GAO

United States General Accounting Office

Report to the Chairman of the 

Subcommittee on National Security, 

Veterans Affairs and International 

Relations, Committee on Government 

Reform, House of Representatives

March 2001 COMBATING 

TERRORISM

Accountability Over 

Medical Supplies 

Needs Further 

Improvement

GAO-01-463

Page 1 GAO-01-463 Combating Terrorism

Contents

Letter 3

Appendixes Appendix I: Objective, Scope, and Methodology 30

Appendix II: Comments From the Department of Health and Human 

Services 32

Appendix III: Comments From the Department of Veterans Affairs 38

Appendix IV: Comments From the Department of Defense 42

Appendix V: GAO Contact and Staff Acknowledgments 44

Glossary 46

Related GAO Products

(as of November 30, 

2000)

48

Figures Figure 1: U.S. Chemical and Biological Medical Supplies Used to

Combat Terrorism 8

Figure 2: CDC Operations 14
Page 2 GAO-01-463 Combating Terrorism
Page 3 GAO-01-463 Combating Terrorism

United States General Accounting Office

Washington, D.C. 20548 Letr

March 30, 2001

The Honorable Christopher Shays

Chairman

Subcommittee on National Security, Veterans Affairs

and International Relations

Committee on Government Reform

House of Representatives

Dear Mr. Chairman:

This report responds to your request that we follow up on the status of the 

corrective actions taken by the responsible agencies to address the internal 

control weaknesses and recommendations previously reported in October 

19991

 that could affect the United States’ ability to effectively respond to 

chemical or biological terrorist incidents. This ability is dependent, among 

other things, on the plans, methods, and procedures used to ensure that the 

medical supplies designated for this purpose are current, accounted for, 

and ready for use. The President’s fiscal year 2001 budget proposed 

spending about $11.3 billion to combat terrorism. Among the resources the 

federal government is devoting to combating chemical and biological 

terrorism is funding to develop and maintain a national stockpile2

 of 

pharmaceutical and medical supplies that can be used to treat civilian and 

military victims of chemical and biological terrorist acts.

1

Combating Terrorism: Chemical and Biological Medical Supplies Are Poorly Managed

(GAO/HEHS/AIMD-00-36, October 29, 1999).

2

Marine Corps Chemical Biological Incident Response Force (CBIRF) officials refer to the 

medical supplies they maintain as a working stock. To simplify our presentation, we refer to 

CBIRF’s medical supplies as a stockpile.
Page 4 GAO-01-463 Combating Terrorism

In response to your request, our objective was to follow up on actions 

taken to address our recommendations that the Department of Health and 

Human Services’ (HHS) Office of Emergency Preparedness (OEP) and 

Centers for Disease Control and Prevention (CDC),3

 the Department of 

Veterans Affairs (VA),4

 and U.S. Marine Corps Chemical Biological Incident 

Response Force (CBIRF) establish sufficient systems of internal control 

over chemical and biological pharmaceutical and medical supplies by 

(1) conducting risk assessments, (2) arranging for periodic, independent 

inventories of the stockpiles, (3) implementing a tracking system that 

retains complete documentation for all supplies ordered, received, and 

destroyed, and (4) rotating stock properly. 

Results in Brief OEP, VA, CDC, and CBIRF have made significant progress toward 

implementing the recommendations made in our October 1999 report to 

address identified internal control weaknesses. Management at each of the 

responsible agencies has given priority to and placed emphasis on 

strengthening internal controls over the stockpiles. As a result, corrective 

actions have reduced inventory discrepancy rates and improved 

accountability. At the same time, we found that in all the areas associated 

with our prior recommendations, additional steps can be taken to ensure 

that pharmaceutical and medical supplies that can be used to treat victims 

of chemical and biological terrorist incidents are current, accounted for, 

and readily available for use.

3

At the time of our prior review, CDC was in the initial start-up phase of its National 

Pharmaceutical Stockpile Program; therefore, we did not assess its internal controls. 

However, we made recommendations to CDC, along with the other responsible agencies, to 

consider in implementing its program.

4

Under a memorandum of agreement with OEP, VA is responsible for the purchase, storage, 

quality control, maintenance, exercise, and contingent deployment of pharmaceutical and 

medical supplies. Also, VA is a purchasing and contracting agent for CDC’s National 

Pharmaceutical Stockpile Program. VA does not maintain its own stockpile for use in the 

event of a terrorist incident.
Page 5 GAO-01-463 Combating Terrorism

Although OEP, VA, CDC, and CBIRF conducted risk assessments since our 

last report, we found instances where the risk assessments were not 

sufficiently comprehensive or where actions identified to mitigate risks had 

not yet been implemented. For example, CDC’s risk assessment did not 

adequately address risks specific to the development phase of the National 

Pharmaceutical Stockpile Program (NPSP), in which CDC is partnering5

with various contractors and subcontractors to manage and store its 

medical supplies. Although it placed supplies at five of its six locations, at 

the end of our fieldwork CDC had not finalized agreements with its 

partners covering key responsibilities. Without such agreements in place, 

there is an increased risk that mission critical activities may not be carried 

out.

In other instances, actions taken to mitigate risks were not yet fully 

implemented. For example, while CDC’s risk assessment identified theft as 

a risk, and its handbook specified erecting a fence as a deterrent, stockpiles 

were placed at four locations prior to erecting the fences. In another case, 

OEP had identified the sensitivity of the medical supplies to extreme 

temperatures as a risk that could affect drug stability and potency and had 

subsequently installed temperature monitoring devices. However, during 

one of our site visits we noted that the monitor registered nine degrees 

higher than the maximum temperature recommended by the 

manufacturers. In April 2001, OEP plans to replace affected stock and 

relocate the stockpile, which constitutes over 20 percent of OEP’s total 

stock. In the interim, the affected items may not be effective, should an 

incident occur.

5

Partnering, in the context of this report, is the association of two or more entities in a 

business relationship.
Page 6 GAO-01-463 Combating Terrorism

Each of the responsible agencies has conducted various periodic inventory 

counts and, as a result, discrepancies between inventory records and 

physical inventories have significantly decreased. However, OEP has not 

yet provided to VA, nor has VA developed written guidance stipulating the 

frequency of inventory counts or acceptable discrepancy rates. In addition, 

we found instances where certain medical supplies on hand at CBIRF fell 

short of those specified in the Commanding Officer’s (CO’s) medical 

allowance list, which provides an interim baseline for medical supplies 

needed. CBIRF does not plan to order additional supplies to conform to 

this list, because the Marine Corps System Command (MARCORSYSCOM) 

has provided a specific authorized medical allowance list (AMAL),6

 which 

supercedes the CO’s list. MARCORSYSCOM is in the process of 

programming funding and developing the fielding plan for CBIRF to follow 

in adjusting its stock levels to conform to the AMAL. Further, OEP does not 

have an updated inventory requirements list to reflect recent changes in the 

composition of its stockpile. Unless OEP updates its inventory 

requirements list and conducts periodic inventories in the future, OEP will 

not be able to determine whether it has the necessary supplies to meet its 

mission or identify patterns of shortages, overages, or other discrepancies 

and take timely action. 

Although inventory discrepancy rates have significantly improved since our 

prior report, the current inventory tracking systems used by OEP, VA, CDC, 

and CBIRF lack certain fundamental information as previously reported. 

