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28–228 PDF 2006

LOOKING A GIFT HORSE IN THE MOUTH: A POSTKATRINA REVIEW OF INTERNATIONAL

DISASTER ASSISTANCE

HEARING

BEFORE THE

COMMITTEE ON

GOVERNMENT REFORM

HOUSE OF REPRESENTATIVES

ONE HUNDRED NINTH CONGRESS

SECOND SESSION

APRIL 6, 2006

Serial No. 109–151

Printed for the use of the Committee on Government Reform

(

Available via the World Wide Web: http://www.gpoaccess.gov/congress/index.html

http://www.house.gov/reform

(II)

COMMITTEE ON GOVERNMENT REFORM

TOM DAVIS, Virginia, Chairman

CHRISTOPHER SHAYS, Connecticut

DAN BURTON, Indiana

ILEANA ROS-LEHTINEN, Florida

JOHN M. MCHUGH, New York

JOHN L. MICA, Florida

GIL GUTKNECHT, Minnesota

MARK E. SOUDER, Indiana

STEVEN C. LATOURETTE, Ohio

TODD RUSSELL PLATTS, Pennsylvania

CHRIS CANNON, Utah

JOHN J. DUNCAN, JR., Tennessee

CANDICE S. MILLER, Michigan

MICHAEL R. TURNER, Ohio

DARRELL E. ISSA, California

JON C. PORTER, Nevada

KENNY MARCHANT, Texas

LYNN A. WESTMORELAND, Georgia

PATRICK T. MCHENRY, North Carolina

CHARLES W. DENT, Pennsylvania

VIRGINIA FOXX, North Carolina

JEAN SCHMIDT, Ohio

——— ———

HENRY A. WAXMAN, California

TOM LANTOS, California

MAJOR R. OWENS, New York

EDOLPHUS TOWNS, New York

PAUL E. KANJORSKI, Pennsylvania

CAROLYN B. MALONEY, New York

ELIJAH E. CUMMINGS, Maryland

DENNIS J. KUCINICH, Ohio

DANNY K. DAVIS, Illinois

WM. LACY CLAY, Missouri

DIANE E. WATSON, California

STEPHEN F. LYNCH, Massachusetts

CHRIS VAN HOLLEN, Maryland

LINDA T. SANCHEZ, California

C.A. DUTCH RUPPERSBERGER, Maryland

BRIAN HIGGINS, New York

ELEANOR HOLMES NORTON, District of

Columbia

———

BERNARD SANDERS, Vermont

(Independent)

DAVID MARIN, Staff Director

LAWRENCE HALLORAN, Deputy Staff Director

TERESA AUSTIN, Chief Clerk

PHIL BARNETT, Minority Chief of Staff/Chief Counsel

(III)

C O N T E N T S

Page

Hearing held on April 6, 2006 ................................................................................ 1

Statement of:

D’Agostino, Davi M., Director, Defense Capabilities and Management;

Scott Rowell, Deputy Assistant Secretary for Homeland Defense, U.S.

Department of Defense; Gregory C. Gottlieb, Acting Director of the

Office of U.S. Foreign Disaster Assistance, U.S. Agency for International Development; Casey Long, Acting Director of the Office of

International Affairs, Federal Emergency Management Agency, U.S.

Department of Homeland Security; Deborah McCarthy, Director of the

Hurricane Katrina Task Force Working Group, U.S. Department of

State; and Hudson La Force, Senior Counselor to the Secretary, U.S.

Department of Education ............................................................................. 18

D’Agostino, Davi M. .................................................................................. 18

Gottlieb, Gregory C. .................................................................................. 44

La Force, Hudson ...................................................................................... 84

Long, Casey ................................................................................................ 62

McCarthy, Deborah ................................................................................... 70

Rowell, Scott .............................................................................................. 36

Letters, statements, etc., submitted for the record by:

Cummings, Hon. Elijah E., a Representative in Congress from the State

of Maryland, prepared statement of ............................................................ 13

D’Agostino, Davi M., Director, Defense Capabilities and Management,

prepared statement of ................................................................................... 21

Davis, Chairman Tom, a Representative in Congress from the State of

Virginia, prepared statement of ................................................................... 4

Gottlieb, Gregory C., Acting Director of the Office of U.S. Foreign Disaster Assistance, U.S. Agency for International Development, prepared

statement of ................................................................................................... 46

Kucinich, Hon. Dennis J., a Representative in Congress from the State

of Ohio, prepared statement of .................................................................... 98

La Force, Hudson, Senior Counselor to the Secretary, U.S. Department

of Education, prepared statement of ........................................................... 86

Long, Casey, Acting Director of the Office of International Affairs, Federal Emergency Management Agency, U.S. Department of Homeland

Security, prepared statement of .................................................................. 64

McCarthy, Deborah, Director of the Hurricane Katrina Task Force Working Group, U.S. Department of State, prepared statement of .................. 72

Rowell, Scott, Deputy Assistant Secretary for Homeland Defense, U.S.

Department of Defense, prepared statement of ......................................... 38

Waxman, Hon. Henry A., a Representative in Congress from the State

of California, prepared statement of ........................................................... 8

(1)

LOOKING A GIFT HORSE IN THE MOUTH: A

POST-KATRINA REVIEW OF INTERNATIONAL

DISASTER ASSISTANCE

THURSDAY, APRIL 6, 2006

HOUSE OF REPRESENTATIVES,

COMMITTEE ON GOVERNMENT REFORM,

Washington, DC.

The committee met, pursuant to notice, at 11:13 a.m., in room

2154, Rayburn House Office Building, Hon. Tom Davis (chairman

of the committee) presiding.

Presents: Representatives Tom Davis, Ros-Lehtinen, Gutknecht,

Platts, Miller, Dent, Waxman, Owens, Cummings, Kucinich, Clay,

Ruppersberger, Higgins, and Norton.

Staff present: David Marin, staff director; Chas Phillips, policy

counsel; Rob White, communications director; Andrea LeBlanc, deputy director of communications; Grace Washbourne and Wimberly

Fair, professional staff members; Teresa Austin, chief clerk; Sarah

D’Orsie, deputy clerk; Phil Barnett, minority staff director/chief

counsel; Michael McCarthy, minority counsel; Earley Green, minority chief clerk; and Jean Gosa, minority assistant clerk.

Chairman TOM DAVIS. Good morning. Thank you for your patience. A quorum being present, the committee will come to order.

After Hurricane Katrina, donations from other countries poured

into the U.S. Government. Offers of money, water, food, and medical supplies and other commodities came from more than 130 nations and a dozen international organizations. In cash alone, the

United States has received $126 million to date.

On behalf of the members of the committee and the people we

represent, I want to thank those nations who rushed in to offer assistance and aid to those Americans affected by Hurricane Katrina.

The list of countries who offered to help as reported by the State

Department and the Department of Defense is enormous, and it reflects the goodwill of all people who come to the aid of those in

need. The United States is eternally grateful for your generosity.

We are here today to find out if our government in effect looked

this gift horse in the mouth. We will examine how prepared the

Federal Government was to accept this unprecedented level of aid

from foreign governments and whether the ad hoc procedures for

accepting aid put in place after Katrina has been adequate. It appears that policies and procedures were lacking simply because no

one in the Federal Government anticipated needing or receiving

this assistance. It does no good to be offered money, food, water,

or potentially life-saving medical supplies if we don’t have proceVerDate 11-MAY-2000 11:19 Aug 24, 2006 Jkt 000000 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 D:\DOCS\28228.TXT HGOVREF1 PsN: HGOVREF1
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dures in place to get those donations into the hands of the people

who need them.

The Government Accountability Office is here to talk about some of the problems they uncovered, among them about $66 million of

$126 million donated has been allocated to the Federal Emergency

Management Agency to assist with long-term recovery of Gulf

Coast citizens. The remaining $60 million is being held by the Department of State in a non-interest bearing account. Why is this

money not earning interest? Are there not people or organizations

in New Orleans or southern Louisiana or the Mississippi Gulf

Coast who could use the money?

Several thousand MREs, or meals ready to eat, were donated for

the hurricane relief but were not used. Why? The Federal Government had difficulty accounting for in-kind assistance received. The

ad hoc procedures put in place after Katrina didn’t include policies

to help ensure FEMA had oversight of donated commodities such

as food and water and medical supplies and to ensure that commodities were vetted through the State Department exceptions

process. This resulted in incomplete knowledge of in-kind assistance received from foreign countries.

It appears in-kind contributions were not always properly

tracked at those final destinations. In one case, this failure cost the

U.S. Government approximately $80,000 in storage fees. These are

GAO’s conclusions. FEMA may have a different view, and we have

FEMA here today as well to give its side of the story.

