Chemical Weapons: Better Management Tools Needed to Guide DOD's  
Stockpile Destruction Program (30-OCT-03, GAO-04-221T). 	 
                                                                 
Since its inception in 1985,the Chemical Demilitarization	 
(Chem-Demil) Program has been charged with destroying the	 
nation's large chemical weapons stockpile. After years of	 
planning and building new facilities, the program started	 
destroying the stockpile in 1990. As of October 2003, the program
had destroyed 26 percent of the 31,500-ton agent stockpile, and  
its total estimated cost to destroy the entire stockpile is more 
than $25 billion. This testimony summarizes GAO's September 2003 
report and addresses the following issues: (1) the status of	 
schedule milestones and cost estimates, (2) the impact of the	 
current schedule on the Chemical Weapons Convention (CWC)	 
deadlines, (3) the challenges associated with managing the	 
program, and (4) the status of the Chemical Stockpile Emergency  
Preparedness Program (CSEPP).					 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-04-221T					        
    ACCNO:   A08790						        
  TITLE:     Chemical Weapons: Better Management Tools Needed to Guide
DOD's Stockpile Destruction Program				 
     DATE:   10/30/2003 
  SUBJECT:   Emergency preparedness				 
	     Weapons						 
	     Chemical and biological agents			 
	     Schedule slippages 				 
	     Cost analysis					 
	     Program management 				 
	     Performance measures				 
	     Intergovernmental relations			 
	     DOD Chemical Demilitarization Program		 
	     Chemical Weapons Convention			 
	     DOD Chemical Stockpile Emergency			 
	     Preparedness Program				 
                                                                 

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GAO-04-221T

United States General Accounting Office

GAO Testimony

Before the Subcommittee on Terrorism, Unconventional Threats and
Capabilities, Committee on Armed Services, House of Representatives

For Release on Delivery Expected at 9 a.m. EST

Thursday, October 30, 2003 CHEMICAL WEAPONS

  Better Management Tools Needed to Guide DOD's Stockpile Destruction Program

Statement of Henry L. Hinton, Jr., Managing Director, Defense Capabilities and
Management

GAO-04-221T

Highlights of GAO-04-221T, a testimony to the Subcommittee on Terrorism,
Unconventional Threats and Capabilities, Committee on Armed Services,
House of Representatives

Since its inception in 1985, the Chemical Demilitarization (Chem-Demil)
Program has been charged with destroying the nation's large chemical
weapons stockpile. After years of planning and building new facilities,
the program started destroying the stockpile in 1990. As of October 2003,
the program had destroyed 26 percent of the 31,500-ton agent stockpile,
and its total estimated cost to destroy the entire stockpile is more than
$25 billion.

This testimony summarizes GAO's September 2003 report and addresses the
following issues: (1) the status of schedule milestones and cost
estimates, (2) the impact of the current schedule on the Chemical Weapons
Convention (CWC) deadlines, (3) the challenges associated with managing
the program, and (4) the status of the Chemical Stockpile Emergency
Preparedness Program (CSEPP).

GAO recommended in its September 2003 report that the Department of
Defense (DOD) and the Army develop an overall strategy and implementation
plan for the program and implement a risk management approach, and DOD
concurred.

www.gao.gov/cgi-bin/getrpt?GAO-04-221T.

To view the full product, including the scope and methodology, click on
the link above. For more information, contact Henry L. Hinton, Jr. at
(202) 512-4300 or [email protected].

October 30, 2003

CHEMICAL WEAPONS

Better Strategic and Risk Management Tools Needed to Guide DOD's Stockpile
Destruction Program

The Chem-Demil Program faces schedule delays and higher costs, but it has
improved emergency preparedness in communities near the sites. In 2001,
the Chem-Demil Program extended its schedule milestones and increased its
cost estimates from $15 billion to about $24 billion. Since then nearly
all sites have experienced delays, stemming from problems such as: plant
safety issues, environmental requirements, approving emergency
preparedness plans, and funding shortfalls. The program needs a risk
management plan to mitigate problems affecting program schedules, costs,
and safety. Program officials say the delays have raised the cost
estimates by an additional $1.4 billion, to more than $25 billion as of
September 2003. Based on current schedule slippages, GAO believes that
costs will grow higher and further delays will occur. (See figure.)

