluate the readiness of our Nation’s ‘‘stockpile’’ of chemical and biological medicines designed to treat civilian casualties. As originally envisioned no Department of Defense Activities were projected to be a part of that study. However, the GAO

did visit our command at CBIRF, Camp Lejeune, and had some

valuable insight for us.

Although CBIRF maintains medical supplies as part of routine

inventory, we’ve never considered those supplies to fall into the category of being a ‘‘stockpile,’’ basically because we don’t view those

supplies as being held for further distribution. We view that our

medical supplies are held for internal use, primarily for the treatment of the Marines and sailors assigned to the command; that is

to say, sir, that the medical supplies that are stocked are not

stocked for distribution to civilian care providers or for routinely

treating civilian casualties, except where emergency lifesaving care

is required.

Accordingly, we view the supplies that we hold as being held by

the end user as opposed to distributor. Nonetheless, where the

GAO recommended we strengthen our internal control measures,

we think that we’ve taken appropriate action to comply with the

guidelines set forth in OMB Circular A–123.

First they asked that we conduct risk assessments and look at

our program activities and organize those to identify and mitigate

those risks.

I conducted a risk assessment in December 1999, and as part of

this risk assessment I asked for a formal independent external

physical security evaluation. We just received the results of that

evaluation late in February of this past year and we’re taking appropriate action to implement the measures contained therein.

Specifically, we’ll be looking at improving our access control

under that portion of the warehouse where medical supplies are

stored, setting up positive lock and key control procedures.

In addition, we will be providing crime prevention and loss

awareness training for all personnel performing supply related duties.

Additionally, as part of this risk assessment I asked my Supply

Officer to conduct a total review of the medical supply operating

procedures in effect at my command. His charter was to ensure

that the procedures that we have in place are consistent with governing Marine Corps directives and the policy as set forth in the

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Marine Corps Consumer Level Supply Policy Manual, Marine

Corps Order P4400.150E. Since the Department of Defense is not

formally a participant in the National Pharmaceutical Stockpile

Program, it is this directive that we use to manage our medical

supply operations.

Second, the GAO recommended that CBIRF arrange for periodic

independent evaluations. The Marine Corps Field Supply Maintenance Analysis Office, an independent agency that operates outside

of my influence and outside of my command, routinely conducts external reviews of all Marine Corps supply related accounts.

Following the GAO’s visit I coordinated and arranged with my

higher headquarters for an independent evaluation by an external

agency having specific knowledge of Navy medical logistic procedures. The Medical Logistics Company of the Second Force Service

Support Group was tasked to conduct a review of our operating

procedures, and that review was just completed approximately 1

week ago.

Pending the written results of that review, when received, we

will take appropriate action to implement any findings and recommendations that they make.

Further, I directed that my Supply Officer conduct periodic spot

checks of our inventory and have arranged for a quarterly reconciliation of the medical supply account. I’ve asked him to ensure that

the medical supply account receive special emphasis during all future supply related inspections and audits.

Third, the GAO recommended that we implement a tracking system that retains complete documentation for all supplies that were

either ordered, received, or destroyed.

We have recently evaluated our existing data base and to be

quite honest, sir, there’s room for improvement. And we’re working

to modify that data base to improve the fields of data this captures

so that we will have better tracking and visibility.

Additionally, in light of the fact that our medical supply account

is maintained on a daily basis by Navy medical personnel as opposed to supply personnel, my Supply Officer has been directed to

ensure that the medical personnel tasked with the daily operation

receive adequate training in supply related functions.

Finally, the GAO recommended that we rotate supplies properly.

It is my intent to publish specific written policy that addresses the

overall management of our supply medical account when we receive

the results of the Medical Logistics Company’s independent evaluation. This policy will address not only the proper rotation of medical supplies, but will further ensure that we are being consistent

with the existing Marine Corps and Department of Navy regulations.

I believe that all these actions will significantly improve the internal control over my medical supply account.

Before I conclude, sir, I would like to address a few additional

issues raised in the GAO Report.

The GAO noted that CBIRF did not have an authorized allowance list of supplies that it was authorized to maintain.

Mr. SHAYS. If you talk a little slower—I think you’re well trained

to get it all done, but I’m going to try to listen carefully here.