For example, the agencies’ systems still do not record and track all activity 

throughout the life cycle of each product stocked. The agencies are taking 

steps to replace their current systems with ones that are capable of 

tracking pharmaceutical and medical supplies from the time an order is 

placed until the item is consumed or otherwise disposed of. At the 

completion of our fieldwork, CDC was reviewing vendor proposals for a 

new system. OEP expects to rely on the results of CDC’s review and use the 

same system as that selected by CDC. The Marine Corps has developed a 

new inventory system, ATLAS II+, that it expects to implement at CBIRF by 

June 2001. 

6

Authorized Medical Allowance List (AMAL) sets the minimum level of medical supplies to 

be kept on hand to meet mission needs.
Page 7 GAO-01-463 Combating Terrorism

In determining whether OEP, VA, CDC, and CBIRF are properly rotating 

pharmaceutical and medical supplies in a timely manner, we inspected the 

agencies’ inventories and records and found no expired items in OEP’s and 

CDC’s stockpiles. This was a marked improvement for OEP, since we had 

found expired items in its active inventory in our prior review. For CBIRF, 

we identified 161 expired items on hand during our October 2000 inventory 

count, but this represented less than 1 percent of its inventory. However, 

these expired items included controlled substances such as morphine 

sulfate, acetaminophen and codeine phosphate, and midazolam7

 that had 

expired but not been replaced. Neglecting to remove and replace expired 

items − especially controlled substances − promptly, increases the risk of 

an inadequate supply of effective items being on hand and available for 

deployment with CBIRF should a terrorist incident occur.

We are making 13 new recommendations to the responsible agencies to (1) 

minimize the risks associated with partnering with private companies and 

other entities, (2) improve accountability over pharmaceutical and medical 

supplies, and (3) ensure the effectiveness of supplies on hand. 

We obtained written comments on a draft of this report from HHS, VA, and 

the Department of Defense (DOD). The agencies concurred with the 

overall conclusion of the report and 12 of 13 recommendations. HHS did 

not agree with our recommendation that CDC install fencing prior to 

placing inventories at storage locations. Subsequently, we modified our 

recommendation as follows: “To the extent practical, install proper fencing 

prior to placing inventories at storage locations.” In addition, we clarified 

the potential impact of certain other issues based on agency comments. 

Also, in their comments, the agencies described several actions that they 

are taking to strengthen management controls in response to our 

recommendations.

Background The United States has established a national policy for combating chemical 

and biological terrorism and managing the consequences of terrorist 

attacks. In the event of a domestic chemical or biological terrorist incident, 

local and state governments would be the first to respond in assisting 

civilian victims. If the consequences of such an incident overwhelmed state 

and local capabilities, federal assistance could be given to support their 

7

See glossary for a definition of pharmaceuticals and medical supplies.
Page 8 GAO-01-463 Combating Terrorism

efforts. Critical to that assistance are the chemical and biological medical 

supplies maintained by OEP, VA, CDC, and CBIRF. A description of the 

support these agencies could provide is described below and depicted in 

figure 1.

Figure 1: U.S. Chemical and Biological Medical Supplies Used to Combat Terrorism 

Source: GAO analysis based on our review of HHS’s and CDC’s operating plans and CBIRF 

documents.
Page 9 GAO-01-463 Combating Terrorism

If a national emergency has been declared, the Federal Emergency 

Management Agency (FEMA) is responsible for managing the support 

provided by other federal agencies and coordinating response activities 

with state and local authorities. FEMA coordinates the federal response 

through the Federal Response Plan and the Terrorism Incident Annex, 

which establishes a general concept of operations for the federal response 

to a terrorist incident. FEMA, through the Federal Response Plan, has 

designated HHS as the lead agency to coordinate medical assistance in the 

event of a federally declared natural or man-made disaster, including 

chemical or biological terrorist incidents. Within HHS, OEP is responsible 

for implementing and coordinating this medical assistance and has, among 

other efforts, established four National Medical Response Teams (NMRTs) 

in different regions of the country and staffed the teams with specially 

trained doctors, nurses, other health care providers, and emergency 

personnel whose mission is to decontaminate and/or treat victims of a 

terrorist attack. Under a memorandum of agreement between VA and OEP, 

VA maintains a medical stockpile containing antidotes, antibiotics, and 

medical supplies for responding to chemical terrorist attacks at locations 

near each team. OEP also maintains one smaller stockpile that contains 

only antidotes for chemical incidents. This stockpile can be loaned to local 

governments or predeployed for special events, such as the Olympic 

Games. 
Page 10 GAO-01-463 Combating Terrorism

For the past 26 years, among other duties, CDC has maintained the nation’s 

stockpile of the smallpox vaccine. In fiscal year 1999, the Congress 

appropriated $51 million to CDC to establish and implement the NPSP.8

CDC received an additional $52 million of stockpile funds in each of the 

following 2 fiscal years. The program is responsible for establishing a 

pharmaceutical and medical stockpile to counter the potential threats to 

civilian populations of injury or disease due to chemical or biological 

terrorism. Within this charge, the program’s primary focus is on biological 

terrorist attacks. Since November 1999, CDC has been building the 

National Pharmaceutical Stockpile (NPS), which is comprised of two types 

of inventories. The first is a rapid response inventory of pharmaceutical 

and medical supplies that can be positioned at any location in the nation 

within 12 hours of a federal decision to deploy assets, referred to as 12-

hour push packages by CDC. The second is a larger stock of supplies that 

can be deployed within 24 to 36 hours of notification, and can be tailored to 

address a particular type of incident and augment the rapid response 

inventory, referred to as vendor managed inventories.9

 In the event of an 

incident, its stock is shipped in bulk and is accompanied by CDC technical 

advisors who assist and advise state and local officials in organizing the 

bulk stock medications into individual doses and implement plans to 

distribute and dispense the medication. VA acts as a purchasing agent for 

NPSP medical materiel, providing CDC access to VA’s purchasing 

experience and the ability to purchase medical supplies at significant 

discounts. 

CBIRF, created in April 1996 by the Commandant of the Marine Corps, is an 

incident response force and maintains a working stock of medical material 

to provide emergency medical care and stabilization of injured CBIRF 

personnel and a limited number of other casualties. CBIRF is also trained 

and equipped to provide for the detection and identification of chemical 

agents as well as for casualty extraction and decontamination. Thus, it 

should be noted that the purpose of the medical supplies managed by 

CBIRF is fundamentally different from that of OEP’s and CDC’s programs 

in that CBIRF stocks chemical antidotes and medical supplies in only those 

amounts sufficient to treat team members and a limited number of civilian 

8

Omnibus Consolidated and Emergency Supplemental Appropriations Act, 1999 (P.L. 105-

277).

9

Vendor managed inventories are carried on the manufacturers’ inventory records as either 

“government owned” or “government reserved” and may be rotated with the vendor’s 

normal operating stock in order to assure freshness.
Page 11 GAO-01-463 Combating Terrorism

victims. Accordingly, its stock of antidotes and medical supplies is much 

smaller than that of OEP and CDC. 

Scope and 

Methodology

To determine the status of corrective actions taken to address our prior 

recommendations, we interviewed responsible agency officials, reviewed 

agency documentation, and observed agency operations and facilities at 

the OEP, VA, CDC, and CBIRF sites that currently store medical supplies. 

