[House Hearing, 106 Congress]
[From the U.S. Government Printing Office]




                               before the


                                 of the

                              COMMITTEE ON
                           GOVERNMENT REFORM

                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED SIXTH CONGRESS

                             SECOND SESSION


                             MARCH 8, 2000


                           Serial No. 106-159


       Printed for the use of the Committee on Government Reform

  Available via the World Wide Web: http://www.gpo.gov/congress/house


67-017                     WASHINGTON : 2000



                     DAN BURTON, Indiana, Chairman
BENJAMIN A. GILMAN, New York         HENRY A. WAXMAN, California
CONSTANCE A. MORELLA, Maryland       TOM LANTOS, California
CHRISTOPHER SHAYS, Connecticut       ROBERT E. WISE, Jr., West Virginia
JOHN M. McHUGH, New York             EDOLPHUS TOWNS, New York
STEPHEN HORN, California             PAUL E. KANJORSKI, Pennsylvania
JOHN L. MICA, Florida                PATSY T. MINK, Hawaii
THOMAS M. DAVIS, Virginia            CAROLYN B. MALONEY, New York
DAVID M. McINTOSH, Indiana           ELEANOR HOLMES NORTON, Washington, 
MARK E. SOUDER, Indiana                  DC
JOE SCARBOROUGH, Florida             CHAKA FATTAH, Pennsylvania
    Carolina                         ROD R. BLAGOJEVICH, Illinois
BOB BARR, Georgia                    DANNY K. DAVIS, Illinois
DAN MILLER, Florida                  JOHN F. TIERNEY, Massachusetts
ASA HUTCHINSON, Arkansas             JIM TURNER, Texas
LEE TERRY, Nebraska                  THOMAS H. ALLEN, Maine
JUDY BIGGERT, Illinois               HAROLD E. FORD, Jr., Tennessee
GREG WALDEN, Oregon                  JANICE D. SCHAKOWSKY, Illinois
DOUG OSE, California                             ------
PAUL RYAN, Wisconsin                 BERNARD SANDERS, Vermont 
HELEN CHENOWETH-HAGE, Idaho              (Independent)

                      Kevin Binger, Staff Director
                 Daniel R. Moll, Deputy Staff Director
           David A. Kass, Deputy Counsel and Parliamentarian
                    Lisa Smith Arafune, Chief Clerk
                 Phil Schiliro, Minority Staff Director

Subcommittee on National Security, Veterans Affairs, and International 

                CHRISTOPHER SHAYS, Connecticut, Chairman
MARK E. SOUDER, Indiana              ROD R. BLAGOJEVICH, Illinois
ILEANA ROS-LEHTINEN, Florida         TOM LANTOS, California
JOHN M. McHUGH, New York             ROBERT E. WISE, Jr., West Virginia
JOHN L. MICA, Florida                JOHN F. TIERNEY, Massachusetts
DAVID M. McINTOSH, Indiana           THOMAS H. ALLEN, Maine
    Carolina                         BERNARD SANDERS, Vermont 
LEE TERRY, Nebraska                      (Independent)
JUDY BIGGERT, Illinois               JANICE D. SCHAKOWSKY, Illinois

                               Ex Officio

DAN BURTON, Indiana                  HENRY A. WAXMAN, California
            Lawrence J. Halloran, Staff Director and Counsel
              Kristine McElroy, Professional Staff Member
                         Jason M. Chung, Clerk
           David Rapallo, Minority Professional Staff Member

                            C O N T E N T S

Hearing held on March 8, 2000....................................     1
Statement of:
    Bascetta, Cynthia, Associate Director, Veterans Affairs and 
      Military Health Care Issues, General Accounting Office, 
      accompanied by Ronald Guthrie and Martin Eble..............     4
    Murphy, Frances, M.D., Acting Deputy Under Secretary for 
      Policy and Management, Department of Veterans Affairs, 
      accompanied by John Ogden; Robert F. Knouss, M.D., Office 
      of Emergency Preparedness, Public Health Service, 
      Department of Health and Human Services; Stephen M. 
      Ostroff, M.D., Associate Director for Epidemiologic 
      Science, National Center for Infectious Diseases, Centers 
      for Disease Control and Prevention, accompanied by Steven 
      Bice; and Colonel Carlos Hollifield, U.S. Marine Corps, 
      Chemical Biological Incident Response Force, accompanied by 
      Captain Warren (Rich) Dalton, M.D., U.S. Navy..............    12
Letters, statements, et cetera, submitted for the record by:
    Hollifield, Colonel Carlos, U.S. Marine Corps, Chemical 
      Biological Incident Response Force, prepared statement of..    42
    Knouss, Robert F., M.D., Office of Emergency Preparedness, 
      Public Health Service, Department of Health and Human 
      Services, prepared statement of............................    22
    Murphy, Frances, M.D., Acting Deputy Under Secretary for 
      Policy and Management, Department of Veterans Affairs, 
      prepared statement of......................................    16
    Ostroff, Stephen M., M.D., Associate Director for 
      Epidemiologic Science, National Center for Infectious 
      Diseases, Centers for Disease Control and Prevention, 
      prepared statement of......................................    30
    Shays, Hon. Christopher, a Representative in Congress from 
      the State of Connecticut, prepared statement of............     3



                        WEDNESDAY, MARCH 8, 2000

                  House of Representatives,
       Subcommittee on National Security, Veterans 
              Affairs, and International Relations,
                            Committee on Government Reform,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 10 a.m., in 
room 2154, Rayburn House Office Building, Hon. Christopher 
Shays (chairman of the subcommittee) presiding.
    Present: Representatives Shays and Tierney.
    Staff present: Lawrence J. Halloran, staff director and 
counsel; J. Vincent Chase, chief investigator; Kristine 
McElroy, professional staff member; Jason M. Chung, clerk; 
David Rapallo, minority counsel; and Jean Gosa, minority 
assistant clerk.
    Mr. Shays. Good morning. I'd like to call this hearing to 
    Pharmaceutical and vaccine stockpiles constitute a vital 
and growing element of the national domestic preparedness 
effort against terrorism. In the event of a chemical, 
biological or nuclear incident, local hospitals will need 
extraordinary quantities of antidotes, antibiotics and sera to 
treat the victims. If the right medicines do no arrive quickly, 
thousands could die.
    Today, the Department of Health and Human Services' four 
National Medical Response Teams are available to deploy with 
medical supplies to treat up to 5,000 casualties each. The 
Marine Corps' Chemical/Biological Incident Response Force also 
maintains a supply of pharmaceuticals and equipment that could 
be used to support local first responders. A larger National 
Pharmaceutical Stockpile is being assembled by the Centers for 
Disease Control.
    To be useful, medical stockpiles must be carefully 
maintained and well managed. So we asked the General Accounting 
Office to assess the accuracy of current inventory tracking and 
the adequacy of internal controls over critical stockpile 
    GAO found inventory shortfalls, recordkeeping discrepancies 
and security lapses that compromised the ability to respond to 
the chemical or biological incidents.
    The fundamental cause of the problems was not the 
complexity of the terrorism threat, or the logistics of a 
multi-event response scenario, but the lack of the most basic 
management controls. GAO found a critical national program 
running on little more than Post-It notes and a spreadsheet. 
The Marine Corps isn't even willing to concede their cache is a 
``stockpile'' that needs to be managed like the others.
    Terrorism poses any number of extremely difficult 
challenges to our national security. Accounting for medical 
stockpiles should be the easy part. Well recognized principles 
of program design, inventory management and internal control 
should be applied immediately to transform the current cottage 
industry of stockpile management into the national enterprise 
Congress intended.
    The threat of domestic terrorism demands we amass, and 
preposition, costly medical supplies we hope never to use. We 
hope the very existence of stockpiles will deter terrorists. 
But in the tragic event we are called upon to open the national 
medicine cabinet, it must contain the types and amounts of 
supplies needed to save lives.
    In addition to testimony from GAO, we will hear today from 
those responsible for management of the Nation's stockpiles. To 
varying degrees, each has acknowledged GAO's findings and 
pledged reforms. We look forward to their testimony.
    [The prepared statement of Hon. Christopher Shays follows:]

    [GRAPHIC] [TIFF OMITTED] T7017.001
    Mr. Shays. Our first panel, and we have two, is GAO, Ms. 
Cynthia Bascetta, Associate Director, Veterans Affairs and 
Military Health Care Issues, U.S. General Accounting Office, 
accompanied by Mr. Ronald Guthrie, Assistant Director. And 
Martin Eble, Senior Evaluator, Accounting and Information 
Management Division of GAO.
    If you would rise, we'll swear you in and we'll get 
    [Witnesses sworn.]
    Mr. Shays. Ms. Bascetta, it's my understanding you will 
give testimony and then we'll ask questions and all three will 
respond to the questions we might ask.
    Ms. Bascetta. That's correct.
    Mr. Shays. Great to have you here. Thank you.
    Ms. Bascetta. Thank you.
    Mr. Shays. And also let me say to you, what we'll do is 
we'll do 5 minutes but we'll roll it over. So you'll see the 
first 5 minutes red light and then we'll roll you over again.