I chaired the House Bipartisan Select Committee that investigated the Katrina disaster. I traveled to New Orleans and the

Gulf Coast twice to see the damage and the recovery firsthand. The

American people saw the destruction on their TV screens and the

pages of their newspaper for weeks. I think they, like me, would

want answers as to how this unprecedented amount of foreign assistance was used or not used.

The National Response Plan does contain procedures for accepting offers of international assistance and response to domestic incidents of national significance. The plan’s international coordination

support annex charges the State Department to coordinate and facilitate U.S. requests for aid as conveyed by the U.S. Department

of Homeland Security or our Federal Agencies. The State Department also acts as an intermediary for offers of assistance, expediting delivery of such assistance whenever possible. In addition,

international affairs offices within our government agencies are to

act as primary partners with the State Department in such endeavors. Under this annex, the department may also engage the Red

Cross and the U.S. Agency for International Development.

Today we have witnesses from across the government, the Department of State, the Department of Defense, USAID, FEMA, the

Department of Education, and the GAO to explain what procedures

were used to accept and distribute foreign disaster assistance received during the aftermath of Katrina. We need to get to the bottom of how this coordination should work and if the current polices

in place for the acceptance and use the foreign disaster assistance

are adequate. Under what authority did the Department of State

determine that it should hold foreign cash donations that were

meant for domestic disaster assistance for Hurricane Katrina? Why

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did it take so long to decide where to distribute the money? When

the decisions were made to give money for levy repair, why did the

Army Corps of Engineers turn down the $60 million? Why were

they allowed to? How did the Department of Education become involved in the distribution of funds? And what led to the involvement of the National Security Council regarding the international

cash donations?

Since the Department of Homeland Security is responsible for developing the National Response Plan, how does DHS or FEMA ensure the agencies involved in international assistance are prepared

to manage international assistance? How does FEMA provide oversight for international assistance that is received in the United

States for domestic incident? Equally important, does Congress understand how priorities for distribution are reached and are we

helping to make sure that the people who need the foreign assistance are getting it?

On February 23rd, the White House released its report, ‘‘The

Federal Response for Hurricane Katrina, Lessons Learned.’’ The report recommended that the State and Homeland Security Departments lead an interagency effort to develop procedures for reviewing and accepting or rejecting any offers of international assistance

for a domestic catastrophic incident, including a mechanism to receive, disburse, and audit any cash assistance. These procedures

are due to the Homeland Security Council June 1st.

I look forward today to hearing what changes need to be made

so that this country can take advantage of the generosity of other

countries in our time of tragedy.

I would now yield to our ranking member, Mr. Waxman, for his

opening statement.

[The prepared statement of Chairman Tom Davis follows:]

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Mr. WAXMAN. Mr. Chairman, this Nation is grateful for the outpouring of support from around the world the aftermath of Hurricane Katrina. Nations large and small generously offered money,

supplies, and technical aid to help us recover from this enormous

natural disaster.

Unfortunately, we will hear today of a new GAO report that

finds serious waste and mismanagement of these international donations. More than 6 months after Katrina made landfall, nearly

half of the funds donated by other nations have yet to be spent.

The Army Corps of Engineers for reasons unknown decided not to

accept $60 million of this money for levy reconstruction. As a result, the $60 million has been sitting in a State Department account that doesn’t earn interest.

GAO says FEMA could have earned more than $1 million in interest on this money, but the State Department wanted to keep

control of it. Well, this is bureaucracy at its worst and the citizens

of the Gulf Coast are suffering for it.

The Bush administration’s mishandling of international donations for Hurricane Katrina comes on the heals of its mismanagement of international donations to rebuild Iraq. Just this week, the

Army Corps admitted that a project to build 142 health clinics in

Iraq would run out of money with just 20 clinics completed due in

part to runaway contractor overhead costs as high as 50 percent.

Army Corps officials said they would seek foreign donations to complete the work, but the top world health organization official for

Iraq found the lack of progress, ‘‘shocking’’ and said, ‘‘that is affecting people’s expectations and people’s trust, I must say.’’

The same problems are recurring in the Gulf Coast except the

funds being squandered are for Katrina relief and it is our citizens

who are suffering. The State Department, the National Security

Council, which have no experience administering domestic programs, have been controlling how international donations will be

distributed. The Agency for International Development, which does

have experience in rebuilding, seems to have been pushed to the

sidelines just as it was in Iraq.

Meanwhile, donations remain in limbo for months, and other nations questioned whether their contributions were necessary or appreciated. We should all be grateful for the generosity of other nations. We should be equally grateful for the hard work of the many

government officials and volunteers who have been working diligently to rebuild the Gulf Coast, but what we need to overcome is

the bureaucracy and mismanagement that is frustrating their efforts and impeding recovery in the Gulf Coast.

I commend the chairman for holding this hearing and hope that

this hearing will be a first step toward progress.

[The prepared statement of Hon. Henry A. Waxman follows:]

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Chairman TOM DAVIS. Do any other Members wish to make

statements?

The gentleman from Maryland.

Mr. CUMMINGS. Thank you very much, Mr. Chairman, and I have

to tell you I really appreciate you calling this vitally important

hearing to examine the Federal Government’s system for accepting

and distributing foreign donations intended for Hurricane Katrina

relief, and as I listen to you, Mr. Chairman, and certainly to our

ranking member, I can only say that a lot of what has happened

with regard to Katrina either shows one of three things or a combination: a lack of empathy, incompetence, or a failure to synchronize conscience with conduct.

I guess what I have seen and what we have seen over and over

again, Mr. Chairman, and I do applaud you for your Select Committee on the Gulf Coast problems and the way that was handled,

but we have seen it over and over and over again, a failure on the

part of the greatest government in the world to shoot straight. It

is incredible to me. It is incredible to me that people could literally

be begging for a piece of bread and a glass of water in the United

States where 100 miles away there was probably a Safeway or a

Giant that somebody could have put some food in a helicopter and

got it to them, but yet and still, we with all of our phenomenal expertise and our ability to go clear across the world to deliver disaster relief, we can’t seem to get it right.

One need not study the history of the United States very long to

identify the legacy of generosity our Nation has shown to the

world. In light of that tradition, it may come as a surprise that before Hurricane Katrina, America had never accepted international

assistance following a disaster; however, as images from the Gulf

Coast evoked grief and compassion throughout the world, some 76

foreign countries and international organizations were empathetic

enough to provide cash, in-kind contributions, and military assistance to support our relief efforts.

While the Federal Government embraced the helping hand of the

world community, it seemed ill-equipped to accept and distribute

this international assistance effectively and efficiently due to inadequate planning and inadequate interagency communication. Incredible. Consequently, nearly half of the $126 million in cash donations have yet, have yet, to be spent and donated relief supplies

were distributed slowly if at all.

Specifically, the GAO reported that efforts to distribute international aid were plagued by the absence of a commodity tracking

system and procedures to identify resource needs at FEMA, a divide between Federal agencies that included the Department of

Homeland Security and the Department of Defense and intergovernmental turf battles. For example, donations of meals ready to

eat and medical supplies were poorly handled and failed to meet

our health and safety standards. While thousands of Gulf Coast

Americans were abandoned for days without food or water and

called refugees, by the way, Federal officials were at times bewildered about what supplies were safe and therefore eligible for distribution.

I am also concerned that the international cash donations were

deposited with the U.S. Treasury in a non-interest-generating acVerDate 11-MAY-2000 11:19 Aug 24, 2006 Jkt 000000 PO 00000 Frm 00015 Fmt 6633 Sfmt 6633 D:\DOCS\28228.TXT HGOVREF1 PsN: HGOVREF1
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count. It runs counter to common sense that such an account be

utilized when an interest-bearing account could have thus far accrued $1 million in interest. With an additional $400 million in

international cash donations expected, we must immediately address this problem. In doing so, we would generate millions of additional dollars that could be used to meet the critical needs of the

Gulf Coast residents for housing, jobs, education, and reconstruction.

Mr. Chairman, 6 months after Hurricane Katrina, the need still

exists for us to clarify what entity or entities have the authority

and experience to best manage international aid. Moreover, we

must make certain that contracts that are funded with international donations are awarded through a competitive process.

This helps to ensure that we obtain the best goods and services at

the best price. Make no mistake. Our international donors put faith

in us that the assistance given to help Americans are efficiently

and effectively utilized to provide meaningful relief to those in

need. We must honor that trust by demonstrating that we are good

stewards who are willing to take immediate action to strengthen

our Nation’s systems for accepting, managing, and distributing

international assistance.

I look forward to the testimony of today’s witnesses, and with

that, Mr. Chairman, I yield back.

[The prepared statement of Hon. Elijah E. Cummings follows:]

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Chairman TOM DAVIS. Thank you very much.