Colonel HOLLIFIELD. Yes, sir.

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The medical supplies that I maintain, sir, are those that my staff

and I feel were necessary to be able to execute our mission. The

supplies were quite typical in terms of types and quantities to the

types of medical items that would be held by most any military

medical organization.

Within the Department of the Navy the types and quantities of

supplies and equipment that a unit is authorized to hold is set

forth in a standardized, authorized medical allowance list, commonly referred to as an AMAL. An AMAL exists for every type of

military organization, however, none have yet been developed for

chemical or biological response units such as CBIRF. To this end

we have taken the lead in trying to identify what we feel is an appropriate stockage level of medical equipment and supplies that we

should retain to be mission-capable. This has been submitted to our

Marine Corps Systems Command at Quantico, VA, which is currently working to standardize an allowance list.

In the interim it is my intent to publish a standardized allowance list as a CO’s allowance list until such time as an AMAL is

fielded. This allowance list will serve as the baseline for our inventory.

In addition to those general medical care items that we hold, sir,

my unit stocks three medications specifically designed for the treatment of chemical or biological casualties. These medications, 2 Pam

Chloride, atropine, and diazepam, are held first and foremost as

part of my own force protection program. Since CBIRF Marines

and sailors risk potential exposure when sent to respond to a chemical or biological incident, this is a measure that any prudent commander would take. However, I also recognize that during any response there is a potential that we may have to provide care for

either local first responders or civilian casualties. And while the

medications are not stocked or held expressly for this purpose, they

could be so used in emergency situations.

However, in such circumstances it has never been envisioned

these supplies would be turned over to local medical care providers,

but rather that they would be administered by my medical personnel only when lives were genuinely at risk and where no reasonable alternative exists.

Sir, I’m here today not to offer any excuses, but to provide an explanation of the actions that we’ve taken since GAO visited. GAO

provided a very important aspect for us because they brought a

viewpoint that was beyond the pure military bounds and they’ve

caused us to take an internal look at our operations and look for

methods and means within our resources and capabilities to improve our process.

We do feel, however, that in the characterization of CBIRF’s

medical supply as a kind of ‘‘stockpile,’’ the GAO does not truely

provide an accurate depiction of the holdings that we possess.

We’re keenly aware that we are a unique unit with a very important mission, and accordingly my staff and I have made every effort to implement the recommendations within our power and capabilities.

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Mr. Chairman, we stand ready to answer any questions that you

may have today, just as your Marines and sailors within the unit

stand ready to respond when this Nation calls. Thank you.

Mr. SHAYS. Thank you, Colonel.

[The prepared statement of Colonel Hollifield follows:]

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Mr. SHAYS. This is very helpful to have all of you here and it will

be interesting for me, one, to see how you interface and, two, to understand a few things that this raises really beyond the GAO report that will help us in our continual oversight. And I’ll say from

the outset that our view is that sometimes GAO is always easy to

come in and find things wrong and it’s always easy for Congress

to come in condemn and say why is it wrong. But if you see what

GAO has suggested as making sense, and agree with the criticisms,

see that their recommendations make sense and that people are

implementing those recommendations, we’re happy to get on to the

next issue and not throw stones.

But there are some things I just don’t quite understand, so there

are going to be some general questions at first.

First, Colonel, I understand the Marines are usually the first in,

they always want to be the first in, but the Army feels sometimes

they’re going to be the first in in some instances. But bottom line,

you’re usually first in and so I’m making an assumption that that’s

why you have a stockpile. But I don’t understand, one, if you’re the

only branch that has the stockpile—if you have any knowledge of

this I’d like you to share it with me, but I can ask others—one, why

do you have this stockpile? And two, if you’re the only branch to

have it, why you and not the other branches?

Colonel HOLLIFIELD. Mr. Chairman, I would default back to saying that we’ve never considered what we hold as stockpile. If you

look at the quantities of items that we hold and the types of items

that we have in our inventory, they’re very typical to what you

would find in almost any operational military command. So accordingly, if the quantities and items that we hold are truly a stockpile,

in essence almost every military organization holds a stockpile.

