Defense Budget: Tracking of Emergency Response Funds for the War on Terrorism
Published: 2003-04-30T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: As of January 2003, Congress had provided a total of $38 billion to the Department of Defense (DOD) to cover emergency response costs related to the war on terrorism. Appropriated in different ways in fiscal years 2001, 2002, and 2003, these funds are meant to pay for expenses that DOD would not normally incur, such as contingency military operations and Pentagon building repairs. Because our prior work raised questions about DOD's oversight of contingency fund spending, GAO was asked to review DOD's management of emergency response funds, specifically: (1) DOD's adherence to OMB guidance in managing funds and the sufficiency of DOD's guidance on the use of these funds, and (2) DOD's ability to track the use of emergency response funds in general. We limited our review of DOD's guidance to the initial funds placed in the Defense Emergency Response Fund. We did not verify the accuracy of the data contained in DOD's obligation reports or the appropriateness of individual expenditures.
section_title: What GAO Found
paragraphs: While DOD followed the Office of Management and Budget's (OMB) guidance in managing the initial $15 billion in war on terrorism funds that were placed in the Defense Emergency Response Fund in fiscal years 2001 and 2002, DOD provided its components with limited guidance on how to use these funds. DOD allocated the funds according to OMB's 10 funding categories. However, DOD's designations of allowable line items for each category were broad and, thus, could be interpreted in different ways. Also, while OMB directed that the funds were to be used for urgent and known needs, DOD did not define those needs further. Finally, DOD directed the components to use an internal financial management regulation for contingency funding to determine if costs were incremental or not; however, as we have reported previously, these regulations are insufficient for this purpose. In the absence of detailed guidance military officials sometimes had to use their best judgment in obligating emergency response funds. DOD's ability to track the use of emergency response funds has varying limitations depending on the appropriation. For the fiscal years 2001 and 2002 emergency response funds managed separately in the Defense Emergency Response Fund ($15 billion), DOD can report a breakdown of obligations by its 10 funding categories, but cannot correlate this information with its appropriation account structure. For emergency response funds provided in fiscal years 2002 and 2003 ($20.5 billion) that were transferred into or placed directly into DOD's regular appropriations accounts, DOD cannot use its accounting system to track the use of these funds because they are commingled with those appropriated for other purposes. While DOD has an alternative process intended to track obligations for contingency operations related to the war on terrorism, it cannot identify the portion of obligations that are funded with emergency response funds. DOD acknowledged these limitations and, in December 2002, began requiring additional reporting on the use of these funds. DOD partially concurred with this report, noting it clearly told components to use DOD's financial regulation for guidance and also held meetings for clarification. DOD agreed funds were commingled, but noted it had a process to track incremental costs for the war on terrorism.

section_title: Letter
paragraphs: As of January 2003, Congress had provided a total of about $38 billion to  fund the Department of Defense’s (DOD) efforts to recover from and  respond to the September 11, 2001, terrorist attacks. Following the  attacks, Congress initially provided, and the President approved, about  $17.5 billion in emergency response funds to DOD through two emergency  supplemental appropriations in fiscal years 2001 and 2002. Because of the  urgent circumstances, Congress sought an expeditious means to provide  funds to DOD and, with the Office of Management and Budget (OMB),  agreed that DOD could manage these initial funds in the Defense  Emergency Response Fund—an existing account that is separate from  DOD’s regular appropriations accounts. Of the initial $17.5 billion, DOD  received about $15 billion in the Defense Emergency Response Fund,  $2.3 billion was provided to other accounts, and $0.2 billion was rescinded.  Concerned about dual accounting, Congress provided the remaining  $20.5 billion in two subsequent appropriations in fiscal year 2002 and  fiscal year 2003 to DOD’s regular appropriation accounts either through  transfers from the Defense Emergency Response Fund or directly. Among  other things, DOD is using emergency response funds to cover the cost of  repairs to the Pentagon and contingency operations related to the global  war on terrorism. In general, applicable OMB and DOD guidance requires  funds provided for the war on terrorism to be used for expenses that are  emergency and incremental in nature—expenses that DOD would have  otherwise not incurred.