Ms. Norton, do you want to say anything?

Ms. NORTON. I do want to. This is one of those hearings which

astonish you, you really learn something very astonishing. I appreciate that you have called the hearing and hope that it will not

only keep something like this from happening again, but hasten

what are some pretty obvious remedies.

I start out with an understanding that if we had no experience

with a hurricane like Katrina, we certainly had no experience with

receiving cash donations from other countries. We are the country

who donates to other countries. So I can certainly understand that

we would not have in place a capacity to know how to do that and

then to do it quickly.

I find this GAO report, however, depressing, Mr. Chairman, be- cause we are talking about a little itty bit of money, $126 million.

It seems to me it is such a small amount of money that it leads

me to another concern, and that is whether or not the government

is sufficiently flexible in the face of something new to do what is

required. I have regarded and I think there is no way to avoid believing that Katrina was a dress rehearsal for a terrorist attack;

otherwise, why do we have these agencies all together in the Department of Homeland Security, and we have seen what happened

when we had no notice that a hurricane was coming. Imagine what

the chaos would have been with a surprise attack.

Here, we have 76 countries generously offering us aid. My first

instincts given who some of these countries were would be to say

perhaps we should not have accepted some of the aid, but should

have said it is a wonderfully generous thing to do. That might have

offended them. So I guess in the behavior of diplomacy, that is

something you do, you accept the aid; but what kind of flexibility

does it take to assign the money to a lead agency, use existing procedures even if you insist—and I don’t know if this was a turf battle or not—that it go to an agency with no responsibility in the past

for distributing funds on the domestic side? There are procedures,

gazillions of procedures, one could borrow from, pick your agency,

pick the one that best suits you, assign it to a lead agency, and

there goes the money.

Apparently, early in September 2005, FEMA identified an account that could earn interest. Hey, FEMA was incompetent, but

you know the account wasn’t. Simply depositing the account, it

seems to me, would have taken care of that. Of course, that would

have meant that the administration would assign somebody to do

this job, and that is what is most disturbing, that somebody wasn’t

put in charge of this little itty bit of money, small to us, small to

our government, but when you consider what the need was out

there at the time that this money began to flow in, the notion that

there would have been chaos on what to do and still undistributed

money and we are talking about so small an amount can hardly

give this committee confidence in our ability to handle larger items,

larger matters, associated with natural disasters and with terrorist

attacks.

Here, we had the money, plenty of notice it is coming, procedures

on the domestic side for distributing money, a small amount of

money relative to what our government is used to handling and

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can’t figure out what to do rapidly enough to matter to many. It

is very disconcerting, particularly that there is money left now almost a year after the event needs to be fixed, but to me what is

important is what it tells me about the larger effort and the lack

of flexibility in the face of the unknown that our government has,

the lack of an ability to move in keeping with the challenge that

you are faced with, and that is the whole ball game on homeland

security. If you can’t do that for money you are glad to receive this

late after the event, then I don’t know how the committee can have

confidence, and it has to do what you are doing, Mr. Chairman, and

simply find out why.

I am going to try to stay as long as I can, and thank you very

much, Mr. Chairman.

Chairman TOM DAVIS. Thank you very much.

We may have to be interrupted by votes on the floor. We expect

a series of two votes. So it won’t be lengthy. Why don’t we get

started with our very first distinguished panel.

We have Ms. Davi M. D’Agostino, who has been no stranger, who

is the Director of Defense Capabilities and Management of the

GAO; Mr. Scott Rowell, the Deputy Assistant Secretary for Homeland Security; Mr. Gregory Gottlieb, who is Acting Director of the

Office of U.S. Foreign Disaster Assistance at USAID; Mr. Casey

Long, the Acting Director of the Office of International Affairs at

FEMA; Ms. Deborah McCarthy, the Director of the Hurricane

Katrina Task Force Working Group, U.S. Department of State; and

Mr. Hudson La Force, the Senior Counselor to the Secretary, U.S.

Department of Education.

Thank you all for being here with us. It is our policy we swear

you in before you testify. So if you would just rise and raise your

right hands.

Ms. D’Agostino, you have someone behind you that is going to

help you?

Ms. D’AGOSTINO. Yes. McCoy Williams.

Chairman TOM DAVIS. All right. Thank you very much.

And DOD does. OK. Let me just state their names for the record,

so it is on the record. We have Berand McConnell and Deborah

Cagan. Is that right?

OK.

[Witnesses sworn.]

Chairman TOM DAVIS. Thank you.

Ms. D’Agostino, we will start with you. Thank you.

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STATEMENTS OF DAVI M. D’AGOSTINO, DIRECTOR, DEFENSE

CAPABILITIES AND MANAGEMENT; SCOTT ROWELL, DEPUTY

ASSISTANT SECRETARY FOR HOMELAND DEFENSE, U.S. DEPARTMENT OF DEFENSE; GREGORY C. GOTTLIEB, ACTING

DIRECTOR OF THE OFFICE OF U.S. FOREIGN DISASTER ASSISTANCE, U.S. AGENCY FOR INTERNATIONAL DEVELOPMENT; CASEY LONG, ACTING DIRECTOR OF THE OFFICE OF

INTERNATIONAL AFFAIRS, FEDERAL EMERGENCY MANAGEMENT AGENCY, U.S. DEPARTMENT OF HOMELAND SECURITY; DEBORAH McCARTHY, DIRECTOR OF THE HURRICANE

KATRINA TASK FORCE WORKING GROUP, U.S. DEPARTMENT

OF STATE; AND HUDSON LA FORCE, SENIOR COUNSELOR TO

THE SECRETARY, U.S. DEPARTMENT OF EDUCATION

STATEMENT OF DAVI M. D’AGOSTINO

Ms. D’AGOSTINO. Mr. Chairman, members of the committee, I am

pleased to be here today before you to discuss GAO’s work on international assistance for Hurricane Katrina. My testimony is based

on the report we issued today that reviewed how several departments and agencies dealt with the accountability for both international cash and in-kind donations. In-kind donations include

food, medical, and other tangible items as well as technical assistance and support.

As you and the members have noted, Mr. Chairman, Hurricane

Katrina was the first time the U.S. Government had been generously offered and welcomed such large amounts of international assistance for domestic disaster relief. The U.S. Government received

$126 million in cash from 36 foreign donors by December 31, 2005

and literally tons of in-kind items from 43 foreign donors.

Several departments and agencies were involved in agreeing to

receive, accept, and distribute the international assistance, including the Departments of Homeland Security, State, Defense, and

Treasury, and FEMA. Also, the National Security Council was involved in decisions about the international cash donations.

In summary, the agency has created ad hoc procedures to manage the acceptance and distribution of the cash and in-kind assistance. For cash donations, while we could account for all the funds

that were received and disbursed, cash management policies were

not in place to deal with their acceptance and use. Instead, the National Security Counsel established an interagency working group

to decide how to use the foreign cash donations. State Department

provided parameters to the working group regarding conditions it

believed important for the use of the donated funds.

While the group was deciding how to spend them, the funds were

kept in a State Department custodial account that did not pay interest. As a result, the funds’s purchasing power was diminished

and the opportunity to maximize the resources available for relief

was lost.

The chart we provided today lists the key dates and events that

took place regarding the cash donations. As you can see, by September 21st, $115 million was received and FEMA had identified

an interest-bearing account to accept the donations. On September

23rd, FEMA presented a number of items for funding to the interagency group, including living expenses, building materials, furVerDate 11-MAY-2000 11:19 Aug 24, 2006 Jkt 000000 PO 00000 Frm 00022 Fmt 6633 Sfmt 6633 D:\DOCS\28228.TXT HGOVREF1 PsN: HGOVREF1
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niture, and transportation. Then on October 20th, the State Department transferred $66 million to FEMA for a grant to provide

case management assistance for up to 100,000 households affected

by the hurricane. As of March 2006, the remaining $60 million was undistributed;

however, on March 16th, the State Department and Department of

Education signed a memorandum of agreement on the remaining

$60 million to support various educational needs in the affecting

areas, including holding $121 million in reserve for further potential projects. State also told us that at least $400 million in additional cash donations could possibly arrive, making it even more

important that good planning and cash management policies be in

place going forward.

Now I will turn to the in-kind donations, and I have three key

points about the accountability of these items. First, while the inkind assistance was reasonably accounted for as it arrived at Little

Rock Air Force Base and the Office of Foreign Disaster Assistance

did account for it, these goods, however, were not tracked to the

FEMA distribution sites with confirmation of receipt from those

sites.

Second, the lack of clear policies, inadequate information up

front, and insufficient coordination with regulatory agencies resulted in the U.S. Government agreeing to receive food and medical

items that could not be distributed in the United States.

