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entitled 'Hurricane Katrina: Comprehensive Policies and Procedures Are 
Needed to Ensure Appropriate Use of and Accountability for 
International Assistance' which was released on April 6, 2006. 

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Report to Congressional Committees: 

April 2006: 

Hurricane Katrina: 

Comprehensive Policies and Procedures Are Needed to Ensure Appropriate 
Use of and Accountability for International Assistance: 

[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-06-460]: 

GAO Highlights: 

Highlights of GAO-06-460, a report to congressional committees: 

Why GAO Did This Study: 

In response to Hurricane Katrina, countries and organizations donated 
to the United States government cash and in-kind donations, including 
foreign military assistance. The National Response Plan establishes 
that the Department of State (DOS) is the coordinator of all offers of 
international assistance. The Federal Emergency Management Agency 
(FEMA) within the Department of Homeland Security (DHS) is responsible 
for accepting the assistance and coordinating its distribution. In 
light of widespread congressional and public interest in U.S. agencies’ 
accountability in receiving and distributing assistance to hurricane 
victims, this report is one of several initiated under the authority of 
the Comptroller General to review the federal government’s response to 
Hurricane Katrina. It examines (1) the amount and use of 
internationally donated cash, and (2) the extent to which federal 
agencies have adequate policies and procedures to ensure proper 
accountability for the acceptance and distribution of that assistance. 

What GAO Found: 

Because the U.S. government had not received such substantial amounts 
of international disaster assistance before, ad hoc procedures were 
developed to accept, receive and distribute the cash and in-kind 
assistance. Understandably, not all procedures would be in place at the 
outset to provide a higher level of accountability. The Administration 
recognized the need for improvement in its recent report on lessons 
learned from Hurricane Katrina. 

GAO was able to track the cash donations received to designated U.S. 
Treasury accounts or disbursed. In the absence of policies, procedures, 
and plans, DOS developed an ad hoc process to manage $126 million in 
foreign cash donations to the U.S. government for Hurricane Katrina 
relief efforts. As cash donations arrived, a National Security Council 
(NSC)-led interagency working group was convened to make policy 
decisions about the use of the funds. FEMA officials told GAO they had 
identified and presented to the working group a number of items that 
the donated funds could be spent on. The NSC-led interagency working 
group determined that use of those donated funds, once accepted by FEMA 
under the Stafford Act, would be more limited than the wider range of 
possible uses available if the funds were held and then accepted under 
the gift authorities of other agencies. In October 2005, $66 million of 
the donated funds were spent on a FEMA case management grant, and as of 
March 16, 2006, $60 million remained undistributed in the DOS-
designated account at the Treasury that did not pay interest. Treasury 
may pay interest on funds accepted by FEMA under the Stafford Act. 
According to DOS, an additional $400 million in international cash 
donations could arrive. It is important that cash management policies 
and spending plan options are considered and in place to deal with the 
forthcoming donations so that the purchasing power of the donated cash 
is maintained for relief and reconstruction. 

FEMA and other agencies did not have policies and procedures in place 
to ensure the proper acceptance and distribution of in-kind assistance 
donated by foreign countries and militaries. In-kind donations included 
food and clothing. FEMA and other agencies established ad hoc 
procedures. However, in the distribution of the assistance to FEMA 
sites, GAO found that no agency tracked and confirmed that the 
assistance arrived at their destinations. Also, lack of procedures, 
inadequate information up front about the donations, and insufficient 
coordination resulted in the U.S. government agreeing to receive food 
and medical items that were unsuitable for use in the United States and 
storage costs of about $80,000. The procedures also allowed confusion 
about which agency was to accept and provide oversight of foreign 
military donations. DOD’s lack of internal guidance regarding the DOS 
coordinating process resulted in some foreign military donations that 
arrived without DOS, FEMA, or DOD oversight. 

What GAO Recommends: 

GAO makes recommendations designed to improve the policies, procedures, 
planning, and oversight of international cash and in-kind donations to 
the U.S. government in response to disasters. DOD and DHS generally 
agreed with GAO’s recommendations and cited actions being taken. 

www.gao.gov/cgi-bin/getrpt?GAO-06-460. 

To view the full product, including the scope and methodology, click on 
the link above. For more information, contact Davi M. D'Agostino, (202) 
512-5431, or McCoy Williams, (202) 512-9095. 

[End of section] 

Contents: 

Letter: 

Results in Brief: 

Background: 

Foreign Countries Donated Millions in Cash, But Policies, Procedures, 
and Plans Were Not in Place: 

Policies and Procedures Were Lacking in the Acceptance and Distribution 
of in-Kind Donations, Including Foreign Military Donations: 

Conclusions: 

Recommendations for Executive Action: 

Agency Comments and Our Evaluation: 

Appendixes: 

Appendix I: Scope and Methodology: 

Appendix II: Comments from the Department of Defense: 

Appendix III: Comments from the Department of Homeland Security: 

Appendix IV: GAO Contacts and Staff Acknowledgments: 

Related GAO Products: 

Table: 

Table 1: International Cash Donations Received and Used - Key Dates: 

Figures: 

Figure 1: Overview of Process Developed to Receive International Cash 
Donations: 

Figure 2: Overview of Process Developed for Accepting, Receiving, and 
Distributing In-Kind Donations: 

Figure 3: Foreign Donated MREs in Storage as of November 9, 2005: 

Figure 4: Overview of Process Developed for the Acceptance and Receipt 
of Foreign Military Assistance: 

Abbreviations: 

CBP: U.S. Customs and Border Protection: 

DOD: Department of Defense: 

DHS: Department of Homeland Security: 

DOS: Department of State: 

FDA: Federal Drug Administration: 

FEMA: Federal Emergency Management Agency: 

NRP: National Response Plan: 

NSC: National Security Council: 

OFDA: Office of Foreign Disaster Assistance: 

USAID: United States Agency for International Development: 

USDA: United States Department of Agriculture: 

Letter April 6, 2006: 

Congressional Committees: 

Hurricane Katrina struck in August 2005, devastating the Gulf coast of 
the United States, causing billions of dollars in damage, and 
dislocating thousands of residents. Government at all levels--local, 
state, and federal--struggled to respond to the magnitude of the event. 
As the storm's devastation and destruction were viewed around the 
world, many foreign countries offered both cash and in-kind donations, 
including foreign military donations to the United States.[Footnote 1] 
For the first time in its history, the U.S. government welcomed 
international offers of assistance to this degree. 

The framework for managing domestic events is the National Response 
Plan (NRP).[Footnote 2] The NRP establishes that the Department of 
State (DOS) is the coordinator of all offers of international 
assistance. In the aftermath of the hurricane, Federal Emergency 
Management Agency (FEMA) officials told us that they convened an 
interagency meeting to determine how the international assistance would 
be managed. Shortly after this meeting the DOS created a Hurricane 
Katrina Task Force. Through the task force, DOS provided information 
about the offers to the FEMA, within the Department of Homeland 
Security (DHS), and DOS communicated with the countries offering 
assistance regarding what items would be accepted by the U.S. 
government.[Footnote 3] FEMA utilized the Stafford Act[Footnote 4] to 
accept some of the assistance. FEMA was responsible for coordinating 
the distribution of the international assistance and ensuring that it 
was distributed as intended. In carrying out these responsibilities, 
FEMA requested support from other federal agencies, using a process 
known as mission assignment. In the aftermath of Hurricane Katrina, 
FEMA requested that the Office of Foreign Disaster Assistance (OFDA), 
an organization within the U.S. Agency for International Development 
(USAID), manage all logistics/operations support to coordinate the 
international in-kind assistance for FEMA. DOD was involved in the 
receipt of foreign military donations. 

The National Security Council (NSC) also had a role to play in the 
federal response to the hurricane. In the NRP section that discusses 
the principal organizational elements, issues that require policy 
adjudication or that fall outside the Secretary of Homeland Security's 
areas of authority---as defined by the Homeland Security Act,[Footnote 
5] the Stafford Act, and other relevant statues, Executive Orders, and 
directives---are elevated for resolution through the Homeland Security 
Council and the NSC system. In the case of Hurricane Katrina, the NSC 
convened an interagency working group to decide how the donated funds 
would be used. 