For the past several years, we have been reviewing cost and funding issues  associated with overseas contingency operations. Among other things, we  have reported about the need to strengthen DOD’s oversight of funds  appropriated for contingency operations, including improving guidance to  clarify incremental costs. In March 2002, you requested that we continue  this effort by examining DOD’s oversight of the Defense Emergency  Response Fund and the cost of contingency operations in the Balkans and  Southwest Asia. In June 2002, we briefed your staff on the preliminary  results of this work. In September 2002, we reported on the costs  associated with operations in the Balkans and Southwest Asia. This report  summarizes our observations on (1) the extent to which DOD had adhered  to OMB’s guidance for managing funds provided separately for the  Defense Emergency Response Fund (appropriated in the first two  emergency supplemental appropriations), (2) the sufficiency of DOD’s  guidance to its components on the use of these funds, and (3) its ability in  general to track the use of emergency response funds. We are also  providing information on DOD’s plans to expand its reporting on the use  of emergency response funds.
More recently, in February and April of 2003 appropriations, DOD received  about $73 billion in additional funding for war on terrorism-related  expenses. However, this review is limited to the $38 billion in funds  provided under four previous appropriations. In performing our work, we  did not verify the accuracy of the data contained in DOD obligation  reports or the appropriateness of individual expenditures. For details on  our scope and methodology, see appendix I.
subsections: section_title: Background
paragraphs: As of January 2003, Congress had provided about $38 billion, through a  total of four appropriations, for DOD’s emergency response needs related  to the war on terrorism. In September 2001 and December 2001, Congress  enacted two emergency supplemental appropriations to quickly provide  initial funds to meet the emergency needs of DOD and other federal  agencies to recover from and respond to the September 11 terrorist  attacks. These supplementals, enacted in two separate fiscal years, fiscal  year 2001 and fiscal year 2002, provided about $17.5 billion to DOD. Given  the urgent circumstances, Congress sought an expeditious mechanism to  transfer funds and, therefore, provided funds to DOD through the Defense  Emergency Response Fund. This fund is a distinct account and DOD  manages it separately from its regular appropriations accounts. Of the  initial $17.5 billion, DOD received about $15 billion in the Defense  Emergency Response Fund, $2.3 billion was provided to other accounts,  and $0.2 billion was rescinded.
Shortly after the September 11, 2001, attacks, OMB and DOD agreed on  certain parameters for managing funds placed in the Defense Emergency  Response Fund, including that funds would be obligated in 10 funding  categories. OMB stipulated that DOD was to manage the allocation of  funds within the 10 categories and could not transfer these funds to its  regular appropriations accounts. Moreover, OMB used these categories in  its reports to Congress on the expenditure of the funds.
Based on DOD’s limited estimates regarding requirements for each  category, OMB apportioned funds to the Defense Emergency Response  Fund. According to DOD officials, these estimates had to be prepared  quickly, within days of the attacks, and reflected the best judgment of  DOD’s needs at the time without knowing the exact nature of the U.S.  response to the attacks. For each category, DOD also identified multiple  line items for which expenses could be incurred. Figure 1 identifies the  10 categories and identifies some of the line items that DOD established  for one of the categories.
The 10 categories do not correlate with DOD’s existing appropriation  accounts (see app. II). However, the expenses related to a category  would be similar to the types of expenses funded under several  appropriation accounts. For example, DOD may incur operation and  maintenance, and procurement expenses under the categories of improved  command and control and enhanced force protection. Because the  10 funding categories established by OMB and DOD did not correlate  with DOD’s existing appropriation account structure, a dual system of  accounting emerged, which some believed to be cumbersome for tracking  purposes. Therefore, for subsequent appropriations—a second  supplemental appropriation in fiscal years 2002 and DOD’s regular  appropriation in fiscal year 2003—Congress changed its method of  providing funds. Specifically, in these appropriations, DOD received about  $20.5 billion in funds either through the Defense Emergency Response  Fund (fiscal year 2002) to its regular appropriation accounts or directly to  its appropriation accounts (fiscal year 2003). Appendix II provides  additional details on these two appropriations.
On September 14, 2001, OMB issued specific guidelines and criteria for  federal departments and agencies to apply in identifying and evaluating  requirements to be funded under the initial emergency supplemental  appropriations. This guidance covered two areas—response and recovery,  and preparedness and mitigation—and outlined 15 conditions to be met.  Among other things, these conditions stipulated that requirements must be  known, not speculative; urgent, not reasonably handled at a later time; and  unable to be reasonably met through the use of existing agency funds.  Appendix III lists OMB’s guidelines and criteria.