Because of schedule delays, the United States will not meet CWC's April
2004 deadline to destroy 45 percent of the stockpile and it risks not
meeting the original 2007 deadline to complete destruction of the entire
stockpile. Unless the program fixes the problems causing delays, the
United States also risks not meeting CWC's deadline of 2012, if extended.

The program has suffered from several long-standing management and
organizational issues. The lack of sustained leadership has undercut
decision-making authority and obscured accountability. The program's
complex structure, with multiple lines of authority, has left roles and
responsibilities unclear. It does not have an overarching, comprehensive
strategy to guide and integrate its activities and monitor its
performance.

The Army and the Federal Emergency Management Agency have helped state and
local communities become better prepared to respond to chemical
emergencies. Despite these gains, CSEPP costs are rising because some
states have expanded their preparedness requests beyond the approved
budgets. These requests amount to $88 million for fiscal years 2004 and
2005.

Comparison of 1998, 2001, and 2003 Cumulative Program Cost Estimates

Mr. Chairman and Members of the Subcommittee:

I appreciate the opportunity to participate in this hearing today on the
Department of Defense's (DOD) Chemical Demilitarization (Chem-Demil)
Program. Since its inception in 1985, this program has been charged with
destroying the nation's large chemical weapons stockpile, second only to
Russia's in terms of its size. After years of planning and building new
facilities, the program started destroying the stockpile in 1990.

As you requested, my statement focuses on the following issues: (1) the
status of schedule milestones and costs at the sites, (2) the impact that
the current schedule may have on the Chemical Weapons Convention1 (CWC)
deadlines, (3) the challenges associated with managing the program, and
(4) an update on the status of the Chemical Stockpile Emergency
Preparedness Program (CSEPP).

As of October 2003, the Chem-Demil Program had destroyed an estimated
8,210 tons (26 percent) of the total 31,500 tons of the original agent
stockpile stored at nine sites in the United States and the Pacific Ocean
at Johnston Atoll. Of the four sites that have begun agent destruction
operations, Johnston Atoll has destroyed all of its stockpile; Tooele,
Utah, has reduced its stockpile by about 44 percent; Anniston, Alabama,
has destroyed about 2 percent of its stockpile; and Aberdeen, Maryland,
has eliminated over 3 percent of its stockpile. Current schedule estimates
show that the Army will not complete destruction of the entire stockpile
until after the year 2012.

Since 1990, we have issued more than 25 reports on the Chem-Demil Program.
Nearly half of the reviews have raised questions about the program's
growing costs, its inability to meet its schedule milestones, and its
management weaknesses.

1 In April 1997, the United States Senate ratified the Convention on the
Prohibition of the Development, Production, Stockpiling and Use of
Chemical Weapons and on Their Destruction, commonly known as the Chemical
Weapons Convention. S. Res. 75, April 24, 1997.

My testimony today draws heavily from our most recent report, which was
issued in September 2003.2 In summary, we found the following:

o  	While the Chem-Demil Program has revised its schedule milestones and
increased its cost estimates several times, with the latest revision in
2001, the program still cannot meet them. According to current Army
schedules for destruction, five sites will miss their 2001 schedule
milestones, less than 2 years after they were reset. The other four sites
have not yet missed schedule milestones, but they too have experienced
delays. Most of the substantial delays have stemmed from problems that DOD
and the Army have been unable to anticipate or influence. These include
plant safety issues, difficulties in meeting environmental permitting
requirements, public concerns about emergency preparedness plans, and
funding shortfalls. Neither DOD nor the Army has adopted a comprehensive
risk management approach that could help mitigate potential problems that
affect program schedules, costs, and safety by anticipating problems and
developing mitigation plans. Army officials told us they are now
developing such an approach. According to program officials, the delays
that have occurred since the 2001 schedule revisions, along with the
resolution of emergency preparedness issues, have raised the program's
cost estimates by $1.4 billion, to a current total of more than $25
billion. We expect this amount will grow substantially before the
destruction of the stockpile is complete if these delays continue.

