Bioterrorism: Information on Jurisdictions' Expenditure and Reported Obligation of Program Funds
Published: 2005-02-28T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: In 1999, the Department of Health and Human Services' (HHS) Centers for Disease Control and Prevention (CDC) began funding jurisdictions' efforts to prepare for bioterrorism attacks through the Public Health Preparedness and Response for Bioterrorism program. After the events of September 11, 2001, and the 2001 anthrax incidents, program funds increased almost twentyfold. Citing jurisdictions' unexpended program funds, HHS reallocated some fiscal year 2004 funds to support other local and national bioterrorism initiatives. Jurisdictions and associations representing jurisdictions disputed HHS's assertion that large amounts of funds remain unused, noting that HHS did not acknowledge obligated funds that had not yet been expended. GAO was asked to provide information on (1) the extent to which jurisdictions had expended the fiscal year 2002 funds awarded for the program's third budget period as of August 30, 2003, and August 31, 2004, and the fiscal year 2003 funds awarded for the program's fourth budget period, as of August 30, 2004; (2) the extent to which fiscal year 2001, 2002, and 2003 funds awarded for the third and fourth budget periods remained unobligated as of August 30, 2004; and (3) factors jurisdictions identified as contributing to delays in expending and obligating funds and actions some jurisdictions took to address them.
section_title: What GAO Found
paragraphs: Jurisdictions have expended a substantial amount of Bioterrorism program funds. As of August 30, 2004, jurisdictions had expended over four-fifths of the fiscal year 2002 funds awarded during the third budget period through the HHS P accounts--the public assistance accounts that track over 90 percent of all funds awarded. As of that date, they had expended slightly over half of P account funds awarded for the program's fourth budget period. Jurisdictions continued, as authorized, to expend funds beyond the budget period for which they were awarded. For example, some expenditures, such as contract payments, extend beyond one budget period. A t the end of the program's third budget period, jurisdictions reported that less than one-sixth of all bioterrorism funds awarded for that period--including both fiscal year 2001 and 2002 funds--remained unobligated, and some jurisdictions reported that none of their funds remained unobligated. As of August 1, 2004, jurisdictions estimated that less than one-quarter of all funds awarded for the fourth budget period would remain unobligated as of August 30, 2004, and five jurisdictions estimated that they would have no funds remaining unobligated. Many jurisdictions reported facing challenges, partly related to administrative processes, that delayed their obligation and expenditure of bioterrorism funds. These included workforce issues such as hiring freezes; contracting and procurement processes to ensure responsible use of public funds; and lengthy information technology upgrades. Some jurisdictions have simplified these processes to expedite the obligation and expenditure of funds. We provided a draft of this report to HHS for comment, and the agency informed us it had no comments on the draft report.

section_title: Letter
paragraphs: In 1999, the Department of Health and Human Services’ (HHS) Centers for  Disease Control and Prevention (CDC) began funding state and municipal  efforts to prepare for bioterrorism attacks through the Public Health  Preparedness and Response for Bioterrorism program. Total funding  awarded through the program ranged from about $40 million in 1999 to  about $50 million in 2001 annually. The events of September 11, 2001,  increased concern about bioterrorism. In addition, the anthrax incidents  during the fall of 2001 strained the public health system, including  surveillance and laboratory workforce capacities, at the state and  municipal levels. Following these incidents, program funding increased  almost twentyfold, and this increased level of funding continued in fiscal  years 2003 and 2004.
With the substantial increase in funding after the terrorist attacks in 2001,  CDC modified the program’s budget periods. The program’s budget  periods typically run from August 31 of one year to August 30 of the  next—a 12-month period—and use funds from the fiscal year under way at  the start of the period. However, the third budget period, which was  already under way at the time of the September 11 attack, was extended to  24 months, running from August 31, 2001, to August 30, 2003. It used funds  from both fiscal years 2001 and 2002. The fourth budget period reverted to  a 12-month period, running from August 31, 2003, to August 30, 2004, and  used funds from fiscal year 2003.
In May 2004, HHS reported that large unexpended balances remained of  the fiscal year 2002 and 2003 funds awarded to jurisdictions for the  program’s third and fourth budget periods. Citing these large unexpended  balances, HHS made the decision to reallocate approximately $55 million  of the funds for the fifth budget period (August 31, 2004, to August 30,  2005) to support other local and national bioterrorism initiatives. States  and national associations representing jurisdictions have disputed HHS’s  assertion that large amounts of funds remain unused, noting that HHS  chose to focus only on expenditures, and did not focus on obligated funds,  which are funds that a jurisdiction has legally committed to spend—for  example, through a contract for services—but has not yet expended.