We also performed a 100-percent count of the CBIRF medical supplies with 

CBIRF assistance and observed and participated in counts of OEP and CDC 

medical supplies with OEP, VA, and CDC officials. The scope of our work 

spanned from the point that OEP, CDC, and CBIRF identified medical 

supplies to be included in their inventories to the point that the medical 

supplies would be released from the storage sites in response to a terrorist 

incident. Our review did not include an analysis of (1) how these stockpiles 

fit into national counterterrorism plans, (2) the concept of operations for 

the use of these stockpiles, or (3) whether these stockpiles contain the 

appropriate medications. We also did not review management controls 

over medical supplies after the point that they would be deployed for a 

terrorist incident. These issues are the subject of several recently published 

GAO studies. 10 We conducted our review from August 2000 through 

December 2000 in accordance with generally accepted government 

auditing standards. See appendix I for a full description of our objective, 

scope and methodology.

Agencies Performed 

Risk Assessments but 

Did Not Recognize or 

Mitigate All Relevant 

Risks

In October 1999, we reported that neither OEP, VA, nor CBIRF had 

determined the risks that face their stockpiles, assessed the likelihood of 

each risk’s occurrence, and established plans to detect or mitigate the risks. 

Since then these agencies have completed risk assessments that identify 

risks and actions to mitigate those risks. CBIRF not only completed a risk 

assessment, including a physical security analysis, but it also implemented 

controls to mitigate risks identified in its assessment. However, for CDC 

and OEP we found instances where the risk assessments were not 

sufficiently comprehensive or where actions identified to mitigate risks had 

10Combating Terrorism: Observations on Biological Terrorism and Public Health Initiatives

(GAO/T-NSIAD-99-112, March 16, 1999), Combating Terrorism: Need for Comprehensive 

Threat and Risk Assessments of Chemical and Biological Attacks (GAO/NSIAD-99-163, 

September 7, 1999), and Combating Terrorism: Linking Threats to Strategies and Resources

(GAO/T-NSIAD-00-218, July 26, 2000). 
Page 12 GAO-01-463 Combating Terrorism

not been fully implemented. For example, CDC and OEP are partnering 

with various federal and commercial entities for the storage, management, 

and transporting of their pharmaceutical and medical supplies. As of the 

completion of our fieldwork, neither agency had considered all of the risks 

posed by delegating key responsibilities to other entities, nor had they 

taken all the necessary steps to mitigate those risks. 

The federal government’s standards for internal control11 state that internal 

control should provide for an assessment of the risks the agency faces from 

both external and internal sources. According to these standards, agencies 

should conduct risk assessments to (1) identify all potential internal and 

external risks, (2) rank the risks by assessing their likelihood and their 

effect on achieving mission objectives, and (3) act to mitigate those risks. 

Until each agency develops and fully implements comprehensive risk 

assessments and plans for mitigating those risks, each will have limited 

assurance that mission critical activities will be carried out as 

contemplated.

Risk Assessments Did Not 

Recognize All Risks 

Inherent in Partnering With 

Other Entities

CDC completed a risk/benefit assessment in February 2000 that identified 

and analyzed the significance of the hazards and risks facing the NPS as a 

basis for establishing actions needed to mitigate those risks. However, CDC 

did not consider risks that might threaten its mission as a result of 

partnering with other entities, especially during the start-up phase of the 

program, which began in January 1999 and is still ongoing.

In November 1999, CDC partnered with VA to serve as a purchasing and 

contracting agent for the NPSP. The partnership allowed CDC to take 

advantage of VA’s contracting experience and purchasing power by having 

VA purchase supplies at significant discounts, thereby achieving significant 

cost savings that could benefit other areas of the program. VA received 

initial funds from CDC and began purchasing materiel for the rapid 

response inventory in November 1999. 

Once items were purchased, VA configured the supplies to establish eight 

rapid response inventories, also referred to as “push packages.” At the end 

of our fieldwork, CDC had placed six of its rapid response inventories at 

five of six permanent sites managed by a wholesale distributor or other 

11Internal Control: Standards for Internal Control in the Federal Government (GAO/AIMD00-21.3.1, November 1999).
Page 13 GAO-01-463 Combating Terrorism

external parties, as illustrated in figure 2, prior to obtaining signed 

agreements with its proposed partners for the storage, management, and 

transporting of stock in the event of an incident. CDC placed three of the 

inventories with a wholesale distributor, which CDC anticipates will also 

manage the supplies stored at these facilities. Three of the inventories were 

placed at two privately owned warehouses. CDC anticipates the wholesale 

distributor will manage the stockpiles located at these warehouses. The 

remaining two inventories have not been placed at permanent sites, but 

CDC expects to place one at a private warehouse, which will be managed 

by the wholesale distributor, and the other at a federal facility, which will 

be managed by CDC with assistance from a part-time employee at the site. 
Page 14 GAO-01-463 Combating Terrorism

Figure 2: CDC Operations

Source: GAO analysis based on the review of CDC’s NPSP Operating Plan.
Page 15 GAO-01-463 Combating Terrorism

In November 2000, CDC developed and issued standard operating 

procedures in the form of a handbook to the managers of the wholesale 

distributor, which is responsible for storing and managing CDC’s supplies 

stored at its facilities and managing those stored at the private warehouses. 

CDC also issued its handbook to the managers at the private warehouses. 

There is not, however, a written agreement between CDC, VA, and the 

wholesale distributor that covers all the wholesale distributor’s 

responsibilities. While the handbook provides guidance for storing and 

managing CDC’s supplies, without written agreements between CDC and 

its partners covering key responsibilities, there is a greater risk that those 

procedures will not be carried out. 

In addition, the handbook does not fully address policies, procedures, and 

control activities that apply to the private warehouses that are responsible 

for storing, but not managing, the supplies. For example, the handbook 

does not provide guidelines to the private warehouses for granting access 

to the stockpiles for rotation and management of the stock by the 

wholesale distributor or part-time employee at the federal facility. 

Likewise, the handbook does not provide an interim plan that addresses 

access and security controls or rotation of expiring stock by others. 

Without adequate procedures in place to guide control activities, 

management cannot be assured that responsibilities are clearly 

communicated to warehouse personnel entrusted with NPS materiel, 

raising the risk that unauthorized access to the supplies will be gained or 

that stock will not be timely and consistently rotated. In addition, while 

CDC officials told us that they plan to use private air cargo and land 

transport companies to transport the stockpiles in the event of a terrorist 

incident, as of the completion of our fieldwork, there were no standard 

operating procedures or signed agreements to cover these arrangements.

OEP completed its risk assessment in December 2000. However, it did not 

recognize all the risks associated with delegating responsibility for the 

storage and management of its stockpiles to VA. Between April and 

December 2000, OEP and VA jointly drafted both national and local 

operating plans12 in accordance with their memorandum of agreement. 

12The OEP/VA national plan addresses the responsibilities, concept of operations and 

procedures for the procurement, storage, management and deployment of OEP’s stockpiles. 

The local plans address key responsibilities of VA personnel as it relates to each storage site, 

for example the amount of space and level of security to be provided and procedures to be 

followed for the controlled release of supplies when federal assistance is requested in 

response to a chemical or biological terrorist incident.
Page 16 GAO-01-463 Combating Terrorism

However, these plans had not been finalized or approved by OEP as of the 

end of our fieldwork. Although the draft local operating plans were 

provided to the VA locations storing the stockpiles, security personnel at 

two of the locations were unable to provide us with a copy of the draft plan 

or associated training materials. In addition, they could not demonstrate 

that the plan had been communicated to them and was readily available to 

use in a test or an actual terrorist incident.