Because expenses related to contingency operations could be funded with  emergency response funds, DOD also relied on its existing financial  management regulation for guidance. Specifically, volume 12, chapter 23  of this regulation requires that costs incurred in support of contingency  operations be limited to the incremental costs of the operation—costs that  are above and beyond the baseline costs for training, operations, and  personnel. The regulation further states that incremental costs are  additional costs that would not have been incurred had the contingency  operation not been supported.
section_title: DOD Provided Limited Internal Guidance on Use of Initial Emergency Response Funds
paragraphs: DOD adhered to OMB guidance in managing the allocation of $15 billion in  initial emergency response funds placed in the Defense Emergency  Response Fund after the September 11th attacks. While DOD instructed its  components to follow OMB guidelines and internal DOD guidelines and  financial regulations in obligating emergency response funds, it did not  provide specific internal guidance to assist the components in determining  allowable expenses. As a result, command officials were sometimes  uncertain on the appropriateness of expenses and often had to rely on  their best judgment in obligating these funds.
subsections: section_title: DOD Adhered to OMB Guidance Managing Emergency Response Funds
paragraphs: In accordance with OMB guidance, DOD reported on its allocation of  funds to its components in 10 funding categories and did not transfer these  funds into its regular appropriation accounts. As of December 2002, DOD  reported it had obligated about $14 billion of the $15 billion provided in  the emergency supplementals of fiscal years 2001 and 2002 (see table 1).
The data shown in table 1 are based on monthly obligation reports from  DOD’s defense financial accounting system database. These funds do not  expire and, therefore, are available until used. We did not verify the  accuracy or completeness of this data.
As table 1 shows, as of December 31, 2002, DOD reported data shows over  $1 billion of the funds in the Defense Emergency Response Fund remains  unobligated. Over half of that amount, $526 million, had not been allocated  to the 10 funding categories. According to DOD officials, in March 2003,  DOD plans to review the status of the unobligated funds and validate  whether requirements for the funds continue to exist.
section_title: DOD Provided Limited Internal Guidance for Specific Use of Funds
paragraphs: For each of the 10 funding categories established by OMB and DOD,  DOD identified line items that could be funded under the 10 categories.  However, these line items were broad in nature and DOD did not identify  the specific types of expenses that could be funded within each line item.  In addition, OMB, among other things, directed that any requirement to be  funded must reflect an urgent and known need. However, DOD did not  establish any specific parameters to define the meaning of urgent and  known. Also, in the event that funds in the Defense Emergency Response  Fund would be needed to meet the requirements of contingency  operations, DOD stipulated that funds would be used to cover the  incremental costs of contingency operations. DOD directed components to  use its existing financial management regulation in reporting incremental  costs, but it did not offer any further guidance as to how commands were  to distinguish incremental from baseline costs. In May 2002, we reported  that DOD’s financial management regulation did not provide sufficient  information on what types of costs met DOD’s definition of incremental  costs, which resulted in various interpretations among the services—and  even among units within a service—as to appropriate and proper  expenditures. As a result, we recommended that DOD expand its  financial management regulation to include more comprehensive  guidance governing the use of contingency funds. DOD agreed with our  recommendation and, as of April 2003, is still working on revisions to its  guidance. Because DOD is in the process of improving its guidance based  on recommendations from our prior work, we are not making a new  recommendation in this report.
In the absence of detailed guidance, command officials often had to  use their best judgment in deciding how to spend the defense emergency  response funds, and we found the same type of uncertainty among  commands as we reported in May 2002. For example, command officials  told us that determining what could be purchased from each category  and line item was often difficult because the categories and line items  were broad and generally differed from DOD’s regular appropriation  accounts. For example, DOD designated mobilization of guard and  reserves as an allowable line item for the category of increased worldwide  posture. Mobilization involves many factors, such as special pay,  transportation, and equipment, but DOD did not specify which could be  appropriately funded.
We also found differing interpretations existed as to whether requirements  were urgent or known. Some commands used emergency response funds  on items that could not be delivered in a reasonable time frame to be  considered urgent. For example, one command purchased a RC-135  Rivet Joint aircraft for intelligence, communications, and reconnaissance.  Typically, this aircraft would not be fielded for 8 years because it needed  multiple contractors to install and test its integrated electronics suite.  In another example, one command, before it knew its specific role in  supporting the war on terrorism, obligated $52 million for spare parts  based on an analysis of prior usage. By contrast, another command was  reluctant to obligate funds until its specific role had been determined.  Moreover, in some cases, command officials were unclear about how  to determine the incremental costs to their regular appropriations.  For example, commands used emergency response funds to pay for  accelerated ship maintenance that was already planned for future budgets  and to purchase computer and communication upgrades that were  previously unfunded from the regular appropriation.
