We are all aware that certain key large-scale terrorist incidents at home and abroad since 1993 have dramatically raised the public profile of U.S. vulnerability to terrorist attack. The bombings of the World Trade Center in 1993 and of the federal building in Oklahoma City, Oklahoma, in 1995, along with terrorists’ use of a nerve agent in the Tokyo subway in 1995, have elevated concerns about terrorism in the United States—particularly terrorists’ use of chemical and biological weapons. Previously, the focus of U.S. policy and legislation had been more on international terrorism abroad and airline hijacking. The U.S. intelligence community, which includes the Central Intelligence Agency, the National Security Agency, the Federal Bureau of Investigation (FBI), and others, has issued classified National Intelligence Estimates and an update on the foreign-origin terrorist threat to the United States. In addition, the FBI gathers intelligence and assesses the threat posed by U.S. or domestic sources of terrorism. What is important to take away from these intelligence assessments is the very critical distinction made between what is conceivable or possible and what is likely in terms of the threat of terrorist attack. According to intelligence agencies, conventional explosives and firearms continue to be the weapons of choice for terrorists. Terrorists are less likely to use chemical and biological weapons than conventional explosives, although the likelihood that terrorists may use chemical and biological materials may increase over the next decade. Chemical and biological agents are less likely to be used than conventional explosives, at least partly because they are more difficult to weaponize and the results are unpredictable. According to the FBI, the threat of terrorists’ use of chemical and biological weapons is low, but some groups and individuals of concern are beginning to show interest in such weapons. Agency officials also have noted that terrorists’ use of nuclear weapons is the least likely scenario, although the consequences could be disastrous. The FBI will soon issue its report on domestic terrorist incidents and preventions for 1996. According to the FBI, in 1996, there were 3 terrorist incidents in the United States, as compared with 1 in 1995; zero in 1994; 12 in 1993; and 4 in 1992. The three incidents that occurred in 1996 involved pipe bombs, including the pipe bomb that exploded at the Atlanta Olympics. U.S. policy and strategy have evolved since the 1970s, along with the nature and perception of the terrorist threat. The basic principles of the policy continue, though, from the 1970s to today: make no concessions to terrorists, pressure state sponsors of terrorism, and apply the rule of law to terrorists as criminals. U.S. policy on terrorism first became formalized in 1986 with the Reagan administration’s issuance of National Security Decision Directive 207. This policy resulted from the findings of the 1985 Vice President’s Task Force on Terrorism, which highlighted the need for improved, centralized interagency coordination of the significant federal assets to respond to terrorist incidents. The directive reaffirmed lead agency responsibilities, with the State Department responsible for international terrorism policy, procedures, and programs, and the FBI, through the Department of Justice, responsible for dealing with domestic terrorist acts. Presidential Decision Directive (PDD) 39—issued in June 1995 following the bombing of the federal building in Oklahoma City—builds on the previous directive and contains three key elements of national strategy for combating terrorism: (1) reduce vulnerabilities to terrorist attacks and prevent and deter terrorist acts before they occur; (2) respond to terrorist acts that do occur—crisis management—and apprehend and punish terrorists; and (3) manage the consequences of terrorist acts, including restoring capabilities to protect public health and safety and essential government services and providing emergency relief. This directive also further elaborates on agencies’ roles and responsibilities and some specific measures to be taken regarding each element of the strategy. Now a new PDD on combating terrorism is being drafted that could further refine and advance the policy. This draft directive, which is classified, reflects a recognition of the need for centralized interagency leadership in combating terrorism. Among other things, the draft policy tries to resolve jurisdictional issues between agencies and places new emphasis on managing the consequences of a terrorist incident and on the roles and responsibilities of the various agencies involved. Based on the reports and work we have performed to date, we would like to make three observations. First, in certain critical areas, just as the Vice President’s Task Force on Terrorism noted in 1985, improvements are needed in interagency coordination and program focus. Since that time—and even since PDD-39 was issued in June 1995—the number of players involved in combating terrorism has increased substantially. In our September 1997 report, we noted that more than 40 federal agencies, bureaus, and offices were involved in combating terrorism. To illustrate the expansion of players since PDD-39, for example, Department of Agriculture representatives now attend counterterrorism crisis response exercise planning functions. Also, to