FEMA had responsibility to safeguard the international assistance and 
to ensure that it was used as intended. In other words, FEMA was 
accountable to ensure that offers of assistance were acceptable for 
consumption and use and, if so, were properly received and distributed. 
Additionally in our opinion, when FEMA asks other agencies for 
assistance through its mission assignment process, FEMA is to maintain 
adequate oversight of the agencies' management of the assistance, 
particularly since FEMA will reimburse the agencies for providing 
assistance. The countries that provided the United States with 
assistance did not stipulate specific uses for their donations. 
Nevertheless, the United States often stipulates conditions regarding 
how the assistance we provide to foreign countries should be used, and 
for Hurricane Katrina DOS recognized that it had a responsibility to 
maintain accountability and transparency with regard to the use of the 
cash donations. 

In light of widespread congressional and public interest in U.S. 
agencies' accountability in receiving and distributing assistance to 
hurricane victims, this report is one of several to review the events 
and aftermath surrounding Hurricane Katrina initiated under the 
statutory authority provided to the Comptroller General of the United 
States. Our objectives were to determine (1) the amount of cash that 
was donated by foreign countries, and the extent to which it had been 
used to assist in the relief efforts, and (2) the extent to which those 
federal agencies with responsibilities regarding the international 
assistance offered to the United States had policies and procedures in 
place to ensure the appropriate accountability for the acceptance and 
distribution of in-kind donations, including foreign military 
donations. 

To achieve these objectives, we reviewed legislation and other 
guidance, including the NRP, and met with key officials from DOS, DHS, 
DOD, USAID, Department of Treasury (Treasury), U.S. Department of 
Agriculture (USDA), and Food and Drug Administration (FDA) within the 
Department of Health and Human Services. In addition, we collected and 
reviewed relevant data, including lists of items offered and received, 
and letters of acceptance from the agencies. We determined that the 
data used were sufficiently reliable for the purposes of this report. 
We conducted our review from October 2005 through February 2006 in 
accordance with U.S. generally accepted government auditing standards. 
For additional details on our scope and methodology, see appendix I. 

Results in Brief: 

The U.S. government had never before received such large amounts of 
international disaster assistance, and ad hoc procedures were developed 
to manage the acceptance and distribution of the assistance. It is 
understandable that not all procedures would be in place at the outset 
to ensure full accountability of the assistance. We were able to track 
the funds received and disbursed to those held in designated U.S. 
Treasury accounts. In the absence of policies, procedures, and plans, 
DOS developed an ad hoc process to manage the cash donations flowing to 
the U.S. government from other countries to assist in Hurricane Katrina 
relief efforts. Through this process, $126 million was donated to the 
U.S. government from 36 foreign countries and international 
organizations without restrictions, which DOS recorded in a designated 
account at the U.S. Treasury to hold the funds. FEMA had identified an 
account that earned interest in which to accept and hold the 
international cash donations. However, as cash donations arrived, an 
NSC-led interagency working group was convened to make policy decisions 
about the use of the funds.[Footnote 6] FEMA officials told us they had 
identified and presented to the working group a number of items that 
the donated funds could be spent on. The NSC-led interagency working 
group determined that use of those donated funds, once accepted by FEMA 
under the Stafford Act, would be more limited than the wider range of 
possible uses available if the funds were held until their ultimate use 
was determined and accepted under the gift authorities of other 
agencies. By September 21, about $115 million had been received. In 
October 2005, $66 million of the donated funds were accepted by FEMA 
under the Stafford Act and spent on a case management grant to provide 
case workers to help 100,000 households affected by Hurricane Katrina 
identify their needs and direct them to available assistance. As of 
March 16, 2006, $60 million remained undistributed in the DOS 
designated account at the Treasury that does not pay interest.[Footnote 
7] As explained below, Treasury can pay interest on funds accepted by 
FEMA under the Stafford Act. Because Treasury did not have statutory 
authority to pay interest on the funds held in the DOS account, the 
purchasing power of those funds held in that account have diminished 
due to inflation. Although it is understandable that procedures were 
not in place at the outset, given that an additional $400 million or 
more in potential international donations are outstanding and could 
materialize, it is important that cash management policies and plans be 
put in place to deal with the forthcoming donation so that the 
purchasing power of the donated cash is maintained. 

FEMA, OFDA, and DOD lacked sufficient policies and procedures prior to 
this disaster to adequately ensure the acceptance and distribution of 
in-kind donations, which includes such things as food, blankets, 
medical items, and foreign military donations such as ships and diving 
teams. This lack of guidance, as well as inadequate information up 
front about the nature and content of foreign offers of in-kind 
assistance, and insufficient advance coordination before items entered 
the United States resulted in food and medical items, such as Meals 
Ready to Eat (MREs) and medical supplies, that arrived and did not meet 
USDA or FDA standards and thus could not be distributed in the United 
States. That said, these agencies created ad hoc policies and 
procedures to reasonably account for the assistance in most cases. For 
example, although FEMA requested that USAID/OFDA manage the receipt and 
distribution of the international assistance that arrived in the United 
States, the ad hoc procedures did not include confirmation of receipt 
of the donated goods at FEMA distribution sites. USAID/OFDA's mission 
is to deliver assistance in foreign countries and thus it did not have 
guidance on how to deliver assistance in the United States. 
Nevertheless, we found that USAID/OFDA recorded the type and amount of 
assistance as it arrived, and it reasonably accounted for the 
assistance, particularly given the lack of information on the manifests 
and the large quantity of goods arriving within a short time. However, 
we noted the ad hoc procedures did not include internal controls that 
would have provided more agency oversight and assurance that the 
assistance was used as intended. Neither agency had a system to track 
the assistance and confirm its arrival at those sites. Thus, FEMA could 
not provide us evidence that it had determined or confirmed that the 
assistance arrived at these sites. According to Standards for Internal 
Control in the Federal Government, policies and procedures help provide 
this oversight and are necessary to manage agency activities. These 
policies and procedures were lacking because the agencies did not 
anticipate that the United States would be receiving this assistance. 
Further, FEMA's initial list of items that could be used was not 
specific and DOS did not respond to FEMA's requests for more specific 
information about the foreign offers. As a result, the U.S. government 
received food and medical assistance, MREs and medical supplies, that 
did not meet USDA or FDA standards and thus could not be distributed 
and had to be stored. In addition to the storage fees of about $80,000 
consequently incurred, there are diplomatic ramifications for rejecting 
foreign countries' donations after their arrival. For receiving foreign 
military donations for disaster relief, DOS established a process to 
coordinate with FEMA and DOD. FEMA and DOD apparently each assumed the 
other agency had accepted these donations under their respective gift 
authorities; however it is unclear whether either agency did so. As a 
result, even for the foreign military donations that were vetted 
through the DOS process, it is unclear whether either agency accepted 
these donations or maintained oversight of these donations and knew how 
they were eventually used. In addition, while some foreign military 
donations were coordinated through DOS, we learned that in other cases, 
some foreign military donations--we were unable to determine the 
amount--arrived directly at a military base without being coordinated 
through DOS. This occurred in part because DOD lacked internal policies 
and procedures for managing foreign military donations intended for use 
in the United States. For foreign military shipments that were not 
vetted through the task force, DOS, FEMA, and DOD officials could not 
provide us with information regarding the amount or type of foreign 
military donations received, and as a result, we were not able to 
confirm that they were used as intended. 

Officials from DOS, FEMA, and DOD acknowledged the need for delineated 
policies and procedures to manage international assistance in the event 
that the United States receives international assistance in the future. 
As called for by The Federal Response To Hurricane Katrina: Lessons 
Learned,[Footnote 8] officials from DOS, FEMA, and DOD told us that by 
June 1, 2006, they will provide policies and procedures for managing 
international assistance to the Homeland Security Council. We make six 
recommendations that focus on specific areas for agencies with a role 
in international assistance to develop in the National Response Plan or 
other appropriate plan. Our recommendations complement the 
administration's recommendations, but are more specific in some areas 
such as the management of cash donations. In commenting on a draft of 
this report, DOD and DHS generally agreed with our recommendations, 
while DOS and Treasury did not comment on the recommendations. We 
received technical comments from DOS, DOD, USAID/OFDA, FEMA, FDA, and 
USDA, which we incorporated as appropriate. 