DOD officials told us that they had to quickly develop funding  requirements after the terrorists attacks and used OMB guidance and  available DOD instructions to instruct their components on how the funds  could be used. The officials said that obligating funds in 10 categories and  related line items that were not directly related to their appropriation  accounts was confusing. In recognizing the lack of detailed guidance, DOD  officials also told us that they maintained constant communication among  all levels of DOD, especially at the command and unit levels, in order to  review and clarify the use of emergency response funds. Furthermore, the  officials said that they believe most of the funds were obligated for  appropriate purposes.
section_title: DOD’s Ability to Track the Use of Emergency Response Funds Has Varying Limitations
paragraphs: DOD’s ability to track funds appropriated for the war on terrorism has  varying limitations depending on the appropriation. For funds provided  under the two emergency supplemental appropriations of fiscal years 2001  and 2002 and managed out of the Defense Emergency Response Fund,  DOD is able to report a breakdown of obligations by the 10 categories,  but found that tracking these obligations was cumbersome because the  categories do not correlate with its regular appropriations account  structure. For the two subsequent appropriations in fiscal year 2002 and  2003, DOD cannot separately identify obligations funded with emergency  response funds because these funds are commingled with funds  appropriated for other purposes, and DOD’s accounting system does not  distinguish among obligations. For example, in its fiscal year 2003  appropriation, Congress appropriated about $3.7 billion for the Air Force’s  operation and maintenance subactivity group related to primary combat  forces, including about $389 million in emergency response funds for  expenses related to the war on terrorism, and about $3.3 billion for  expenses not related to the war on terrorism. All of these funds were  commingled in the Air Force’s operation and maintenance account. Within  DOD’s accounting system, DOD records obligations, but does not identify  the source of funds. Therefore, at any given time, DOD is only able to  track and report total obligations for operation and maintenance purposes  and cannot separately identify obligations funded from emergency  response funds.
DOD officials agreed that DOD’s accounting system does not separately  track obligations funded with emergency response funds, but they  emphasized that DOD has established procedures intended to track  obligations for contingency operations, including operations associated  with the war on terrorism such as in Afghanistan. Under DOD’s financial  management regulation, DOD components are required to track and report  the incremental costs (obligations) for each contingency operation. DOD  established a special code for each operation, and components track  obligations in a management tracking system separate from DOD’s  accounting system. The components report the total obligations for each  contingency operation according to four specific cost categories:  personnel, personnel support, operating support, and transportation—and  by appropriation account. This information is reported monthly and is  provided to Congress. However, the contingency cost categories do not  correlate with DOD’s appropriation accounting structure. Also, funding  for contingency operations comes from both special funding sources  such as emergency response funds, as well as, the regular peacetime  appropriations given to components. Because DOD’s accounting system  does not separately track obligations by funding source, DOD’s reporting  does not identify the portion of contingency operations-related obligations  funded with emergency response funds.
subsections: section_title: DOD Sets Up Additional Reporting Requirements Intended to Improve Tracking
paragraphs: During our review, DOD acknowledged the limitations of its ability to  track the war on terrorism obligations and acknowledged the continued  interest of Congress, OMB, GAO, and other organizations regarding the  use of the funds. Starting in December 2002, DOD expanded its reporting  on obligations associated with the war on terrorism and contingency  operations. Specifically, in addition to continuing the separate tracking  of fiscal year 2001 and fiscal year 2002 emergency supplemental funds  contained in the Defense Emergency Response Fund, components are  now required to report more detailed data on obligations associated  with the two subsequent appropriations in fiscal year 2002 and 2003.  The additional reporting requirements are as follows:    For the fiscal year 2002 supplemental, components are, on a monthly  basis, to describe the purpose of the obligation, provide the amount, and  identify the appropriation account.
For the fiscal year 2003 appropriation, components are, on a monthly  basis, to identify which funds they are obligating from their peacetime  budget to directly support the global war on terrorism, i.e., components  are using their baseline budget for the war on terrorism obligations.  The report is to describe the purpose of the obligation and the amount  and identify what activities were not being accomplished and the  appropriation account affected. This is referred to as “cash flowing.”