We are not a part of the formal cache program that you were

briefed on earlier. However, we do stock a small quantity of 38,000

medical items and hold approximately 7,000 items that would be

specifically designed for first response to a chemical or biological

event. The remainder of the items that we stock are primarily general medical care items. So we don’t view this as a stockpile. We

really view it at a response stock. Primarily we hold these supplies

for our own individual use. We’ve never envisioned that we would

distribute those to anyone outside of our organization or outside

military control.

Mr. SHAYS. So it basically is your testimony that you suspect the

other branches are doing the same thing you’re doing?

Colonel HOLLIFIELD. Sir, I couldn’t speculate on whether they’re

doing that. I know that we have been a test bed, in essence, to develop techniques and procedures and I’m sure they face the same

challenge as we have in terms of an authorized list of what they

should have.

Mr. SHAYS. Is this a directive from the Secretary of Defense that

you do this? In other words, if I’m asking a question you may not

know, I understand, because it’s not really the primary focus of this

hearing, it’s just a logical question to ask for our understanding

this whole process.

Colonel HOLLIFIELD. There is no basis, sir, that tells me what I’m

authorized to hold. The items that we hold now are those that we

held when the unit was first activated in 1996. Since that time

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we’ve developed to come up with an understanding of what we feel

is appropriate to have in order to be able to effectively execute a

response.

Mr. SHAYS. I’ll come back to this.

My understanding—I’ll ask anyone here to correct me—we in

Congress asked that the VA stockpile, HHS and VA—well, actually, maybe HHS and then they contracted with VA, so I’ll have

that clarified—but we had four sites. But we also said that CDC

would have a stockpile as well. I get the sense that it really—I

mean, the way I was beginning to see it, I was beginning to think

the Marines would be first, maybe, they might be the first to a particular site, but this is probably just military.

Colonel HOLLIFIELD. The event that would get us to the site

would be a request from another Federal agency, such as FEMA.

Mr. SHAYS. My sense, though, is that the primary sites are the

four for the earliest, that those are primary sites for the fastest

call, and then my sense is the CDC sites will be larger and then

will respond on a more long-term basis. Dr. Ostroff, am I right?

Kind of give me a picture here. Give me the sequence of how this

works.

Dr. OSTROFF. Right. I think I’ll let Dr. Knouss also respond.

I think one of the things that is important to point out is that

there are different types of events which are possible. And we look

at chemical events as being quite different from biological events.

When chemical events occur, the timeframe between when the release occurs and when people start getting sick is really quite brief,

whereas with most of the biological agents the time interval between the exposure and when people will become ill for some of

these agents can be days to weeks. And so the events will play

themselves out quite differently. And how these events get recognized will clearly be quite different as well.

The stockpiles developed by OEP—and I think I’ll leave that to

Dr. Knouss to further elaborate—are largely around the deployment of teams that will be responding to chemical events. We have

developed our stockpile to be able to supplement in larger numbers

those materials if the chemical event is larger that can be handled

with the stockpiles developed by OEP. But ours is principally developed around being able to respond to biological events.

Dr. KNOUSS. Support function No. 8 of the Federal Response

Plan under FEMA deals with the consequence management responsible agency if there should be one of these events in the United

States. Our part of that is that the health and medical response

and the four national response teams that we have put together

are meant to be able to deploy to an incident site or to be

prepositioned out at the site in which there is a threat, a known

threat, a significant threat, in order to deal with the most immediate consequences. So most of the cache that we carry with us is

meant to deal with the immediate consequences of a chemical exposure, where time is absolutely of the essence to get to the scene

and to be able to offer antidotes. And frankly, by the time we reach

the scene a lot of our supplies are meant to be resupply of what

we are trying to already preposition through metropolitan medical

response systems in the major metropolitan areas themselves.

And then we would come in with our stockpiles and our caches.

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Mr. SHAYS. Those being—— Dr. KNOUSS. OEP, HHS.

Mr. SHAYS. The four VA stockpiles?

Dr. KNOUSS. Yes. They would accompany our teams in and we

have designed those caches so that they can be split into five

pieces, readily. One piece could go to an incident and four other

pieces could go to resupply up to four hospital facilities. And once

we arrive at a scene we could immediately separate those caches

into those five pieces, or we could manage it a little bit differently.