    Ms. Bascetta: Mr. Chairman, thank you for inviting us to 
discuss our report on the Federal medical stockpiles that would 
be used to treat civilian victims of a chemical or a biological 
terrorist attack. My testimony today will highlight weaknesses 
in management at the stockpiles, the results of our count of 
stockpiled supplies, and the progress the agencies have made 
since we issued our report about 3 months ago.
    At that time, we reported that OEP, VA, and the Marine 
Corps unit known as CBIRF did not have basic internal controls 
in place to manage their stockpiles. As a result when we 
counted the inventory, we identified discrepancies between what 
should have been on hand and what was actually there. We found 
excesses of supplies such as sterile gloves, as well as 
shortages of some antidotes and antibiotics. For example, in 
one location we found 1,000 fewer diazepam injectors than 
required. Diazepam, also known as Valium, would be administered 
to calm victims and control convulsions. Although VA contends 
that it stockpiled a substitute for these injectors, it could 
not produce written documentation of OEP's approval at the time 
of the substitution. At another location, the entire supply of 
amyl nitrate--an antidote for cyanide poisoning--had been 
expired for 8 months. We also found incorrectly recorded 
expiration dates and lot numbers, which are necessary to keep 
supplies current and to respond to potential manufacturer 
recalls. At one location this information was wrong for 250 
doxycycline tablets and 100 cipro tablets, two antibiotics used 
to prevent the onset of symptoms in people exposed to anthrax.
    To improve stockpile management, we recommended that VA, 
OEP and CBIRF each establish fundamental internal controls, 
which serve as the first line of defense in safeguarding assets 
like these stockpiles. Incorporated in OMB Circular A-123, 
internal control is essential to managing an organization and 
it compromises the plan, methods and procedures used to meet 
missions, goals and objectives--in this case, the critical 
mission to save lives in the event of biochemical terrorism.
    We identified the lack of internal control as the root 
cause of the inventory discrepancies we found in our review. 
Until this is corrected, the responsible agencies cannot 
provide reasonable assurance that all the stockpiled items will 
be current, accounted for, and available for use. For example, 
at the time of our review, the systems lacked basic information 
required for sound recordkeeping, including documentation of 
back orders, replacements, and the shipment and receipt of 
pharmaceuticals and medical supplies. Further, none of the 
agencies conducted periodic inventories of the stocks they had 
on hand to compare them with required amounts.
    Moreover, security was lax at some locations. We found 
commingling of stockpiled items with other VA Medical Center 
pharmaceuticals, sometimes in unsecured refrigerators. While 
CBIRF's overall security was much better, it could not ensure 
that proper access was maintained because no logs were kept for 
recording access to its warehouse and trucks where the working 
stock is stored.
    Mr. Chairman, we're encouraged that OEP, VA, and CBIRF 
concurred with all our recommendations and have committed to 
improving stockpile management. In fact, the current memorandum 
of agreement between VA and OEP appears to incorporate much of 
our advice for improving stockpile management. So does VA's new 
agreement with CDC, which as you know is responsible for a new 
and vastly larger pharmaceutical stockpile. Specifically, CDC's 
agreement includes provisions for unannounced inspections and 
specific remedial actions with timeframes for completion if 
VA's performance is unsatisfactory. In addition, VA told us 
that it has prepared a plan indicating its commitment to 
conduct risk assessment of its vulnerabilities, to arrange for 
annual inventories, to implement the tracking system for the 
complete documentation of all transactions, and to rotate 
supplies properly. CBIRF is working on a list of required items 
but it needs to expedite this because it is pivotal to 
implementing our recommendations.
    In conclusion, we believe the agencies should be able to 
turn this situation around and, because of the criticality of 
this mission they should do so expeditiously. Since this is 
not, in my view, an expensive problem to fix, how quickly and 
effectively they will be able to depends less on resources and 
more on their commitment to implement an organized and 
disciplined response to our findings. Placing higher priority 
on this effort at the highest management levels will be 
essential to ensuring better stewardship of the stockpiles and, 
as a result, mitigating as best as possible the potential 
consequences of a terrorist attack.
    This concludes my remarks. We'd be happy to answer any 
questions you might have.
    Mr. Shays. Thank you. It's my understanding that your 
investigation didn't look at what supplies should be there, but 
how the supplies were being maintained.
    Ms. Bascetta. That's correct.
    Mr. Shays. Did one of the three of you, or all of you, 
visit all four sites?
    Ms. Bascetta. We visited five sites.
    Mr. Shays. Right.
    Ms. Bascetta. The four NMRT sites.
    Mr. Shays. Four VAs?
    Ms. Bascetta. Yes. And also the CBIRF site.
    Mr. Shays. Describe to me what the--I don't even know what 
the site would look like.
    What is the--describe to me, I mean is it a small room, is 
it a large room? Do we have trucks with supplies? Just describe 
to me what it looks like.
    Ms. Bascetta. There is some variability. I have been at one 
of the sites and it's located at a VA Medical Center. I'm not 
sure, but----
    Mr. Shays. Which State?
    Ms. Bascetta. Washington, DC. I'm not sure of the 
dimensions of the stockpile, but it's a secured area. It's 
called a cage, and inside this cage are a number of pallets 
that have boxes on the pallets, and they're all shrink-wrapped. 
They're on pallets so that they can be moved easily.
    I don't know if Ron or Marty would like to describe what 
some of the conditions are like in some of the other areas.
    Mr. Shays. I'd like to have it all. I'd like you to 
contrast some of the sites and so on.
    Ms. Bascetta. OK.
    Mr. Eble. Mr. Chairman, I visited the Hines location. This 
is also a VA facility. This is in Chicago, just outside of 
Chicago at Hines, IL. And it's set up very much like Ms. 
Bascetta is describing within--in this case within a 
pharmaceutical facility, a large, caged, locked room. And the 
pharmaceuticals for this purpose are segregated from the other 
items there and locked.
    Mr. Shays. I'm just trying to get some basic area of what 
you're talking about. It seems to me like that this is not a 
big deal in terms of being able to store this and to keep 
records, and it strikes me that obviously there are some of the 
pharmaceuticals that may expire and you have to replace them.
    Mr. Eble. Right.
    Mr. Shays. I would imagine some would have to be cooled.
    Ms. Bascetta. That's correct.
    Mr. Shays. And I just want to know if you saw a consistency 
in all five sites. I want to know if we're talking about a 
small room, 10x10, if we're talking about a very large place, 
with some already on trucks. I just want to have a sense of 
    Mr. Eble. This would be small location, perhaps 10X10 or 
    Mr. Shays. I mean, you could almost store it in one of 
these public storage spaces?
    Mr. Eble. In a garage. Right, that's correct.
    Ms. Bascetta. That's about the dimension.
    Mr. Guthrie. Essentially, Mr. Chairman, there are 
essentially six to eight pallets. And pallets are typically 4x4 
or 5x5 and the goods are stacked perhaps 3 to 5 feet high on 
each one of these pallets. So if you can envision an area 
that's perhaps as large as the space in front of us here, it's 
a caged area usually with solid masonry walls behind and a 
screen, like a screen fencing, a fairly rigid fencing with a 
locked screen door. That's rather typical. It's kind of a 
warehouse feeling environment to it. And it typically would 
have a small refrigerator inside that space to house 
pharmaceuticals that must be refrigerated.
    Mr. Shays. We don't need to know the exact location of 
these sites since, actually, security is important. But I want 
to also get a feeling for the number of different types of 
things that we have to record. Are we talking about 100 items, 
are we talking about 5,000 items, what are we talking about?
    Ms. Bascetta. About 200,000 items is the denominator in the 
counts that we did, in the inventory counts that we did.
    Mr. Shays. And 200,000 items and there are groupings within 
each so are you----
    Ms. Bascetta. Three of the sites have 35,000 items of 
primarily medical supplies. Not antidotes or antibiotics. Those 
are in smaller quantities.
    Mr. Shays. I'm just trying to now get a sense of what your 
major concern is and then what your second biggest concern 
would be and just go down.
    What's your first--and let me ask you, when you were doing 
your investigation, are we talking about things in the margin, 
or are we talking about some very serious problems?
    Ms. Bascetta. In terms of the specific significance of the 
shortages that we found, we didn't make a judgment as to the 
criticality of those specific shortages to the mission. Our 
concern was that because of the failure in the underlying 
systems to be able to track what's in the stockpiles and to be 
able to assure currency and their availability for use, that we 
wouldn't be able to tell from time to time how adequately 
maintained those stockpiles were.
    That's our major message. It's less a message that focuses 
on the specific findings of our inventory count, which we 
consider symptomatic of the more serious underlying problem of 
the need to have systems in place that can track the stockpiled 
    Mr. Shays. Are you saying that we were not--did they have 
records of what they have, but they simply didn't have the 
quantities they needed? Or did they not even have the records 
to say what was actually in the cage?
    Ms. Bascetta. Sometimes they didn't have the correct 
quantities, but the bigger problem was that they didn't have, 
for example, historical documentation of what had been 
replaced. And so there was no way over time to track how the 
stockpile had been maintained.
    Mr. Shays. Just tell me the method you used to examine the 
inventory in the stockpile material. What was the method?
    Ms. Bascetta. Sure. I'd be happy to and this might help 
give you a sense of how manageable these stockpiles are in 
terms of their size and dimensions.
    I'm also glad that you asked this question because the 
agencies, although they concur with our recommendations, do 
take issue with our count.
    What we did was, of course, because of our timeframes, we 
wanted to go onsite immediately, but VA was uncomfortable with 
that. They wanted a few weeks to do some pre-inventories before 
we arrived.
    Mr. Shays. I don't understand that at all. Why wouldn't the 
best way of knowing the condition have been to go in right away 
and just check it out?
    Ms. Bascetta. Well, it would have been and that certainly 
would have been our preference, although we were concerned more 
about the systems again then the actual counts. So we were 
willing to accommodate them on their request to give them a 
little bit more time.
    When we arrived onsite we did a 100 percent count of every 
single item in the stockpile. We did not use a sampling 
approach so that----
    Mr. Shays. In all five sites?
    Ms. Bascetta. Yes, that's correct. So, there you know that 