You asked us to provide information on the expenditure and obligation of  funds awarded under the Public Health Preparedness and Response for  Bioterrorism program cooperative agreements and factors that may affect  these expenditures and obligations. In this report, we will provide  information on (1) the extent to which jurisdictions expended the fiscal  year 2002 funds awarded for the program’s third budget period as of  August 30, 2003, and August 30, 2004, and fiscal year 2003 funds awarded  for the program’s fourth budget period, as of August 30, 2004; (2) the  extent to which fiscal year 2001, 2002, and 2003 funds awarded for the  third and fourth budget periods remained unobligated by jurisdictions as  of August 30, 2004; and (3) factors that jurisdictions identified as  contributing to delays in expending and obligating funds and actions some  jurisdictions took to address those factors.
To determine the expenditure of fiscal year 2002 funds awarded during the  third budget period as of August 30, 2003, and August 30, 2004, and the  fourth budget period’s expenditures as of August 30, 2004, we analyzed  expenditure data obtained from HHS’s Division of Payment Management  (DPM) Payment Management System (PMS). These expenditure data  come from PMS’s public assistance accounts (P accounts)—awardee  accounts that are specific to particular cooperative agreements, such as  the Bioterrorism program, or grants. The Bioterrorism P accounts do not  include fiscal year 2001 funds awarded during the first half of the third  budget period. Therefore, we were not able to include fiscal year 2001  funds in our analysis of the third budget period’s expenditures. In addition,  the P accounts do not include funds carried over, with CDC’s approval,  from prior budget periods, funds related to the Strategic National  Stockpile awarded after fiscal year 2002, or funds provided to  jurisdictions as direct assistance. However, while the P accounts are a  subset of the total Bioterrorism funds awarded to jurisdictions, they  accounted for over 90 percent of program funds awarded. We determined  the percentage of both the third budget period’s fiscal year 2002 and fourth  budget period’s fiscal year 2003 funds expended by comparing  expenditures recorded in the PMS P accounts to the total funds in the   P accounts. We did not conduct a review to determine the appropriateness  of any jurisdiction’s expenditures.
To obtain obligation data, we reviewed the financial status reports (FSR)  that CDC required jurisdictions to submit at the end of the third budget  period (August 31, 2001, to August 30, 2003) and the estimated FSRs for  the fourth budget period (August 31, 2003, to August 30, 2004) that CDC  asked jurisdictions to submit by August 1, 2004. We also reviewed the  Notices of Cooperative Agreement (NCA), which are provided by CDC to  jurisdictions and contain information on the total bioterrorism funds  awarded to the jurisdiction for a budget period. Unlike PMS’s P account  data, the FSRs and NCAs include information on all bioterrorism funds  awarded as financial assistance, including both fiscal year 2001 and 2002  funds, funds carried over from prior periods, and funds related to the  Strategic National Stockpile. Because the FSR data related to obligation  are self-reported by jurisdictions, we interviewed officials from CDC,  HHS’s Office of the Inspector General (OIG), and jurisdiction audit  agencies to obtain information on any efforts to determine the reliability of  these data. Based on the work of the OIG and jurisdiction audit agencies,  obligation data for the third budget period from 18 jurisdictions and for  the fourth budget period from 1 jurisdiction can be considered reliable. In  other cases, the information presented is as reported by jurisdictions, and  we cannot attest to its reliability.
To describe factors that jurisdictions said contributed to delays in  obligating and expending funds and actions some jurisdictions took to  address those factors, we selected 19 jurisdictions, taking into account  diversity in geographic location, population size, urban and rural status,  and their expenditure and obligation patterns. We e-mailed these  jurisdictions to gather information on why some may have had  unobligated or unexpended funds, and we obtained any necessary  clarification of responses by telephone or e-mail.
We did our work from July 2004 through February 2005 in accordance  with generally accepted government auditing standards. (See app. I for  additional details on our scope and methodology.)
subsections: section_title: Background
paragraphs: The Bioterrorism cooperative agreement program spans five budget  periods and is scheduled to end August 30, 2005. Under this program, CDC  has made funds available through cooperative agreements with all   50 states, the District of Columbia, and three of the country’s largest  municipalities—New York City, Chicago, and Los Angeles County. CDC  has distributed funds to these jurisdictions using a formula under which  each jurisdiction receives a base amount of $5 million, plus additional  funds based on the jurisdiction’s population. The program’s budget  periods typically run from August 31 of one year to August 30 of the next,  although the third budget period was extended to run from August 31,  2001, to August 30, 2003. (See table 1 for more information on the budget  periods discussed in this report.) Under its cooperative agreement, a  jurisdiction is required to obligate funds before the end of the specified  budget period and expend funds before the end of the 12 months following  that period. However, CDC may give a jurisdiction permission to obligate  or expend funds beyond those time frames.