Actions Identified by CDC 

and OEP to Mitigate Risks 

Were Not Fully 

Implemented

For OEP and CDC, we also noted instances where risks had been 

appropriately identified, but plans for mitigating these risks were not fully 

implemented. For example, CDC’s risk assessment identified physical 

security as a risk, and its handbook specified a number of actions to 

mitigate the risks including the use of alarms, video devices, and chain link 

fences of at least 10 feet with lock-secured gates around the NPS inventory. 

However, the stockpiles were placed at four locations prior to erecting 

fences to segregate the CDC stock from that of the wholesale distributor or 

others sharing adjacent warehouse space. Placing the stockpiles at storage 

facilities prior to erecting fencing exposes the supplies to unauthorized 

access. For up to 3-1/2 months, the supplies were not segregated by fencing 

at four of the facilities and management was unable to limit or control 

access to the supplies, as prescribed in CDC’s standard operating 

procedures. 

OEP also prepared a risk assessment that identified the risks to its 

program, determined the probability of occurrence, and established plans 

for mitigating the risks. However, some plans were not fully implemented 

by the end of our fieldwork. For example, one of the risks identified in the 

assessment was the sensitivity of the medical supplies to extreme 

temperatures that could damage the drug or medical item. According to 

OEP’s risk assessment, should this occur, the items affected were to be 

replaced. 

Since our prior study, OEP installed temperature monitoring devices at 

each of the locations to monitor temperature minimums and maximums 

during the period between site visits. We noted during our site visit to its 

central location that the temperature monitoring device at the facility 

registered 95 degrees Fahrenheit, and that manufacturers of some 

pharmaceuticals stored in this facility warrant their products only if the 

items are stored at temperatures not over 86 degrees. While the facility is 

heated in the winter, it lacks air conditioning. This facility houses over 20 

percent of OEP’s stock of pharmaceutical and medical supplies, most of 
Page 17 GAO-01-463 Combating Terrorism

which is not refrigerated. Pharmaceuticals subjected to the extreme 

temperatures included diazepam, atropine, and ciprofloxacin. There was 

no way of knowing how often or for how long the temperature exceeded 

the maximum over the summer at this location because these devices 

cannot measure the frequency or duration in which appropriate 

temperatures for storage of pharmaceuticals were exceeded. Such 

information would be necessary to determine whether the subjected 

pharmaceutical and medical supplies are at risk of deterioration due to 

exposure to extreme temperatures.

Subjecting pharmaceuticals to excessive temperatures can affect the 

stability and utility of the items. According to VA’s Handbook, items 

exposed to extreme temperatures are to be inspected by qualified VA 

personnel, local health officials, or if necessary, the Food and Drug 

Administration (FDA). The handbook states that stock confirmed unfit for 

use should be dropped from inventory records and physically disposed of 

as soon as possible. However, in this case such procedures were not 

followed. Rather, OEP officials told us that they planned to relocate the 

stockpile to an environmentally controlled facility in April 2001, and 

replace the affected goods at that time. In the meantime, these items may 

not be effective in the event of a terrorist incident. 

In the course of our review, we also found weaknesses in OEP’s physical 

security over controlled substances at its central location. During our 

November site visit, we noted that the OEP storage cages at this location 

did not comply with Drug Enforcement Administration (DEA) regulations 

for the storage of controlled substances. The storage cage within the 

warehouse facility used to store OEP medical supplies, including 

controlled substances, was not equipped with an alarm system which upon 

unauthorized entry would transmit a signal to VA security or the local 

police agency, as required by DEA regulations.13 OEP officials told us that 

they do not plan to add an alarm system at this location because of their 

plans to move these supplies to the new facility in April 2001. They stated 

that the new facility will comply with DEA regulations. In the meantime, 

inadequate physical safeguards raise the risk that the controlled substances 

could be stolen and the theft not promptly detected. 

1321 CFR 1301.72 (b)(4)(v), (2000).
Page 18 GAO-01-463 Combating Terrorism

Inventory Accuracy 

Improved but 

Additional Actions Are 

Needed

We previously reported large discrepancies between data recorded in 

CBIRF’s and OEP’s inventory systems and physical counts of their 

inventories. In addition, during our prior review, we noted that while OEP 

had identified and prepared a list of the minimum pharmaceuticals and 

medical supplies needed to carry out its mission (requirements list), CBIRF 

had not. In our current review, we noted that while discrepancies still 

existed, the accuracy of both CBIRF and OEP inventory records had 

improved significantly. However, OEP lacked certain detailed written 

inventory procedures necessary to help ensure overall reliability of 

inventory records. We also found in our current review that CBIRF had 

developed a requirements list; however, it did not have on hand all items 

included in the list. Also, OEP had not updated its requirements list for 

significant increases to its stockpile. These issues need to be addressed in 

order to ensure the readiness of the inventory in the event of a chemical or 

biological incident. 

Since our October 1999 report, CDC has developed an inventory 

requirements list and is using the list as a basis for making inventory 

purchases to establish the NPS. It has also begun performing periodic 

inventory counts, and as of the end of our fieldwork, no unresolved 

discrepancies between medical supplies on hand and system data had been 

identified.

Periodic Inventories 

Reduced Discrepancy Rates

Since our inventory counts of CBIRF’s medical supplies in 1999, the 

discrepancy rate has declined from 26 percent to approximately 10 percent. 

While this is a significant improvement, we found during our most recent 

counts that the inventory system still had inaccurate or incomplete data. 

We found discrepancies in quantities, expiration dates, and lot numbers. 

Approximately 6.7 percent of the discrepancies we found were quantity 

discrepancies and approximately 3.3 percent were discrepancies in the lot 

numbers or expiration dates. It is important to note, however, that no 

discrepancies were found between the records for controlled substances 

and data from the physical inventory of controlled substances. CBIRF had 

no official explanation for the noted variances and identified human error 

as the likely cause. 
Page 19 GAO-01-463 Combating Terrorism

In response to our prior report, VA began performing quarterly inventory 

counts on behalf of OEP in April 2000. As a result, the inventory 

discrepancy rate declined from approximately 11 percent, as previously 

reported, to less than 1 percent in November 2000. In addition to current 

inventory items on hand for immediate deployment in response to an 

incident, VA was also holding certain expired controlled substances for 

OEP, pending approval by FDA to extend the shelf life of these items. As of 

December 2000, VA was holding 17,897 expired items for OEP for this 

purpose. When we counted these expired items and compared the results 

to VA’s inventory records, we found that approximately 5 percent of the 

expired items were not listed in the system. DEA regulations require that a 

complete and accurate record of all controlled substances on hand shall be 

maintained in written form.14 VA officials told us that they attribute the 

higher discrepancy rate for these expired items to less frequent inventory 

counts and a lack of periodic reconciliation of system data to what is on 

hand.

While OEP’s overall discrepancy rate has significantly improved, it has not 

provided, nor has VA established, written guidance stipulating acceptable 

discrepancy rates or the frequency of inventory counts. Sustained progress 

is dependent upon setting goals against which performance can be 

measured and conducting periodic inventories. Without these, OEP will not 

be able to measure improvement or determine the reliability of inventory 

records.

Since CDC is in the process of establishing the NPS, it just recently began 

performing quarterly cyclical inventory counts, as well as quality assurance 

reviews. From September through November 2000, we observed and 

participated in CDC’s quarterly inventory counts at three sites. To date, no 

unresolved discrepancies have been identified between the quantities of 

supplies recorded in the inventory system and the physical counts. 