if we were able to do it in a matter of days, it's a manageable 
    Mr. Shays. Right.
    Ms. Bascetta. We also ensured that VA program staff were 
present at every location while we were counting. And when we 
noted discrepancies, we brought them to the attention of the VA 
personnel onsite with us. And in all cases they recounted 
except in California, where toward the end of our work they 
chose not to recount.
    In no instance did they inform us that we had counted 
incorrectly while we were onsite. It was only after our report 
was issued that they raised some questions about substitutions 
and nomenclature issues that they think might have caused us to 
    And the final issue that I want to clarify for the record 
is that while the agencies believe that our count of errors is 
inflated, we want to explain that that is truly the accurate 
way to measure deficiencies in the systems. What we did was 
count multiple errors for a single item. And that's because if 
an item had, for example, a wrong expiration and a wrong lot 
number, that would require two corrective actions to make the 
system accurate.
    So, our discrepancy rate does account for multiple errors 
for a single item, but we believe that's the correct way to 
measure the systems.
    Mr. Shays. Now, for the record just tell me how the lack of 
management controls affects management of the stockpiles.
    Ms. Bascetta. How a lack of management----
    Mr. Shays. How the lack of the internal controls affects 
the management of the stockpile.
    Ms. Bascetta. Well, there are several dimensions of 
internal controls that need to be in place to give stockpile 
management the appropriate attention. First, you need to 
establish an environment in which the staff who are involved 
place an appropriate priority on stockpile management and not 
in a singular fashion, but in a continuous fashion. It's an 
iterative process that needs to have a high level of attention 
over an extended period of time.
    In addition, all of the policies and procedures that you 
would have in place, such as those that are reflected in our 
Standards for Internal Control and in OMB Circular A-123, 
pretty much spell out what you need to do to ensure that your 
inventories are accurately maintained.
    Mr. Shays. This may seem like somewhat of a digression, but 
I'm having a hard time understanding why it is we would have 
any problems whatsoever. I mean, when I go and get my car 
repaired, I go the parts desk of the automobile dealer and they 
can, on their computer, tell me what they have. They can show 
me pictures of it. They can decide they only have three left or 
two left or they're going to order it and they're going to get 
it in a few days. I mean, so this is not rocket science-kind of 
management skills, is it?
    Ms. Bascetta. No, it's pretty straightforward inventory 
control. I agree with you.
    Mr. Shays. To what extent have the agencies tried to 
implement your recommendations?
    Ms. Bascetta. Well, right now what we have is their letters 
to us concurring with our recommendations. And our best 
evidence of their actions are the agreements that they've 
signed with VA. And those appear to be much better than the 
previous agreement that VA had with OEP. As you know, this is 
CDC's first agreement with VA and they quite proactively 
incorporated many of our recommendations to prevent the kind of 
problems that we had identified in the VA OEP situation. I'd 
say that if they implement what is in those current agreements 
and they give it appropriate management attention, they ought 
to be able to fix the problems that we identified.
    Mr. Shays. What internal controls did you find in place to 
ensure that the requests and draw-downs for the medical 
supplies from national stockpiles were properly authorized?
    Ms. Bascetta. I don't think we----
    Mr. Guthrie. Mr. Chairman, I don't know that there have 
been draw downs per se. These are pretty static stockpiles and 
it would be the rare event where they would draw down on these 
    Mr. Shays. If a draw down were to occur, how would they 
record it?
    Mr. Guthrie. I don't know that we covered that during the 
course of our review, sir.
    Mr. Shays. Is this the same--I've asked you about the four 
VA facilities, but how about the Marine facility, describe to 
me how it would compare.
    Ms. Bascetta. The Marine----
    Mr. Shays. Do they stockpile the same basic 
pharmaceuticals, and so on?
    Ms. Bascetta. They have similar types of items in their 
stockpile, emergency supplies and a variety of antidotes that 
would be used. They refer to their stockpile--they refer to 
their supplies as a working stock. They object to the word 
``stockpile.'' But it seems to us----
    Mr. Shays. Why would they object to that?
    Ms. Bascetta. Well, we're not sure, to be honest. It seems 
to us to be a semantic difference. And to us the important part 
is that whether they call it a working stock or a stockpile, 
they agree that it needs to be managed in accordance with the 
standards that we laid out.
    Mr. Shays. Does a working stock mean they continually roll 
over and take things out? I mean, what's the significance of 
that? I'll ask them, but what is your sense of the 
    Ms. Bascetta. The way we understand it, the supplies would 
be handled similarly to the NMRT sites in that they're 
deployable supplies. So we really don't see much of a 
distinction. The other issue that they raise is that their 
working stock is internal to their unit. They have primarily a 
military mission rather than a civilian mission. But on the 
other hand they do acknowledge that in the event of an 
emergency, if they show up onsite and the locals don't have 
supplies, they will treat civilians in those situations.
    Mr. Shays. Do they have supplies that are just for, say, 
    Ms. Bascetta. They do.
    Mr. Shays. So that would strike me--as they don't have 
children in the Marines, so they obviously have some supplies 
for civilians. And that makes sense.
    Ms. Bascetta. It seems that way. And they also appear to 
have thousands more of certain items than they would need for 
their own internal use.
    Mr. Shays. Great.
    Mr. Tierney, nice to have you here.
    Mr. Tierney. I want to thank the members of the panel for 
coming forward today. And I apologize for my tardiness. I have 
read your testimony in addition to listening to what you have 
to say, and I don't have very many questions in addition to the 
chairman's. I think he covered the ground pretty well.
    But I am curious to know, when you were dealing with the 
folks that are responsible for these measures, did you find any 
glaring lack of training or glaring lack of unfamiliarity with 
your standards?
    Ms. Bascetta. Yes, I'd say that we did. We're not certain 
whether the reason is that there simply wasn't enough attention 
put on the kinds of skills that a person would need to have to 
handle this kind of an effort, but we did notice that people 
with financial background or with any kind of accounting were 
not in the picture and that had those skill sets been brought 
to bear, we don't think that this would have happened or 
certainly not to this degree.
    Mr. Tierney. And was that right across the board, VA, the 
    Ms. Bascetta. Yes.
    Mr. Tierney. How about the management skills on that, did 
you find that the people that were responsible overall for it 
had the skills and just lacked the individuals beneath them 
having those appropriate skills and training, or do you think 
the management skills needed to be improved?
    Ms. Bascetta. I don't think that it was a problem of 
management skills as much as a problem of lack of attention. I 
simply think this wasn't given high enough priority. It just 
didn't seem to be on everybody's radar screen at an appropriate 
    Mr. Tierney. I was a little concerned about what appeared 
to be in your testimony, a lack of internal oversight or 
mechanisms to assure that they were doing what they ought to be 
doing. And so nobody was watching anybody else and sometimes 
somebody was doing all the functions instead of dividing them 
so that you make sure errors would be caught.
    Ms. Bascetta. Right.
    Mr. Tierney. Have you noticed any marked improvement in 
those areas since your report in dealing with those companies?
    Ms. Bascetta. We see that they have policies and procedures 
in place to follow those standards, but we haven't been back to 
verify that, in fact, that's what's happening.
    Mr. Tierney. When will you go back for that?
    Ms. Bascetta. We haven't been asked.
    Mr. Tierney. OK, fair enough. Thank you very much.
    Mr. Shays. I just have one other question in terms of the 
draw downs. I understand they haven't drawn down, but did you 
look the procedures of how they draw them down? Did you ask 
them what they would do and how they would do it or did you 
just not?
    Ms. Bascetta. We really focused only on what was actually 
physically in the stockpile. I suppose that if there had been 
those kinds of procedures in place we would have reviewed them 
as well. And certainly they should be spelled out in their new 
policies and procedures.
    Mr. Shays. You weren't asked to do this, but were you--I 
mean, these are four sites in the country that then may go 
somewhere else.
    Ms. Bascetta. Right.
    Mr. Shays. Did you have a sense intuitively when you saw 
these sites that they were in a reasonable location, near an 
airport, so that we could get these to where they needed to go 
in a few hours, not days?
    Ms. Bascetta. I think that's fair to say, yes. That they 
were appropriately positioned.
    Mr. Shays. OK. Thank you very much. You've given us an 
opportunity now to meet with the next panel. Thank you.
    Our second panel is Dr. Frances Murphy, acting Deputy Under 
Secretary for Policy at the Department of Veterans Affairs, 
accompanied by Mr. John Ogden, Chief Consultant, Pharmacy 
Benefits Management Strategic Health Group, Department of 
Veterans Affairs; testimony from Dr. Robert Knouss, Office of 
Emergency Preparedness, Public Health Service, Department of 
Health and Human Services; Dr. Steven Ostroff, Associate 
Director for Epidemiologic Science, National Center for 
Infectious Diseases, Center for Disease Control and Prevention, 
accompanied by Mr. Steve Bice, Branch Chief, National 
Pharmaceutical Stockpile Branch, Department of Health and Human 
Services, and our fourth testimony is from Colonel Carlos 
Hollifield, Chemical Biological Incident Response Force, U.S. 
Marine Corps, Department of Defense, accompanied by Captain 
Warren Rich Dalton, M.D.--so, Doctor, Biological Incident 
Response Force, with the Marines as well.
    Do you have everybody at the table?
    Now, let me just say, I'm going to swear you all in, but I 
just have to first take care of some procedural things from the 
committee, unanimous consent, and we're going to welcome your 
testimony and have it basically be as long as you need it to 
    I ask unanimous consent that all members of the 
subcommittee be permitted to place an opening statement in the 
record and that the record remain open for 3 days for that 
purpose. Without objection, so ordered.
    And I ask further unanimous consent that all witnesses be 
permitted to include their written statements in the record. 
And without objection, so ordered.
    Again, we'll do the 5-minutes, we'll roll it over again for 
another 5 minutes, but if you feel that you need to say 
something and can't do it within the 10-minutes I want it part 
of the record and am happy to have you do that.
    Dr. Murphy, we're just going to start with you and then 
we'll go to Dr. Knouss and go right down the line, Dr. Ostroff, 
and then Colonel Hollifield.
    You're on.