Third, the ad hoc procedures allowed confusion as to which agency, FEMA or DOD, Defense, was to accept foreign military donations that were vetted through a State Department process that

was created for that purpose. As a result, it is unclear today

whether any agency properly accepted and took responsibility for

the foreign military donations.

The administration’s recently issued Lessons Learned Report you

mentioned highlighted the need for improvements as well in policies and procedures. We also recommended a number of areas

where such improvements could be made in managing and overseeing international cash and in-kind donations. Homeland Security and Defense Departments generally agreed with our recommendations.

Mr. Chairman, that concludes my prepared statement, and I

would be happy to respond to any questions.

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[NOTE.—The GAO report entitled, ‘‘Hurricane Katrina, Comprehensive Policies and Procedures are Needed to Ensure Appropriate Use of and Accountability for International Assistance, April

2006, GAO–06–460,’’ may be found in committee files.]

[The prepared statement of Ms. D’Agostino follows:]

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Chairman TOM DAVIS. Thank you very much.

Mr. Rowell.

STATEMENT OF SCOTT ROWELL

Mr. ROWELL. Chairman Davis, Ranking Member Waxman, distinguished members of the committee, thank you for the opportunity to address you today on international disaster relief received

by the United States as a result of Hurricane Katrina. In order to

save the maximum amount of time for questions, I would like to

submit my formal prepared testimony for the record, but provide

the committee a brief verbal summary.

Chairman TOM DAVIS. Great. Everyone’s entire statement is in

the record.

Mr. ROWELL. I would also like to take this opportunity to introduce Mr. Berand McConnell, Director of Interagency Coordination

from the U.S. Northern Command, and Ms. Deborah Cagan from

the Office of the Assistant Secretary of Defense for International

Security Affairs. I have asked these two individuals to join me at

today’s hearing to provide any additional details to your questions

on the Department of Defense’s involvement in the receipt of international disaster relief assistance.

Hurricane Katrina was one of the most destructive natural disasters in U.S. history and proved to be the deadliest storm to strike

since 1928. The international assistance received by the United

States in the wake of this disaster was tremendous. 151 nations

and international organizations offered assistance. Many of these

same nations had accepted donations from the United States in

previous disasters in their our countries. This generosity displayed

by our friends and neighbors continued until well after Hurricane

Katrina had passed.

When it became clear that the United States was going to accept

international assistance in response to Katrina, the U.S. Agency for

International Development Office of Foreign Disaster Assistance

contacted the U.S. Northern Command in order to establish an appropriate location for the delivery of international donations. Working with U.S. Northern Command’s logistics director, OFDA identified Little Rock Air Force Base Arkansas as the central collection

point for foreign relief donations.

Little Rock Air Force Base was selected because of its proximity

to the affected area and because the supplies that were arriving

could then be loaded on trucks and moved out immediately. Although it was not a major hurricane relief staging area and was

not responsible for warehousing relief supplies, Little Rock Air

Force Base served as a vital transportation hub in the response.

The receipt of international donations was a mission led by

OFDA; however, the men and women of Little Rock Air Force Base

provided needed assistance to OFDA contract support on base.

Overall for the Hurricane Katrina response, relationships between

USAID, OFDA, and U.S. Northern Command worked well.

As with any significant event, the lessons learned from Katrina,

the Katrina experience, are critical to future success. For the Department of Defense, the three recommendations identified in the

GAO report require our attention.

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We concur with the recommendations one through three. Specifically, recommendations one and two speak to the need for policies

and procedures to ensure that foreign military offers of assistance

for domestic disasters are coordinated with the Department of

State and that internal DOD guidance to our military commanders

on this issue is clear and for recommendation three, which speaks

to the need for Federal Departments, DOD among them, to have

appropriate State guidance on how offers of assistance are processed, match existing requirements, meet U.S. standards, and are

delivered to the right locations.

Mr. Chairman, I commend you and the members of this committee for your leadership, interest in, and support of the Department’s homeland defense and civil support missions with the particular focus today on international disaster relief assistance received by this country as a result of Katrina, and I look forward

to any questions you may have.

[The prepared statement of Mr. Rowell follows:]

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Chairman TOM DAVIS. Mr. Rowell, thank you.

Mr. Gottlieb, you will probably be the last one we get in before

the break, and then we will probably take a 15, 20-minute break.

STATEMENT OF GREGORY GOTTLIEB

Mr. GOTTLIEB. Thank you, Mr. Chairman and committee members, for this opportunity to testify today. I will present a synopsis

of USAID’s role during Hurricane Katrina and what we are doing

to make improvements in case there is a next time.

Hurricane Katrina response was the first of its kind for the

USAID, which is a signatory agency to the National Response Plan.

Although USAID coordinates often with FEMA, until Katrina,

USAID had never before been asked to provide significant support

for domestic response. Our role in the Hurricane Katrina response

was one of our most challenging and unusual experiences.

On August 29th, the day the hurricane came ashore on the Gulf

Coast, USAID’s Office of Foreign Disaster Assistance, which has a

long history of coordination with FEMA, offered any assistance it

could provide. On August 31st, the USAID Administrator offered

the entire agency’s support to FEMA.

Through formal mission assignments from FEMA, USAID began

its work on Hurricane Katrina shortly thereafter. In probably its

most important role, USAID provided support for handling internationally donated resources and commodities. FEMA, the Department of State, and USAID came to agreement on a division of

labor.

The State Department task force would receive international offers of assistance from countries around the globe. FEMA would determine which offers to accept, and USAID would coordinate the

overall process, including the logistics, of receiving the donated

goods and integrating them into the FEMA distribution system.

USAID was perhaps uniquely qualified to fill this function. On

the one hand from its extensive experience responding to disasters

overseas, USAID understood the operational responsibilities of

FEMA. On the other hand, from its experience as an operational

foreign assistance agency, USAID understood the foreign policy

concerns of the Department of State.

Since international assistance of this magnitude had never been

previously received, ad hoc systems were rapidly developed by

FEMA, State, and USAID. While these systems were not perfect,

the cooperation among these three agencies was outstanding and

in the end performed remarkably well. The mechanisms established during Katrina have become a rough model for a more formalized and codified management tool that is currently being created.

On behalf of the overall effort and at FEMA’s request, USAID activated a response management team in Washington and dispatched USAID personnel throughout the Gulf Coast. USAID disaster response systems lend themselves to easy integration with

FEMA because both agencies operate on the principals of the Incident Command System.

During the weeks following Hurricane Katrina, USAID provided

a variety of staff, commodities, and services in support of the overall domestic response efforts. Some highlights include: The reVerDate 11-MAY-2000 11:19 Aug 24, 2006 Jkt 000000 PO 00000 Frm 00048 Fmt 6633 Sfmt 6633 D:\DOCS\28228.TXT HGOVREF1 PsN: HGOVREF1
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sponse management team in Washington became a hub for coordination of international offers of assistance, working closely with

State and FEMA. The work was in some ways more complex than

some of the largest foreign responses we have ever orchestrated. In

particular, the response management team hosted a variety of liaison officers from domestic U.S. Government Agencies, including

State, Defense, Department of Homeland Security, the Department

of Health and Human Services, and USDA. We also for first time

hosted international counterparts, including NATO, several United

Nation’s officers, the European Union, and the International Federation of Red Cross and Red Crescent Societies.

The response management team worked to integrate international partners into Federal and regional agencies, coordinating

field visits throughout the affected regions. USAID also created

systems and procedures to support the review, acceptance, and delivery of international donations. Specifically, the RNT negotiated

and communicated official dispatch procedures for supplies that

had been received from international donors and also created a

comprehensive data base to organize and track transportation of

commodity offers and donations.

I have brought with me today copies of our final dispatch spread

sheet from Little Rock which indicates the distribution points for

all commodities received. We believe this will show the effectiveness of the dispatch system to donation points. Overall, USAID deployed a total of 24 field officers to the affected region in the first

several weeks of the response. We facilitated a total of 52 flights

of donated goods from international donors and consolidated all of

these at Little Rock Air Force Base. From that reception point,

USAID processed more than 2,500 metric tons of donated goods

and transported 142 truckloads of foreign donated commodities to

distribution centers.

Let me just say in conclusion through its unprecedented involvement in a domestic disaster response, USAID has learned many

lessons. There is a unique and valuable interagency role for USAID

during incidents of national significance. USAID staff members

adapt quickly and our systems function well within the context of

the domestic response, a proficiency that we have come to expect

in a foreign environment. Experience gained by USAID overseas is

valued and beneficial when applied in the United States and, as

with most things, nothing works perfectly the first time.

Finally, USAID has learned that it can look constructively and

critically at itself to continually improve its performance and is already working hard to ensure that it will.