CDC’s Procurement and Grants Office (PGO) is responsible for awarding  and administering CDC’s grants and cooperative agreements. In this  capacity, PGO is responsible for notifying the jurisdictions, through an  NCA, of the funds awarded for each budget period. In addition to notifying  the jurisdictions, PGO also provides this information to CDC’s Financial  Management Office (FMO), which processes CDC’s grant awards and  cooperative agreements. FMO works with DPM to place the cooperative  agreement funds into the appropriate accounts and to ensure that  jurisdictions have access to their Bioterrorism funds through PMS’s  accounts. CDC’s Office of Terrorism Preparedness and Emergency  Response, which coordinates emergency response and preparedness  across CDC, is responsible for the programmatic components of the  program and also works with PGO and FMO to provide direct assistance  to jurisdictions on request. To monitor the use of the Bioterrorism funds,  CDC requires that jurisdictions submit regular progress reports that track  their progress toward completing a set of activities. Jurisdictions are also  required to submit annual FSRs that provide information on the  expenditure and obligation of Bioterrorism funds. In addition, DPM  monitors the funds drawn down by jurisdictions from PMS, and  jurisdictions must submit quarterly federal cash transaction reports to  DPM.
section_title: Jurisdictions Have Expended over Four- Fifths of Fiscal Year 2002 Funds and over Half of Fiscal Year 2003 Funds
paragraphs: Jurisdictions had expended a substantial amount of fiscal year 2002 and  2003 program funds as of August 30, 2004. They had expended over four- fifths of the fiscal year 2002 funds awarded through the HHS P accounts  for the program’s third budget period and over half of the fourth budget  period funds awarded through the HHS P accounts. As allowed by CDC’s  cooperative agreements, jurisdictions continued to expend fiscal year 2002  funds after the end of the third budget period in August 2003 and have  continued to expend funds awarded during the fourth budget period since  the end of that period.
subsections: section_title: Over 80 Percent of 2002 Bioterrorism Funds Were Expended over the Course of the Third and Fourth Budget Periods
paragraphs: As of August 30, 2004, jurisdictions had expended 85 percent of the fiscal  year 2002 funds awarded through the PMS P accounts for the Bioterrorism  program’s third budget period. There was considerable variation among  jurisdictions’ expenditure rates, with individual jurisdictions’ rates ranging  from a high of 100 percent to a low of 27 percent. Ten jurisdictions had  expended all fiscal year 2002 funds in the P accounts, and 22 had  expended over 90 percent. Three jurisdictions, Delaware, the District of  Columbia, and Massachusetts, had expended less than half of their funds.  (See fig. 1 for information on the third budget period’s fiscal year 2002  funds expended as of August 30, 2004. App. II provides additional data.)
Jurisdictions continued, as authorized, to expend the third budget period’s  fiscal year 2002 P account funds over the course of the following budget  period to pay for obligations incurred during the third budget period, such  as contracts that extended beyond August 2003. Although jurisdictions had  expended only 56 percent of the third budget period’s fiscal year 2002 P  account funds by the end of that budget period, they had expended   85 percent of the funds as of August 30, 2004, the end of the fourth budget  period. No jurisdiction had expended all its fiscal year 2002 P account  funds by the end of the third budget period—individual expenditure rates  ranged from 4 percent to 87 percent. (See fig. 1 for information on the  third budget period’s fiscal year 2002 funds expended from the P accounts  as of August 30, 2003. App. II provides additional data.)
section_title: Over Half of 2003 Bioterrorism Funds Were Expended over the Course of the Fourth Budget Period
paragraphs: As of August 30, 2004—the end of the fourth budget period—jurisdictions  had expended 53 percent of the fiscal year 2003 bioterrorism funds  awarded through the P accounts for that period. As with fiscal year 2002  funds awarded during the third budget period, there is variation in  individual jurisdictions’ rates of expenditure, which ranged from 93  percent to zero. While expenditure rates varied, 15 jurisdictions had  expended at least two-thirds of the 2003 funds awarded through the P  accounts for the fourth budget period. (See fig. 2 for information on the  fourth budget period’s funds expended from the P accounts. App. III  provides additional data.) While slightly over half of the fourth budget  period’s funds in the P accounts had been expended as of August 30, 2004,  jurisdictions have continued to expend these funds during the current  budget period—August 31, 2004, to August 30, 2005. The pattern of  expenditure for budget period four funds was similar to that of budget  period three; in both cases, jurisdictions expended just over half their  funds during the budget period and continued to expend the funds during  the next budget period.
section_title: Few Bioterrorism Funds Remained Unobligated, According to Jurisdiction Reports
paragraphs: At the end of the Bioterrorism program’s third budget period, jurisdictions  reported that less than one-sixth of fiscal year 2001 and 2002 funds  awarded for that period remained unobligated. Similarly, as of August 1,  2004, jurisdictions estimated that approximately one-fifth of fiscal year  2003 funds awarded for the program’s fourth budget period would remain  unobligated as of August 30, 2004, the end of that period.