                        M.D., U.S. NAVY

    Dr. Murphy. Mr. Chairman and members of the subcommittee, I 
am pleased to have this opportunity to address GAO's recent 
report concerning managements of chemical and biological 
medical supplies. I am accompanied by Mr. John Ogden, Chief 
    Mr. Shays. We swear in everyone who testifies, even Members 
of Congress. Actually I didn't, Senator Byrd came and we didn't 
administer the oath to him. I chickened out, but everyone else 
who has come before us has.
    I'm sorry, I'm going to have you start over again. My 
    [Witnesses sworn.]
    Dr. Murphy. I'd like to enter my entire testimony in the 
record if that would be possible, but to shorten the statement 
this morning if I could.
    As you know, VA's primary mission is to provide health care 
and benefits to veterans; however an additional VA role is to 
ensure health care for eligible veterans, military personnel, 
and the public during Department of Defense contingencies, 
natural, man-made, and technological emergencies. VA has 
assigned lead responsibility for this mission to the Emergency 
Management Strategic Health Care Group, which is headquartered 
in Martinsburg, WV. The primary responsibilities and 
authorities governing VA's program implementation are to serve 
as a VA/DOD Contingency Hospital System backup, which requires 
VA to serve as the primary backup to DOD medical services in 
times of national emergencies.
    We also act as part of the National Disaster Medical 
Defense System. VA operates to provide capability for treating 
large numbers of patients who are injured in major peacetime 
disasters in the United States and its territories, or to treat 
casualties resulting from conventional military conflict 
    In addition, Presidential Review Decision Directive 62, 
Combating Terrorism, which was issued in May 1998, tasked the 
U.S. Public Health Service to work with VA in ensuring that 
adequate stockpiles of antidotes and other necessary 
pharmaceuticals are maintained nationwide and to have the 
ability to train medical personnel in NDMS hospitals.
    Under the provisions of this plan over the past 9 years, VA 
has deployed over 1,000 health care personnel, and provided 
medical supplies, and equipment, including mobile health 
clinics, and facilities.
    In addition, under the Presidential Decision Directive and 
as part of the NDMS system, VA has an agreement with the U.S. 
Public Health Service to maintain the four caches that were 
talked about in the GAO testimony this morning, at strategic 
locations throughout the United States, that may be needed for 
treatment of victims of an event involving weapons of mass 
destruction. If such an event occurs, these caches would be 
deployed to the site of the incident. These pharmaceuticals 
would be used and could provide supplemental capability to 
local medical caregivers and facilities to treat the victims of 
the weapons of mass destruction.
    VA also has entered into a recent agreement with the 
Centers for Disease Control and Prevention to assist with 
procurement and maintenance of the National Pharmaceutical 
Stockpile that would also be located in specific cities 
throughout the United States. In both of these instances VA 
receives funds from the agencies involved to procure and 
maintain these stockpiles for those respective agencies.
    In response to the GAO Report on Management of Medical 
Supplies, I am pleased to have an opportunity to discuss with 
you VA's role and activity as a partner with HHS in 
procurements, inventory storage and maintenance and delivery of 
medical supplies that are needed for these responses.
    The development and maintenance of these stockpiles are 
integral parts of the Nation's ability to provide needed health 
care following an emergency. We recognize the key and strategic 
nature of this mission.
    OEP officials determine the contents of those inventories; 
they provide the funding for the procurement, maintenance and 
deployment of the medical supplies; and they determine the 
locations of the stockpile at these sites across the Unites 
States. The partnership with the Office of Emergency 
Preparedness and VA began in late 1995 and evolved into a 
formal agreement by 1997.
    This partnership has been extended now to a partnership 
with CDC to maintain the National Pharmaceutical Stockpile 
    With that background, I'd like to give you a sense of how 
VA has responded to the GAO report recommendations. As you've 
already heard, Mr. Chairman, we concurred with the GAO 
recommendations and have taken action to correct the problems 
that they identified. GAO recommended that OEP, CDC, and the 
Marine Corps, and VA establish sufficient systems of internal 
control over their chemical and biological stockpiles of 
medical supplies and pharmaceuticals maintained for responding 
to a terrorist incident. Management needs to reasonably make 
certain that personnel conduct risk assessments to ensure 
efficient and effective administration of the stockpiles and to 
organize those program activities to identify and mitigate any 
risks. That way, when needed, the stockpiles can be provided as 
    To implement this recommendation, OEP has contracted with 
the Logistics Management Institute to evaluate the program, to 
conduct a risk assessment, and to advise VA on areas for 
improvement. We look forward to utilizing their expertise and 
input and are moving ahead briskly to get this evaluation done.
    Second, the GAO recommended that the agencies arrange for 
periodic, independent inventories of the stockpiles. I'm happy 
to report to you that VA has already conducted full inventories 
of all of the stockpiles at every location. Complete stockpile 
inventory will be done on a quarterly basis from this time 
forward. And at completion of the December 2000 inventory, the 
team will review the lessons learned and make any further 
improvements that we feel are necessary in looking at the 
processes in place during that year.
    Third, GAO recommended that VA implement a tracking system 
that retains complete documentation for all supplies which are 
ordered, received or destroyed. While a tracking system was in 
place at the time, obvious deficiencies were noted. We 
recognized that improvement needed to be made and we arranged 
for a more comprehensive and consistent tracking system to be 
in place on a continuous real-time basis that will be 
accessible to VA, OEP, and CDC staff.
    Fourth, the GAO recommended that supplies be properly 
rotated. It is important that the system be updated and provide 
reports about future expiration dates, and that the ordering, 
receiving, shipping and rotating of stock at each site be done 
on a timely basis. We've put systems in place to ensure that 
this will occur.
    Mr. Chairman, I would like to close with a quick 
description of some additional actions that have been taken 
since the GAO review process took place, and that is that, as 
you've heard, we have new memorandums of agreement with both 
OEOP and with CDC which address all of these issues. We feel 
that we have moved forward very rapidly to correct the problems 
that were identified.
    Second, VA employees who were responsible for managing this 
program previously did this as an ancillary duty. Obviously, 
while the resource need is not great, it is important to have 
dedicated staff to maintain these stockpiles and to carry out 
the periodic activities that are necessary to ensure that these 
functions are being performed in a consistent and reproducible 
way. Those full-time personnel have been put in place. There is 
now a permanent full-time director of the emergency pharmacy 
activities, and a total of six full-time staff will be assigned 
to this activity.
    Third, all the refrigeration issues have been dealt with.
    Fourth, some communication issues were raised. The 
communication between our partners and VA has been improved. 
There have been numerous meetings and conference calls and we 
intend to continue that schedule of routine meetings and 
activities into the future.
    Fifth, all the stockpiles have been replenished. And in 
addition, during the week of December 27, 1999, full 
inventories were conducted and the amount of diazepam on hand 
at each stockpile was revalidated. We do feel that we need to 
take issue with the statement that 1,000 doses of diazepam were 
missing. In fact, they were not missing, they were replaced 
with substitutes when the original auto-injectors were not 
available for purchase. And I am pleased to report that we can 
account for all of the Valium/Diazepam stores that were 
necessary for that stockpile.
    Mr. Chairman, I believe that the efforts of both the HHS 
staff and the VA staff to develop, maintain, and deploy 
emergency supplies, while they have had limitations in the 
past, have been improved significantly over the last several 
months. And we believe we now have systems in place that 
address the GAO concerns and will ensure that these stockpiles 
are available should they be necessary in the event of a 
national emergency.
    I'd be happy to answer questions for the committee.
    Mr. Shays. Thank you very much. We appreciate it a lot.
    [The prepared statement of Dr. Murphy follows:]