Background: 

Historically, governments worldwide--including that of the United 
States--have provided areas stricken by major disasters with aid in the 
recovery process. Unlike many other countries, the U.S. government has 
previously neither asked for nor accepted disaster assistance directly 
from foreign countries, choosing instead to direct offers of assistance 
to nongovernmental organizations such as the Red Cross. However, on 
August 29, 2005, Hurricane Katrina struck the coasts of Louisiana, 
Mississippi, and Alabama, causing billions of dollars in damage, and 3 
days afterward the federal government, through the DOS announced 
worldwide assistance would be accepted. As of December 31, 2005, 76 
countries and international organizations, such as UNICEF, donated $126 
million in cash to the U.S. government; various types of in-kind 
donations, such as food, clothing, and blankets; and foreign military 
goods and services, such as the use of ships and diving teams. Seven 
countries donated both cash and in-kind items. 

There are several federal legislative and executive provisions that 
support preparation for and response to emergency situations. The 
Robert T. Stafford Disaster Relief and Emergency Assistance Act (the 
Stafford Act)[Footnote 9] primarily establishes the programs and 
processes for the federal government to provide major disaster and 
emergency assistance to states, local governments, tribal nations, 
individuals, and qualified private nonprofit organizations. FEMA has 
responsibility for administering the provisions of the Stafford Act. 

When and if natural disasters or terrorist attacks occur within the 
United States, the National Response Plan (NRP), released in December 
2004 by DHS, provides federal agencies with a framework to coordinate 
federal support to states and localities in need. The NRP works on a 
tiered request system, according to which requests for assistance flow 
from localities to states to the federal government when or if local 
and state resources are exhausted. However, under the NRP, the federal 
government--DHS--can in certain cases declare a catastrophic incident 
and provide assistance without waiting for requests for assistance. 
According to the NRP, as events occur and shortcomings are identified, 
FEMA is responsible for updating the plan. In the NRP section that 
discusses the principal organizational elements, issues that require 
policy adjudication or that fall outside the Secretary of Homeland 
Security's areas of authority---as defined by the Homeland Security 
Act,[Footnote 10] the Stafford Act, and other relevant statues, 
Executive Orders, and directives---are elevated for resolution through 
the Homeland Security Council[Footnote 11] and the National Security 
Council system. In the case of Hurricane Katrina, the NSC led an 
interagency working group to decide how the donated funds would be 
used. 

The Stafford Act also provides the President or his delegate with the 
authority to accept and use gifts or donations in furtherance of the 
purposes of the Stafford Act.[Footnote 12] FEMA, as the President's 
delegate, utilized this provision to accept international in-kind 
donations for the Hurricane Katrina recovery efforts. FEMA, through its 
mission assignments to other agencies, directed the use of the 
assistance to response efforts. Various other agencies have gift 
authorities, including DOS and DOD. However, an agency's gift authority 
typically restricts the acceptance of gifts or donations to those 
activities that are within the accepting agency's mission. For the 
purposes of Hurricane Katrina, FEMA--through the Stafford Act--accepted 
donations for the response and recovery efforts. 

Pursuant to Homeland Security Presidential Directive 5, the Secretary 
of Homeland Security is the principal federal official for domestic 
incident management, and the Secretary of State is charged with the 
responsibility to coordinate international activities related to the 
prevention, preparation, response, and recovery from a domestic 
incident within the United States.[Footnote 13] Further, the Secretary 
of State and Secretary of Homeland Security are to establish 
appropriate relationships and mechanisms for cooperation and 
coordination between their two departments. In the case of Hurricane 
Katrina, DOS, through a Hurricane Katrina Task Force, coordinated the 
acceptance of foreign monetary and nonmonetary assistance on behalf of 
the U.S. government and DHS (FEMA), respectively. The Task Force 
consisted of representatives from DOS and USAID/OFDA. 

The NRP designates 15 Emergency Support Functions that identify 
specific disaster responses and the organizations that have significant 
roles in responding to the disasters. Two key annexes apply to 
international disaster assistance. The International Coordination 
Support annex provides guidance on carrying out responsibilities for 
international coordination in support of the government's response to 
an Incident of National Significance. Under this annex, DOS is charged 
with coordinating requests for foreign assistance based on needs 
conveyed by DHS or other federal agencies. DOS facilitates 
communication with foreign governments on behalf of the United States 
that can assist and/or support response, mitigation, and recovery 
efforts and acts as an intermediary for requests and foreign offers of 
assistance to the U.S. government. The NRP also includes a Financial 
Management Annex. This annex requires federal agencies to use proper 
federal financial principles, policies, and regulations, and management 
controls to ensure proper accountability of funds. To safeguard the 
assets, agencies can use the Comptroller General's Standards for 
Internal Controls in the Federal Government.[Footnote 14] These 
standards provide federal agencies with the framework necessary to 
establish internal controls and thus safeguard and monitor assets and 
inventory to prevent waste, loss, or unauthorized use. 

USDA and FDA were also involved in the Hurricane Katrina relief effort. 
USDA is responsible for regulating the importation of animals and 
animal-derived materials to ensure that exotic animal and poultry 
diseases are not introduced into the United States, as well as to 
ensure that imported meat, poultry, or egg products are fit for human 
consumption.[Footnote 15] FDA regulates the importation of foods 
(except for certain meats and poultry products), drugs (human, animal, 
and biological), cosmetics, medical devices and radiation emitting 
devices, as defined in the Federal Food, Drug, and Cosmetic 
Act.[Footnote 16] For conventional operations, USDA and FDA are 
notified by U.S. Customs and Border Protection (CBP) prior to the 
import of food items or medical supplies in order to ensure that the 
items are acceptable for receipt in the United States.[Footnote 17] 

The ad hoc processes to accept, receive, and distribute international 
assistance varied depending on the type of assistance being offered. 
However, whether the assistance was in the form of cash, or in-kind 
donations, including foreign military donations, offers were supposed 
to be initially coordinated through the DOS Hurricane Katrina Task 
Force. However, we noted that not all foreign assistance was 
coordinated through DOS. For example, an unknown quantity of in-kind 
assistance came to the United States directly from foreign militaries. 

On September 15, 2005, the President ordered a comprehensive review of 
the federal government's response to Hurricane Katrina. The 
administration released its report, The Federal Response To Hurricane 
Katrina: Lessons Learned, on February 23, 2006. The report contained 
125 recommendations, one of which requires DOS and DHS to lead an 
interagency effort to develop procedures for reviewing, accepting, or 
rejecting any offers of international assistance for a domestic 
catastrophic incident, including a mechanism to receive, disburse, and 
audit any cash assistance. Officials from DOS, FEMA, and DOD told us 
that by June 1, 2006, they will provide policies and procedures for 
managing international assistance to the Homeland Security Council. Our 
report complements the findings in the administration's report. 

Foreign Countries Donated Millions in Cash, But Policies, Procedures, 
and Plans Were Not in Place: 

In the absence of policies, procedures, and plans, DOS developed an ad 
hoc process to manage the cash donations flowing to the U.S. government 
from other countries to address Hurricane Katrina relief 
efforts.[Footnote 18] Through this process, $126 million was donated to 
the U.S. government which DOS recorded in a designated account at the 
U.S. Treasury to hold the funds. An NSC-led interagency working group 
was established to make policy decisions about the use of the funds. 
FEMA officials told us they had identified and presented to the working 
group a number of items that the donated funds could be spent on. Once 
accepted by FEMA under the Stafford Act, donated funds would be limited 
to use on activities in furtherance of the Act. The working group 
wanted greater flexibility in the use of the donated funds, and thus 
held the funds pending the group's determination as to which agency or 
agencies should ultimately accept and use the monies. By September 21, 
2005 about $115 million had been received and in October 2005, $66 
million of the donated funds were accepted by FEMA and spent on a case 
management grant. As of March 16, 2006, $60 million remained 
undistributed in the DOS-designated account at the Treasury that does 
not pay interest.[Footnote 19] As discussed previously, undistributed 
funds accepted by FEMA under the Stafford Act and recorded at Treasury 
can receive interest.[Footnote 20] Because DOS expects additional cash 
donations to be received, it is important that cash management policies 
and spending plans are in place to deal with the forthcoming donations 
so that the purchasing power of the donated cash is maintained. 