subsections: section_title: Jurisdiction Reports Indicate That Less Than One-Sixth of Third Budget Period Funds Remained Unobligated
paragraphs: According to the jurisdictions’ annual FSRs and NCAs, as of the end of the  third budget period (August 31, 2001, to August 30, 2003), 14 percent of  all bioterrorism funds awarded for that period remained unobligated. As  with expenditure rates, individual jurisdictions’ rates of unobligated funds  varied, ranging from none to over three-fifths of the awarded funds. Seven  jurisdictions reported that all their funds from that period had been  obligated, and 44 jurisdictions reported that less than one-quarter of their  third budget period funds remained unobligated. Two jurisdictions, the  District of Columbia and Massachusetts, reported the highest levels of  unobligated third budget period funds—62 percent and 51 percent,  respectively. (See fig. 3 for more information on jurisdiction-reported  unobligated Bioterrorism funds. App. IV provides additional data.)
section_title: Jurisdiction Estimates Indicated That One-Fifth of Fourth Budget Period Funds Remained Unobligated
paragraphs: According to jurisdiction estimates as of August 1, 2004, approximately   20 percent of all Bioterrorism funds awarded for the program’s fourth  budget period (August 31, 2003, to August 30, 2004) would remain  unobligated as of August 30, 2004. Jurisdictions’ individual estimated  unobligated balances varied greatly, ranging from none to almost three- quarters of the awarded funds. Five jurisdictions estimated that all their  fourth budget period’s funds would be obligated by the end of the period,  and 31 jurisdictions estimated that less than one-quarter of their fourth  budget period’s funds would remain unobligated. Three jurisdictions,  Chicago, New Mexico, and Delaware, estimated that over half of the  Bioterrorism funds awarded to them for the fourth budget period would  remain unobligated as of August 30, 2004. (See fig. 3 for more information  on jurisdiction-reported unobligated Bioterrorism funds. App. IV provides  additional data.)
section_title: Jurisdictions Identified Administrative Processes and Other Challenges to Obligation and Expenditure, and Some Jurisdictions Described Solutions
paragraphs: Many jurisdictions faced challenges, partly related to state and local  administrative processes, that slowed the pace of their obligation and  expenditure of bioterrorism funds. Reported challenges included  workforce issues, contracting and procurement processes to ensure the  prudent use of public funds, and problems stemming from lengthy  information technology upgrades. Some jurisdictions have developed ways  to streamline these administrative processes, facilitating the obligation  and expenditure of funds.
subsections: section_title: Jurisdictions Reported Challenges to Obligation and Expenditure
paragraphs: State and municipal officials told us that the obligation and expenditure of  funds were delayed during the Bioterrorism program’s third and fourth  budget periods for a variety of reasons, including issues related to the  workforce, contracting and procurement, and information technology  upgrades.
subsections: section_title: Workforce
paragraphs: Officials in 16 of 19 jurisdictions we contacted cited workforce issues  related to recruitment and retention and complex staffing processes as  challenges to timely obligation and expenditure of bioterrorism funds.  According to the Association of State and Territorial Health Officials, 75 to  80 percent of bioterrorism funds have been used for personnel  expenditures.
Seven jurisdiction officials we contacted reported difficulties in recruiting  staff, and some officials reported staff retention problems. As we  previously reported, such barriers included noncompetitive salaries and a  general shortage of people with the necessary skills. Officials told us they  had difficulty finding qualified workers, particularly epidemiologists and  laboratory technicians, and two officials indicated that problems related to  recruiting have delayed the expenditure of funds. In one of those  jurisdictions, the public health laboratory had so many vacancies that  there were not enough staff to fully implement a new bioterrorism and  emergency preparedness initiative. Officials indicated that, within their  jurisdictions, skilled workers could find better-paying positions with other  organizations. In one case, a municipality had to persuade a job candidate  to take a significant pay cut to work on the program. In another instance,  the salaries offered by a federal agency within a state were about   25 percent higher than those offered by the state. The same state reported  that competition from the private sector and other agencies has resulted  not only in a shortage of qualified applicants for positions, but also in the  loss of highly qualified personnel who had gained extensive experience  and expertise working for the state.