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    Mr. Shays. Dr. Knouss.
    Dr. Knouss. Thank you very much, Mr. Chairman. I want to 
thank you again for the opportunity to appear before the 
committee and for previous appearances where we've discussed 
the whole of the National Disaster Medical System and our 
approach as to trying to be prepared to assist the civilian 
population should one of these awful events occur. But I would 
like to put into context these teams and these stockpiles 
because these are just a part of the total system of the 
National Disaster Medical System in which we partner with the 
Department of Veterans Affairs and the Department of Defense 
and the Federal Emergency Management Agency.
    I'd like to spend a few minutes this morning just 
highlighting my testimony. I've provided my complete statement 
for the record.
    Today I'm here to discuss the recently released GAO report 
of the complete audit of four of our specialized pharmaceutical 
caches that are used by our special National Medical Response 
    These stockpiles were designed to be deployed with these 
four specialized teams in responding to a weapons of mass 
destruction event and providing medical care to its victims. Of 
course, we use our system for many other things. And in fact, 
we're just now today completing some of our work with the Air 
Alaska crash out in California in identifying the victims that 
died in that accident. The stockpiles that we maintain for the 
National Medical Response Teams contain specialized 
pharmaceuticals to treat up to 5,000 victims of a chemical 
exposure to nerve agents, among other medicines and medical 
    The NMRT stockpiles are designed primarily to provide 
additional supplies to local areas that have depleted their own 
pharmaceutical resources in the initial hours after a chemical 
attack, when time is of the essence. The NMRT stockpiles have 
also been used to preposition supplies for designated special 
events, including here in Washington, DC, for State of the 
Union addresses and other activities.
    The Department of Veterans Affairs is one of the four 
partners in the National Disaster Medical System and manages 
one of the largest pharmacy systems in the country. 
Consequently, we approached VA with our proposal for the 
purchase, management and deployment of these stockpiles. VA was 
able to purchase the pharmaceuticals and supplies through their 
purchasing system and store the stockpiles in locations from 
which they can be deployed with our teams.
    The report recently issued by GAO raises important concerns 
about the manner in which these stockpiles were managed and the 
oversight provided by our office. We've taken GAO's efforts and 
report seriously, and we're taking immediate steps to ensure 
proper internal controls are in place and that we are in 
compliance with all regulations. I want to note that we have 
carefully reviewed the results of GAO's audit and do not 
believe that any of the issues cited degraded our ability to 
respond to a chemical attack should it have occurred over the 
last 2 years.
    Based on the result of the GAO audit, however, we have 
signed a new interagency agreement with the VA that spells out 
each agency's responsibilities and activities, including 
assurance of appropriate storage and physical security of the 
stockpiles; strengthening of internal controls, including 
audits by both our staff and VA staff, as well as independent 
reviews; establishment of a schedule of regular communications, 
inventory updates and reports; and regular and recurring 
management oversight by our office.
    We certainly understand GAO's concerns that insufficient 
management and oversight controls do not provide any assurance 
that, even if the audit had been 100 percent correct on 1 day, 
there are no absolute assurances the same would be true the 
next day, or at the time of deployment. However, we do not 
agree with the implication that we would not have been able to 
respond effectively to a WMD incident. A ``12 percent error 
rate'' has to be put in the context of the type of items that 
were included in the calculation, and how the error rate was 
determined. An excess of large gloves is not a significant 
problem and it is our understanding that an individual item 
could have been produced up to three errors if it was over or 
under the count, if the lot number was recorded incorrectly, 
and if the expiration date was not the same as the inventory 
    But since being provided the audit results we have been 
working with the VA to assure that these errors, regardless of 
level of significance, are corrected. Our office and VA will 
ensure implementation of a far more effective control 
environment, including stricter inventory control and 
monitoring and regular reporting and feedback; ensuring that 
information is recorded properly and the inventory is kept up 
to date; ensuring additional and regular onsite monitoring of 
the stockpiles, including announces and no-notice inspections 
of each stockpile; and ensuring that risk assessments and 
control activities are implemented.
    In conclusion, I want to reiterate that we are working very 
diligently within our own office and with our VA partners to 
correct the problems that GAO found, to do a 100 percent 
inventory, to ensure that current stocks and recordkeeping are 
accurate and up to date, and to develop and implement the 
proper management controls and oversight to ensure that the 
stockpiles are ready to deploy and that we are in compliance 
with all laws and regulations.
    Mr. Chairman, that concludes my testimony. I will be 
pleased to answer any questions that you may have later on.
    Mr. Shays. Thank you very much. We've heard from the VA and 
from HHS and now we'll hear from CDC.
    [The prepared statement of Dr. Knouss follows:]

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    Mr. Shays. Dr. Ostroff.
    Dr. Ostroff. Thank you, Mr. Chairman.
    We appreciate the opportunity to discuss the development of 
the National Pharmaceutical Stockpile or NPS, which is one of 
the components of our overall public health response to the 
threat of bioterrorism.
    Today I am accompanied by Mr. Steven Bice, who is Chief of 
our CDC National Pharmaceutical Stockpile Branch located in the 
National Center for Environmental Health.
    In 1998, CDC issued Preventing Emerging Infectious 
Diseases: A Strategy for the 21st Century, our plan for 
preventing emerging diseases. It focuses on four goals, each of 
which has direct relevance to preparedness for bioterrorism: 
disease surveillance and outbreak response; applied research; 
infrastructure and training; and disease prevention and 
control. This plan emphasized the need to be prepared for the 
unexpected--whether it be a naturally occurring West Nile Virus 
outbreak or the deliberate release of anthrax by a terrorist.
    A 5-year strategic plan for bioterrorism that CDC has been 
developing with its partners will soon be published. It defines 
activities necessary to ensure that the public health community 
is prepared to recognize and respond to a threat or actual act 
of bioterrorism.
    However, CDC has already moved forward in multiple critical 
areas using funds appropriated by Congress beginning in fiscal 
year 1999. One of these areas was the development of a National 
Pharmaceutical Stockpile which can be called upon in response 
to an episode caused by a biological or chemical agent. The 
mission of CDC's NPS is to ensure the availability of life-
saving pharmaceuticals and other medical supplies for prompt 
delivery to the site of a biological or chemical terrorist 
event anywhere in the United States. While the first response 
to an incident will come from local and State emergency medical 
and public health personnel, few local governments have the 
resources to create sufficient stockpiles on their own.
    CDC has used an ongoing deliberative process to guide 
purchasing decisions for the NPS. Fiscal year 1999 decisions 
were based on the recommendations of two multispeciality expert 
working groups and the Department's operating plan, which was 
submitted to Congress.
    A subcommittee of the Advisory Committee to the Director of 
CDC also is involved in this review process. Because 
acquisition priorities may change over time as threats change, 
these committees will continue to provide input and oversight. 
CDC has also established relationships with the national 
security agencies to ensure that the stockpile reflects current 
concerns and information.
    The expert working groups convened by CDC prioritized the 
following six biological agents and diseases as concerns in 
civilian settings: smallpox, anthrax, pneumonic plague, 
tularemia, botulinum toxin and viral hemorrhagic fevers. 
Because anthrax, plague and tularemia can be treated with 
currently available antibiotics, purchasing these products for 
the NPS formulary was given top priority for fiscal year 1999. 
Presently there is no additional smallpox vaccine or botulism 
antitoxin to procure. However, efforts to rectify this 
situation are a high priority for the Department and our 
partners in the Department of Defense.
    The working groups also identified chemical agents that 
could be used in a terrorist incident, including nerve agents 
such as sarin, and respiratory irritants and vesicants such as 
sulfur mustard and cyanide. Obtaining antidotes for these 
agents was also given high priority in fiscal year 1999.
    The NPS has two basic components. One consists of four pre-
assembled sets of supplies which are called ``12-hour push 
packages,'' ready for quick delivery and use in the field. And 
in response to your questions to the previous panel, we've 
brought pictures so that you can see what one of these actually 
looks like in the warehouse. There are also Vendor Managed 
Inventory packages [VMI], which will be activated if the 
incident requires a continued response. The VMI packages will 
be shipped to arrive at 24 and 36 hours after activation and 
will comprise material that would be delivered from one or more 
pharmaceutical manufacturers or prime vendors with whom we will 
contract to hold inventory that can be released at the time of 
an emergency.
    The decision to deploy the stockpile will be based on the 
best epidemiologic, laboratory and public health information 
regarding the nature of the threat. This is one of the reasons 
the development of the public infrastructure for bioterrorism 
response is so important. When a biological or chemical 
terrorist incident is suspected, CDC will enhance surveillance 
activities, laboratory confirmation procedures, notification of 
the Office of Emergency Preparedness and appropriate Federal 
agencies and provide pertinent technical support. With regard 
to the stockpile, the Director of CDC, in consultation with the 
Assistant Secretary for Health, will direct its mobilization. 
If CDC stockpile components are needed, 12-hour push packages 
will be rapidly deployed. CDC will then begin the process of 
tailoring subsequent deliveries of stockpile components from 
the Vendor Managed Inventory as indicated by the specific 
biological or chemical threat.
    In regard to the GAO-identified weaknesses in internal 
controls and management structure, there are three aspects of 
our NPS which are critical in addressing these concerns. First, 
there is direct coordination and management by CDC staff. CDC 
is an active partner in all aspects of the NPS. This includes 
providing guidance, oversight, operational control, and 
evaluation. After an intensive systematic deliberative process, 
which included valuable input and support from GAO and others, 
CDC chose the VA as the acquisition partner to work with on the 
NPS and feels that carefully planned management steps and close 
oversight will prevent future problems such as those identified 
by GAO.
    The second point is that there will be continuous 
monitoring, quality assurance, and evaluation. We've taken 
steps to assure that the memorandum of agreement between CDC 
and the VA is explicit, comprehensive and precise. And CDC's 
tradition of oversight, technical assistance, and onsite 
presence is an integral part of the NPS. Through its real-time 
access to the VA's electronic inventory record system, CDC will 
monitor the purchase of stockpile pharmaceuticals and medical 
equipment, rotation of stock, and disposal of items for which 
there is not comparable civilian use.
    CDC will physically verify the records of stock maintenance 
and transactions as part of its periodic unannounced site 
visits. Since the memorandum of agreement was signed CDC has 
already made multiple visits to inspect the 12-hour push 
packages, including two visits which were unannounced. Security 
measures will also be in place to safeguard NPS pharmaceutical 
supplies and equipment.
    The third aspect of our management plan is partnerships, 
collaboration and communication. The responsibility for 
managing the NPS requires that we partner with OEP, other 
Federal agencies and State and local governments. CDC is 
planning training to fully prepare our State and local partners 
and will provide technical assistance to State and local 
governments that wish to purchase pharmaceuticals, chemical 
antidotes, other medical supplies and medical equipment to 
augment their current emergency response capabilities.
    In summary, we believe that these components of the NPS 
will address the management concerns identified by GAO and 
assure provision of medical supplies, pharmaceuticals and other 
stockpiled equipment in a timely fashion.
    This concludes my comments and we, too, will be happy to 
answer any questions.
    Mr. Shays. Thank you. This is very interesting and it will 
be interesting for me to see how all of you interface with each 
    [The prepared statement of Dr. Ostroff follows:]