Thank you.

[The prepared statement of Mr. Gottlieb follows:]

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Chairman TOM DAVIS. Thank you very much. I am going to declare, I would say, about a 15-minute recess, maybe 20 minutes you

can count on, and then we will finish up.

Thank you for your patience.

[Recess.]

Chairman TOM DAVIS. I want to thank you all for your patience.

I think, Mr. Long, we can start with you. Is that where we left off?

STATEMENT OF CASEY LONG

Mr. LONG. Good morning, Mr. Chairman. My name is Casey

Long, and I am the Acting Director of the Office of International

Affairs at the Federal Emergency Management Agency of the Department of Homeland Security. I want to thank you for inviting

me here today to discuss international assistance in the wake of

Hurricane Katrina and how that assistance was used.

It is important to note that the United States had never before

accepted international assistance on such a large scale as it did

during Hurricane Katrina. The outpouring of international aid was

both heartwarming and beneficial, but also created some difficulties. In total, 151 nations and international organizations offered financial and material assistance. In response to this outpouring of

generosity, FEMA with their Federal partners quickly developed a

system to manage international assistance. Today I hope to explain

to you that system and what we intend to do in the future to manage both material and cash donations.

After Hurricane Katrina hit the Gulf Coast of the United States,

the U.S. Government began to receive offers of assistance from foreign governments and private organizations. On September 1st, the

administration indicated that the U.S. Government was accepting

all offers of international assistance in principle. Consistent with

its role in the National Response Plan [NRP], the State Department set up a Hurricane Katrina task force and took on the duty

of receiving those offers of international assistance.

As the lead agency in coordinating the Federal response to Stafford Act disasters and emergencies, FEMA has the authority to request assistance in responding to these disasters from other Federal agencies. Accordingly, in the immediate aftermath of Katrina,

FEMA turned to the agency that has expertise working with the

international community in responding to disasters, the U.S. Agency for International Development’s Office of Foreign Disaster Assistance [OFDA].

On September 2nd, FEMA formally tasked OFDA to manage logistics and operations of international donations in response to

Katrina. On Saturday, September 3rd, FEMA convened those departments and agencies that might play a role in managing national donations. These departments and agencies included other

components of DHS such as Customs and Border Protection, the

State Department, OFDA, the Department of Defense, Health and

Human Services, and the American Red Cross, all of whom are signatories to the NRP. Collectively, this group met to discuss the

roles and responsibility of each agency and to determine how the

United States was going to management international material donations. The outcome of this meeting was a system for accepting

and using or declining commodities from international donors,

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which worked as follows: The State Department would act as the

focal point for receiving and responding to international offers of

assistance. FEMA would identify the potential requirements and

communicate acceptance of offers to State. OFDA would manage

the operations and distribution for those international donations.

Despite the fact that the U.S. Government had never managed

such a large quantity of donated international assistance before, we

successfully accepted blankets, cots, tents, generators, school supplies, and other materials. Ultimately, on FEMA’s behalf, OFDA

distributed 143 truckloads of international donations to distribution centers in Louisiana, Alabama, Mississippi, Texas, and Arkansas.

Since additional decisions were required to determine how to

send monetary donations, pledges of cash were handled under a

different system. State received and held donated funds in a custodial account until a decision about how these funds would be used

was made. When it became apparent that the Nation’s cash would

be coming in from foreign sources, FEMA also identified an account

to hold a portion of these funds. An interagency group was convened to discuss how international donations, cash donations,

would be accepted and distributed. FEMA identified types of activities for which the donated funds could be used to help meet the

needs of communities and individuals impacted by the disaster,

and we provided these options to the monetary donations working

group.

Later, FEMA provided this working group with a more detailed

proposal for individual case management which proposed that the

funds be used to assist disaster victims by identifying immediate

needs and helping them reach a level of self-sufficiency and begin

the process of recovery. As a result, a portion of the cash donations

were transferred to FEMA and awarded for a case management

initiative.

Last November, FEMA initiated meetings to form an interagency

work group made up of departments and agencies that participated

in Hurricane Katrina’s international donations effort. This effort

corresponded with recommendations from the Homeland Security

Council to develop a process for international assistance. The working group has begun formalizing an international assistance system. Participants include DHS components of FEMA, Customs and

Border Protection, Immigration and Customs Enforcement, Citizenship and Immigration Services, the State Department, Defense, Agriculture, USAID, FDA, the American Red Cross, and the U.S.

Army Corps of Engineers, among others.

Much progress has been made to develop standardized procedures to review and accept or decline international offers of assistance and to respond to international inquiries. By June 1st, the

interagency group expects to agree to a system on managing offers

of international assistance.

Once again, Mr. Chairman, I thank you again for having me here

today. If you have any questions, I would be happy to answer them

at the appropriate time.

[The prepared statement of Mr. Long follows:]

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Chairman TOM DAVIS. Thank you very much.

Ms. McCarthy.

STATEMENT OF DEBORAH MCCARTHY

Ms. MCCARTHY. Thank you Mr. Chairman.

I would like to immediately go to the issue of how we managed

the cash donations and how we came to decisions on how best to

place them, and I would like to start off by first saying that we

have placed the balance of the funds that we have received. $60.4

million were transferred on March 17th to the Department of Education. So the amounts of money that we have received, the $126

million, have been transferred to FEMA and to the Department of

Education.

I wanted to note a couple of things with regards to the cash process and noting, for one, that on September 15th at a Homeland Security meeting, the Department of State agreed and was given the

lead in developing options on how to distribute and utilize the

funds. Subsequently, the Department of State and the National Security Council initiated as many have referred to here an interagency process. FEMA was requested and provided proposals for

consideration for use of the funds. It was agreed in the interagency

to use the funds immediately for immediate needs, and the case

management system met that requirement.

Subsequently, we obviously entered into a memorandum of

agreement with FEMA. Then the interagency looked for ways to

place the money into tangible reconstruction projects where there

were unmet needs. We considered a number of options and ultimately decided through the interagency that the funds should go

to support schools, K through 12 and universities, in the affected

area where there were unmet needs for reconstruction, bricks and

mortar, libraries, scholarships for students, and financial and ability to retain some staff and faculty. On March 16th, as I noted, we

signed an agreement with the Department of Education, and we

transferred the moneys on March 17th.

We have obviously learned a lesson on how to process the money,

and in the wake of the recommendations of the Homeland Security

Council, we are developing guidelines to set up an interagency

process that would be more swift, more effective in moving international donations should we get them and accept them in another

crisis. We are under a short time line to report to the Homeland

Security Council by June 1st and we are well on way.

I want to note one other thing just before I sum up on a conclusion, and that is we need to recognize that moneys came in not

only from governments, but this country received a huge amount

of assistance, the sum total of which has never been calculated,

from private individuals and organizations, and I want to mention

a few: The donation of an entire life savings by a senior citizen in

Europe who arrived at one of our embassies and asked that this

gift be accepted in return for her having been liberated by U.S. soldiers from a concentration camp in World War II. She could not afford to give her savings but she did; the donation from one family

in France of a check of approximately $602,000; millions of dollars

in private donations from individuals and companies in Japan;

funds raised by our own State Department foreign service nations;

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and last but not least, the offers of many Canadians to open up

their homes to take in displaced people as they had after September 11th when our planes were stranded.

To sum up a few things, our Nation received, as we have noted,

an unprecedented amount of international assistance reflective that

the people and governments around the world are prepared to support us and stand with us in our hour of need. We want to thank

the international community and all those private citizens who

gave so generously. We have ensured the best we could that the

gifts made reached those affected by Hurricane Katrina.

We believe that in a major domestic crisis, it is likely that we

will again receive generous offers, particularly from neighbors and

close partners. Should we decide to accept them, we will have the

mechanisms in place to quickly process the assistance given.

I would like to thank you for having the opportunity to discuss

the international support we received during Katrina. It is an unknown aspect of this crisis, and I look forward to responding to

your questions.

[The prepared statement of Ms. McCarthy follows:]

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Chairman TOM DAVIS. Thank you very much.

Mr. La Force.

STATEMENT OF HUDSON LA FORCE III

Mr. LA FORCE. Mr. Chairman and members of the committee, on

behalf of Secretary Margaret Spellings, thank you for the opportunity to testify on the actions Education is taking to distribute

funds received from international donors following Hurricane

Katrina. We regard these international donations as one important

element of our total effort to provide assistance to schools and colleges directly impacted by the hurricanes last summer and to those

schools who have enrolled students displaced by those storms.

Within days of when Hurricane Katrina made landfall, Secretary

Spellings sent high level officials to the affected States to gain firsthand information about the situation and the needs in those jurisdictions. We focused on listening to the issues faced by educators

in the Gulf States and developing solutions that would work for

schools, colleges, and students. We have provided significant technical and financial assistance to States, school districts, and colleges and have granted waivers when necessary to support State

and local school leaders in managing their response to the disaster.