implement the Nunn-Lugar-Domenici Domestic Preparedness Program, the U.S. Army’s Director of Military Support has created a new office for the new mission to train U.S. cities’ emergency response personnel to deal with terrorist incidents using chemical and biological WMD and plans to create another office to integrate another new player—the National Guard and Reserve—into the terrorism consequence management area. The National Guard and Reserve initially plan to establish 10 Rapid Assessment and Initial Detection (RAID), teams throughout the country. The U.S. Marine Corps has established the Chemical Biological Incident Response Force. Further, the Department of Energy has redesigned its long-standing Nuclear Emergency Search Team into various Joint Technical Operations Teams and other teams. At least one Department of Energy laboratory is offering consequence management services for chemical and biological as well as nuclear incidents. And the Public Health Service is in the process of establishing 25 Metropolitan Medical Strike Teams throughout the country in addition to 3 deployable “national asset” National Medical Response Teams and existing Disaster Medical Assistance Teams. There are many more examples of new players in the terrorism arena. Effectively coordinating all these various agencies’, teams’, and offices’ requirements, programs, activities, and funding requests is clearly important. We are currently examining interagency coordination issues as part of our work for this Subcommittee and Congressman Skelton in counterterrorism operations, exercises, and special events and in the Nunn-Lugar-Domenici Domestic Preparedness Program. In doing our work, we have observed some indications of potential overlap in federal capabilities to deal with WMD, and we plan to further assess this issue for you and Congressman Skelton. In a second, related observation, more money is being spent to combat terrorism without any assurance of whether it is focused on the right programs or in the right amounts. Our December 1997 report showed that seven key federal agencies spent more than an estimated $6.5 billion in fiscal year 1997 on federal efforts to combat terrorism, excluding classified programs and activities. Some key agencies’ spending on terrorism-related programs has increased dramatically. For example, between fiscal year 1995 and 1997, FBI terrorism-related funding and staff-level authorizations tripled, and Federal Aviation Administration spending to combat terrorism tripled. We also reported that key interagency management functions were not clearly required or performed. For example, neither the National Security Council nor the Office of Management and Budget (OMB) was required to regularly collect, aggregate, and review funding and spending data relative to combating terrorism on a crosscutting, governmentwide basis. Further, neither agency had established funding priorities for terrorism-related programs within or across agencies’ individual budgets or ensured that individual agencies’ stated requirements had been validated against threat and risk criteria before budget requests were submitted to the Congress. Because governmentwide priorities have not been established and funding requirements have not necessarily been validated based on an analytically sound assessment of the threat and risk of terrorist attack, there is no basis to have a reasonable assurance that funds are being spent on the right programs in the right amounts and that unnecessary program and funding duplication, overlap, misallocation, fragmentation, and gaps have not occurred. In part, as a result of our work, the National Defense Authorization Act for Fiscal Year 1998 (P.L. 105-85, Nov. 18, 1997) requires OMB to establish a reporting system for executive agencies on the budgeting and expenditure of funds for programs and activities to combat terrorism. OMB is also to collect the information and the President is to report the results to the Congress annually, including information on the programs and activities, priorities, and duplication of efforts in implementing the programs. OMB recently issued its first report to the Congress on enacted and requested terrorism-related funding for fiscal years 1998 and 1999, respectively. OMB reported that more than 17 agencies’ classified and unclassified programs were authorized $6.5 billion for fiscal year 1998, and $6.7 billion was requested for fiscal year 1999. OMB’s figures are lower than ours were for fiscal year 1997, but different definitions and interpretations of how to attribute terrorism-related spending in broader accounts could cause a difference of billions of dollars. What is important about the OMB effort is that it is a first step in the right direction toward improved management and coordination of this growing program area. But this crosscutting, or functional, view of U.S. investments in combating terrorism, by itself, does not tell the Congress or the executive branch whether or not the federal government is spending the right amounts in the right areas. Many challenges are ahead as we continue to see the need for (1) governmentwide priorities to be set; (2) agencies’ programs, activities, and requirements to be analyzed in relation to those priorities; and (3) resources to be allocated based on the established priorities and assessments of the threat and risk of terrorist attack.