Ad Hoc Procedures Allowed Reasonable Accountability for Cash Donations: 

For offers of cash assistance, the DOS Hurricane Katrina Task Force 
developed ad hoc procedures to track and account for amounts offered 
and received as events evolved. Ad hoc procedures were necessary 
because specific policies and procedures for handling international 
cash donations to the federal government had not been developed. The 
DOS Hurricane Katrina Task Force evaluated each monetary offer by 
working with foreign donors to determine whether there were any 
specific restrictions or conditions associated with the offers. In 
making their donations, foreign donors did not generally place 
restrictions or conditions on amounts pledged. DOS also encouraged 
governments and private foreign donors to direct their cash 
contributions to the Red Cross and other organizations. Additionally, 
DOS coordinated with other federal agencies to determine whether any 
U.S. government sanctions imposed on a donating country prevented the 
acceptance of its offer.[Footnote 21] Once an offer was accepted on 
behalf of the U.S. government, DOS provided the donor with instructions 
on how to wire transfer the funds to a designated Department of the 
Treasury account maintained at the Federal Reserve Bank of New York 
specifically for DOS.[Footnote 22] In other cases, countries and 
private citizens wrote checks to the U.S. government that were 
deposited and routed to the same account following normal operating 
procedures. Figure 1 below shows the process developed to receive cash 
donations. 

Figure 1: Overview of Process Developed to Receive International Cash 
Donations: 

[See PDF for image] 

[End of figure] 

As of December 31, 2005, DOS reported that $126 million had been 
donated by 36 countries and international organizations. Our review 
noted that although DOS's procedures were ad hoc, they did ensure the 
proper recording of international cash donations that have been 
received to date, and we were able to reconcile the funds received with 
those held in the designated DOS account at Treasury. DOS expects that 
additional donations could come in from several countries including 
$400 million in pledged oil products from a foreign country. DOS 
officials told us that the foreign country's governing body must 
approve the donation before this pledge can be executed and that the 
country intends to monetize--convert to cash--the oil products if and 
when its governing body approves the donation. 

Cash Donation Management Policies, Procedures, and Plans Not in Place: 

In the absence of international cash donation management policies, 
procedures, and plans, an NSC-led interagency working group was 
established to determine uses for the international cash donations. In 
October 2005, $66 million of the donated funds had been accepted by 
FEMA under the Stafford Act and used for a Hurricane Katrina relief 
grant. As of March 16, 2006 the other $60 million from international 
donations remained undistributed.[Footnote 23] We were told that the 
NSC-led interagency working group did not transfer the funds to FEMA 
because it wanted to retain the flexibility to spend the donated funds 
on a wider range of assistance than is permitted under the Stafford 
Act. During this period and while deliberations were ongoing, the funds 
were kept in a DOS account that did not pay interest, thereby 
diminishing the purchasing power of the donated funds and losing an 
opportunity to maximize the resources available for relief. Under the 
Stafford Act, FEMA could have held the funds in an account that can pay 
interest, but Treasury lacks the statutory authority to credit these 
DOS-held funds with interest. If there are dual goals of flexibility 
and maintaining purchasing power, there are a number of options that 
could be considered. 

Table 1 below shows the dates of key events in the receipt and 
distribution of the international cash donations according to 
documentation received and interviews with DOS and FEMA officials. 

Table 1: International Cash Donations Received and Used - Key Dates: 

Date: August 29, 2005; 
Event: Hurricane Katrina hit Gulf Coast Region. 

Date: September 2, 2005; 
Event: DOS Hurricane Katrina Task Force Established. 

Date: September 3, 2005; 
Event: DOS provides deposit instructions to diplomatic and consular 
posts for foreign cash donations. 

Date: September 6, 2005; 
Event: FEMA identified account that can earn interest. 

Date: September 21, 2005; 
Event: About $115 million in foreign donations received. 

Date: September 23, 2005; 
Event: FEMA presented items the funds could have been spent on. 

Date: October 20, 2005; 
Event: DOS transferred $66 million to FEMA. 

Date: October 28, 2005; 
Event: FEMA awarded case management services grant to United Methodist 
Committee on Relief. 

Date: February 28, 2006; 
Event: $60 million in remaining donations undistributed. 

Date: March 16, 2006; 
Event: Memorandum of Agreement signed between DOS and Department of 
Education to spend remaining $60 million. 

Source: GAO analysis. 

[End of table] 

In early September 2005, FEMA officials had identified an account at 
the U.S. Treasury for recording international cash donations and had 
developed a number of potential uses for the donations that would help 
meet relief needs of the disaster. By September 21, 2005, about $115 
million in foreign cash donations had been received. In its input to 
the NSC-led interagency working group, dated September 22, 2005, DOS 
recognized that every effort should be made to disburse the funds to 
provide swift and meaningful relief to Hurricane Katrina victims 
without compromising needed internal controls to ensure proper 
management and effective use of the cash donations and transparency. 
FEMA officials told us that on September 23, 2005, they had identified 
and proposed to the NSC-led interagency working group that the 
international cash donations could be spent on the following items for 
individuals and families affected by Hurricane Katrina: social services 
assistance, medical transportation, adapting homes for medical and 
handicap needs, job training and education, living expenses, building 
materials, furniture, and transportation. In responding to our draft 
report, a DHS official said that at the next meeting of the interagency 
working group on October 7, 2005, FEMA, at NSC's request, presented a 
more detailed description of certain potential activities, including a 
proposal to finance case management services for households affected by 
Hurricane Katrina. On October 20, 2005, with the NSC-led interagency 
working group consensus, DOS transferred to FEMA $66 million of the 
international donations for the purpose of financing case management 
services for up to 100,000 such households. These services will provide 
case workers to help individual households define what their needs are 
and to obtain available assistance. On October 28, 2005, FEMA awarded a 
$66 million 2-year case management grant to the United Methodist 
Committee on Relief. With these funds, the United Methodist Committee 
on Relief will lead and manage a national consortium consisting of 10 
primary organizations that will provide case management services to 
victims of Hurricane Katrina.[Footnote 24] 

As of February 2006, the remaining $60 million had not been released, 
pending the NSC-led interagency working group determination as to which 
agency or agencies should ultimately accept and use the remaining 
funds. The NSC-led interagency working group set various parameters for 
using the funds, including that the funds should be used for "bricks 
and mortar" projects, such as buildings that provide tangible evidence 
of how contributions were used. We were told that the NSC-led 
interagency working group determined that use of those funds, once 
accepted by FEMA under the Stafford Act, would be more limited than the 
wider range of possible uses available if the funds were held until 
their ultimate use was determined and then accepted under the gift 
authorities of other agencies. 

DOS and FEMA officials told us that for the remaining $60 million in 
donated funds, the NSC-led interagency working group was considering a 
series of proposals received from various entities, both public and 
private. At the time of our review, a member of the NSC-led interagency 
working group told us they had agreed that the vital needs of schools 
in the area would be an appropriate place to apply the donations and 
they were working with the Department of Education to finalize 
arrangements to provide funding to meet those needs. FEMA officials 
told us that under the Stafford Act, they could use donated funds for 
projects such as rebuilding schools, but projects for new school 
buildings are not consistent with Stafford Act purposes unless 
replacing a damaged one. Also, according to a DHS official, the Act 
would have required that receiving entities match FEMA funds for these 
purposes. However, because of the devastation, the entities would have 
difficulty matching FEMA funds, which in essence limited FEMA from 
doing these types of projects. According to DHS, FEMA considered 
whether it would be useful for donated funds to contribute to the non- 
federal share for applicants having trouble meeting the non-federal 
share, but would need legislative authority to use it to match federal 
funds. We contacted NSC to further discuss these matters; however, NSC 
did not respond to our requests for a meeting. On March 16, 2006, DOS 
and the Department of Education signed a Memorandum of Agreement 
regarding the use of $60 million of the international cash donations. 
We did not review the details of this agreement. 