Furthermore, components are to start compiling and reporting on four  additional cost categories for contingency operations: reconstitution of  forces and capability, recapitalization, classified programs, and working  capital fund. DOD officials stated the data are compiled from individual  command and unit management tracking systems, which are not linked  with DOD’s accounting system, referred to as parallel tracking.
According to DOD officials, the additional reporting is expected to provide  the management information that DOD needs to better manage and  oversee the war on terrorism obligations and that Congress and others  need to exercise oversight responsibilities. Officials believe that requiring  components to provide additional data on obligations is preferable to  modifying the accounting system to distinguish war on terrorism-related  obligations from other obligations. Officials told us that modifying the  accounting system would be too costly, time consuming, and the effort  would not justify the value added at this time. Also, officials point out that  the additional work involved and learning curve associated with a  modified accounting system would pose problems because of the  complexity involved with additional reporting, the time involved with  obtaining staff competency, and the need to retrain staff due to assignment  rotations. As of February 2003, components were still compiling data;  therefore, we are not making a recommendation in this report, but will  continue to review DOD’s expanded reporting efforts in our ongoing  review of contingency operations costs.
section_title: Agency Comments and Our Evaluation
paragraphs: In written comments on a draft of this report, DOD partially concurred  with the report (see app. IV). Specifically, DOD disagreed that guidance  provided to components on how to use emergency response funds was  not sufficient. DOD stated that components were clearly instructed to  treat expenses as incremental costs as defined in DOD’s financial  management regulation and that subsequent meetings were held to clarify  this guidance. DOD also noted that, because the category structure used  for emergency response funds was unique, some confusion existed among  the components. DOD stated that the confusion dissipated as the  components became more familiar with the structure.
In our report, we recognized that DOD directed components to rely on the  financial regulation, as well as other guidelines, and acknowledged DOD’s  view that it maintained constant communication to review and clarify the  use of emergency response funds. However, in our May 2002 report, we  noted that the financial regulation does not provide sufficient guidance on  the types of costs that are defined as incremental, which resulted in  various interpretations among the services. DOD agreed with the  recommendation made in that report that the regulation be expanded to  include more comprehensive guidance. During our work conducted for  this report, we found that command officials were sometimes uncertain  about whether certain expenses were allowable, including how to  determine incremental costs, and sometimes had to use their best  judgment in obligating emergency response funds. We continue to believe  that more comprehensive guidance is warranted. Because DOD is still  revising the guidance based on prior GAO work, we are not making a new  recommendation in this report.
While DOD stated our report correctly said that DOD cannot correlate the  funding categories for emergency response funds with its appropriation  accounts, it believed we were only partially accurate in stating that DOD  is unable to track all emergency response funds in its accounting system.  DOD noted that it had implemented a process to track incremental costs  related to the war on terrorism and, in particular, the Defense Finance  Accounting Service collects cost information on contingencies from  components. DOD also noted that it is implementing procedures to  capture the incremental costs of Operation Iraqi Freedom. Our report  specifically recognizes DOD has established procedures intended to track  incremental costs for contingency operations including operations  associated with the war on terrorism, and that the components report this  type of information. However, we note that this information is compiled in  a management tracking system separate from DOD’s accounting system.  Furthermore, funding for contingency operations comes from both special  funding sources such as emergency response funds, as well as regular  peacetime appropriations. Because DOD’s accounting system does not  separately track obligations by funding source, DOD’s reporting does not  identify the portion of contingency-operations related obligations funded  with emergency response funds.
Further, DOD partially agreed that its accounting system cannot report  on the $20.5 billion in emergency response funds provided for the war on  terrorism in fiscal years 2002 and 2003. DOD noted that it received only  $13.5 billion and that, except for $305 million appropriated for Pentagon  repairs, these funds went directly to component accounts and their  execution is captured in accounting reports. DOD noted that components  report separately on obligations of these funds. In subsequent discussions,  a DOD comptroller official confirmed the accuracy of our calculation that  DOD had received a total of $20.5 billion. As discussed previously, our  report recognizes that components report separately on obligations  related contingency operations, but that these reports do not distinguish  the portion of contingency operations-related operations funded with  emergency response funds.
Unless you publicly announce its contents earlier, we plan no further  distribution of this report until 30 days from the date of this letter. At that  time, we will send copies of this report to interested congressional  committees with jurisdiction over DOD’s budget.