o  	Because of schedule delays, the United States will not meet CWC's
April 2004 deadline to destroy 45 percent of the chemical stockpile. The
United States recently asked the governing body of the convention for an
extension beyond the April 2004 deadline. If the delays that the program
has experienced continue, the United States also risks not meeting the
2007 deadline to destroy 100 percent of the stockpile. Unless the
Chem-Demil Program is able to fix the problems that have caused these
delays, the United States also risks not meeting CWC's deadline, if
extended to 2012, to destroy the entire stockpile. The CWC allows
extensions of up to 5 years to the 2007 deadline.

o  	Despite recent efforts to improve the management and streamline the
organization of the Chem-Demil Program, the program has suffered from
several long-standing and unresolved leadership, organizational, and
strategic planning issues. The program has lacked sustained leadership at

2 U.S. General Accounting Office, Chemical Weapons: Sustained Leadership,
Along with Key Strategic Management Tools, Is Needed to Guide DOD's
Destruction Program, GAO-03-1031 (Washington, D.C.: Sept. 5, 2003).

both the upper levels of oversight and at the program-manager level, which
undercuts decision-making authority and obscures accountability.3 In
addition, the program's complex management structure, with multiple lines
of authority within the Army and the separation of program components
among the Army, DOD, and the Federal Emergency Management Agency (FEMA),
has left roles and responsibilities for the different parts of the program
unclear. FEMA manages the emergency preparedness program (CSEPP) for
communities near the storage sites. Finally, the absence of an
overarching, comprehensive strategy has resulted in a program without a
clear road map to closely guide and integrate all of its activities and
monitor its performance.

o  	Since our 2001 report,4 the Army and FEMA have helped state and local
communities become better prepared to respond to chemical emergencies.
Based on the states' self-assessments and FEMA's reviews, all of the
states with nearby chemical storage sites are considered close to being
fully prepared for emergency issues. However, despite these
accomplishments, CSEPP costs continue to rise because some state and local
communities have expanded their emergency preparedness requests beyond
their approved budgets, exceeding them by $88 million for fiscal years
2004 and 2005, especially as they move closer to agent operations phase.
FEMA and the Army have implemented a number of recommendations we made to
improve technical assistance and guidance, training, and compliance
measures to assess preparedness.

  Most Sites Will Miss Schedule Milestones due to Program's Inability to
  Anticipate and Influence Issues

Despite several revisions to schedule milestones since the program's
inception, the Chem-Demil Program still is unable to meet these milestones
because of unanticipated delays. Most incineration sites have missed
important milestones established in 2001. Delays at Anniston, Umatilla,
and Pine Bluff have already resulted in their missing the 2001 schedule
milestones to begin chemical agent destruction operations (operations
phase).5 Johnston Atoll has missed its schedule milestone for shutting
down the facility (closure phase).6 Although Tooele has not

3 Upper level refers to the offices of the assistant secretary or above in
the Departments of the Army and Defense.

4 Chemical Weapons: FEMA and Army Must Be Proactive in Preparing States
for Emergencies, GAO-01-850 (Washington, D.C.: Aug. 13, 2001).

5 At the time of the 2001 schedule revision, all three of these sites were
in the systemization phase; thus, their next milestone was to begin agent
destruction operations.

6 At the time of the 2001 schedule revision, agent destruction operations
had been completed and its next milestone was to complete closure of the
facility.

missed any milestones since the 2001 schedule was issued, the site has
undergone substantial delays in destroying its stockpile primarily because
of a safety-related incident in July 2002. If additional delays occur at
the Tooele site, it could also exceed its next milestone as well. Table 1
shows the status of the incineration sites that will miss 2001 schedule
milestones.

