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. 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. 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.) 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. 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. 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.) 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.) 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. 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. 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. 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. 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. 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. 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. 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. 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. Data on funds awarded to California, Illinois, and New York do not include funds awarded to Los Angeles County, Chicago, or New York City. 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. 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. 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.

Summary: 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. 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.