Inventory Requirement 

Levels Were Not Always 

Provided or Followed

We previously reported that OEP had a list of pharmaceutical and medical 

supplies and quantities required to meet its mission. In fiscal year 1999, 

OEP authorized the purchase of about $1.6 million in chemical antidotes to 

increase the total number of victims that could be treated in a chemical 

incident from 8,000 to 20,000. At the end of our fieldwork, OEP had not yet 

updated and issued an official inventory requirements list to reflect recent 

1421 CFR 1304.11, (2000).
Page 20 GAO-01-463 Combating Terrorism

increases in its stockpile. As a result, OEP cannot be assured that it has the 

right composition and quantity of medical supplies readily available, and 

VA has no official baseline for maintaining the requisite materiel on hand to 

support OEP’s mission.

In our October 1999 report we also noted that CBIRF did not have an 

approved list of what items should be in its inventory. In May 2000, CBIRF 

established a CO’s Medical Allowance List. The allowance list, updated in 

December 2000, provided an interim baseline for the medical supplies that 

CBIRF officials determined were needed to meet the agency’s mission until 

the MARCORSYSCOM issued a CBIRF specific AMAL. Subsequently, 

CBIRF officials told us that MARCORSYSCOM had approved the AMAL, 

but it had not yet provided the funding nor developed the fielding plan for 

adjusting the stock to conform to the AMAL as of the end of our fieldwork. 

When we did our inventory count in October 2000, we noted that CBIRF did 

not have on hand all of the medical supplies included in its May 2000 CO 

list. For example, the CO list called for 406 intravenous sets but only 163 

were on hand. Also, the CO list called for stocking 394 oropharyngeal 

airways, but only 166 were on hand. CBIRF officials told us that they do not 

plan to order additional supplies until MARCORSYSCOM provides funding 

and develops a fielding plan for CBIRF to follow in adjusting its inventory 

of medical supplies, because they want to avoid potentially overstocking 

supplies. As such, the CO stated that once the MARCORSYSCOM programs 

funds and develops the fielding plan, CBIRF will adjust its physical stock to 

conform to the AMAL.

We found that CDC had developed internal guidelines for the composition 

and stock levels of medical supplies purchased to establish the NPS, 

particularly the rapid response inventory. CDC developed its initial 

inventories pursuant to guidance contained in the 1999 HHS Operating Plan 

for Bioterrorism Initiative, with input from the NPSP Working Group, 

which consisted of external experts in emergency response/medicine, 

public health, pharmacy and logistics management. CDC later established a 

medical review panel of internal subject-matter experts in infectious 

disease, emergency response/medicine, public health, medical 

management and toxicology, to review, validate and make 

recommendations regarding the NPS composition and stock levels on an as 

needed basis. We concluded that CDC followed its internal guidelines for 

establishing the composition and stock levels of its medical supplies and is 

using its requirements list to guide its purchase of supplies for the NPS. As 

of the end of our fieldwork, CDC had filled approximately 47 percent of its 

rapid response inventory requirement, based on the requirements list. 
Page 21 GAO-01-463 Combating Terrorism

However, the requirements for the vendor-managed inventory had not been 

filled, since CDC had just begun negotiations and contracting with vendors 

for this inventory. 

Current Tracking 

Systems Do Not 

Record Inventory 

Activity Over the Life 

Cycle of the Supplies

We previously reported that the responsible agencies’ inventory systems 

did not adequately track inventory items and recommended that they 

implement tracking systems that retain complete documentation for all 

supplies that have been ordered, received, and destroyed. The current 

inventory systems used by OEP, VA, CDC, and CBIRF still lack certain 

fundamental information, which impedes their ability to comprehensively 

track their pharmaceutical and medical supplies. 

Maintaining accountability over inventories requires that the agencies be 

able to record and track all activity associated with each product stocked 

throughout its life cycle. Such information is needed to monitor activity 

affecting the stockpiles and make timely decisions about adjusting the 

composition and stock levels of the inventory as well as ordering 

replacements for expiring supplies. Each agency is in the process of 

replacing its current system with one that is expected to be able to track 

medical supplies from the time an order is placed until the item is 

consumed or otherwise disposed of. Until these upgrades are complete, 

information relating to order, receipt, removal, destruction, and cost of 

supplies is not readily available to the responsible agencies. 

CDC has defined its requirements for inventory software and recently 

completed a review of vendor proposals. CDC’s goal is to have the new 

system in place by April 2001. CDC’s requirements include the capability to 

track inventory throughout each item’s life cycle. Since automated 

information about the NPS will be kept on a variety of independent 

computer systems, CDC recognizes the need for its system to interface 

with those of its partners, and to continually track the overall status, 

activity, and cost of supplies. Because OEP’s and CDC’s system needs are 

similar, OEP expects to rely on the results of CDC’s review of system 

capabilities and vendor proposals and use the same system as that selected 

by CDC. 

The Marine Corps has developed a new inventory management system, the 

ATLAS II +, that it expects to implement at CBIRF by June 2001. In 

response to our October 1999 report, CBIRF implemented an interim 

inventory system in September 2000, which is capable of tracking inventory 

quantities, expiration dates and lot numbers, pending transition to the new 
Page 22 GAO-01-463 Combating Terrorism

system. In addition to these capabilities, CBIRF expects its new system to 

be able to report whether items are on order, whether items ordered have 

been received, and whether items are pending shelf-life extension or 

waiting to be destroyed.

Rotation Policies and 

Practices at CBIRF and 

CDC Need 

Improvement

We previously reported that the responsible agencies’ inventories included 

items that had expired but not been replaced and recommended that they 

properly rotate supplies. For example, we found that OEP had 2,000 amyl 

nitrite inhalants on hand which had expired 8 months prior to our 1999 

visit. In response to our report, we found that all responsible agencies have 

developed policies and procedures related to rotating stock in their 

inventories. However, in some cases, planned approaches were not 

completely implemented. 

Proper rotation entails replacing pharmaceuticals and medical supplies 

that have expired or are close to their expiration dates with current stock. 

Agency policies require expired items to be segregated and destroyed, 

redistributed, or put into the shelf-life extension program discussed earlier. 

If expired items are not appropriately removed and replaced, there is an 

increased risk of ineffective items being deployed, an adequate supply of 

effective items being unavailable, or contemplated cost savings not being 

realized. 

During our October 2000 counts at CBIRF, we found that 161 expired 

pharmaceutical and medical supplies, including 146 controlled substances, 

were on hand. Among the expired controlled substances that had not been 

replaced were morphine sulfate, acetaminophen and codeine phosphate, 

and midazolam. The senior member of the CBIRF controlled substances 

inventory board told us that, prior to our October 2000 count, he had 

informed the CO that the inventory contained expired controlled 

substances and requested the CO’s approval to destroy the items. He 

subsequently informed us that CBIRF had destroyed the expired controlled 

substances on December 20, 2000. However, as of January 2001, CBIRF had 

not replaced the expired items with current stock in sufficient quantities to 

meet the minimum stock levels determined by the CO’s medical allowance 

list. According to CBIRF officials, a decision on whether to replace these 

expired items is pending and will be made once the MARCORSYSCOM 

provides program funds and the fielding plan for the CBIRF specific AMAL.

Although CDC’s inventory was too new for any of its items to have expired, 

it had not finalized agreements with a private sector partner to implement a 
Page 23 GAO-01-463 Combating Terrorism

stock rotation method designed to rotate soon-to-expire pharmaceuticals 

into the commercial marketplace and replace them with fresh stock. 