Hiring freezes and complex staffing processes were also cited as delaying  the obligation and expenditure of funds. According to jurisdiction officials  with whom we spoke, as well as officials from the National Association of  County and City Health Officials, program officials in some jurisdictions  were not permitted to hire staff during an across-the-board freeze,  regardless of the federal funding available. Moreover, jurisdiction officials  reported that in some cases the release of a hiring freeze inundated the  hiring process, lengthening it in one state to as long as 10 months.  Jurisdiction officials stated that other staffing constraints also hindered  their hiring process. One state mandated mass layoffs in December 2002,  which resulted in the loss of approximately 60 health agency employees,  including the entire unit that was handling bioterrorism contracts. This  was followed in early 2003 by an early retirement plan that resulted in the  loss of support staff for the cooperative agreement. The layoffs and early  retirement program delayed bioterrorism contract payments. Moreover,  employees who had been laid off had contractual rights to placement in  new positions, which resulted in the placement into bioterrorism program  positions of some employees with little or no background in public health.  Some fiscal support positions remained unfilled for several months as a  result of the layoffs and early retirement program, which in turn affected  the state’s ability to process bioterrorism program payments.
section_title: Contracting and Procurement
paragraphs: Because expenditures related to contracting for services and procuring  equipment can occur after the end of a given budget period, program  officials stressed the importance of being able to expend obligated funds  up to 12 months beyond the budget period, as CDC allows for in this  program. To illustrate the importance of such an allowance, one official  gave the example of a contract for $100,000 that began in June 2003,  during the third budget period. Under the terms of the contract, the  contractor would bill the program quarterly. The state in question would  draw down funds for the contract from PMS on a quarterly basis. If the  program received the first bill of $25,000 in September 2003, the first  drawdown related to this contract would occur in December 2003 and  subsequent drawdowns would occur in March 2004, June 2004, and  September 2004, all within the next budget period.
Jurisdiction officials provided a number of examples of the complexity of  their jurisdictions’ contracting processes and the resulting effect on  obligations and expenditures. An official in one state reported that the  state had to negotiate and develop contracts with over 100 local health  agencies after it received an influx of funding during the Bioterrorism  program’s third budget period. After the local health contracts were  developed, they needed approval by the municipalities or health district  boards, a process that in some cases took several months. Another state  indicated that its contracting process takes a minimum of 2 months. Yet  another stated that the process could take from 3 to 6 months, depending  on which complexities arise. In addition, officials reported that the request  for proposals (RFP) process and bidding requirements delayed their ability  to create contracts and orders for services and equipment. In one state, the  RFP process takes 4 to 7 months, while in another the process can take as  long as 9 months.
The necessity of developing large infrastructure projects related to the  bioterrorism preparedness cooperative agreement has also had an effect  on obligations and expenditures in a number of jurisdictions. These  projects, such as setting up a syndromic surveillance system, require the  assistance and expertise of a limited number of national contractors. A  state official informed us that since many of the jurisdictions began these  projects at the same time—after the influx of fiscal year 2002 funds during  the third budget period—some jurisdictions have had to wait for these  contractors to become available. Therefore, some jurisdictions have had to  wait to receive services and equipment, in effect delaying both obligations  and expenditures. In addition, jurisdictions indicated that effective  planning or the development of RFPs for these large projects required  extended periods of time. One official told us the state health department  went through a careful planning process in order to ensure the proper use  of funds, consequently delaying the obligation and expenditure of funds.
section_title: Information Technology Upgrades
paragraphs: Several jurisdictions reported that their efforts to upgrade their  information technology—a focus area of the Bioterrorism program— delayed program expenditures. Officials in four jurisdictions noted that it  took time to plan and implement improvements in information technology  systems and equipment. For example, in one state, the installation of each  piece of equipment, including new computer systems and  videoconferencing equipment, required a site survey by the state’s  Department of General Services to assess the feasibility of the proposed  location to house the equipment. These site surveys could take anywhere  from 2 to 12 months to complete.
In another state, an official reported that funds were designated to support  the state’s Internet connectivity to provide local public health agencies  and their public health partners with continuous, high-speed Internet  access. Because significant areas of the state did not have access to high- speed Internet services, the state conducted engineering studies, which  delayed distribution of funds to local public health agencies.
section_title: Some Jurisdictions Have Streamlined Administrative Processes to Facilitate Obligation and Expenditure of Funds
paragraphs: While officials described challenges to quickly obligating and expending  bioterrorism funds, some also described techniques they had developed to  address workforce and procurement issues. Officials in three jurisdictions  indicated that being exempted from hiring freezes expedited the obligation  of funds. In one case the jurisdiction exempted bioterrorism positions  from hiring freezes and also gave these positions the highest priority for  hiring. According to another state official, many of the program staff were  hired as contractual or “at will” employees, to bypass the state’s lengthy  hiring process. Another state, which was reluctant to hire permanent full- time program staff because of concern about the sustainability of federal  funding, employed temporary staff instead.