On December 30th, President Bush signed into law the Hurri- cane Education Recovery Act which gave education $1.6 billion for

hurricane relief activities. Included was $750 million to help public

and private schools in Louisiana, Mississippi, Texas, and Alabama

restart their schools, $645 million to public and private schools

across the Nation for the costs they have incurred in enrolling displaced students, and $190 million for colleges in Louisiana and

Mississippi. We made the first allocation of over $250 million less than 1

week after President Bush signed the law, made the first allocation

of aid for displaced students 1 week after final applications were

due from the States, and as of today have fully allocated nearly

$1.5 million of the $1.6 billion appropriation. The only remaining

funds are a portion of the aid for displaced students which by statute is intended to be made in four quarterly payments across the

school year.

We are actively engaged with the States and our Inspector General in monitoring the use of these funds. In January, we began

discussions with the Department of State regarding approximately

$60 million in donations that State had received from foreign donors. We developed a proposed strategy for using this aid and on

February 16th presented that strategy to an interagency task force

comprised of officials from the Departments of State and Homeland

Security, the National Security Council, FEMA, and the Office of

the Federal Coordinator for Gulf Coast Rebuilding. The task force

decided that education should receive and manage these foreign donations.

On March 16th, we entered into a memorandum of agreement

with State under which Education has accepted these donations

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and Mississippi. The agreement provides a framework for education to maintain the funds in a separate trust account and to administer them in an accountable and transparent manner, includVerDate 11-MAY-2000 11:19 Aug 24, 2006 Jkt 000000 PO 00000 Frm 00088 Fmt 6633 Sfmt 6633 D:\DOCS\28228.TXT HGOVREF1 PsN: HGOVREF1
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ing proper Internet controls and performance measures. While we

have not yet made final decisions on the distribution of this aid,

we do know that it will go to schools and colleges in the hardest

hit areas of Louisiana and Mississippi, and we expect to make

those final decisions and disburse the money in May. I believe that

we have established and maintained an effective working relationship with State on this matter, and if the Federal Government

were to receive education assistance from foreign sources in the future, we would be ready to do so again.

Education has learned important lessons about crisis management and response from our Katrina experiences. We are using

those lessons to inform ongoing agency activities in emergency response and crisis management, including our preparedness for the

potential flu pandemic. We are working with the Homeland Security Council and other agencies to implement the recommendations

of the Federal Response to Hurricane Katrina, Lessons Learned

Report and are reviewing our internal capabilities for crisis planning and response and our capabilities to work with State and local

education leaders in emergency situations.

This concludes my statement, and I am happy to respond to any

questions you have.

[The prepared statement of Mr. La Force follows:]

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Chairman TOM DAVIS. Thank you.

The good news is I am the only one here. The bad news is there

is no time limit. So I get to ask what I need to ask.

I will start with Mr. Long. Is it accurate that FEMA has not in- vested the $66 million in international funds yet?

Mr. LONG. I don’t know. I know that the money was transferred

into a FEMA account, and then it is my understanding that as the

UMCOR got up and running that we would then transfer upon receipt. As to how we would utilize those funds, FEMA would then

transfer the money to UMCOR to utilize those, but I don’t have a

current status as to where the money resides.

Chairman TOM DAVIS. Is there anyone here from GAO that can

answer that? What is your understanding of the money?

Mr. WILLIAMS. Thank you, Mr. Chairman. That is our understanding also, that is the case.

Chairman TOM DAVIS. But these funds sat in non-interest bearing accounts. Is that accurate?

Mr. WILLIAMS. We identified $60 million that had been in noninterest bearing accounts.

Chairman TOM DAVIS. For how long?

Mr. WILLIAMS. From the September timeframe when the money

first started to come into the organization, and I would feel it was

through March 16th.

Chairman TOM DAVIS. Six months, 7 months.

Mr. WILLIAMS. About 7 months or so, and we estimate that if it

had been invested, it would have earned nearly $1 million.

Chairman TOM DAVIS. Mr. Long, do you know why that is? Is

there some law that makes it go to a non-interest-bearing account

or anything?

Mr. LONG. I am sorry, Mr. Chairman. Can you repeat that question?

Chairman TOM DAVIS. Why would the money go to a non-interest-bearing account? Is there a prohibition in law about putting it

in an interest-bearing account or was it thought that it would be

there a short period and it just languished there?

Mr. LONG. It is my understanding that the FEMA account is interest-bearing.

Chairman TOM DAVIS. Is that correct?

Ms. D’AGOSTINO. Yes.

Chairman TOM DAVIS. So was any money lost as a result of going

into the—did we lose any money in the investments, I guess is my

question.

Ms. D’AGOSTINO. By not placing it in the FEMA account, the

FEMA interest-bearing account, yes.

Chairman TOM DAVIS. How long did that happen? Was it a 6-

month period?

Ms. D’AGOSTINO. We calculated about $1 million in interest

would have been gained on the moneys had they been in the FEMA

account.

Chairman TOM DAVIS. Ms. McCarthy, you sat on the money, not

you personally, but State sat on the money for 6 months?

Ms. MCCARTHY. I think Mr. Chairman, I think we need to clarify

something here, which is absent specific authority, funds held in

the U.S. Treasury do not ordinarily accumulate interest. We disVerDate 11-MAY-2000 11:19 Aug 24, 2006 Jkt 000000 PO 00000 Frm 00093 Fmt 6633 Sfmt 6633 D:\DOCS\28228.TXT HGOVREF1 PsN: HGOVREF1
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cussed with Treasury and OMB that we had a specific State Department account and it would be the appropriate place to place

the money as it flowed in over time. It didn’t come in in one fell

swoop, and it was determined at the time that the donations in this

account could not earn interest.

Chairman TOM DAVIS. Why not?

Ms. MCCARTHY. I would have to ask my legal team here.

Chairman TOM DAVIS. Go ahead. Ask them.

Ms. MCCARTHY. Absent statutory authority, our moneys could

not earn the interest.

Chairman TOM DAVIS. OK.

Ms. MCCARTHY. That is the key element, and another element to

consider is——

Chairman TOM DAVIS. I gather you would welcome statutory authority in a case like this so we don’t leave $1 million on the table.

Ms. MCCARTHY. We are discussing in the interagency group right

now that is looking at how best to stand up a team immediately

and an interagency, we are discussing precisely that.

Chairman TOM DAVIS. Well, hurricane season officially starts

shortly, and moving things through this Congress even when they

are easy takes a period of time. We will probably just initiate something on that right away and try to work with your team.

I think that is something we all ought to be a little embarrassed

about, not that it is anybody’s fault. I understand the rationale, but

when money is pouring in, maybe somebody should have said this

ought to go in an account where it can earn some interest.

Ms. MCCARTHY. One of the things we may have to keep in mind

is that the interest, I suppose, that these funds—again, I am not

from Treasury, but if these funds earn interest in U.S. Government

investment mechanisms, those who are paying the interest are the

U.S. taxpayers.

Chairman TOM DAVIS. Well, basically you are using it for debt

reduction instead of for its intended purpose. That is all. I mean,

I know everything is fungible, accounts and everything like that,

but I think in a case like this, this is $1 million that really should

have been earmarked for the coast and should have gone to the

coast as opposed to debt reduction. I understand Government think

and how this works, but at a time when you still have a lot of people along the coast that are looking for help and aid and everything

else, that is my only point.

So I think from a statutory point of view, we would like to get

this to a conclusion sooner or later, which is probably moving. I

know what the government pays in interest. I don’t know if we

could have gotten something better off in a different marketplace

or not, but I think that explains it. Now, FEMA has not invested the $66 million in international

funds yet; is that right, Mr. Long, and what is it about the United

Methodist Committee of Relief Contract? Can you tell us a little bit

more about that?

Mr. LONG. The interagency group upon receiving international

donations collectively as a group decided that case management

would be an appropriate use of those funds. After that decision was

made, FEMA pulled together a panel and reviewed proposals in the

November timeframe and based on reviewing those proposals deVerDate 11-MAY-2000 11:19 Aug 24, 2006 Jkt 000000 PO 00000 Frm 00094 Fmt 6633 Sfmt 6633 D:\DOCS\28228.TXT HGOVREF1 PsN: HGOVREF1
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cided that UMCOR was a cost-effective efficient way to utilize

those funds.

Chairman TOM DAVIS. Well, Ms. McCarthy, FEMA has told the

committee and GAO that they provided the State Department-led

task force with uses for $326 million on September 23rd, identifying that the international cash donations could be spent on social

service assistance, medical transportation, adopting homes for medical and handicap needs, job training, education, living expenses,

building materials, and so forth. Why did the task force decide not

to give the entire amount to FEMA for these purposes?