Advance planning is very important given that outstanding pledges of 
$400 million or more that DOS officials indicated will likely be 
received. While acknowledging that the U.S. government has never 
previously had occasion to accept such large amounts of international 
donations for disaster relief, going forward, advance planning is a 
useful tool to identify potential programs and projects prior to the 
occurrence of an event of such magnitude. The administration's report 
The Federal Response To Hurricane Katrina: Lessons Learned, released on 
February 23, 2006, recognized that there was no pre-established plan 
for handling international donations and that implementation of the 
procedures developed was a slow and often frustrating process. The 
report includes recommendations that DOS should establish before June 
1, 2006, an interagency process to determine appropriate uses of 
international cash donations, and ensure timely use of these funds in a 
transparent and accountable manner, among others. DOS officials 
recognized that the ad hoc process needed to be formalized and planned 
to develop such procedures by June 1, 2006. 

While the NSC-led interagency working group was reviewing various 
proposals on the further use of the funds beyond the initial $66 
million, the remaining $60 million was being held in a DOS account at 
the U.S. Treasury that does not pay interest. Treasury lacks the 
statutory authority to credit these DOS-held funds with interest. Since 
these funds have not yet been used, their purchasing power has 
diminished due to inflation. If these funds had been placed in an 
account that could be credited with interest to offset the erosion of 
purchasing power, the amount of funds available for relief and recovery 
efforts would have increased while decision makers determined how to 
use them. The U.S. government would be responsible for paying the 
interest if these funds were held in an account at the Treasury that 
can earn interest. 

Although the Stafford Act does not apply to the donated funds 
maintained in the DOS account at Treasury, the Stafford Act does 
provide that excess donated funds may be placed in Treasury securities, 
and the related interest paid on such investments would be credited to 
the account. This Stafford Act provision applies only to donated funds 
that have been accepted by FEMA. Had the foreign monetary donations 
been placed in Treasury securities, we estimate that by February 23, 
2006, the remaining funds for relief efforts would have increased by 
nearly $1 million.[Footnote 25] Although Treasury lacks the authority 
to invest the foreign monetary donations received by DOS, the FEMA 
account does permit the government to protect the purchasing power of 
foreign monetary donations. 

As noted previously, outstanding pledges totaling over $400 million 
could be received in the near future. Advanced planning and procedures 
for the decision-making process in the disbursement of funds is 
important so that this money can be utilized for disaster relief in a 
timely manner or be placed in an account to earn interest for the 
benefit of relief and reconstruction efforts while decisions are being 
made on how to spend the funds. When developing policies, procedures, 
and plans to provide the flexibility given by leaving the international 
donations in the DOS account, it is important that consideration also 
be given to strategies that can help maintain the purchasing power of 
the international donations. If the goal is to maintain both their 
purchasing power and flexibility, then among the options to consider 
are seeking statutory authority for DOS to record the funds in a 
Treasury account that can pay interest similar to donations accepted 
under the Stafford Act, or to allow DOS to deposit the funds in an 
existing Treasury account of another agency that can pay interest 
pending decisions on how the funds would be used.[Footnote 26] 

Policies and Procedures Were Lacking in the Acceptance and Distribution 
of in-Kind Donations, Including Foreign Military Donations: 

The agencies having responsibilities regarding international assistance 
did not have policies and procedures in place to ensure the acceptance 
and distribution of in-kind donations, including foreign military 
donations, received from 43 countries and international organizations. 
With little guidance, DOS, FEMA, OFDA, and DOD created ad hoc policies 
and procedures in an effort to provide the assistance to victims as 
quickly as possible. However, we did note areas in which the ad hoc 
procedures were missing internal controls to ensure sufficient agency 
oversight of the assistance and to ensure that the assistance was used 
as intended. For example, the lack of guidance, inadequate information 
up front about the nature and content of foreign offers of in-kind 
assistance, and insufficient advance coordination before acceptance 
resulted in food and medical items, such as Meals Ready to Eat (MREs) 
and medical supplies, that arrived and did not meet USDA or FDA 
standards and thus could not be distributed in the United States. Also, 
the ad hoc procedures allowed for confusion about which agency--FEMA or 
DOD--accepted and was responsible for oversight of foreign military 
donations. 

Process Developed for Accepting, Receiving, and Distributing In-Kind 
Donations: 

For offers of in-kind assistance, FEMA worked in close coordination 
with the DOS Task Force to determine whether it should accept the 
offers.[Footnote 27] Specifically, FEMA provided the Task Force with a 
list of supplies the agency could use to assist in recovery efforts. 
The Task Force compared the offers of assistance against a list of 
needed supplies provided by FEMA.[Footnote 28] As matches were 
identified by the Task Force, DOS relayed a message to the donor that 
the offer would be accepted on behalf of the United States for use in 
Hurricane Katrina relief efforts. 

Once a message of acceptance was relayed to the foreign country or 
international organization donating the in-kind assistance, the Office 
of Foreign Disaster Assistance was tasked by FEMA with the 
responsibility of providing logistical support for physical receipt of 
the donation. USAID/OFDA coordinated with DOD-Northern Command to 
establish a location that could be used to receive international 
donations. The location had to be both accessible to numerous flights 
delivering supplies and in close proximity to the areas devastated by 
Hurricane Katrina, and USAID/OFDA and DOD-Northern Command determined 
that the Little Rock Air Force Base best qualified for these criteria. 
Accordingly, USAID/OFDA coordinated with foreign donors for in-kind 
donations to arrive in Little Rock, Arkansas, where agency personnel 
would unload donations and, upon request from FEMA, forward the 
donations to a distribution point. 

Figure 2 below shows the process developed for accepting, receiving, 
and distributing in-kind donations. 

Figure 2: Overview of Process Developed for Accepting, Receiving, and 
Distributing In-Kind Donations: 

[See PDF for image] 

[End of figure] 

Lack of Guidance Regarding the Tracking and Confirmation of Receipt for 
International Assistance: 

In the absence of guidance, USAID/OFDA created a database to track the 
assistance as it arrived. We found, under the circumstances, that 
USAID/OFDA reasonably accounted for the assistance, especially given 
the lack of manifest information and the amount of assistance that was 
arriving within a short time. Compounding difficulties in USAID/OFDA's 
ability to record the assistance as it arrived were planes that arrived 
from the North Atlantic Treaty Organization for which the organization 
would not provide reliable manifest information. 

Internal controls, such as a system to track that shipments are 
received at intended destinations, provides an agency with oversight, 
and for FEMA in this case, they help ensure that international 
donations are received at FEMA destination sites. On September 14, 
2005, FEMA and USAID/OFDA agreed that USAID/OFDA would track the 
assistance from receipt through final disposition. However, the system 
USAID/OFDA created did not include confirming that the assistance was 
received at the FEMA distribution sites. In part, USAID/OFDA did not 
set up these procedures on its own in this situation because USAID/OFDA 
had never distributed assistance within the United States as its 
mission is to deliver assistance in foreign countries. FEMA officials 
told us that they assumed USAID/OFDA had these controls in place. FEMA 
and USAID/OFDA officials could not provide us with evidence that 
confirmed that the assistance sent to distribution sites was received. 
Without these controls in place to ensure accountability for the 
assistance, FEMA does not know if all or part of these donations were 
received at FEMA distribution sites. Had USAID/OFDA created a system to 
track the items transported through receipt at distribution sites and 
had FEMA overseen the USAID/OFDA process, FEMA would be able to 
determine the extent to which all or part of the foreign assistance was 
received at the FEMA distribution sites. 

Lack of Guidance Resulted in the Arrival of Food and Medical Items that 
Could Not be Used: 

The lack of guidance, inadequate information up front about foreign 
offers of in-kind assistance and insufficient advance coordination 
before agreeing to receive it, resulted in food and medical items, such 
as MREs and medical supplies, that came into the United States and did 
not meet USDA or FDA standards and thus could not be distributed in the 
United States. The food items included MREs from five countries. 
Because of the magnitude of the disaster, some normal operating 
procedures governing the import of goods were waived. According to USDA 
and FDA officials, under normal procedures, entry documents containing 
specific information which are filed with CBP, are transmitted to USDA 
and FDA for those agencies' use in determining if the commodities are 
appropriately admissible into the United States. Based on U.S. laws and 
regulations, the agencies then determine whether the items to be 
imported meet U.S. standards. CBP authorized suspension of some normal 
operating procedures for the import of regulated items like food and 
medical supplies without consultation or prior notification to USDA or 
FDA.[Footnote 29] Thus, USDA and FDA had no involvement in the decision-
making process for regulated product donations, including MREs and 
medical supplies before the United States agreed to receive them. 