Some officials also described techniques they had developed to address  challenges related to procurement issues. Prior to receiving fiscal year  2002 funds during the program’s third budget period, one jurisdiction’s  program elected to use a nonprofit fiscal and administrative intermediary  to reduce the delays caused by the municipality’s regulations. A program  official told us that using the intermediary also allowed the program to  expedite the routine processes of recruitment, contracting, purchasing,  and ensuring fiscal accountability. According to the official, the  intermediary has a long history of collaborating with that health agency to  quickly and successfully implement new initiatives and is experienced in  grant management. The official stated that the intermediary has reduced  the time that it takes to implement program procedures because it does  not have to follow the municipality’s normal requirements. For instance,  unlike the health agency, the intermediary is not subject to certain  municipal contracting and procurement requirements. Consequently, it is  able to use statewide general services contracts that can have as little as a  2-day turnaround. In addition, the intermediary has reduced the  municipality’s RFP process from the usual 6 months to 2 months.
One state official indicated that the state health agency had made a  concerted effort to streamline its procurement process. Prior to this effort,  the procurement process had taken as long as 18 months, including time  for the development and distribution of an RFP and for appeals. The  official said that one of the major improvements involved compiling a list  of preapproved contractors, which enables bioterrorism program officials  to purchase directly from those contractors without going through the  time-consuming RFP process.
Another official told us that the health agency staff can place orders and  contracts more rapidly than usual if they designate them as “sole source”  and “single source” procurement, meaning that the needed equipment or  service is available from only one vendor. The official indicated that the  state’s bioterrorism program uses this designation whenever they can  demonstrate that only one vendor can provide the equipment or service.  Additionally, the state has “master price” agreements with some vendors  for certain goods and services that are commonly needed by the various  agencies in the state. The official said that staff can quickly place orders  for goods and services that fall under the master price agreement and  receive these items in 2 to 4 days.
section_title: Concluding Observations
paragraphs: After the terrorist events of 2001, HHS’s funding to help jurisdictions  prepare for and defend against a possible bioterrorism attack greatly  increased. In 2004, HHS expressed concern that jurisdictions had not  moved quickly enough to use these funds. However, jurisdictions  expended and obligated a substantial amount of program funds as of  August 30, 2004. In assessing the pace at which jurisdictions are spending  these funds, it is useful to consider that prudent use of public funds— particularly for new programs—requires careful and often time-consuming  planning. Once plans have been developed, obligating and expending the  funds to implement them takes additional time. It is also important to  recognize that because some expenditures, such as those for contracts,  take place over a period of time rather than as one lump sum early in the  budget period, it may take longer than the program’s budget period to  expend these funds. Furthermore, jurisdictions face additional challenges  to quickly obligating and expending funds, partly related to various  administrative processes, although some jurisdictions have found ways to  streamline certain processes.
section_title: Agency Comments
paragraphs: We provided a draft of this report to HHS for comment, and the agency  informed us it had no comments on the draft report. However, HHS  provided technical comments, which we incorporated into the report as  appropriate.
As we arranged with your office, unless you publicly announce its  contents earlier, we plan no further distribution of this report until 30 days  after its issue date. At that time, we will send copies to the Secretary of  Health and Human Services, the Director of the Centers for Disease  Control and Prevention, appropriate congressional committees, and other  interested parties. We will also make copies available to others who are  interested upon request. In addition, the report will be available at no  charge on the GAO Web site at http://www.gao.gov.
If you or your staffs have any questions about this report, please call  Marjorie Kanof at (202) 512-7114. Major contributors to this report are  listed in appendix V.
section_title: Appendix I: Scope and Methodology
paragraphs: For the Department of Health and Human Services (HHS) Centers for  Disease Control and Prevention’s (CDC) Public Health Preparedness and  Response for Bioterrorism program cooperative agreement, we provide  information on the extent to which jurisdictions had expended fiscal year  2002 funds awarded for the third budget period as of August 30, 2003, and  August 30, 2004, and had expended fiscal year 2003 funds awarded for the  fourth budget period as of August 30, 2004. We also provide information  on the extent to which fiscal year 2001, 2002, and 2003 Bioterrorism funds  awarded for the program’s third and fourth budget periods were obligated,  and challenges jurisdictions have faced when attempting to expend or  obligate the Bioterrorism funds. To provide information on the  expenditure and obligation of Bioterrorism program funds awarded to  jurisdictions, we analyzed documents and interviewed officials from HHS’s  Office of the Secretary, CDC, Division of Payment Management (DPM),  and Office of the Inspector General (OIG). In addition, we reviewed  documents and interviewed officials from the Association of State and  Territorial Health Officials and the National Association of County and  City Health Officials, two national associations representing state and  local health officials. We also interviewed jurisdiction audit and  Bioterrorism program officials to obtain information on program  obligations and to determine challenges faced by jurisdictions in  expending and obligating funds, and reviewed documents from the  Congressional Research Service, the Association of Public Health  Laboratories, and other organizations.