We could send two to one place or three pieces to another, but they

are manageable pieces of an overall cache and designed to be

tactically responsive to whatever the situation might be.

If we need more to treat 5,000 people we can bring in a second

cache from another location to reinforce that. But frankly, at some

point the limiting factor becomes the number of professionals that

are available to be able to administer the caches in a pharmaceutical—on a rapid basis.

Mr. SHAYS. So technically you think you have basically the ability to respond to 20,000?

Dr. KNOUSS. Exactly. At the maximum. Now, that response

needs to occur in hours, so time is really of the essence. The CDC

stockpile is meant to deal with reinforcing some of that chemical

supply if we need to for very serious exposures. But is primarily

geared to meeting the very large pharmaceutical requirements

where up to millions of people might be exposed to a biological attack. And so therefore the cache that you see there illustrated as

part of CDC’s cache is far larger than the size of the cache that

you will see—the number of boxes that you would see at one of our

warehouses.

Mr. SHAYS. Dr. Ostroff, how many sites are you going to be developing?

Dr. OSTROFF. The actual number of sites is still under discussion.

There will be four sites for the 12-hour push packages.

Mr. SHAYS. Four different sites than with the VA?

Dr. OSTROFF. No, one of the sites is the VA warehouse in Hines,

IL. The other three have yet to be prepositioned. There are still discussions about how to most efficiently locate them.

Mr. SHAYS. So the one in Hines has basically yours and HHS’s.

I just want to make sure I’m not—I want to be clear here. We have

four VA sites. CDC has mandated to establish a bigger cache.

Dr. OSTROFF. Right.

Mr. SHAYS. Are you also using some of the VA sites as well as

other sites?

Dr. OSTROFF. Well, it’s conceivable. For instance, the Vendor

Managed Inventory, which is the longer-term supply, will be a virtual inventory through either the manufacturers themselves or

through what’s referred to as Prime Vendor, essentially a middleman who would be able to provide a variety of different agents.

And that inventory may be in a number of different locations. We

are seeking to try to minimize the number of different locations.

Mr. SHAYS. I’m going to go to Mr. Tierney. But just let me ask

this question then I’ll be coming back. Is it conceivable that we

would just pay manufacturers to have an excess supply? I would

think one of the advantages is that then they could then keep roVerDate 11-MAY-2000 13:39 Dec 28, 2000 Jkt 000000 PO 00000 Frm 00055 Fmt 6633 Sfmt 6633 C:\DOCS\67017.TXT HGOVREF1 PsN: HGOVREF1
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tating it out so it never becomes useless, and they can still get into

the marketplace potentially.

Mr. OSTROFF. That’s correct. You’re absolutely correct and that

is far and away the most efficient way to have the vendor

managed—— Mr. SHAYS. And I’m going to come back and ask the VA and HHS

if you let—the shelf life runs out, but do you try to, maybe if you

have weeks or a month left or something, try to get them out so

they can be used somewhere where there’s a need. I know for instance that Ameri-Cares, based in my community of Canaan, has

given out billions of dollars worth of drugs around the world. And

what they do is, they get close to terminated vaccines and so on

and then use them up within the time period. So I’ll ask VA if they

just throw away these pharmaceuticals or whether we’re still able

to utilize them.

Mr. Tierney said I could just jump in and ask you that. Is this

a little beyond the point now? I’m not trying to rush you because

I first want to make sure you manage the pharmaceuticals well,

but this is when we get beyond the good management, and I’m just

hoping that we’re not wasting the products.

Dr. OGDEN. It’s possible to return some of the items. Some of the

items we can’t return because that’s part of the agreement between, let’s say, the manufacturer and the Department of Defense

for those items that we specifically buy for the Department of Defense, but some items we can return and we have returned and do

have credits received for those outdated products.

Mr. SHAYS. We can get into this later. Thank you.

Mr. TIERNEY. Thank you, Mr. Chairman. I really don’t have a lot

of questions in here. I think that you’ve all addressed the GAO’s

report in a fine manner.

I do have one question for the Colonel, to try to get an understanding. Do you have any knowledge about whether or not the

other branches have units similar to yours?