Table 1: Slippage of 2001 Scheduled Milestone Dates, by Incineration Site

                                                                   Difference 
                                                                      between 
                              2001 schedule                     2001 schedule 
                Next schedule date to begin   Date to begin      and estimate 
          Site   milestone    next milestone     next phasea  (no. of months) 

                  Anniston        Operations     July 2002    Aug. 2003   +13 
                  Umatilla        Operations     July 2003    Mar. 2004    +8 
                Pine Bluff        Operations     Oct. 2003    Apr. 2004    +6 
            Johnston Atoll End of closure     Sept. 2003      Nov. 2003    +2 

Sources: DOD and the U.S. Army.

aProgram manager's official estimates for Pine Bluff, Umatilla and
Johnston Atoll.

Many of the recent delays at the incineration sites have resulted from
operations incidents, from environmental permitting problems, community
protection concerns, and funding issues-a trend that we identified in
previous reports on the program. Among the events that have caused delays
at incineration sites since 2001 are the following:

o  	Incidents during operations. At Tooele, a chemical incident involving
a plant worker who came into contact with a nerve agent while performing
routine maintenance led to the suspension of agent destruction operations
from July 2002 to March 2003. An investigation attributed the incident to
inadequate or poorly followed worker safety procedures, and a corrective
action plan, including an improved safety plan, was instituted before
operations resumed. Since operations restarted in March 2003, Tooele has
experienced several temporary shutdowns.

o  	Environmental permitting. Several environmental permitting issues have
delayed the start of agent destruction operations at sites at Umatilla and
Anniston.7 At Umatilla, the delays stemmed from several unanticipated

7 We have reported on permitting delays in Chemical Weapons And Materiel:
Key Factors Affecting Disposal Costs and Schedule, GAO/NSIAD-97-18
(Washington, D.C.: Feb. 10, 1997).

engineering changes related to reprogramming software and design changes
that required permit modifications and to a shutdown by state regulators
because furnaces were producing an unanticipated high amount of heavy
metals during surrogate agent testing. At Anniston, delays occurred
because state environmental regulators did not accept test results for one
of the furnaces because the subcontractor did not follow state
permit-specified protocols.

o  	Community protection. Concerns about emergency preparedness for local
communities have led to additional delays at Anniston. These concerns
included the inadequacy of protection plans for area schools and for
special needs residents (e.g., elderly and disabled individuals) who would
have difficulty in an evacuation. Although we reported on this issue in
July 19968 and again in August 2001, and a senior DOD official identified
it as a key concern in September 2001, the Army had difficulty
satisfactorily resolving the issue with key state stakeholders. As a
result, operations did not begin until August 2003.

o  	Funding. Delays at Pine Bluff and Johnston Atoll occurred because DOD
redirected fiscal year 2002 destruction program funds to acquire $40.5
million worth of additional emergency protection equipment for Anniston.
To cover this unfunded budget expense, the Army reduced Pine Bluff's
budget by $14.9 million and Johnston Atoll's budget by $25.1 million,
leading to systemization and closure milestone slippages, respectively, at
these sites. Program officials told us that the total cost of this
schedule slip would ultimately be $116 million due to the extended period
before closure. The program is likely to face unfunded requirements as
programwide funding requests continue to exceed budgeted amounts. As of
October 2003, according to preliminary estimates from FEMA, unfunded CSEPP
requirements for all sites are expected to amount to $39.4 million and
$49.0 million for fiscal years 2004 and 2005, respectively.