To determine expenditures as of August 30, 2003, and August 30, 2004, we  analyzed expenditure data from DPM’s Payment Management System  (PMS). We obtained and reviewed data from both the public assistance   (P) accounts and the general (G) accounts. Funds accounted for in the   P accounts are specific to certain grants or agreements, while G accounts  merge funds from grants and agreements made to one grantee into one  overall account. While over 90 percent of funds awarded to jurisdictions  through the Bioterrorism program are tracked in P accounts, some funds  are tracked in the G accounts, including all unexpended funds from budget  periods prior to the fiscal year 2002 funds awarded during the third budget  period and funds related to the Strategic National Stockpile before and  after fiscal year 2002. Because expenditures from the G accounts related  to a specific grant or agreement cannot be linked to funds from specific  budget periods, we are not able to describe the rates of expenditure of  Bioterrorism funds tracked in the G accounts. Moreover, because all funds  awarded to jurisdictions prior to the fiscal year 2002 funds are tracked in  the G accounts, we are not able to account for all expenditures during the  program’s third budget period—August 31, 2001, to August 30, 2003.  Rather, we are able to track expenditures for only the second portion of  that budget period, starting with the fiscal year 2002 emergency  supplemental appropriation. Expenditure data provided in this report  were obtained from PMS’s P accounts and include only funds awarded as  financial assistance beginning with the fiscal year 2002 emergency  supplemental appropriation. (See table 2 for information on funding  included in the data sources reviewed.) The OIG annually contracts for an  audit that provides reasonable assurance about the design of controls  included in DPM’s PMS, including controls for recording award  authorizations, processing awardee requests for funds, and reporting  payment and recipient disbursement information to the awarding agency.  We did not conduct a review to determine the appropriateness of any  jurisdiction expenditure.
To determine obligation data, we reviewed the financial status reports  (FSR) jurisdictions were required to submit to CDC at the end of the third  budget period (August 31, 2001, to August 30, 2003) and the estimated  FSRs for the fourth budget period (August 31, 2003, to August 30, 2004)  that jurisdictions were requested to submit by August 1, 2004. Unlike  PMS’s P account data, the FSRs include information on all Bioterrorism  funds awarded as financial assistance, including both fiscal year 2001 and  2002 funds awarded during the third budget period, funds carried over  from prior periods, and funds related to the Strategic National Stockpile.  Along with FSRs for the entire third budget period, CDC asked  jurisdictions to submit FSRs reflecting only the fiscal year 2002 emergency  supplemental appropriation funds. However, because few jurisdictions  submitted such emergency supplemental FSRs, we were unable to use  these FSRs. Because of this, we are reporting on obligation data obtained  from the FSRs for the entire third budget period, encompassing both fiscal  year 2001 and 2002 funds; this is a different period from that used for the  expenditure data provided in this report, which describe only  expenditures of the third budget period’s fiscal year 2002 funds. Final  FSRs for the fourth budget period were not available in sufficient time to  be used in our work. For this period, we used the estimated FSRs  jurisdictions were asked to submit prior to the end of the budget period.  While the unobligated amounts reported on the final FSR may vary from  the estimates, CDC determined that these estimates were sufficiently  accurate to use for planning purposes. Seven jurisdictions did not submit  an estimated FSR, but did provide information in their application for  budget period five funds on estimated unobligated balances as of August  30, 2004. Eight jurisdictions did not provide any information on estimated  unobligated balances and were excluded from our analysis.
In addition to reviewing jurisdictions’ FSRs, we also reviewed the Notices  of Cooperative Agreement (NCA), which are provided by CDC to  jurisdictions and provide information on total Bioterrorism program funds  awarded to them for a budget period. Unlike the PMS P account data, the  NCAs include information on all funds awarded for the program’s entire  third budget period, including funds from both fiscal years 2001 and 2002,  and information on funds carried over from previous periods, funds  related to the Strategic National Stockpile, and funds awarded as direct  assistance. To determine obligation rates, we compared the information  on total funds awarded obtained from the NCAs and FSRs to obligation  data that jurisdictions reported in the third budget period FSRs and  estimated in the fourth budget period FSRs.
We interviewed CDC staff to resolve any inconsistencies between the  information provided on the FSRs and information provided in the NCAs  and modified data as appropriate. In addition, because the data related to  obligation are self-reported by jurisdictions to CDC, we interviewed  officials at CDC and HHS’s OIG to obtain information on any work done to  determine the reliability of these data. We also contacted the jurisdiction  audit agencies in all the jurisdictions by e-mail or telephone to determine  whether they had performed any work to determine the reliability of the  obligation data. Data for the third budget period from 18 jurisdictions and  for the fourth budget period from 1 jurisdiction can be considered reliable  based on the work of OIG and jurisdiction audit agencies. However, in  many cases, insufficient work had been done to assess the reliability of the  obligation data reported by jurisdictions. In these cases, the information  presented is as reported by the jurisdictions, and we cannot attest to its  reliability. In addition, we did not conduct a review to determine the  appropriateness of any obligations reported by jurisdictions to CDC.