In December 1999, CDC developed a unique concept for medical materiel 

management, termed “rotation-in-place.” CDC found that given the demand 

in the commercial market place for certain pharmaceutical items held by 

the program, NPS materiel could be more economically maintained by 

partnering with a pharmaceutical wholesale company. Under the 

partnership arrangement, the wholesaler could sell certain 

pharmaceuticals to hospitals and other customers before the items reached 

their expiration dates and replace these items with fresh stock. Thus, it 

would be unnecessary to hold the CDC stock until expiration, dispose of it, 

and replace the disposed items at full cost. This approach would result in 

significant cost savings that could be funneled back into the program. We 

were told by CDC officials that the wholesale company requires the items 

be returned for redistribution not less than 6 months prior to the expiration 

date to allow it to redistribute the supplies to its other customers with a 6-

month minimum shelf life remaining on the items. CDC adopted a 12 month 

“trigger” date to ensure that items will be flagged and rotated in time to 

meet the wholesale company’s 6 month requirement. 

CDC is continuing to negotiate with the wholesaler to rotate the items. If an 

agreement is not finalized so that supplies can be redistributed by June 

2001, CDC could lose the opportunity for cost savings for approximately 

$4.3 million of CDC’s inventory, which will expire by December 2001. 

Without finalized agreements in place, the expiring medical materiel may 

have to be replaced at full cost and the expired items destroyed.

Conclusion Since our last report, the responsible agencies have significantly improved 

accountability over the medical supplies designated to treat victims of 

chemical or biological terrorism. However, ensuring that supplies are 

current, accounted for and readily available for use is dependent in large 

part on successful collaboration with other entities. Until CDC and OEP 

formalize certain ad hoc arrangements with other entities covering the 

storage, management, stock rotation and transporting of supplies, they will 

face the risk that, should a chemical or biological incident occur, the 

appropriate supplies will not be available when needed. Also, unless the 

agencies’ inventory requirements lists are up-to-date and reflective of their 

own identified needs, the agencies are limited in assuring that they have the 

supplies needed to fulfill their mission.
Page 24 GAO-01-463 Combating Terrorism

Recommendations for 

Executive Action

To minimize risks associated with partnering with private-sector 

companies and other entities in managing the National Pharmaceutical 

Stockpile, we recommend that the Secretary of Health and Human Services 

require the Director of the Centers for Disease Control and Prevention to

• execute written agreements as soon as possible with all CDC’s partners 

covering the storage, management, stock rotation and transporting of 

medical supplies designated for treatment of biological or chemical 

terrorism victims; 

• issue written guidance on security to private warehouses that store 

stockpiles, on such issues as granting access to the wholesale 

distributor for stock rotation; and

• to the extent practical, install proper fencing prior to placing inventories 

at storage locations.

To improve accountability over medical supplies in its inventory, we 

recommend that the Secretary of Health and Human Services require the 

Director of the Office of Emergency Preparedness to

• finalize, approve, and issue an inventory requirements list;

• improve physical security at its central location to comply with DEA 

regulations, or move the supplies as soon as possible to a location that 

meets these requirements;

• issue a written policy on the frequency of inventory counts and 

acceptable discrepancy rates;

• finalize and implement approved national and local operating plans 

addressing VA’s responsibilities for the procurement, storage, 

management, and deployment of OEP’s stockpiles; and 

• train VA personnel and conduct periodic quality control reviews to 

ensure that national and local operating plans are followed.

To ensure the effectiveness of medical supplies in its inventory, we 

recommend that the Secretary of Health and Human Services require the 

Director of the Office of Emergency Preparedness to

• immediately contact FDA or the pharmaceutical and medical supply 

manufacturers of items stored at its central location to determine the 

impact of items exposed to extreme temperatures;

• replace those items deemed no longer usable; and

• either add environmental controls to the current location or move the 

supplies as soon as possible to a climate controlled space.
Page 25 GAO-01-463 Combating Terrorism

To ensure that medical supplies on hand reflect those identified as being 

needed to respond to a chemical or biological terrorism incident, we 

recommend that the Marine Corps Systems Command program funding 

and complete the fielding plan for the CBIRF specific authorized medical 

allowance list and that the Commandant of the Marine Corps require the 

Commanding Officer of the Chemical Biological Incident Response Force 

to

• adjust its stock levels to conform with the authorized medical allowance 

list and

• remove expired items from its stock and replace them with current 

pharmaceutical and medical supplies.

Agency Comments We obtained written comments on a draft of this report from the 

Departments of Health and Human Services, Veterans Affairs, and Defense. 

The agencies concurred with the overall conclusion of the report and 12 of 

13 recommendations. However, in several instances where they concurred 

with the recommendations, they took exception to the related risk that we 

noted. The individual agencies’ responses related to the 13 

recommendations are summarized below, and are reprinted in their 

entirety in appendixes II through IV.

HHS concurred with our recommendation that CDC finalize written 

agreements with its partners covering the storage, management, stock 

rotation and transporting of medical supplies. In its response, HHS stated 

that CDC has accelerated the establishment of final contractual agreements 

and standard operating procedures for each of its NPSP partners and, since 

the end of our fieldwork, has finalized some of those agreements. However, 

HHS did not agree that mission critical activities could be compromised by 

not having written agreements in place. HHS explained that it proceeded 

with the placement of the 12-hour push packages prior to executing final 

agreements in order to make the NPSP response available as soon as it was 

technically feasible. The NPSP is relying on existing contractual 

agreements between VA and its commercial partners while it finalizes 

agreements with these same partners. While these existing agreements are 

designed to address VA’s hospital supply needs, they do not address key 

responsibilities, requirements, and control activities specific to the NPSP. 

We recognize the need to position the stockpiles for rapid deployment as 

soon as possible. However, we continue to believe that without final 

written agreements specifying key responsibilities of all parties, mission 

critical activities may not be carried out as contemplated.
Page 26 GAO-01-463 Combating Terrorism

HHS also concurred with our recommendation that CDC issue written 

guidance on security to private warehouses that store stockpiles, covering 

such issues as granting access to the wholesale distributor for stock 

rotation. HHS noted that it is in the process of updating its existing 

standard operating procedures to include information regarding controlled 

access to the NPSP inventory, key responsibilities for stock rotation, and 

guidelines for rotation of stock. However, HHS did not agree that the lack 

of such guidance increased the risk of unauthorized entry or failure to 

rotate inventory in a consistent and timely manner, because the private 

warehouses have their own security procedures in place. While we did not 

find any evidence that the integrity of the stockpiles had been 

compromised, or that stock rotations did not occur in a timely manner, we 

believe that written guidance is essential to reducing the risk of 

misunderstandings between CDC and its partners regarding security and 

rotation requirements. The actions HHS described that CDC is currently 

taking should address the risks noted in our report by ensuring that 

security and other procedures specific to the NPSP are carried out. 

HHS did not concur with our recommendation that CDC install fencing 

prior to placing inventories at storage locations, because it believes that 

there was no risk of theft during the initial months of the 12-hour push 

package placements. CDC stated that it did not intend for the installation of 

fencing to be a theft deterrent, but rather to serve as means of segregating 

CDC supplies from assets belonging to others sharing adjacent storage 

space. The NPSP standard operating procedures highlight the importance 

of protecting and securing the pharmaceutical supplies by requiring that 

access to the assets be limited by chain link fencing and lock-secured gates. 