Unlike the incineration sites, the two bulk-agent only sites, Aberdeen and
Newport, have experienced delays but have not breeched their schedule
milestones. In 2002, DOD approved using an alternative technology
(neutralization), instead of incineration, at these two sites. This
technology is expected to accelerate the rate of destruction at these two
sites. The

8 See U.S. General Accounting Office, Chemical Weapons Stockpile:
Emergency Preparedness in Alabama Is Hampered by Management Weaknesses,

GAO/NSIAD-96-150 (Washington, D.C: July 23, 1996).

Army estimated that this process would reduce the scheduled end of
operations at both sites by 5 years, from 2008 to 2003 at Aberdeen and
from 2009 to 2004 at Newport. However, Aberdeen has encountered
unanticipated problems with the removal of residual agent from bulk
containers and has extended its planned completion date by 6 months, from
October 2003 to March 2004. In addition, Newport has faced construction
delays and community resistance to offsite treatment of waste byproducts.
As a result of these delays, Newport has extended its planned start date
for agent operations by 5 months, from October 2003 to February 2004.

At two sites, Pueblo, Colorado, and Blue Grass, Kentucky, no milestones
were set in the 2001 schedule because DOD had not yet selected a
destruction technology. DOD has now selected a destruction technology for
these sites, but it made decisions several months later than estimated.
More importantly, DOD has set initial schedule milestones for these two
sites that go beyond the extended April 2012 CWC deadline. According to
DOD officials, these milestones are preliminary and will be reevaluated
once contractors finish initial facility designs.

The Chem-Demil Program has faced continued delays with the program largely
because DOD and the Army have not yet developed a risk management approach
to proactively anticipate and address potential problems that could
adversely affect program schedules, costs, and safety. Such an approach
could also leverage knowledge of potential problems gained at other sites.
Instead, according to a DOD official, the program has used a crisis
management approach, which has forced it to react to, rather than control,
issues. The program had drafted a plan in June 2000 that was intended to
address these issues. However, according to a program official, this plan
was never approved or implemented because of a change in management in
2001.

The delays and schedule extensions9 have contributed directly to program
cost growth, according to program officials. As a result, DOD's total
program cost estimate grew from $15 billion to $24 billion between 1998
and 2001. (See fig. 1.) Because of delays encountered since the 2001
revisions, the Army is now in the process of developing new milestones
that will extend beyond those adopted in 2001. According to an Army

9 Schedule extensions are caused largely by actual destruction rates being
lower than planned.

official, the program will use events that have occurred since 2001 in
presenting new cost estimates to DOD for preparation of the fiscal year
2005 budget submission. Program officials told us that they estimate new
costs had increased by $1.4 billion as of October 2003, and this estimate
is likely to rise further as additional factors are considered.

 Figure 1: Comparison of 1998, 2001, and 2003 Cumulative Program Cost Estimates

Although the United States met the first two chemical weapons treaty
deadlines, the continuing delays jeopardize its ability to meet the final
two deadlines. (See table 2.) Since reaching the 2002 deadline to destroy
20 percent of the stockpile in July 2001, the Chem-Demil Program has been
able to destroy only an additional 3 percent of the stockpile. In order to
meet the April 2004 CWC deadline to destroy 45 percent of the stockpile,
the program would have to eliminate an additional 22 percent of the
stockpile within the next 6 months. Because the program will likely not be
able to achieve this rate of destruction, the United States has asked for
an extension of the 2004 deadline.

According to current destruction schedules, the United States will not
meet the 2007 deadline to eliminate 100 percent of the stockpile. As a
result, the United States will likely have to ask for an extension of the
2007 deadline to complete the destruction of the entire stockpile. The CWC
allows extensions of up to 5 years beyond the 2007 deadline. Unless the

  Schedule Delays Jeopardize Ability of Program to Meet CWC Deadlines

program fixes the problems that are causing schedule delays, the United
States also risks not meeting this deadline, if extended to 2012.

                             Table 2: CWC Deadlines

                Required percentage of   Deadlines for     Date United States 
                       agent destroyed    destruction        met deadline     
                                     1  April 29, 2000         September 1997 
                                    20  April 29, 2002        July 2001       
                                    45  April 29, 2004      Will not meet     
                                   100  April 29, 2007      Will not meet     

  Long-standing Management and Organizational Weaknesses Hamper Program Progress

Sources: CWC and U.S. Army.