Also at that time, we will send copies of this report to the Secretary  of Defense; the DOD Comptroller; the Secretaries of the Army, the Navy,  and the Air Force; the Director of the Defense Finance and Accounting  Service; the Director of the OMB, and others upon request. In addition,  the report will be available at no charge on the GAO Web site at  http://www.gao.gov/.
If you have any questions regarding this report, please contact me at  (202) 512-9619 or pickups@gao.gov, or Gary Billen, Assistant Director,  at (214) 777-5703 or billeng@gao.gov. Major contributors to this report are  acknowledged in appendix V.
section_title: Appendix I: Scope and Methodology
paragraphs: To determine the extent that the Department of Defense (DOD) adhered  to the Office of Management and Budgets (OMB) guidance for managing  funds provided separately for the Defense Emergency Response Fund  (appropriated in the first two emergency supplemental appropriations)  and the sufficiency of DOD’s guidance to its components on the use of  these funds, we reviewed the guidance provided by OMB to federal  government departments and agencies and the guidance provided by  DOD to its defense components for justifying their obligations funded  through the emergency supplementals of fiscal years 2001 and 2002. We  interviewed knowledgeable DOD officials responsible for implementing  this guidance, obtained DOD reports of emergency response fund  allocations to DOD component commands, and used these reports to  select sites for our subsequent visits. At DOD’s component commands,  we interviewed officials and obtained reports or examples of obligations  (purchases). We compared selected examples of obligations to OMB and  DOD guidance. We also relied on prior GAO work regarding DOD’s  guidance and reporting for contingency operations.
To assess DOD’s ability to track the use of emergency funds provided to  DOD in the emergency supplementals of fiscal years 2001 and 2002, the  supplemental for fiscal year 2002, and the DOD appropriation for fiscal  year 2003, we analyzed relevant DOD financial documents, including the  Office of the Secretary of Defense monthly reports allocating the funds to  services and commands and the Defense Finance and Accounting Service  monthly obligation reports and accounting manuals. We did not verify the  accuracy and completeness of this data. We also reviewed budget and  accounting procedures and documents and interviewed knowledgeable  DOD officials.
We performed our work at the Office of the Secretary of Defense; the  Office of the Comptroller; the headquarters of the Army, the Army  Reserve, the Army National Guard, the National Guard, the Navy, and  the Air Force; and the following commands and centers:    Transportation Command, Scott Air Force Base, Ill.    Army Forces Command, Fort McPherson, Ga.    Army Central Forces Command, Fort McPherson, Ga.    Air Force Aeronautical Services Center, Wright-Patterson  Air Force Base, Ohio    Air Force Air Armament Center, Eglin Air Force Base, Fla.    Air Force Air Combat Command, Langley Air Force Base, Va.    Navy Atlantic Fleet Command, Norfolk Naval Base, Va.    Army Tank-Automotive and Armaments Command, Warren, Mich.
Army Materiel Command, Alexandria, Va.    Air Force Materiel Command, Wright-Patterson Air Force Base, Ohio    Air Mobility Command, Scott Air Force Base, Ill.    Special Operations Command, MacDill Air Force Base, Tampa, Fla.    Pacific Command, Pearl Harbor, Hawaii    Air Force Special Operations Command, Hurlburt Field, Fla.    Army Special Operations Command, Fort Bragg, N.C.
We performed our review between March 2002 and February 2003 in  accordance with generally accepted government auditing standards.
section_title: Appendix II: Appropriation of Emergency Response Funds to DOD for Fiscal Years 2001, 2002, and 2003
paragraphs: As of January 2003, Congress appropriated a total of about $38 billion in  fiscal years 2001, 2002, and 2003 to fund DOD’s expenses related to the  war on terrorism. As table 2 shows, Congress provided these emergency  response funds in four appropriations—two emergency supplementals  (fiscal years 2001 and 2002), a fiscal year 2002 supplemental, and the fiscal  year 2003 Defense appropriation—and used different methods to transfer  funds to DOD.
subsections: section_title: Fiscal Years 2001 and 2002
paragraphs: Congress appropriated about $17.5 billion to fund DOD’s emergency  needs in the aftermath of the September 2001 terrorist attacks during  fiscal years 2001 and 2002. Of this amount, about $15 billion was  eventually transferred to DOD’s Defense Emergency Response Fund.  OMB, in conjunction with DOD, identified 10 broad funding categories to  govern the use of these funds. While funds in the Defense Emergency  Response Fund were obligated for similar types of requirements funded  under several of DOD’s regular appropriations account, such as for  operation and maintenance and military personnel expenses, the 10  categories do not directly correlate with DOD’s existing appropriation  account structure. Figure 2 lists the Defense Emergency Response funding  categories and provides examples of DOD’s regular  appropriation accounts.