Further, the operating procedures state that the storage facility must (1) 

specify the employees who can access the area, (2) have a system for 

identifying employees with access to the assets, (3) have a process in place 

to ensure that only those specified employees gain access to the area, and 

(4) enforce its rules of access with rigor. While we agree that the storage 

facilities have their own security procedures in place, we continue to 

believe that fencing provides the added benefit of limiting access to only 

authorized individuals. However, we agree that theft is not the primary risk, 

and we have modified our recommendation as follows, “To the extent 

practical, install proper fencing prior to placing inventories at storage 

locations.”

HHS agreed with all six of our recommendations regarding improving 

accountability over OEP’s medical supplies and ensuring their 

effectiveness. In its response, HHS described several actions it had taken to 
Page 27 GAO-01-463 Combating Terrorism

address our recommendations as follows. OEP approved an updated 

inventory requirements list on February 27, 2001. Further, national and 

local operating plans were approved and are being transmitted to VA. Also, 

OEP has taken steps to provide training to VA personnel and has conducted 

periodic quality control reviews. OEP has assessed the pharmaceuticals at 

the central location and, based on its findings, will continue to store them 

at this site until the supplies are moved to a new location in April. At that 

time, all temperature sensitive items will be replaced. In addition, OEP has 

directed VA to conduct a physical inventory of supplies stored at each 

location annually. While we did not provide OEP with a suggested tolerable 

inventory discrepancy rate, as noted in its response, we commend OEP for 

establishing a zero tolerable error rate for controlled substances and a 3- to 

5-percent error rate for other items. 

Although we did not address recommendations to VA in this report, the 

department provided comments detailing actions that it is taking in support 

of the NPSP and the management of OEP’s inventory of medical supplies 

used to combat terrorism. VA acknowledges OEP’s new inventory 

requirements list and will adjust the inventories to comply with that list in 

June 2001. Also, VA will augment OEP’s final operating plans with sitespecific plans and will assist OEP in scheduling staff to receive related 

training.

DOD generally concurred with both of our recommendations to adjust its 

stock levels to conform to the CBIRF specific authorized medical 

allowance list and to remove expired items from stock and replace them 

with current pharmaceutical and medical supplies. The Marine Corps is in 

the process of programming funding and ordering supplies to augment 

CBIRF’s existing inventory of medical supplies to conform to the AMAL. 

Further, CBIRF will segregate expired materiel from serviceable stock and 

will dispose of expired materiel not included in the DOD/FDA shelf-life 

extension program. DOD also emphasized the fundamental differences 

between the purpose of its medical supplies and those of CDC and OEP. In 

response, we added further clarification to the background section of our 

report.

As we agreed with your office, unless you publicly announce the contents 

of this report earlier, we will not distribute it until 30 days after its date. At 

that time, we will send copies to the Honorable Dennis J. Kucinich, 

Ranking Minority Member of your Subcommittee; Senator Fred Thompson, 

Chairman, and Senator Joseph I. Lieberman, Ranking Member, Senate 
Page 28 GAO-01-463 Combating Terrorism

Governmental Affairs Committee; Representative Dan Burton, Chairman, 

and Representative Henry A. Waxman, Ranking Minority Member, House 

Governmental Reform Committee; the Honorable Donald H. Rumsfeld, 

Secretary of Defense; the Honorable Tommy Thompson, Secretary of 

Health and Human Services; the Honorable Anthony J. Principi, Secretary 

of Veterans Affairs; the Honorable Mitchell E. Daniels, Jr., Director of the 

Office of Management and Budget; and other interested parties. We will 

also make copies available to others upon request.

Please contact me at (202) 512-9508 or Alana Stanfield, Assistant Director, 

at (202) 512-3197 or by e-mail at calboml@gao.gov or stanfielda@gao.gov if 

you have any questions. Other major contributors to this report are listed in 

appendix V. 

Sincerely yours,

Linda M. Calbom

Director, Financial Management

and Assurance
Page 29 GAO-01-463 Combating Terrorism
Page 30 GAO-01-463 Combating Terrorism

Appendix I

Objective, Scope, and Methodology ApApenednxidexiIs

Our objective was to determine the status of the corrective actions that 

OEP, VA, CDC, and CBIRF had taken to address our prior 

recommendations for improving management controls over medical 

supplies designated to treat victims of chemical and biological terrorism. 

To determine whether these agencies had conducted risk assessments and 

organized program activities to mitigate risks, we obtained and reviewed 

each agency’s risk assessment to determine its congruency with mission 

objectives as well as any actual or planned control activities to mitigate 

identified risks. 

To determine whether the agencies had arranged for periodic inventories, 

we (1) held discussions with agency officials to understand their inventory 

methodologies, (2) reviewed policies, procedures, and actions 

implemented to perform periodic independent inventories, (3) examined 

evidence that agencies had performed periodic inventories, and 

(4) assessed agencies’ follow-up actions for adequacy. 

To assess the accuracy and currency of recorded medical supply data, we 

performed a 100-percent count of the CBIRF medical supplies with CBIRF 

assistance and observed and participated in counts of the CDC and OEP 

medical supplies with CDC, OEP, and VA officials. We then compared the 

count results to inventory system data to identify discrepancies in recorded 

quantities, expiration dates, and lot numbers. We calculated the 

discrepancy rate by dividing the number of discrepancies we found by the 

total number of recorded on-hand medical supply items. 

Where available, we also compared on-hand pharmaceutical and medical 

supplies to management’s inventory requirements lists to determine 

whether agencies had the recommended and approved type and quantity of 

supplies on-hand to effectively carry out their missions.

To determine whether agencies had implemented inventory tracking 

systems that retained complete documentation over the life cycle of the 

medical supplies, we interviewed agency officials to understand their 

current inventory tracking systems’ capability to record, monitor, and 

account for on-hand medical supplies, and observed the systems’ output 

data. We also gained an understanding of the current inventory-tracking 

systems’ general controls and assessed them for adequacy.

To determine whether agencies had acted to properly replace expired or 

about to expire items with current stock (rotate supplies), we
Appendix I

Objective, Scope, and Methodology

Page 31 GAO-01-463 Combating Terrorism

(1) interviewed agency officials, (2) reviewed policies and procedures for 

rotating supplies, (3) assessed agencies’ inventory tracking systems’ 

capability to track medical supplies through their life cycle, (4) observed 

rotations at OEP sites, and (5) analyzed inventory reports to determine 

whether expired items had been timely rotated or scheduled for rotation. 

We also reviewed management controls for expired controlled substances 

that are being held in storage at VA, pending FDA approval of OEP’s shelf 

life extension program, including performing a 100-percent count of 

controlled substances on hand and reconciliation with system data.

To determine the additional actions OEP, VA, CDC, and CBIRF need to take 

to enhance their management controls, we gained an understanding of 

current management controls via inquiries, observations, and inspections 

and compared them to the criteria in our Standards for Internal Control in 

the Federal Government (GAO/AIMD-00-21.3.1, November 1999) and 

Internal Control Management and Evaluation Tool (GAO/AIMD Exposure 

Draft, October 2000). We also considered criteria in the Office of 

Management and Budget Circular A-123, Management Accountability and 

Control, revised June 21, 1995; 31 U.S.C. 3512 (the Federal Managers’ 

Financial Integrity Act of 1982); and the Federal Financial Management 

Systems Requirements of the Joint Financial Management Improvement 

Program. As part of our work, we also reviewed certain presidential 

directives and the Robert T. Stafford Disaster Relief and Emergency 

Assistance Act, as amended, to determine U.S. policy on chemical and 

biological terrorism.