Despite recent efforts to improve the management and streamline the
organization of the Chem-Demil Program, the program continues to falter
because several long-standing leadership, organizational, and strategic
planning weaknesses remain unresolved. The lack of sustained leadership
has undercut decision-making authority and obscured accountability. The
program's complex structure, with many lines of authority, has left roles
and responsibilities unclear. Finally, the program lacks an overarching,
comprehensive strategy to guide and integrate its activities and monitor
performance.

Leadership Shifts The Chem-Demil Program's lack of sustained leadership
above the Affect Continuity in program level is underscored by the
multiple shifts in oversight Decision Making responsibilities that have
occurred three times between DOD and the

Army during the past two decades. The most recent change took place in
2001 when oversight responsibility for the program shifted back to DOD's
Office of the Secretary of Defense. Table 3 summarizes the changes.

Table 3: Transfer of Program Oversight Responsibilities between DOD and
the Army, 1986-Present

                        Year Oversight authority Action

1986 Army 	DOD designates the Army as the executive agent for the
Chem-Demil Program.

1994 DOD 	DOD makes the program a major defense acquisition program and
oversight is elevated to control cost and schedule increases and to raise
program visibility.

1998 Army 	DOD delegates decision-making authority to the Army, primarily
as part of its overall effort to reduce responsibilities and staffing of
its offices.

2001 DOD 	DOD reinstates its position as the program's top decision maker.
According to DOD, this was done to streamline decision making, which is
consistent with the cost of the program and national and state interest in
the safe and timely destruction of the stockpile.

Source: GAO analysis of DOD data.

These shifts in oversight responsibilities affected the continuity of
program decision making and obscured accountability. As a different office
assumed major decision authority, the program's emphasis shifted and
initiatives that had been started were often not completed. For example,
when the Army had oversight responsibility for the program, it established
a memorandum of understanding with FEMA to clarify each of their roles and
responsibilities related to CSEPP.10 However, after DOD assumed the
program's oversight responsibilities in 2001, DOD did not follow the
protocols for coordination that had been established in the memorandum,
according to FEMA and DOD officials. As a result, DOD provided funds for
emergency preparedness items without having adequate plans for
distribution, which delayed the process. This shift in oversight
responsibilities from the Army to DOD also left state and local community
officials and other stakeholders uncertain as to the credibility of
federal officials. According to FEMA and Army officials, coordination
between the two agencies has improved in the last few months and efforts
are being made to repair relationships with community and state
stakeholders.

10 U.S. General Accounting Office, Chemical Weapons: FEMA and Army Must Be
Proactive in Preparing States for Emergencies, GAO-01-850 (Washington,
D.C.: Aug. 13, 2001).

Similar problems have also occurred within the Army as program leadership
has changed. Three different officials at the Assistant Secretary level
have held senior leadership positions since December 2001. In addition,
five officials have served as the Deputy Assistant Secretary of the Army
(Chem-Demil) during that time.11 From April 2002 to February 2003, the
program manager's position remained vacant for nearly 1 year, before being
filled. However, after only 4 months, the program manager resigned and the
Army named a replacement.

Frequent shifts in key leadership positions have led to several instances
where the lack of continuity affected decision making and obscured
accountability. For example, in June 2002, a program official promised to
support future funding requests for emergency preparedness equipment from
one community, but his successor did not fulfill this promise. Other
communities viewed the agreement with one community as an opportunity to
substantially expand their own funding requests. The lack of sustained
leadership makes it unclear who is accountable when program commitments
are made and not fulfilled. Moreover, when key leaders do not remain in
their positions to develop the needed long-term perspective on program
issues and effectively implement program initiatives, it is difficult to
maintain program progress and ensure accountability for leadership
actions.