FEMA notified USDA and FDA on approximately September 4, 2005, that 
food and medical supplies were received by the U.S. government and 
approved by CBP for entry into the United States. However, FEMA 
officials told us that they did not accept MREs from one country even 
though these MREs were shipped and stored in the warehouse along with 
the MREs from the other countries. On approximately September 4, the 
items were either in route or had already arrived at the staging area 
in Little Rock, Arkansas. The USDA and FDA then sent personnel to 
Little Rock to inspect the donations. Simultaneously, USAID/OFDA 
personnel, unaware that some of these donations would not be eligible 
for distribution and trying to expedite provision of relief supplies, 
forwarded approximately 220,000 MREs to distribution points. When 
USAID/OFDA officials became aware that the MREs they distributed were 
not approved by the USDA, they recalled the items back to Little Rock, 
Arkansas, pending USDA inspection. 

According to USDA inspectors, they determined that a number of the MREs 
donated to the United States contained meat and poultry products from 
countries that, based on U.S. regulations,were excluded from exporting 
meat to the United States. According to USDA, the MREs from one country 
were banned because of concerns regarding Bovine Spongiform 
Encephalopathy (BSE) meat contamination,[Footnote 30] or because the 
MREs originated in countries lacking food inspection systems equivalent 
to those in the United States. In addition, FDA found that many of the 
medical supplies received in Little Rock were not approved for use in 
the United States because they were either labeled with instructions in 
a language other than English or stored under conditions that were 
deemed unsanitary. Both USDA and FDA, based on regulations intended to 
protect public health, prevented distribution of some international 
donations. 

Per FEMA guidance, USAID/OFDA received 359,600 rations of MREs that 
could not be distributed within the United States. USAID/OFDA, on 
behalf of FEMA, has been storing the MREs and medical supplies at a 
private warehouse in Little Rock, Arkansas, until DOS and FEMA 
determine what to do with them. As of February 1, 2006, FEMA and 
DOS[Footnote 31] had paid the warehouse $62,000, with an additional 
$17,600 contract pending for the month of February. In addition to the 
storage cost, there is an unquantifiable cost in the diplomatic impact 
of rejecting foreign donations after they have been received. DOS has 
arranged for some of the MREs to be shipped to foreign countries in 
need and DOS officials told us that the receiving countries will be 
paying the shipping costs. As of February 3, 2006, approximately 40 
percent of the 359,600 rations of MREs have been forwarded to two other 
countries. The DOS plans to forward an additional 21 percent to other 
countries by February 28, 2006.[Footnote 32] While the disposition of 
the remaining 40 percent of the MREs and the medical supplies still 
stored in the private warehouse is uncertain, DOS will continue to pay 
storage fees. The following picture displays the numerous pallets of 
MREs stored in Little Rock, Arkansas as of November 9, 2005. 

Figure 3: Foreign Donated MREs in Storage as of November 9, 2005: 

[See PDF for image] 

[End of figure] 

The costs for FEMA's receipt and later storage of the MREs and medical 
supplies that were not distributed for the disaster were attributable 
in part to the lack of policies and procedures needed to guide it 
through the process of coordinating and accepting international in-kind 
assistance. First, our review noted that FEMA's list of items that 
could be used for disaster relief that was provided to DOS was very 
general and did not provide any exceptions, for example about contents 
of MREs. Also, DHS commented on our report that FEMA repeatedly 
requested from DOS additional information about the foreign items being 
offered to determine whether or not they should be accepted and DOS did 
not respond. Had FEMA supplied DOS officials with more detailed 
information early on about what could be accepted and what could not be 
ultimately distributed, and had DOS requested and received additional 
details from potential donors on the nature and contents of the 
assistance such as MREs, they might have prevented the unusable 
products from coming into the United States. FEMA officials told us 
that in the event of another disaster of this size, they would 
coordinate with USDA, FDA, and other agencies as required to avoid 
similar problems. 

Policies and Procedures Were Lacking in the Oversight of Foreign 
Military Donations: 

In the absence of policies and procedures, DOS, FEMA, and DOD created 
ad hoc policies and procedures to manage the receipt and distribution 
of foreign military goods and services; however, this guidance allowed 
for confusion about which agency had oversight of these donations. 
Also, there were no controls or procedures to assure that all foreign 
military donations were vetted through the DOS process. The offers of 
foreign military assistance included, for example, the use of 
amphibious ships and diver salvage teams. 

For foreign military donations, the DOS Hurricane Katrina Task Force 
coordinated with FEMA and DOD, through Northern Command, to determine 
whether the offer of assistance could be utilized. Northern Command 
reviewed the offers of assistance and compared them against the mission 
assignments it received from FEMA that included such tasks as clearing 
ports and waterways of debris. If Northern Command believed the foreign 
militaries' offers of assistance could be utilized to accomplish a 
mission assignment, the command coordinated the receipt of the 
assistance with the foreign donor. Figure 4 below shows the process 
developed for acceptance and receipt of foreign military assistance. 

Figure 4: Overview of Process Developed for the Acceptance and Receipt 
of Foreign Military Assistance: 

[See PDF for image] 

[End of figure] 

The ad hoc procedures, however, allowed confusion about which agency-- 
DOD or FEMA--was to formally accept the foreign military assistance and 
therefore, each agency apparently assumed the other had done so under 
their respective gift authorities. It is unclear whether FEMA or DOD 
accepted or maintained oversight of the foreign military donations that 
were vetted through the DOS task force. A FEMA official told us that 
they were unable to explain how the foreign military donations were 
used because FEMA could not match the use of the donations with mission 
assignments it gave Northern Command. Establishing accountability is an 
important internal control activity to help ensure that there is an 
organization to account for the goods and services and that they are 
used as intended. While we have found no evidence to suggest that any 
of the foreign military goods or services were not used as intended, 
establishing and maintaining oversight provides more assurance that 
these donations were used as intended. 

Moreover, FEMA and Northern Command officials told us of instances in 
which foreign military donations arrived in the United States that were 
not vetted through the DOS task force. For example, we were told of 
foreign military MREs that were shipped to a military base and 
distributed directly to hurricane victims. Having policies and 
procedures in place would have instructed federal officials to 
coordinate all foreign military offers of assistance through the DOS 
task force which would work with FEMA and DOD to determine the best use 
for the items. DOD officials acknowledged the need for policies and 
procedures and are trying to establish policies and procedures to 
manage international assistance. When we asked about shipments that 
were not vetted through the task force, neither DOS, FEMA, nor DOD 
officials could provide us information on the type, amount, or use of 
these donations. As a result, we can not determine if these items of 
assistance were safeguarded and used as intended. 

Conclusions: 

We recognize that since the United States government had never before 
received such substantial amounts of international disaster assistance, 
DOS, FEMA, OFDA, and DOD needed to create ad hoc procedures to manage 
the acceptance and distribution of the assistance as best they could. 
Going forward, it will be important to have in place clear policies, 
procedures, and plans on how international cash donations are to be 
managed and used, which would enhance the accountability and 
transparency of these funds. In addition, there is a need to consider 
whether international donations should be treated on the same basis as 
Stafford Act donations for the purpose of Treasury crediting interest 
to such donations. Since this was the first time international 
donations were accepted, this situation was not contemplated. If the 
goal is to maintain both purchasing power and flexibility, then among 
the options to consider are seeking statutory authority for DOS to 
record the funds in a Treasury account that can pay interest, or to 
allow DOS to deposit the funds in an existing Treasury account of 
another agency that can pay interest pending decisions on how the funds 
would be used. In addition, focusing immediate attention on the 
potentially forthcoming donations of $400 million, as well as the $60 
million in presently available funds, would be prudent. 