Colonel HOLLIFIELD. Mr. Tierney, I don’t have any knowledge of

a unit exactly like mine. I know that they are developing the

Weapons of Mass Destruction Civil Support Teams within the

Army National Guard. The parameters of that program I’m not familiar with in specific detail.

Mr. TIERNEY. Thank you. Other than that I think I understand

pretty much what’s going on and what’s transpired here. I do want

to make the comment without at all seeming patronizing or anything that I think it was refreshing to hear people acknowledge the

GAO’s value in the report that they did and address it. And I think

everybody reserved whatever questions and issues they wanted to

raise on that, but I think it’s a very high level of professionalism

and response and I just want to commend you all for doing that

and it’s impressive to us and I think it’s going to benefit the country. And thank you very much.

Mr. SHAYS. I have just one question. I wanted to read the testimony that I had on the Marines.

Colonel, I want you to put this in some perspective because on

the surface it doesn’t make me feel comfortable. I think there is an

answer for it so you say, ‘‘While I do not think that CBIRF should

be held to a higher supply management standard then those reVerDate 11-MAY-2000 13:39 Dec 28, 2000 Jkt 000000 PO 00000 Frm 00056 Fmt 6633 Sfmt 6633 C:\DOCS\67017.TXT HGOVREF1 PsN: HGOVREF1
53

quired of any other military unit, I recognize that the unique nature of our unit and mission make consideration of GAO’s observations prudent.’’ I’ve always thought that the military actually has a higher

standard then the private sector and the implication there is not

comforting.

Colonel HOLLIFIELD. Sir, we have a set procedure for the management of our supply account as set forth in our Marine Corps

Consumer Level Supply Policy Manual. As it was pointed out when

the GAO visited, some of the systems that we use, our data bases

for example, do not capture all of the exact data fields that would

be necessary to adequately ensure that we’re tracking and properly

getting the visibility to the degree that was lacking when GAO visited. Those data bases that we use are data base systems that are

prescribed for us. Certainly, however, there’s nothing preventing us

from looking at or modifying those and adding additional fields so

that we do capture stuff such as consumption data, rotation dates

of supplies, shelf life expiration, et cetera. Those right now are not

captured with the existing data base system.

Mr. SHAYS. Those are not what? I’m sorry.

Colonel HOLLIFIELD. Those are not captured at this time by the

existing data base. So in addition the data base captures only the

very basic information in terms of the type of item, its stock number, et cetera. But we have to go in and manually track shelf life

expiration. So when we say that we don’t feel that we should be

held to a higher supply management standard, my intent there is

to say, we think we have pretty good guidelines already in existence with our existing policy. But we do need to go back and make

some minor modifications to enhance our control mechanisms.

Mr. SHAYS. I’m trying to understand why when GAO looked at

your facility, they were basically directed by DOD Health Affairs

to look at your facility as a stockpile facility, and so it’s—we’re

going to try to understand the Marines, not Army, why Marines.

In one sense maybe it’s a compliment to you all that you all may

be doing something a little different than the other branches. But

let me just state what I think I’m hearing and then I want to be

corrected because we’re almost done here.

The bottom line, the first responders are going to actually be the

local communities themselves, that’s going to happen. They’re

going to have some supplies. And the next response is going to be—

and I’m not sure how the logistics work—but we’re going to get

supplies from one or more of our four locations. Is that going to be

done by the military, is it going to be done commercially, is it going

to be done in a combination? And is HHS basically, is the VA just

responsible for the stockpile once, but that’s it and then HHS takes

over? I’ve asked a few questions.

Dr. KNOUSS. To get back to our system, the National Disaster

Medical System is made up of four components. We have HHS’s

components which are mainly the teams that are going out and

providing care at the scene of a disaster. Our partners in the Department of Veterans Affairs also assist us with that, but also are

responsible for operating a part of the system that would be used

to hospitalize people that need care in which the local communities

resources have been overwhelmed and DOD——

54

Mr. SHAYS. DOD using the VA facilities locally?