Program Management Structure Remains Complex

As our 2003 report documents, the Army recently reorganized the program.
But this change in management structure has not streamlined the program's
complex organization nor clarified roles and responsibilities. The
establishment of the Chemical Materials Agency (CMA) in January 2003 has
left the Director reporting to two different senior Army organizations,
which is one more than under the previous structure. This divided
reporting approach is still not fully developed, but has the potential to
adversely affect program coordination and accountability. The
reorganization has also divided the responsibility for various program
phases between two offices within CMA. One organization, the Program
Manager for the Elimination of Chemical Weapons, will manage the first
three phases (design, construction, and systemization) for each site, and
a newly created organization, the Director of Operations, will manage the
final two phases (operations and

11 This position is now the Deputy Assistant Secretary of the Army
(Elimination of Chemical Weapons).

closure). This reorganization changes the cradle-to-grave management
approach that was used to manage sites in the past and has blurred
responsibilities for officials who previously provided support in areas
such as quality assurance and safety. Moreover, the reorganization did not
address two program components-Assembled Chemical Weapons Alternatives
(ACWA) program and community-related CSEPP. DOD will continue to manage
ACWA separately from the Army, as congressionally directed. In addition,
the Army will continue to manage CSEPP jointly with FEMA.

Program Lacks Strategy and Implementation Plan

While DOD and the Army have issued numerous policies and guidance
documents for the Chem-Demil Program, they have not developed an
overarching, comprehensive strategy or an implementation plan to guide the
program and monitor its progress. This is contrary to the principals that
leading organizations embrace to effectively implement and manage
programs. Some key aspects of an approach typically used to effectively
manage programs include promulgating a comprehensive strategy that
includes a clearly stated mission, long-term goals, and methods to
accomplish these goals. An implementation plan that includes annual
performance goals, measurable performance indicators, and evaluation and
corrective action plans is also important. According to DOD and Army
officials, the Chem-Demil Program has relied primarily on guidance and
planning documents related to the acquisition process.12 However, in
response to our recent recommendation that they prepare such a strategy
and plan, DOD stated that it is in the initial stages of doing so and
estimates completion in fiscal year 2004.

  Emergency Preparedness Program Is Improving, but Costs Are Rising

Since our 2001 report, the Army and FEMA have assisted state and local
communities to become better prepared to respond to chemical emergencies.
Based on the states' self-assessments and FEMA's reviews, all 10 states
with chemical storage sites located within them or nearby are now
considered close to being fully prepared to respond to a chemical
emergency. This is a marked improvement from the status we reported in
200113 when 3 states reported that they were far from being prepared. Now,
6 of the 10 states are reporting that their status is fully prepared and
the

12 Acquisition programs establish program goals for cost, schedule, and
performance parameters over the program's life cycle.

13 GAO-01-850.

remaining 4 are close to being fully prepared. However, these statuses are
subject to change because the states and communities themselves can revise
or expand their agreed-upon emergency preparedness needs. They can make
these changes because the "maximum protection" concept that governs CSEPP
is open to interpretation. As a result, they can appear to be less
prepared than before. For example, Oregon certified that it was fully
prepared, but now has requested additional emergency equipment. This
request has changed Oregon's self-reported preparedness status from fully
prepared to incomplete.

Despite these accomplishments, CSEPP costs continue to rise because,
according to Army and FEMA officials, state and local communities may add
to their emergency requirements beyond approved requests. Army and FEMA
officials explain that the states often identify and expand their
requirements, especially as destruction facilities move closer to the
start of the operations phase. For example, the states of Colorado,
Alabama, and Oregon have all requested funds for infrastructure, including
roads and bridges. In June 2002, Oregon certified that its community
readiness was adequate and recommended permit approval to allow test burns
at Umatilla. Since that time, Oregon has asked for additional emergency
preparedness support that exceeds its CSEPP budget. This request follows a
pattern of substantially increasing funding requests at the start of the
operations phase, as occurred at Anniston in 2001 when it received $40.5
million for additional CSEPP items. Programwide, new requirements continue
to exceed approved CSEPP funding levels. FEMA has little control over the
additional funding requests made by the states. As of October 2003, FEMA
had identified $39.4 and $49.0 million in unfunded requirements for fiscal
years 2004 and 2005, respectively. (See table 4.)