With respect to the donations of food and medical supplies, we agree 
that normal procedures should be waived to expedite recovery efforts 
when necessary; however, food and medical supplies are essential in any 
disaster and the health and safety of the public should be considered 
when accepting food and medical assistance from the international 
community. Moreover, the failure to track in-kind donations after they 
were loaded onto trucks resulted in a lack of assurance that all of the 
international assistance FEMA accepted was safeguarded, and used as 
intended. The need to have proper knowledge, acceptance, and oversight 
of foreign military donations is equally important. 

Recommendations for Executive Action: 

As mentioned previously, in February 2006, the administration issued 
its report on the federal response to Hurricane Katrina and the lessons 
learned in that response. In the report, the administration made 125 
recommendations, including several to improve the management of 
international donations. Specifically, DOS and DHS are required to lead 
an interagency effort to improve the management of international 
donations, which includes developing procedures for reviewing, 
accepting, or rejecting any offers as well as developing a mechanism to 
receive, disburse, and audit any cash donations. To help ensure that 
the cognizant agencies fulfill their responsibility to account for and 
effectively manage foreign donations and maintain adequate internal 
controls over government resources, we recommend that the Secretary, 
Department of Homeland Security, in consultation with the Secretary, 
Department of State, establish within the National Response Plan--or 
other appropriate plans--clearly delineated policies and procedures for 
the acceptance, receipt, and distribution of international assistance. 
As the agencies develop and implement the administration's 
recommendations, we believe they should also incorporate the following 
actions and procedures into their guidance. 

* Develop policies, procedures, and plans to help ensure international 
cash donations for disaster relief and assistance are accepted and used 
appropriately as needed. 

* Consider cash management options as discussed in the conclusions 
section above and place international cash donations in an account that 
would pay interest while decisions are pending on their use to maintain 
the purchasing power of those donations. 

* Maintain oversight of foreign donated in-kind assets by tracking them 
from receipt to disbursement, to reasonably ensure that assistance is 
delivered where it is intended. 

* Establish plans for the acceptance of foreign-donated items that 
include coordinating with regulatory agencies, such as USDA and FDA, in 
advance, in order to prevent the acceptance of items that are 
prohibited from distribution in the United States, regardless of 
waivers that might be established to expedite the importing of foreign 
assistance; these plans should also include DOS obtaining information 
on acceptable or unacceptable items in order to communicate to the 
international community what is needed or what can not be accepted. 

We also recommend that the Secretary of Defense, in consultation with 
the Secretaries of State and Homeland Security, take the following two 
actions: 

* Establish within the National Response Plan or other appropriate 
plans--clearly delineated policies and procedures to ensure that 
foreign military offers of assistance for domestic disasters are 
coordinated through the DOS to ensure they are properly accepted and 
safeguarded and used as intended. 

* Develop and issue internal DOD guidance to commanders on the agreed- 
upon process to coordinate assistance through DOS. 

Agency Comments and Our Evaluation: 

We asked the Secretaries of Defense, Homeland Security, State, and 
Treasury to comment on our draft. We also asked USDA, FDA, and 
USAID/OFDA to provide comments. DOD and DHS generally agreed with our 
recommendations and provided written comments on a draft of this 
report, included at appendixes II and III, respectively. We received 
technical comments from DOS, DOD, USAID/OFDA, FEMA, FDA, and USDA which 
we incorporated as appropriate. 

DOD agreed with the recommendations pertaining to it and suggested that 
we adjust the wording of the recommendation that procedures be 
developed to assure that foreign military donations be routed through 
DOS. We adjusted the recommendation based on DOD's suggestion. In its 
technical comments, DOD also suggested specific information on the 
process to coordinate international offers of assistance through DOS, 
including ensuring that the offers match U.S. requirements, meet U.S. 
standards, and are received at the right locations. These specifics may 
be considered as the agencies develop policies, procedures, and plans 
for the management of future international assistance. 

DHS generally agreed with our recommendations and noted that, in some 
cases, actions were already underway to address the recommendations. 
Regarding our recommendation to develop policies, procedures, and plans 
for international cash donations for disaster relief to assure they are 
accepted and used appropriately as needed, DHS noted that, in 
coordination with Treasury and the Office of Management and Budget, it 
is already developing a system to manage such donations. DHS also 
agreed with our recommendation regarding cash management options that 
would maintain the purchasing power of the cash donations while 
decisions are pending on their use. DHS added that this recommendation 
was consistent with what FEMA did during Hurricane Katrina, pointing 
out that on September 6, 2005, FEMA established an interest bearing 
account to hold international funds and began identifying programs and 
needs that would not be eligible for FEMA assistance but could benefit 
from monetary donations. DHS also agreed that FEMA should maintain 
oversight of foreign donated in-kind assets to the distribution points. 
DHS noted that FEMA and USAID/OFDA agreed that it was USAID/OFDA's 
responsibility to track incoming international donations. We 
acknowledge this agreement, but note in our report, however, that the 
in-kind donations were not tracked to the final distribution points 
with confirmation that they arrived and note that USAID/OFDA and FEMA 
could not provide evidence that this had been accomplished. We 
clarified the report in this regard. DHS agreed with our recommendation 
regarding the need to coordinate with regulatory agencies such as USDA 
and FDA in advance to prevent the receipt of items that could not be 
distributed in the United States. DHS noted that FEMA coordinated with 
these agencies during Hurricane Katrina, and made constant requests to 
DOS to obtain more information from the donors about the donations to 
determine whether or not they could be properly accepted. We agree that 
more specificity is needed about the nature and content of items the 
United States can accept and foreign nations are offering through DOS 
channels, such as MREs, and reflected DHS's comment in the final 
report. Without such information, it may not be possible to undertake 
appropriate coordination with regulatory agencies such as USDA and FDA 
and make a sound determination as to whether the items should be 
accepted and could be used in the United States before they arrive. DHS 
also agreed that all foreign military offers of assistance for domestic 
disasters should be coordinated through DOS for official acceptance or 
denial. However, we continue to believe that clear procedures are 
needed regarding which agency--FEMA or DOD--accepts and maintains 
oversight of such donations in advance. We adjusted our draft report to 
reflect the apparent confusion over the acceptance of foreign military 
donations. 

We also received technical comments from DOS, DOD, USAID/OFDA, FEMA, 
FDA, and USDA, which we incorporated as appropriate. 

We are sending copies of this report to the Secretaries of Homeland 
Security, Defense, and State and interested congressional committees. 
We will also make copies available to others upon request. In addition, 
the report will be available at no charge on the GAO Web site at 
http://www.gao.gov. 

Please contact Davi M. D'Agostino at (202) 512-5431 or [Hyperlink, 
dagostinod@gao.gov] or McCoy Williams at (202) 512- 9095 or [Hyperlink, 
williamsm1@gao.gov] if your staff have any questions concerning this 
report. Contact points for our Offices of Congressional Relations and 
Public Affairs may be found on the last page of this report. GAO staff 
who made major contributions to this report are listed in appendix IV. 

Signed by: 

Davi M. D'Agostino, Director: 
Defense Capabilities and Management: 

Signed by: 

McCoy Williams, Director:
Financial Management and Assurance: 

List of Congressional Committees: 

The Honorable Joseph I. Lieberman: 
Ranking Minority Member: 
Committee on Homeland Security and Governmental Affairs: 
United States Senate: 

The Honorable Tom Davis: 
Chairman: 
The Honorable Henry A. Waxman: 
Ranking Minority Member: 
Committee on Government Reform: 
House of Representatives: 

[End of section] 

Appendixes: 

Appendix I: Scope and Methodology: 

To meet our objectives for this report we relied on information 
gathered through our visits and interviews with key personnel within 
the Department of State's (DOS) Hurricane Katrina Task Force; Office of 
the General Counsel for the DOS; Department of Homeland Security (DHS) 
Inspector General; Office of the General Counsel for Federal Emergency 
Management Agency (FEMA); FEMA Response Division; FEMA Recovery 
Division; Office of the Chief Financial Officer for FEMA; 
FEMA/Financial and Acquisitions Management Division; FEMA/Grants 
Management Division; United States Agency for International Development 
(USAID)/Office of Foreign Disaster Assistance (OFDA); OFDA/Response 
Alternatives for Technical Services; Office of the Assistant Deputy 
Under Secretary of Defense; Office of the Assistant Secretary of 
Defense; Northern Command (NORTHCOM)/Joint Staff Logistics; 
NORTHCOM/Joint Staff Civil Affairs; NORTHCOM/Political Advisor; 
Department of Treasury (Treasury)/Cash Accounting; Treasury/Chief 
Systems Integrity Division; Food and Drug Administration (FDA); and 
United States Department of Agriculture (USDA)/Food Safety and 
Inspection Service. We conducted our work in Washington, D.C; Little 
Rock, Arkansas; Colorado Springs, Colorado, and New York, New York, 
from October 2005 through February 2006, in accordance with generally 
accepted government auditing standards. DOS and FEMA officials told us 
the National Security Council (NSC) had established an interagency 
working group that had a role in determining how the international cash 
donations were to be used. We contacted NSC to discuss its role in 
managing the international cash donations; however, NSC did not respond 
to our request for a meeting. 