Ms. MCCARTHY. If I can respond, Mr. Chairman.

Chairman TOM DAVIS. Sure. I was asking you.

Ms. MCCARTHY. The initial allocation was for the case management system, which would be for people to go out and determine

the longer-term needs of those who had been affected by the hurricane. The other proposals as reviewed by the interagency needed

further development and would flow from the case management

system, and essentially what we decided to do in the interagency

process is to look for something that was tangible immediate reconstruction and not wait for the development of what would be the

results of the case management system, the citizens would need

‘‘X’’ or ‘‘Y’’ or housing, etc., because that process was going to take

a longer time.

Chairman TOM DAVIS. I mean, I know these are foreign dollars

flowing and somebody has to hold them, but I wonder if the State

Department is competent. I mean they are not really part of the

FEMA and recovery efforts as we look at this in the future. I don’t

know if that is something we are looking at, but it is just not something you are used to, the State Department is used to, overseeing.

Right?

Ms. MCCARTHY. Correct. It is not something we are used to overseeing, and that is why in the interagency process that we set up,

we pulled in agencies who have a better feel for what is occurring

on the ground, and in the future, that is what we would do. Obviously, the nature of the crisis is hard to determine. It could be

manmade. It could be natural-made. And the moneys could go to

one agency or another. That is essentially what we are discussing

right now, to set up at least a mechanism to determine which agency would be the appropriate one to then process the money depending on the nature of the crisis.

Chairman TOM DAVIS. Mr. Rowell, during the aftermath of

Katrina, what process did DOD use to route foreign military assistance through the State-led task force charged with the responsibility for recording all offers of assistance? Was it an effective process?

Mr. ROWELL. Mr. Chairman, let me ask you to restate the question, please.

Chairman TOM DAVIS. What process did DOD use to route the

foreign military assistance that came in through the Department

of State-led task force charged with the responsibility of recording

all offers of assistance?

Mr. ROWELL. Sir, let me ask Mr. Berand McConnell to address

that, please.

Chairman TOM DAVIS. That would be fine.

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Mr. MCCONNELL. Good morning, sir.

Chairman TOM DAVIS. Good morning.

Mr. MCCONNELL. The NORTHCOM role in particular followed

essentially the same procedures that you have heard already described, which is to say when an offer of foreign assistance was received directly, we would refer those to the State-led task force for

determination as to whether that task force would go to accepting

the offer. Our part directly was to validate with General Honre and

his task force whether those offers met a valid military need and

then we made a recommendation on that point.

If all the pieces aligned, to include the Department of State task

force agreement, we communicated directly with the military representatives to facilitate delivery.

Chairman TOM DAVIS. Ms. D’Agostino, GAO reports that the

Federal Government didn’t have the policies to help ensure FEMA

had oversight of donated commodities and to ensure that the commodities were vetted through the Department of State acceptance

process, but FEMA reports to the committee yesterday that everything went through the DOS acceptance process. Can you resolve

that for us?

Ms. D’AGOSTINO. Apparently not everything went through the

DOS acceptance process, and, in fact, there is actually still confusion about particularly the foreign military donations, who actually

accepted them and was responsible for them. Basically, as we understand it from DOD, well, actually NORTHCOM General Counsel, they believed that because they used the task force process at

the State Department that FEMA accepted the foreign military donations, and FEMA has also told us that they did not accept anything that went through the foreign military donations.

Chairman TOM DAVIS. I mean, this is part of the debate going

on with Congress about should FEMA be part of Homeland Security or should it be attached to the Office of the President. Obviously, if this were in the White House or attached right there, this

stuff moves very, very quickly. It looks here like we have a bureaucratic jumble. Everybody is getting sign-offs and everything and

money is sitting in accounts and it is not getting out there.

Mr. MCCONNELL. Mr. Chairman, if I may.

Chairman TOM DAVIS. Yes, please.

Mr. MCCONNELL. Maybe I misunderstood the question. The

interagency process either accepted or declined the military offers.

Once the acceptance of those things, purely military goods, was

complete, then they——

Chairman TOM DAVIS. What kind of things did you decline?

Mr. MCCONNELL. I don’t know that we declined anything, because the things that we accepted were divers, nurses. Ships from

various countries came in to provide that sort of support. I don’t

know that once something was defined as a purely military offer,

I do not believe we declined anything.

Chairman TOM DAVIS. My information shows that some of the

items that were declined, we had some Japanese self-defense force

units. Jordan offered two field hospitals. France offered an enabled

frigate and hospital ship. Israel and Germany offered ground-based

cellular communication systems, Switzerland two disaster relief

platoons.

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Mr. ROWELL. Mr. Chairman, we will have to take that one for the

record. We are not prepared to speak to that.

Chairman TOM DAVIS. There have been widespread news reports

about items that were offered from countries that we weren’t prepared to take and turned back. Does GAO want to add anything

to that?

Ms. D’AGOSTINO. No, we don’t.

Chairman TOM DAVIS. I just named a few. We have a couple of

pages of things that were declined at this point.

Mr. MCCONNELL. Sir, I agree with you that there were things

that were declined. As far as NORTHCOM was concerned, our

process was part of the interagency process. Those things that we

were able to validate against General Honres’ requirements, we

recommended for the interagency process.

Chairman TOM DAVIS. All right. Mr. La Force, in your joint

memorandum of agreement with the Department of State, which I

think is in Attachment A, are you familiar with what I am talking

about?

Mr. LA FORCE. Yes, sir.

Chairman TOM DAVIS. It indicates that the department will dedicate funds to Xavier and Dillard Universities, the Louisiana Department of Education, and the Laura Bush Foundation for American Libraries. In your written testimony, you say that you haven’t

yet decided who to give the money to. Is this like a draft?

Mr. LA FORCE. The attachment to the memorandum is a summary of the proposals that we had received at the time the memorandum was signed. We have received additional proposals since

that time and have made no decisions about the actual grant

awards that we would be making.

Chairman TOM DAVIS. Ms. McCarthy, you reported to this committee that State-led interagency working group offered international funds to the Army Corps of Engineers for the rebuilding

of levies and that the Corps turned down the offer. Is that basically

the gist of it?

Ms. MCCARTHY. In the interagency effort to move the money

swiftly for reconstruction, yes, we did approach the Corps, and once

they had made a determination based on the moneys they received

in the supplemental, they indicated to us that they did not need

the international funds.

Chairman TOM DAVIS. All right. I am just trying to understand

it. The Corps reports to the committee this morning that the Department of State was looking for options regarding how they could

best allocate the foreign donations, but they never actually offered

to give the money to the Corps. The Corps said they referred

State’s inquiry to the Department of Homeland Security Office of

the Federal Coordinator for Gulf Coast Rebuilding who is responsible for overseeing all of the recovery operations because they felt

they would have a better feel as to where the greatest needs were.

Ms. MCCARTHY. Sir, I am not privy to how internally they deliberated and who they went to, but ultimately the response to us on

approximately November 22nd was that they did not and would not

need these funds.

Chairman TOM DAVIS. Thank you.

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Ms. D’Agostino, does GAO believe that the current process that

is currently in operation for acceptance and distribution of international assistance is transparent enough for proper oversight by

Congress?

Ms. D’AGOSTINO. Certain aspects of the process were very transparent and we were able to get very good records and access and

information on. I would say that certain aspects regarding the role

of the National Security Council were not as transparent.

Chairman TOM DAVIS. Mr. Long, how does FEMA provide oversight for international assistance it has received in the United

States for domestic incidents?

Mr. LONG. We would utilize standard case management oversight. Just to give you a brief overview of how FEMA manages

these sorts of engagements, one would be to review the financial

status, provide progress reports and close-out reports. In the case

of UMCOR, we conduct site visits where we would go over a routine checklist of business and administrative systems, review the

subgrantee selection and monitoring process. We monitor by telephone to maintain consistent communication, and there is consultation with the program officer at the time of payment requests and

also at the time of progress reports, and then there is review of

audit reports as well.

Chairman TOM DAVIS. OK. Let me ask this: I will start with Ms.

D’Agostino, if you can shed some light on it. The National Security

Council had a large role in determining how internationally donated funds would be used. What led to the involvement of the National Security Council regarding international cash donations?

Any idea?

Ms. D’AGOSTINO. The only thing I can tell you is that part of the

National Response Plan acknowledges that there may be policy

issues that need to be elevated to either the Homeland Security

Council or the National Security Council. Since these were international cash donations and the State Department is a member of

the NSC, I assume that is why they went the route of the NSC.