Table 4: CSEPP Unfunded Requirements (UFR) for Fiscal Years 2004 and 2005, as of
                                  October 2003

Dollars in millions

FY2004 unfunded requirements

FY2005 unfunded requirements

                                 FY2004                        FY2005 
Funding entity FY2004   requirements  FY2004  FY2005  requirements  FY2005 
                  funded                  UFRs   funded                  UFRs 
      Alabama         21.0         41.9     21.0    19.7         36.7 
      Arkansas        16.9         24.7      7.8     3.6         13.1 
      Colorado         3.1          2.8     -0.3     2.5          4.5 
    Confederated                                                      
       Tribes          0.2          3.7      3.5     0.2          0.9 
      Illinois         0.9          0.8     -0.1     0.8          0.7 
      Indiana          3.9          4.7      0.8     2.3          6.0 
      Kentucky         4.3          5.3      1.0     3.7          4.4 
      Maryland         2.3          1.5     -0.8     1.8          2.0 
       Oregon          5.7         12.4      6.7     4.5         13.9 
        Utah           5.6          5.6      0.0     7.1          7.0 
     Washington        5.9          5.8     -0.1     3.1          5.3 
    FEMA support      18.7         18.7      0.0    22.6         26.5 
       Total          88.5        127.9     39.4    72.0        120.9 

Source: FEMA data.

In our August 2001 report, we recommended that the Army and FEMA (1)
provide technical assistance, guidance, and leadership to the three states
(Alabama, Indiana, and Kentucky) with long-standing emergency preparedness
issues to resolve their concerns; (2) provide all states and their
communities with training and assistance in preparing budget and
life-cycle cost estimates and provide guidance and plans on reentry; and
(3) establish specific measures of compliance with the benchmarks to more
evenly assess performance and to correctly identify requirements. The Army
is continuing to provide assistance to CSEPP states and communities as
requested by FEMA. FEMA now participates more often in local community
CSEPP activities and sponsors an annual CSEPP conference in an effort to
improve its working relationships. FEMA has also provided software to
simplify development of CSEPP financial reporting documents and has
published a Reentry and Recovery Workbook. The workbook fills a void in
state and local guidance for emergency responders to follow in the event
of a chemical emergency. Lastly, FEMA expanded its capability assessment
readiness tool to assist local communities in quantifying benchmark
scores.

  Agencies' Actions to Implement Prior GAO Recommendations

(350462)

We recommended in our September 2003 report that the Secretary of Defense
direct the Under Secretary of Defense for Acquisition, Technology and
Logistics, in conjunction with the Secretary of the Army, to (1) develop
an overall strategy and implementation plan for the chemical
demilitarization program and (2) implement a risk management approach that
anticipates and influences internal and external factors that could
adversely impact program performance. DOD concurred with our
recommendations. It said that it was in the initial stages of developing
an overall strategy and implementation plan and estimated that it would be
completed in fiscal year 2004. It also said that CMA will review the
progress of an evaluation of several components of its risk management
approach within 120 days and then that DOD would evaluate the results and
determine any appropriate action. In our 2001 report, we recommended that
the Army and FEMA make improvements to the program, and they have
implemented those recommendations.

Mr. Chairman, this concludes my statement. I would be pleased to respond
to any questions that you or members of the Subcommittee may have.

Contacts and Acknowledgments

For future questions regarding this testimony, please contact me at (202)
512-4300. Individuals making key contributions to this testimony include
Donald Snyder, Rodell Anderson, Bonita Oden, John Buehler, Nancy Benco,
and Mike Zola.

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