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    Mr. Shays. Colonel, it is so wonderful to have you here and 
you have the floor.
    Colonel Hollifield. Thank you, sir. I'm very pleased to be 
here. I have the opportunity today to address the management of 
medical supplies within the Chemical/Biological Incident 
Response Force. With me today is Commander Warren R. Dalton. 
Commander Dalton is a U.S. Navy Medical Officer and board-
certified emergency medical physician and serves as my Senior 
Medical Officer.
    Commander Dalton dealt directly with the GAO 
representatives who visited our command and is here to provide 
any additional insight you may desire relative to that visit or 
the management of our medical supplies.
    As you're aware, sir, during the summer of 1999 the GAO 
undertook a study to evaluate the readiness of our Nation's 
``stockpile'' of chemical and biological medicines designed to 
treat civilian casualties. As originally envisioned no 
Department of Defense Activities were projected to be a part of 
that study. However, the GAO did visit our command at CBIRF, 
Camp Lejeune, and had some valuable insight for us.
    Although CBIRF maintains medical supplies as part of 
routine inventory, we've never considered those supplies to 
fall into the category of being a ``stockpile,'' basically 
because we don't view those supplies as being held for further 
distribution. We view that our medical supplies are held for 
internal use, primarily for the treatment of the Marines and 
sailors assigned to the command; that is to say, sir, that the 
medical supplies that are stocked are not stocked for 
distribution to civilian care providers or for routinely 
treating civilian casualties, except where emergency lifesaving 
care is required.
    Accordingly, we view the supplies that we hold as being 
held by the end user as opposed to distributor. Nonetheless, 
where the GAO recommended we strengthen our internal control 
measures, we think that we've taken appropriate action to 
comply with the guidelines set forth in OMB Circular A-123.
    First they asked that we conduct risk assessments and look 
at our program activities and organize those to identify and 
mitigate those risks.
    I conducted a risk assessment in December 1999, and as part 
of this risk assessment I asked for a formal independent 
external physical security evaluation. We just received the 
results of that evaluation late in February of this past year 
and we're taking appropriate action to implement the measures 
contained therein.
    Specifically, we'll be looking at improving our access 
control under that portion of the warehouse where medical 
supplies are stored, setting up positive lock and key control 
    In addition, we will be providing crime prevention and loss 
awareness training for all personnel performing supply related 
    Additionally, as part of this risk assessment I asked my 
Supply Officer to conduct a total review of the medical supply 
operating procedures in effect at my command. His charter was 
to ensure that the procedures that we have in place are 
consistent with governing Marine Corps directives and the 
policy as set forth in the Marine Corps Consumer Level Supply 
Policy Manual, Marine Corps Order P4400.150E. Since the 
Department of Defense is not formally a participant in the 
National Pharmaceutical Stockpile Program, it is this directive 
that we use to manage our medical supply operations.
    Second, the GAO recommended that CBIRF arrange for periodic 
independent evaluations. The Marine Corps Field Supply 
Maintenance Analysis Office, an independent agency that 
operates outside of my influence and outside of my command, 
routinely conducts external reviews of all Marine Corps supply 
related accounts.
    Following the GAO's visit I coordinated and arranged with 
my higher headquarters for an independent evaluation by an 
external agency having specific knowledge of Navy medical 
logistic procedures. The Medical Logistics Company of the 
Second Force Service Support Group was tasked to conduct a 
review of our operating procedures, and that review was just 
completed approximately 1 week ago.
    Pending the written results of that review, when received, 
we will take appropriate action to implement any findings and 
recommendations that they make.
    Further, I directed that my Supply Officer conduct periodic 
spot checks of our inventory and have arranged for a quarterly 
reconciliation of the medical supply account. I've asked him to 
ensure that the medical supply account receive special emphasis 
during all future supply related inspections and audits.
    Third, the GAO recommended that we implement a tracking 
system that retains complete documentation for all supplies 
that were either ordered, received, or destroyed.
    We have recently evaluated our existing data base and to be 
quite honest, sir, there's room for improvement. And we're 
working to modify that data base to improve the fields of data 
this captures so that we will have better tracking and 
    Additionally, in light of the fact that our medical supply 
account is maintained on a daily basis by Navy medical 
personnel as opposed to supply personnel, my Supply Officer has 
been directed to ensure that the medical personnel tasked with 
the daily operation receive adequate training in supply related 
    Finally, the GAO recommended that we rotate supplies 
properly. It is my intent to publish specific written policy 
that addresses the overall management of our supply medical 
account when we receive the results of the Medical Logistics 
Company's independent evaluation. This policy will address not 
only the proper rotation of medical supplies, but will further 
ensure that we are being consistent with the existing Marine 
Corps and Department of Navy regulations.
    I believe that all these actions will significantly improve 
the internal control over my medical supply account.
    Before I conclude, sir, I would like to address a few 
additional issues raised in the GAO Report.
    The GAO noted that CBIRF did not have an authorized 
allowance list of supplies that it was authorized to maintain.
    Mr. Shays. If you talk a little slower--I think you're well 
trained to get it all done, but I'm going to try to listen 
carefully here.
    Colonel Hollifield. Yes, sir.
    The medical supplies that I maintain, sir, are those that 
my staff and I feel were necessary to be able to execute our 
mission. The supplies were quite typical in terms of types and 
quantities to the types of medical items that would be held by 
most any military medical organization.
    Within the Department of the Navy the types and quantities 
of supplies and equipment that a unit is authorized to hold is 
set forth in a standardized, authorized medical allowance list, 
commonly referred to as an AMAL. An AMAL exists for every type 
of military organization, however, none have yet been developed 
for chemical or biological response units such as CBIRF. To 
this end we have taken the lead in trying to identify what we 
feel is an appropriate stockage level of medical equipment and 
supplies that we should retain to be mission-capable. This has 
been submitted to our Marine Corps Systems Command at Quantico, 
VA, which is currently working to standardize an allowance 
    In the interim it is my intent to publish a standardized 
allowance list as a CO's allowance list until such time as an 
AMAL is fielded. This allowance list will serve as the baseline 
for our inventory.
    In addition to those general medical care items that we 
hold, sir, my unit stocks three medications specifically 
designed for the treatment of chemical or biological 
casualties. These medications, 2 Pam Chloride, atropine, and 
diazepam, are held first and foremost as part of my own force 
protection program. Since CBIRF Marines and sailors risk 
potential exposure when sent to respond to a chemical or 
biological incident, this is a measure that any prudent 
commander would take. However, I also recognize that during any 
response there is a potential that we may have to provide care 
for either local first responders or civilian casualties. And 
while the medications are not stocked or held expressly for 
this purpose, they could be so used in emergency situations.
    However, in such circumstances it has never been envisioned 
these supplies would be turned over to local medical care 
providers, but rather that they would be administered by my 
medical personnel only when lives were genuinely at risk and 
where no reasonable alternative exists.
    Sir, I'm here today not to offer any excuses, but to 
provide an explanation of the actions that we've taken since 
GAO visited. GAO provided a very important aspect for us 
because they brought a viewpoint that was beyond the pure 
military bounds and they've caused us to take an internal look 
at our operations and look for methods and means within our 
resources and capabilities to improve our process.
    We do feel, however, that in the characterization of 
CBIRF's medical supply as a kind of ``stockpile,'' the GAO does 
not truely provide an accurate depiction of the holdings that 
we possess. We're keenly aware that we are a unique unit with a 
very important mission, and accordingly my staff and I have 
made every effort to implement the recommendations within our 
power and capabilities.
    Mr. Chairman, we stand ready to answer any questions that 
you may have today, just as your Marines and sailors within the 
unit stand ready to respond when this Nation calls. Thank you.
    Mr. Shays. Thank you, Colonel.
    [The prepared statement of Colonel Hollifield follows:]