Chairman TOM DAVIS. Can anybody shed light on that? Is somebody afraid we would take some bad money from somebody? The

NSC seems that it is really not equipped to decide how this stuff

ought to be sent and accepted and stuff. Can anybody shed any

light on that?

Ms. MCCARTHY. If I could clarify, the NSC offered to pull together agencies working with us so we would start a deliberative

process. I don’t think one can infer from that they had veto making

authority. It was an interagency deliberative process. They pulled

the agencies together for meeting.

Chairman TOM DAVIS. OK. Until just a week or two ago, we still

had some of these commodities sitting in a warehouse in Arkansas;

is that right?

Ms. D’AGOSTINO. That is our understanding.

Chairman TOM DAVIS. While everybody is meeting and discussing and everything else.

Ms. McCarthy, as you interpret it, what kind of authority does

the NRP give the Department of State for making decisions about

handing foreign assistance to the United States? As you interpret

it, what kind of authority does the NRP give the Department of

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State to make decisions about spending foreign assistance given to

the United States? What is the current thought?

Ms. MCCARTHY. Essentially, we act as an intermediary for foreign offers of assistance under the NRP and we work with other

agencies to respond to requests and expedite the delivery of assistance. That in a nutshell is essentially our role under the NRP.

Chairman TOM DAVIS. All right. Mr. Long, GAO reports that

FEMA and USAID’s Office of Foreign Disaster Assistance were unable to provide the GAO with evidence that they had determined

or confirmed that international in-kind assistance arrived at FEMA

distribution sites. Can you shed any light on that?

Mr. GOTTLIEB. Mr. Chairman, I think I mentioned in my remarks that we actually recently received from our dispatch agent,

DHL, a thorough listing of all that came into Little Rock, what

those donations were, who the donors were, and the distribution

points to which those are were dispatched. I believe we left 30 copies with the clerk.

Chairman TOM DAVIS. OK.

Mr. GOTTLIEB. So I think if you look——

Chairman TOM DAVIS. We just got them. OK. That is fine.

Mr. Long, let me ask you this: If matching funds that are required for State and local governments for public assistance was an

issue and not using Stafford Act funds, could the Stafford Act be

amended to permit international donations to be used for such

matching funds? Do you have any thought on that?

Mr. LONG. I was just informed that it would require statutory action.

Chairman TOM DAVIS. So that is something we could consider

from our end?

Mr. LONG. Yes. It is something we could consider.

Chairman TOM DAVIS. Is FEMA seeking statutory authority to

change the Stafford Act to allow it to use international funds for

other uses currently permitted under the act? That is what we are

asking. That is something else we ought to look at.

Mr. LONG. We are currently looking at all the changes that

should be considered to be made to the Stafford Act based on what

happened in Katrina.

Chairman TOM DAVIS. Let me ask this for the panel, if somebody

can answer it: Who is responsible for tracking who received in-kind

donations to their final destinations, from the beginning to the end,

receiving them and going to the end with this process? Who is ultimately responsible for that? We have all these different agencies

up here. We have all these task forces. Ultimately, who makes

those decisions, or it is just so diffuse at this point that you just

kind of have to get GAO involved to try to follow the cash?

Mr. GOTTLIEB. Mr. Chairman, if I can respond in part and I

think Mr. Long may respond afterwards, I think the way the system developed, which is fairly rapidly after we——

Chairman TOM DAVIS. Kind of ad hoc?

Mr. GOTTLIEB. Ad hoc, but because we didn’t have a system, that

is the best we can call it, but it was pretty clear what our role was

at OFDA, and that was once a decision had been made to accept

an offer, after OFDA then liaised with wherever that donor was,

whether it was consolidated goods from a NATO air base or it was

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Britain or wherever it was, and then those planes were directed

into Little Rock. At Little Rock Air Force Base, that is where we

had our logisticians. We were working with DOD. They helped us

with some of the offloads. We then engaged the services of DHL to

help us then dispatch those goods to destination points that were

given to us through consultation with FEMA.

So in the documents to which I referred earlier, it shows many,

many destinations throughout Mississippi and Louisiana and Alabama where we actually dispatched those. Now, after that point,

that was the end point for us. We sent it to a distribution center.

Chairman TOM DAVIS. You sign off at that point?

Mr. GOTTLIEB. That is where we sign off, yes.

Chairman TOM DAVIS. Then who gets it? I guess FEMA gets it.

Mr. LONG. At that point, when the goods landed in Little Rock,

FEMA would be in communication with OFDA as to where to distribute those based on need. If the goods were transferred to a Federal staging area, which would be FEMA warehouse or distribution

center, we then, yes, would take physical receipt of those goods.

Chairman TOM DAVIS. Mr. Rowell, let me ask did we have any

issues with DOD coordinating with the Department of State, ensuring permission or visa for foreign military ships and planes and

personnel during this emergency? Did it run pretty smoothly or did

you run into some red tape in moving and getting people in and

out?

Mr. ROWELL. Our information is even though this was an ad hoc

and quickly formed group, I have to say that the people at this

table and the folks that supported them, it went well after we got

our sea legs, if you will, and DOD has no problem.

Chairman TOM DAVIS. So we don’t need any statutory or any

changes in a case like this to make sure that it functions should

this happen again? We are asking this not to come back and chew

everybody out for what happened this time around, but——

Mr. ROWELL. In my discussions in the department, I know of no

conversations regarding a change to statutory authority.

Chairman TOM DAVIS. This was the largest storm in recorded

history in the United States, and I think as we take a look at that,

and I have been down there three times and I know many of you

have been down, even though it was predicted, it was predictable,

we learned a lot and a lot of mistakes got made. The key is to

make sure the next time around we are ready and we can be a

smooth efficient machine.

We are going to wrestle up here with some major issues on organization. Frankly, we know FEMA is having trouble filling the slots

at this point. There is some concern that being attached to the Department of Homeland Security, that it can’t operate as quickly

and efficiently under the National Response Plan. It really never

got a chance to operate in this particular case because Michael

Brown who was on the ground kind of didn’t believe in the plan

to begin with. He had handled emergencies before. He just tried to

circumvent it and deal directly with the White House.

So, look, a lot of things happened that in retrospect today we

would all do differently. You are just spokesmen for your different

agencies. What we are trying to elicit here is the kind of statutory

changes so we can give these departments the flexibility you need

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to get the job done should something like this occur again. That is

ultimately what we are after.

Any other comments before we close the hearing? I appreciate

everybody’s patience today.

Mr. MCCONNELL. Just one brief one, sir, and that is I am here

as the NORTHCOM kind of representative, and just speaking from

an operational basis, I think in many ways this is a very good news

story. Yes, there was no system, there was no anticipation that

there would be a need for this kind of a system, but once the people

on the ground started to work together—and particularly kudos to

the Office of U.S. Foreign Disaster Assistance who has impressed

the men and women of JTF Katrina very well—I think this in some

ways as a good news story in allowing us to proceed along the lines

that you just described.

Chairman TOM DAVIS. I am not sure I disagree with that. I think

one of the problems is that we have institutional barriers, some

statutory, some regulatory, that made it harder for people to get

the jobs done, and that is really what we are trying to solicit here.

I was down on the ground and saw people working 24–7. I saw

volunteers, fire departments, and emergency personnel from all

over the country coming in and making this work. I saw people in

the face of the storm who had made some early decisions decide

they were going to put everything into saving lives, which meant

some other things had to go by the wayside and did a remarkable

job of actually limiting loss of the life once the levies broke and

once some of the initial decisions that they probably wished had

gone otherwise came about, and there were a lot of heroes in this

story, and I don’t mean to detract from that at all.

We are really ultimately after institutionally what do we need to

do to make sure that we can be a smooth-running machine. I know

you have to deal with the rules and regulations that are passed by

Congress and in some cases regulations that come through the

agencies, and you are subject to that, and when you violate them,

we will call you up and say why did you do that. Of course, emergency situations are different, and one of the things we found with

FEMA and the folks on the ground—the Governor of Louisiana

talked about this, even Michael Brown when the military came

in—they were mission-oriented. They were not driven by regulations, and they were able to get things done a lot quicker than

some other elements of the government that seemed to be just constrained by regulations. In emergencies, you have to look at the

mission. You have to get the job done. It sometimes goes outside

the box. We are seeing this all the time.

Anyway, I appreciate everybody sharing their thoughts with us

today, coming before us. I am sure if we had it to do over again,

we would all do it differently, but so would we up here. We are just

trying to see what we need to do so that the next time, we give

you the tools.

I appreciate your patience. The hearing is adjourned.

[Whereupon, at 1:07 p.m., the committee was adjourned.]

[The prepared statement of Hon. Dennis J. Kucinich and additional information submitted for the hearing record follow:]

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