section_title: Fiscal Year 2002
paragraphs: In an emergency supplemental appropriation for fiscal year 2002,  Congress appropriated $13.4 billion in emergency response funds, of  which $11.3 billion was placed in the Defense Emergency Response  Fund for subsequent transfer to DOD’s regular appropriation accounts.  Furthermore, Congress designated the distribution of these funds by  DOD component, appropriation account, and purpose. Figure 3 provides  an example of how Congress designated the use of fiscal year 2002  emergency response funds for the Air Force.
section_title: Fiscal Year 2003
paragraphs: In fiscal year 2003, Congress appropriated $7.1 billion in emergency  response funds to DOD as part of DOD’s regular appropriation, and these  funds were appropriated directly to DOD’s regular appropriation accounts.  In contrast to the fiscal year 2002 emergency supplemental, Congress  provided more detail in designating the distribution of fiscal year 2003  emergency response funds. In the conference report accompanying the  fiscal year 2003 appropriation act, Congress designated specific funding  levels by appropriation account, DOD component, budget activity, and  subactivity group. Figure 4 provides an example of how Congress  designated funding for the Air Force.
section_title: Appendix III: OMB Guidelines and Criteria for Emergency Funding Requests Related to the Terrorist Attacks of September 11, 2001
paragraphs: In a September 14, 2001, memorandum, OMB provided the heads of  federal departments and agencies with the following guidelines and  criteria for requesting emergency funding related to the terrorist attacks  of September 11, 2001.
subsections: section_title: Response and Recovery
paragraphs: (1)  The damage to be repaired must have been directly caused by the  terrorist acts.  (2)  The absence of funding, and consequently a delay in damage repair,  protection or other activities, would result in significant economic  loss/hardship, attack risk or human endangerment/suffering,  including the cost of enhanced security and relocation of employees  to secure sites.  (3)  Any action ordered by the President to respond to the national  security consequences of the events of September 11, 2001.  (4)  The requirement is known, i.e., not a speculative need.  (5)  The requirement is urgent, i.e., could not reasonably be handled at a  later time.  (6)  The activity to be performed is an appropriate federal role and  reflects an appropriate sharing of responsibility among state, local,  private, and federal entities.  (7)  The level of funding is limited to the amount necessary to restore the  entity/facility to current standards and requirements (e.g., damage to  a 1950s building would be repaired using current building codes and  standards and guidelines for counter-terrorism defense).  (8)  The requirement is not competitive with or duplicative of activities of  other agencies with statutorily mandated disaster assistance  programs such as Small Business Administration and Federal  Emergency Management Agency.  (9)  The requirement cannot reasonably be met through the use of  existing agency funds, e.g., through reprogramming actions or the use  of other emergency funds.
section_title: Preparedness and Mitigation
paragraphs: (10)  Funds should address specific deficiencies, encountered or identified  to prevent events such as those that occurred on September 11, 2001,  and may include expenditures for: law enforcement and investigative  activities; general preparation and response (planning, training,  equipment, and personnel); physical protection of government  facilities and employees; physical protection of the national populace  and infrastructure; and governmental awareness of potential threats.  (11)  Funds can be used to enhance U.S. abilities to interdict  terrorist threats.  (12)  The activity to be performed is an appropriate federal role and  reflects an appropriate sharing of responsibility among state, local,  private, and federal entities.  (13)  The requirement is urgent, i.e., could not reasonably be handled at a  later time.  (14)  Activities are not competitive with or duplicative of activities of other  agencies with statutorily mandated preparation programs such as  DOD and Federal Emergency Management Agency.  (15)  The requirement cannot reasonably be met through the use of  existing agency funds, e.g., through reprogramming actions or the use  of other emergency funds.
section_title: Appendix IV: Comments from the Department of Defense
section_title: Appendix V: GAO Contacts and Staff Acknowledgments
subsections: section_title: GAO Contacts
section_title: Staff Acknowledgments
paragraphs: In addition to the names above, the following individuals made significant  contributions to this report: Nancy Benco; Bruce Brown; George Duncan;  Harry Jobes; Tom Mahalek; Charles Patton, Jr.; Kenneth Patton; and James  Reid.