To describe factors that jurisdictions say contributed to delays in  obligating and expending funds and actions some jurisdictions took to  address those factors, we contacted selected jurisdictions via e-mail in two  phases. Initially, the team contacted 10 jurisdictions to gather information  on why they may have had unobligated Bioterrorism funds. We analyzed  the obligation and expenditure data to identify jurisdictions with high and  low rates of unobligated and unexpended Bioterrorism funds, for both the  third and fourth budget periods. Jurisdictions were categorized as those  with (1) reported high unobligated balances, (2) reported low unobligated  balances, or (3) reported low unobligated balances and high levels of  unexpended funds. We then selected jurisdictions from each of the groups,  taking into account diversity in geographic location, population size, urban  and rural status, and their expenditure and obligation patterns. We   e-mailed each jurisdiction, and we followed up by telephone to obtain any  necessary clarification on responses.
For phase 2, we e-mailed 3 jurisdictions from the phase 1 group and 9  additional jurisdictions. These 12 jurisdictions had expended from 50 to   87 percent of their third budget period funds by August 30, 2003, the end of  that period, but had expended 100 percent of those funds by August 30,  2004. We followed up by telephone and e-mail to obtain any necessary  clarification on responses.
section_title: Appendix II: Bioterrorism Program’s Budget Period Three Expenditures
paragraphs: Data on funds awarded to California, Illinois, and New York do not include funds awarded to   Los Angeles County, Chicago, or New York City.
section_title: Appendix III: Bioterrorism Program’s Budget Period Four Expenditures
section_title: Appendix IV: Unobligated Bioterrorism Program Funds Reported by Jurisdictions
paragraphs: Percentage of awarded  funds reported  Data on awarded funds were not consistent between jurisdiction FSRs and the Notices of  Cooperative Agreement. Based on information provided by officials at the Centers for Disease  Control and Prevention, we determined the correct award amounts. In no case did the difference  account for more than 4 percent of the total awarded funds.
No data fiscal year 2003 data were available for these jurisdictions.
These jurisdictions did not submit estimated FSRs for the fourth budget period, but did provide  information in their application on estimated unobligated balances as of August 30, 2004.
Data on funds awarded to California, Illinois, and New York do not include funds awarded to Los  Angeles County, Chicago, and New York City.
Data for the third budget period have been determined to be reliable.
Data for the third and fourth budget period have been determined to be reliable.
Data on funds awarded to Massachusetts were not consistent between the jurisdiction FSR and the  Notice of Cooperative Agreement. The jurisdiction did not account for $6,682,740 carried over from  prior budget periods in its fourth budget period estimated FSR.
Data comparable to other jurisdictions were not available.
section_title: Appendix V: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Acknowledgments
paragraphs: In addition to the person named above, key contributors to this report  were Helene Toiv, Emily Gamble Gardiner, Lucia P. Fort, Roseanne Price,  and Jessica Cobert.
section_title: Related GAO Products
paragraphs: HHS Bioterrorism Preparedness Programs: States Reported Progress but  Fell Short of Program Goals for 2002. GAO-04-350R. Washington, D.C.:  February 10, 2004.
Bioterrorism: Public Health Response to Anthrax Incidents of 2001.  GAO-04-152. Washington, D.C.: October 15, 2003.
Emerging Infectious Diseases: Review of State and Federal Disease  Surveillance Efforts. GAO-04-877. Washington, D.C.: September 30, 2004.
Emergency Preparedness: Federal Funds for First Responders. GAO-04- 788T. Washington, D.C.: May 13, 2004.
Bioterrorism: Preparedness Varied across State and Local Jurisdictions.  GAO-03-373. Washington, D.C.: April 7, 2003.
Bioterrorism: The Centers for Disease Control and Prevention’s Role in  Public Health Protection. GAO-02-235T. Washington, D.C.: November 15,  2001.
Bioterrorism: Review of Public Health Preparedness Programs. GAO-02- 149T. Washington, D.C.: October 10, 2001.
Bioterrorism: Public Health and Medical Preparedness. GAO-02-141T.  Washington, D.C.: October 9, 2001.
Bioterrorism: Coordination and Preparedness. GAO-02-129T.  Washington, D.C.: October 5, 2001.
Bioterrorism: Federal Research and Preparedness Activities. GAO-01- 915. Washington, D.C.: September 28, 2001.
Combating Terrorism: Observations on Biological Terrorism and Public  Health Initiatives. GAO/T-NSIAD-99-112. Washington, D.C.: March 16,  1999.