Dr. KNOUSS. Well, no, actually it’s a system of 100,000 hospital

beds in civilian hospitals that we have organized under Federal Coordinating Centers operated by the VA and by the three branches

of DOD. And that’s a partnership arrangement where we have

mainly to deal with two problems, military contingencies—— Mr. SHAYS. The ‘‘we’’—sometimes I hear ‘‘we’’, and your ‘‘we’’ might be different then my ‘‘we.’’ Dr. KNOUSS. All right. ‘‘We’’ as the Federal Government. We and

HHS.

Mr. SHAYS. Who is the ‘‘we’’ that makes sure this happens, is it

HHS?

Dr. KNOUSS. The partnership is the Department of Health and

Human Services; the Assistant Secretary for Health chairs the

group that manages this system. The Under Secretary for Health

of the Department of Veterans Affairs, the Assistant Secretary of

Defense for Health Affairs at DOD and the Director of FEMA. That

partnership operates the system. DOD is responsible for transportation of patients in that system. And the Department of Veterans

Affairs and DOD are responsible for the maintenance of the hospital beds in that civilian contingency bed system, with 2,000 hospitals around the country participating.

Mr. SHAYS. How do the pharmaceuticals get to the sites?

Dr. KNOUSS. The way we would do that is under the Federal Response Plan. The first step is for FEMA as responsible for transportation to move our team to the disaster site and they would depend

on DOD resources. If we’re not able to use that system, our backup

is a direct call to the Director of Military Support in the Pentagon.

And our third backup is to piggyback onto the civilian contracts

that CDC will have for the larger stockpile movement.

So we have three steps that we can use to back up movement

of our teams and smaller supplies.

Mr. SHAYS. I’ve learned just in my own small office if I have two

people responsible, nobody is responsible.

Dr. KNOUSS. We are.

Mr. SHAYS. So, I always have one person ultimately responsible.

Dr. KNOUSS. Our office.

Dr. MURPHY. Chairman Shays, we would get a call from OEP

that a disaster has been declared. They need the cache. That call

would go out; VA would go to the cache, transport it and deliver

it to the team, the NMRT, and they would take it to the disaster

site. That’s how the pharmaceuticals would be transported and

that would be VA’s part of the role.

Mr. SHAYS. I think I’m pretty clear about that. I’m pretty clear

that the VA is basically taking the recommendations of the GAO

and implementing them. You have an objection to one area dealing

with what you had in supply and not. So you take issue with one

area of their report, correct?

It’s my understanding that basically you, Dr. Ostroff, are still deciding how much is going to be held by the manufacturer, what

sites to have and so on. But I’m sure the GAO report is helpful for

you to just make sure.

And Colonel, the sense I’m getting from you is that you view

your stockpile differently. I just want to be certain so we don’t have

55

to deal with it later. Is it possible that DOD views your stockpile

as unique and that you aren’t to service the needs the other three

branches?

Colonel HOLLIFIELD. Sir, I have no knowledge if that’s the view

that they hold.

Mr. SHAYS. Well, then I don’t want to imply that it is. I just want

to make sure I asked the question.

Colonel HOLLIFIELD. I know that in your previous analogy, sir,

the two steps, we count that in between the incident and when the

12-hour push is going to show up, we’re there not primarily for that

purpose, but we certainly have some medications with us, that in

the event that there is a time gap to be bridged between the time

that the first responders act and may not have those medical supplies they need, and OEP and CDC can push from their stockpiles,

we can bridge that gap on a very moderate basis.

Mr. SHAYS. Let me say this is the first hearing that’s been helpful for us to get this knowledge and it’s also to make you aware

that we are interested and will be watching, in part because I

think there’s a temptation to think you may never be utilized, and

yet you may. But we’re also going to just make sure that you’re living up to all your goals and objectives. And then we’re also going

to be looking to see if the system can be improved and if we in Congress can play a part.

Is there any comment that any of you want to make before we

adjourn this hearing?

Mr. Ogden, you look like you want to say something.

Mr. OGDEN. No, thanks. Thank you very much, Mr. Chairman.

Just thank you.

Mr. SHAYS. Well it’s wonderful to have you here. Thank you for

your good work.

The hearing is adjourned.

[Whereupon, at 11:35 a.m., the subcommittee was adjourned, to

reconvene at the call of the Chair.]

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