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    Mr. Shays. This is very helpful to have all of you here and 
it will be interesting for me, one, to see how you interface 
and, two, to understand a few things that this raises really 
beyond the GAO report that will help us in our continual 
oversight. And I'll say from the outset that our view is that 
sometimes GAO is always easy to come in and find things wrong 
and it's always easy for Congress to come in condemn and say 
why is it wrong. But if you see what GAO has suggested as 
making sense, and agree with the criticisms, see that their 
recommendations make sense and that people are implementing 
those recommendations, we're happy to get on to the next issue 
and not throw stones.
    But there are some things I just don't quite understand, so 
there are going to be some general questions at first.
    First, Colonel, I understand the Marines are usually the 
first in, they always want to be the first in, but the Army 
feels sometimes they're going to be the first in in some 
instances. But bottom line, you're usually first in and so I'm 
making an assumption that that's why you have a stockpile. But 
I don't understand, one, if you're the only branch that has the 
stockpile--if you have any knowledge of this I'd like you to 
share it with me, but I can ask others--one, why do you have 
this stockpile? And two, if you're the only branch to have it, 
why you and not the other branches?
    Colonel Hollifield. Mr. Chairman, I would default back to 
saying that we've never considered what we hold as stockpile. 
If you look at the quantities of items that we hold and the 
types of items that we have in our inventory, they're very 
typical to what you would find in almost any operational 
military command. So accordingly, if the quantities and items 
that we hold are truly a stockpile, in essence almost every 
military organization holds a stockpile.
    We are not a part of the formal cache program that you were 
briefed on earlier. However, we do stock a small quantity of 
38,000 medical items and hold approximately 7,000 items that 
would be specifically designed for first response to a chemical 
or biological event. The remainder of the items that we stock 
are primarily general medical care items. So we don't view this 
as a stockpile. We really view it at a response stock. 
Primarily we hold these supplies for our own individual use. 
We've never envisioned that we would distribute those to anyone 
outside of our organization or outside military control.
    Mr. Shays. So it basically is your testimony that you 
suspect the other branches are doing the same thing you're 
    Colonel Hollifield. Sir, I couldn't speculate on whether 
they're doing that. I know that we have been a test bed, in 
essence, to develop techniques and procedures and I'm sure they 
face the same challenge as we have in terms of an authorized 
list of what they should have.
    Mr. Shays. Is this a directive from the Secretary of 
Defense that you do this? In other words, if I'm asking a 
question you may not know, I understand, because it's not 
really the primary focus of this hearing, it's just a logical 
question to ask for our understanding this whole process.
    Colonel Hollifield. There is no basis, sir, that tells me 
what I'm authorized to hold. The items that we hold now are 
those that we held when the unit was first activated in 1996. 
Since that time we've developed to come up with an 
understanding of what we feel is appropriate to have in order 
to be able to effectively execute a response.
    Mr. Shays. I'll come back to this.
    My understanding--I'll ask anyone here to correct me--we in 
Congress asked that the VA stockpile, HHS and VA--well, 
actually, maybe HHS and then they contracted with VA, so I'll 
have that clarified--but we had four sites. But we also said 
that CDC would have a stockpile as well. I get the sense that 
it really--I mean, the way I was beginning to see it, I was 
beginning to think the Marines would be first, maybe, they 
might be the first to a particular site, but this is probably 
just military.
    Colonel Hollifield. The event that would get us to the site 
would be a request from another Federal agency, such as FEMA.
    Mr. Shays. My sense, though, is that the primary sites are 
the four for the earliest, that those are primary sites for the 
fastest call, and then my sense is the CDC sites will be larger 
and then will respond on a more long-term basis. Dr. Ostroff, 
am I right? Kind of give me a picture here. Give me the 
sequence of how this works.
    Dr. Ostroff. Right. I think I'll let Dr. Knouss also 
    I think one of the things that is important to point out is 
that there are different types of events which are possible. 
And we look at chemical events as being quite different from 
biological events. When chemical events occur, the timeframe 
between when the release occurs and when people start getting 
sick is really quite brief, whereas with most of the biological 
agents the time interval between the exposure and when people 
will become ill for some of these agents can be days to weeks. 
And so the events will play themselves out quite differently. 
And how these events get recognized will clearly be quite 
different as well.
    The stockpiles developed by OEP--and I think I'll leave 
that to Dr. Knouss to further elaborate--are largely around the 
deployment of teams that will be responding to chemical events. 
We have developed our stockpile to be able to supplement in 
larger numbers those materials if the chemical event is larger 
that can be handled with the stockpiles developed by OEP. But 
ours is principally developed around being able to respond to 
biological events.
    Dr. Knouss. Support function No. 8 of the Federal Response 
Plan under FEMA deals with the consequence management 
responsible agency if there should be one of these events in 
the United States. Our part of that is that the health and 
medical response and the four national response teams that we 
have put together are meant to be able to deploy to an incident 
site or to be prepositioned out at the site in which there is a 
threat, a known threat, a significant threat, in order to deal 
with the most immediate consequences. So most of the cache that 
we carry with us is meant to deal with the immediate 
consequences of a chemical exposure, where time is absolutely 
of the essence to get to the scene and to be able to offer 
antidotes. And frankly, by the time we reach the scene a lot of 
our supplies are meant to be resupply of what we are trying to 
already preposition through metropolitan medical response 
systems in the major metropolitan areas themselves.
    And then we would come in with our stockpiles and our 
    Mr. Shays. Those being----
    Dr. Knouss. OEP, HHS.
    Mr. Shays. The four VA stockpiles?
    Dr. Knouss. Yes. They would accompany our teams in and we 
have designed those caches so that they can be split into five 
pieces, readily. One piece could go to an incident and four 
other pieces could go to resupply up to four hospital 
facilities. And once we arrive at a scene we could immediately 
separate those caches into those five pieces, or we could 
manage it a little bit differently. We could send two to one 
place or three pieces to another, but they are manageable 
pieces of an overall cache and designed to be tactically 
responsive to whatever the situation might be.
    If we need more to treat 5,000 people we can bring in a 
second cache from another location to reinforce that. But 
frankly, at some point the limiting factor becomes the number 
of professionals that are available to be able to administer 
the caches in a pharmaceutical--on a rapid basis.
    Mr. Shays. So technically you think you have basically the 
ability to respond to 20,000?
    Dr. Knouss. Exactly. At the maximum. Now, that response 
needs to occur in hours, so time is really of the essence. The 
CDC stockpile is meant to deal with reinforcing some of that 
chemical supply if we need to for very serious exposures. But 
is primarily geared to meeting the very large pharmaceutical 
requirements where up to millions of people might be exposed to 
a biological attack. And so therefore the cache that you see 
there illustrated as part of CDC's cache is far larger than the 
size of the cache that you will see--the number of boxes that 
you would see at one of our warehouses.
    Mr. Shays. Dr. Ostroff, how many sites are you going to be 
    Dr. Ostroff. The actual number of sites is still under 
discussion. There will be four sites for the 12-hour push 
    Mr. Shays. Four different sites than with the VA?
    Dr. Ostroff. No, one of the sites is the VA warehouse in 
Hines, IL. The other three have yet to be prepositioned. There 
are still discussions about how to most efficiently locate 
    Mr. Shays. So the one in Hines has basically yours and 
HHS's. I just want to make sure I'm not--I want to be clear 
here. We have four VA sites. CDC has mandated to establish a 
bigger cache.
    Dr. Ostroff. Right.
    Mr. Shays. Are you also using some of the VA sites as well 
as other sites?
    Dr. Ostroff. Well, it's conceivable. For instance, the 
Vendor Managed Inventory, which is the longer-term supply, will 
be a virtual inventory through either the manufacturers 
themselves or through what's referred to as Prime Vendor, 
essentially a middleman who would be able to provide a variety 
of different agents. And that inventory may be in a number of 
different locations. We are seeking to try to minimize the 
number of different locations.
    Mr. Shays. I'm going to go to Mr. Tierney. But just let me 
ask this question then I'll be coming back. Is it conceivable 
that we would just pay manufacturers to have an excess supply? 
I would think one of the advantages is that then they could 
then keep rotating it out so it never becomes useless, and they 
can still get into the marketplace potentially.
    Mr. Ostroff. That's correct. You're absolutely correct and 
that is far and away the most efficient way to have the vendor 
    Mr. Shays. And I'm going to come back and ask the VA and 
HHS if you let--the shelf life runs out, but do you try to, 
maybe if you have weeks or a month left or something, try to 
get them out so they can be used somewhere where there's a 
need. I know for instance that Ameri-Cares, based in my 
community of Canaan, has given out billions of dollars worth of 
drugs around the world. And what they do is, they get close to 
terminated vaccines and so on and then use them up within the 