The scope of our review did not include an analysis of (1) how these 

stockpiles fit into national counterterrorism plans, (2) the concept of 

operations for the use of these stockpiles, or (3) whether these stockpiles 

contain the appropriate medications. We did not examine the stockpiles 

and inventories held by U.S. military forces and managed by the Defense 

Logistics Agency for military purposes. We also excluded from our review 

controls over stockpiles that are maintained by Metropolitan Response 

System Teams in several U.S. cities for chemical and biological terrorist 

incidents. We did not review controls over the inventory of smallpox 

vaccine, since no weaknesses were identified in our prior report.

We conducted our review from August 2000 through December 2000 in 

accordance with generally accepted government auditing standards. 
Page 32 GAO-01-463 Combating Terrorism

Appendix II

Comments From the Department of Health 

and Human Services ApendxiI
Appendix II

Comments From the Department of Health 

and Human Services

Page 33 GAO-01-463 Combating Terrorism
Appendix II

Comments From the Department of Health 

and Human Services

Page 34 GAO-01-463 Combating Terrorism
Appendix II

Comments From the Department of Health 

and Human Services

Page 35 GAO-01-463 Combating Terrorism
Appendix II

Comments From the Department of Health 

and Human Services

Page 36 GAO-01-463 Combating Terrorism
Appendix II

Comments From the Department of Health 

and Human Services

Page 37 GAO-01-463 Combating Terrorism
Page 38 GAO-01-463 Combating Terrorism

Appendix III

Comments From the Department of Veterans 

Affairs ApendxiI
Appendix III

Comments From the Department of Veterans 

Affairs

Page 39 GAO-01-463 Combating Terrorism
Appendix III

Comments From the Department of Veterans 

Affairs

Page 40 GAO-01-463 Combating Terrorism
Appendix III

Comments From the Department of Veterans 

Affairs

Page 41 GAO-01-463 Combating Terrorism
Page 42 GAO-01-463 Combating Terrorism

Appendix IV

Comments From the Department of Defense ApendxiIV
Appendix IV

Comments From the Department of Defense

Page 43 GAO-01-463 Combating Terrorism
Page 44 GAO-01-463 Combating Terrorism

Appendix V

GAO Contact and Staff Acknowledgments ApendxiV

GAO Contact Linda M. Calbom, (202) 512-9508

Acknowledgments In addition to the contact named above Louise Beck, Cary Chappell, David 

Grindstaff, Bronwyn Hughes, Charles Norfleet, Alana Stanfield, McCoy 

Williams, and Maria Zacharias made key contributions to this report.
Appendix V

GAO Contact and Staff Acknowledgments

Page 45 GAO-01-463 Combating Terrorism
Page 46 GAO-01-463 Combating Terrorism

Glossary

Acetaminophen and 

Codeine Phosphate 

An over the counter pain reliever and fever reducer combined with a 

narcotic analgesic used to treat moderate to severe pain.1

Amyl nitrite An inhalation drug that is used as an antidote for cyanide poisoning. It is 

also a common recreational stimulant known as a popper.

Atropine A cardiac drug that is also used to reverse the effects of organophosphate 

poisoning. 

Ciprofloxacin A drug, also known as Cipro, that is used to treat infections, including 

anthrax.

Controlled Substance A substance that has a high potential for abuse, as classified by the 

Controlled Substances Act, title II of the Comprehensive Drug Abuse 

Prevention and Control Act of 1970.

Diazepam A drug that is used to treat the symptoms of anxiety, convulsions, and 

muscle spasms. Its brand name is Valium.

Midazolam A drug used to produce sleepiness or drowsiness and to relieve anxiety 

before surgery or certain procedures. It is also used to produce loss of 

consciousness before and during surgery.

Morphine Sulfate A drug in the class of narcotic analgesics used to treat moderate to severe 

pain.

1

The pharmaceuticals listed here may have alternative uses in a chemical or biological 

incident. We have described their primary purpose.
Glossary

Page 47 GAO-01-463 Combating Terrorism

Oropharyngeal Airway A device that is inserted into an unobstructed pharynx through the mouth 

to provide an airway.
Page 48 GAO-01-463 Combating Terrorism

Related GAO Products

(as of November 30, 2000)

Combating Terrorism: Federal Response Teams Provide Varied 

Capabilities; Opportunities Remain to Improve Coordination (GAO-01-14, 

November 30, 2000).

West Nile Virus Outbreak: Lessons for Public Health Preparedness

(GAO/HEHS-00-180, September 11, 2000).

Combating Terrorism: Linking Threats to Strategies and Resources (GAO/TNSIAD-00-218, July 26, 2000).

Combating Terrorism: Comments on Bill H.R. 4210 to Manage Selected 

Counterterrorist Programs (GAO/T-NSIAD-00-172, May 4, 2000).

Combating Terrorism: How Five Foreign Countries Are Organized to 

Combat Terrorism (GAO/NSIAD-00-85, April 7, 2000).

Combating Terrorism: Issues in Managing Counterterrorist Programs

(GAO/T-NSIAD-00-145, April 6, 2000).

Combating Terrorism: Chemical and Biological Medical Supplies Are 

Poorly Managed (GAO/T-HEHS/AIMD-00-59, March 8, 2000).

Combating Terrorism: Chemical and Biological Medical Supplies are Poorly 

Managed (GAO/HEHS/AIMD-00-36, October 29, 1999).

Combating Terrorism: Observations on the Threat of Chemical and 

Biological Terrorism (GAO/T-NSIAD-00-50, October 20, 1999).

Combating Terrorism: Need for Comprehensive Threat and Risk 

Assessments of Chemical and Biological Attack (GAO/NSIAD-99-163, 

September 7, 1999).

Combating Terrorism: Observations on Growth in Federal Programs

(GAO/T-NSIAD-99-181, June 9, 1999).

Combating Terrorism: Use of National Guard Response Teams Is Unclear

(GAO/NSIAD-99-110, May 21, 1999).

Combating Terrorism: Issues to Be Resolved to Improve Counterterrorist 

Operations (GAO/NSIAD-99-135, May 13, 1999).
Related GAO Products (as of November 30, 

2000)

Page 49 GAO-01-463 Combating Terrorism

Combating Terrorism: Observations on Biological Terrorism and Public 

Health Initiatives (GAO/T-NSIAD-99-112, March 16, 1999).

Combating Terrorism: Observations on Federal Spending to Combat 

Terrorism (GAO/T-NSIAD/GGD-99-107, March 11, 1999).

Combating Terrorism: Opportunities to Improve Domestic Preparedness 

Program Focus and Efficiency (GAO/NSIAD-99-3, November 12, 1998).

Combating Terrorism: Observations on Crosscutting Issues (GAO/T-NSIAD98-164, April 23, 1998).

Combating Terrorism: Threat and Risk Assessments Can Help Prioritize 

and Target Program Investments (GAO/NSIAD-98-74, April 9, 1998).

Combating Terrorism: Spending on Governmentwide Programs Requires 

Better Management and Coordination (GAO/NSIAD-98-39, December 1, 

1997).

Combating Terrorism: Federal Agencies’ Efforts to Implement National 

Policy and Strategy (GAO/NSIAD-97-254, September 26, 1997).

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Federal Programs

Contact one:

• Web site: http://www.gao.gov/fraudnet/fraudnet.htm

• e-mail: fraudnet@gao.gov

• 1-800-424-5454 (automated answering system)

United States

General Accounting Office

Washington, D.C. 20548-0001

Official Business

Penalty for Private Use $300

Address Correction Requested

Presorted Standard

Postage & Fees Paid

GAO

Permit No. GI00