time period. So I'll ask VA if they just throw away these 
pharmaceuticals or whether we're still able to utilize them.
    Mr. Tierney said I could just jump in and ask you that. Is 
this a little beyond the point now? I'm not trying to rush you 
because I first want to make sure you manage the 
pharmaceuticals well, but this is when we get beyond the good 
management, and I'm just hoping that we're not wasting the 
    Dr. Ogden. It's possible to return some of the items. Some 
of the items we can't return because that's part of the 
agreement between, let's say, the manufacturer and the 
Department of Defense for those items that we specifically buy 
for the Department of Defense, but some items we can return and 
we have returned and do have credits received for those 
outdated products.
    Mr. Shays. We can get into this later. Thank you.
    Mr. Tierney. Thank you, Mr. Chairman. I really don't have a 
lot of questions in here. I think that you've all addressed the 
GAO's report in a fine manner.
    I do have one question for the Colonel, to try to get an 
understanding. Do you have any knowledge about whether or not 
the other branches have units similar to yours?
    Colonel Hollifield. Mr. Tierney, I don't have any knowledge 
of a unit exactly like mine. I know that they are developing 
the Weapons of Mass Destruction Civil Support Teams within the 
Army National Guard. The parameters of that program I'm not 
familiar with in specific detail.
    Mr. Tierney. Thank you. Other than that I think I 
understand pretty much what's going on and what's transpired 
here. I do want to make the comment without at all seeming 
patronizing or anything that I think it was refreshing to hear 
people acknowledge the GAO's value in the report that they did 
and address it. And I think everybody reserved whatever 
questions and issues they wanted to raise on that, but I think 
it's a very high level of professionalism and response and I 
just want to commend you all for doing that and it's impressive 
to us and I think it's going to benefit the country. And thank 
you very much.
    Mr. Shays. I have just one question. I wanted to read the 
testimony that I had on the Marines.
    Colonel, I want you to put this in some perspective because 
on the surface it doesn't make me feel comfortable. I think 
there is an answer for it so you say, ``While I do not think 
that CBIRF should be held to a higher supply management 
standard then those required of any other military unit, I 
recognize that the unique nature of our unit and mission make 
consideration of GAO's observations prudent.''
    I've always thought that the military actually has a higher 
standard then the private sector and the implication there is 
not comforting.
    Colonel Hollifield. Sir, we have a set procedure for the 
management of our supply account as set forth in our Marine 
Corps Consumer Level Supply Policy Manual. As it was pointed 
out when the GAO visited, some of the systems that we use, our 
data bases for example, do not capture all of the exact data 
fields that would be necessary to adequately ensure that we're 
tracking and properly getting the visibility to the degree that 
was lacking when GAO visited. Those data bases that we use are 
data base systems that are prescribed for us. Certainly, 
however, there's nothing preventing us from looking at or 
modifying those and adding additional fields so that we do 
capture stuff such as consumption data, rotation dates of 
supplies, shelf life expiration, et cetera. Those right now are 
not captured with the existing data base system.
    Mr. Shays. Those are not what? I'm sorry.
    Colonel Hollifield. Those are not captured at this time by 
the existing data base. So in addition the data base captures 
only the very basic information in terms of the type of item, 
its stock number, et cetera. But we have to go in and manually 
track shelf life expiration. So when we say that we don't feel 
that we should be held to a higher supply management standard, 
my intent there is to say, we think we have pretty good 
guidelines already in existence with our existing policy. But 
we do need to go back and make some minor modifications to 
enhance our control mechanisms.
    Mr. Shays. I'm trying to understand why when GAO looked at 
your facility, they were basically directed by DOD Health 
Affairs to look at your facility as a stockpile facility, and 
so it's--we're going to try to understand the Marines, not 
Army, why Marines. In one sense maybe it's a compliment to you 
all that you all may be doing something a little different than 
the other branches. But let me just state what I think I'm 
hearing and then I want to be corrected because we're almost 
done here.
    The bottom line, the first responders are going to actually 
be the local communities themselves, that's going to happen. 
They're going to have some supplies. And the next response is 
going to be--and I'm not sure how the logistics work--but we're 
going to get supplies from one or more of our four locations. 
Is that going to be done by the military, is it going to be 
done commercially, is it going to be done in a combination? And 
is HHS basically, is the VA just responsible for the stockpile 
once, but that's it and then HHS takes over? I've asked a few 
    Dr. Knouss. To get back to our system, the National 
Disaster Medical System is made up of four components. We have 
HHS's components which are mainly the teams that are going out 
and providing care at the scene of a disaster. Our partners in 
the Department of Veterans Affairs also assist us with that, 
but also are responsible for operating a part of the system 
that would be used to hospitalize people that need care in 
which the local communities resources have been overwhelmed and 
    Mr. Shays. DOD using the VA facilities locally?
    Dr. Knouss. Well, no, actually it's a system of 100,000 
hospital beds in civilian hospitals that we have organized 
under Federal Coordinating Centers operated by the VA and by 
the three branches of DOD. And that's a partnership arrangement 
where we have mainly to deal with two problems, military 
    Mr. Shays. The ``we''--sometimes I hear ``we'', and your 
``we'' might be different then my ``we.''
    Dr. Knouss. All right. ``We'' as the Federal Government. We 
and HHS.
    Mr. Shays. Who is the ``we'' that makes sure this happens, 
is it HHS?
    Dr. Knouss. The partnership is the Department of Health and 
Human Services; the Assistant Secretary for Health chairs the 
group that manages this system. The Under Secretary for Health 
of the Department of Veterans Affairs, the Assistant Secretary 
of Defense for Health Affairs at DOD and the Director of FEMA. 
That partnership operates the system. DOD is responsible for 
transportation of patients in that system. And the Department 
of Veterans Affairs and DOD are responsible for the maintenance 
of the hospital beds in that civilian contingency bed system, 
with 2,000 hospitals around the country participating.
    Mr. Shays. How do the pharmaceuticals get to the sites?
    Dr. Knouss. The way we would do that is under the Federal 
Response Plan. The first step is for FEMA as responsible for 
transportation to move our team to the disaster site and they 
would depend on DOD resources. If we're not able to use that 
system, our backup is a direct call to the Director of Military 
Support in the Pentagon. And our third backup is to piggyback 
onto the civilian contracts that CDC will have for the larger 
stockpile movement.
    So we have three steps that we can use to back up movement 
of our teams and smaller supplies.
    Mr. Shays. I've learned just in my own small office if I 
have two people responsible, nobody is responsible.
    Dr. Knouss. We are.
    Mr. Shays. So, I always have one person ultimately 
    Dr. Knouss. Our office.
    Dr. Murphy. Chairman Shays, we would get a call from OEP 
that a disaster has been declared. They need the cache. That 
call would go out; VA would go to the cache, transport it and 
deliver it to the team, the NMRT, and they would take it to the 
disaster site. That's how the pharmaceuticals would be 
transported and that would be VA's part of the role.
    Mr. Shays. I think I'm pretty clear about that. I'm pretty 
clear that the VA is basically taking the recommendations of 
the GAO and implementing them. You have an objection to one 
area dealing with what you had in supply and not. So you take 
issue with one area of their report, correct?
    It's my understanding that basically you, Dr. Ostroff, are 
still deciding how much is going to be held by the 
manufacturer, what sites to have and so on. But I'm sure the 
GAO report is helpful for you to just make sure.
    And Colonel, the sense I'm getting from you is that you 
view your stockpile differently. I just want to be certain so 
we don't have to deal with it later. Is it possible that DOD 
views your stockpile as unique and that you aren't to service 
the needs the other three branches?
    Colonel Hollifield. Sir, I have no knowledge if that's the 
view that they hold.
    Mr. Shays. Well, then I don't want to imply that it is. I 
just want to make sure I asked the question.
    Colonel Hollifield. I know that in your previous analogy, 
sir, the two steps, we count that in between the incident and 
when the 12-hour push is going to show up, we're there not 
primarily for that purpose, but we certainly have some 
medications with us, that in the event that there is a time gap 
to be bridged between the time that the first responders act 
and may not have those medical supplies they need, and OEP and 
CDC can push from their stockpiles, we can bridge that gap on a 
very moderate basis.
    Mr. Shays. Let me say this is the first hearing that's been 
helpful for us to get this knowledge and it's also to make you 
aware that we are interested and will be watching, in part 
because I think there's a temptation to think you may never be 
utilized, and yet you may. But we're also going to just make 
sure that you're living up to all your goals and objectives. 
And then we're also going to be looking to see if the system 
can be improved and if we in Congress can play a part.
    Is there any comment that any of you want to make before we 
adjourn this hearing?
    Mr. Ogden, you look like you want to say something.
    Mr. Ogden. No, thanks. Thank you very much, Mr. Chairman. 
Just thank you.
    Mr. Shays. Well it's wonderful to have you here. Thank you 
for your good work.
    The hearing is adjourned.
    [Whereupon, at 11:35 a.m., the subcommittee was adjourned, 
to reconvene at the call of the Chair.]