To determine the amount of cash that was donated by foreign countries 
and the extent to which it has been used to assist hurricane victims, 
we gathered information from interviews with DOS, FEMA, and Treasury. 
To assess the reliability of foreign cash donations received by the 
U.S. government from the date Hurricane Katrina hit the United States 
until December 31, 2005, we talked with DOS, FEMA, and Treasury 
officials to gain an understanding of the procedures followed in 
recording the funds. We also validated $123,611,143, which is 97.8 
percent of the Hurricane Katrina collections reflected in the 
Department of Treasury records by comparing to supporting documentation 
such as Treasury wire transfers and DOS check receipt documents. We 
also traced the transfer of $66 million in funds from DOS to FEMA. We 
determined the data were sufficiently reliable for the purpose of this 
report. To obtain an understanding of the oversight controls over 
FEMA's-2 year case management grant, we interviewed officials from 
FEMA/Grants Management Division, the United Methodist Committee on 
Relief, and DHS Office of Inspector General, as well as reviewed 
pertinent documents such as the grant proposal and agreement. We also 
contacted the NSC to discuss why an interagency working group and not 
FEMA was used to manage the donated cash and the process by which they 
established the parameters governing how the cash was to be used. NSC 
did not respond to our requests for a meeting. 

To determine the extent to which those federal agencies with 
responsibilities regarding the international assistance offered to the 
United States had policies and procedures in place to ensure the 
appropriate accountability for the acceptance and distribution of in- 
kind donations, including foreign military donations, we relied on 
information gathered during interviews with officials from DOS, DHS, 
DOD, USDA, and FDA. We reviewed the National Response Plan 
International Coordination Support Annex and Financial Management 
Annex; Robert T. Stafford Act; Homeland Security Presidential Directive 
5; Federal Food, Drug, and Cosmetic Act; and 9 CFR 94.18 to determine 
the responsibilities of federal agencies. We also obtained, reviewed, 
and analyzed the Memorandum of Agreement between the Department of 
State and The Department of Homeland Security; a FEMA-created 
international assistance flow chart and processes document; a NORTHCOM- 
created international donations flowchart; USAID Commodity Dispatch 
Procedures; and FDA Import Procedures to assist in understanding the 
roles of federal agencies. We reviewed and analyzed summaries of 
international assistance received; instructional and acceptance cables 
from the Department of State; instructions provided to FEMA accountants 
for recording in-kind donations; and USAID Commodity Dispatch 
Procedures for FEMA to call forward international donations from the 
arrival site in Little Rock, Arkansas. To assess the reliability of 
data provided, we talked with knowledgeable agency officials about the 
data provided and reviewed relevant documentation. We visited Smart 
Choice Delivery warehouse in Little Rock, Arkansas to discuss and 
observe the international Meals-Ready-to-Eat that were stored in the 
facility. We obtained and reviewed the contract between the Office of 
Foreign Disaster Assistance and Smart Choice Delivery. In addition, we 
interviewed representatives from the American Red Cross and the United 
Nations International Children's Fund in order to understand the 
process and procedures of leading non-governmental agencies that are 
experienced in accepting non-monetary donations. 

[End of section] 

Appendix II: Comments from the Department of Defense: 

OFFICE OF THE UNDER SECRETARY OF DEFENSE: 
POLICY: 
2000 DEFENSE PENTAGON: 
WASHINGTON, DC 20301-2000: 

Ms. Davi M. D'Agostino: 
Director, Defense Capabilities and Management: 
U.S. Government Accountability Office: 
441 G Street, N.W.: 
Washington, DC 20548: 

Dear Ms. D'Agostino: 

This is the Department of Defense (DoD) response to the GAO draft 
report, `HURRICANE KATRINA: Comprehensive Policies and Procedures are 
Needed to Ensure Appropriate Use of and Accountability for 
International Assistance,' dated March 23, 2006, (GAO Code 350767/GAO- 
06-450). 

I am forwarding the Department's comments on the draft report 
recommendations for the Under Secretary of Defense for Policy who has 
approved the comments at enclosure one. 

Recommended technical changes that were identified are at enclosure 
two. 

Sincerely, 

Signed by: 

Chris King, COL, USA: 
Senior Military Assistant to the Under Secretary of Defense for Policy: 

Enclosures: 

1. DoD comments: 

2. Technical changes: 

GAO DRAFT REPORT - DATED MARCH 23, 2006 GAO CODE 350767/GAO-06-460: 

"HURRICANE KATRINA: Comprehensive Policies and Procedures are Needed to 
Ensure Appropriate use of and Accountability for International 
Assistance," 

DEPARTMENT OF DEFENSE COMMENTS TO THE RECOMMENDATIONS: 

RECOMMENDATION: 1: The GAO recommended that the Secretary of Defense, 
consultation with the Secretaries of State and Homeland Security 
establish within the National Response Plan or other appropriate plans 
clearly delineated policies and procedures to ensure that foreign 
military offers of assistance for domestic disasters are routed through 
the Department of State to ensure they are safeguarded and used as 
intended. (Page 29/GAO Draft Report): 

DOD RESPONSE: Concur with comments. The phrase "routed through" should 
be changed to "coordinated with". State did establish a process to 
coordinate with FEMA and DoD. (Page 5/GAO Draft Report). 

RECOMMENDATION: 2: The GAO recommended that the Secretary of Defense, 
in consultation with the Secretaries of State and Homeland Security 
develop and issue internal DoD guidance to commanders on the agreed 
upon process to route assistance through the Department of State. (Page 
29/GAO Draft Report): 

DOD RESPONSE: Concur with comments. The word "route" should be changed 
to "coordinate". State did establish a process to coordinate with FEMA 
and DoD. (Page 5/GAO Draft Report): 

[End of section] 

Appendix III: Comments from the Department of Homeland Security: 

U.S. Department of Homeland Security: 
Washington, DC 20528: 

March 31, 2006: 

Davi M. D'Agostino: 
Director, Defense Capabilities and Management and Financial Management 
and Assurance: 
U.S. Government Accountability Office: 
441 G Street N.W. 
Washington, DC 20548: 

Dear Ms. D'Agostino: 

Re: Draft Report GAO-06-460, Hurricane Katrina: Comprehensive Policies 
and Procedures are Needed to Ensure Appropriate Use of and 
Accountability for International Assistance: 

Thank you for the opportunity to review the draft report. The following 
represents the Department of Homeland Security response to the 
recommendations contained in GAO's draft report. 

On the content of the draft GAO report, DHS would like to make four 
points. First, FEMA was extremely proactive. Within 24 hours after the 
U.S. Government declared that we were accepting all international 
offers of assistance in principle, FEMA initiated the mission 
assignment to the U.S. Agency for International Development's (USAID) 
Office of Foreign Disaster Assistance (OFDA). OFDA effectively managed 
the operations and logistics for the international donations that FEMA 
accepted during Hurricane Katrina. FEMA also brought together the 
agencies and components with expertise in handling international 
resources (e.g. Department of State (DOS), USAID/OFDA, Customs and 
Border Protection (CBP), Department of Defense (DOD), and Health and 
Human Services (HHS)) to develop an ad-hoc mechanism for processing the 
offers DOS was receiving. Second, FEMA ensured accountability of 
international donations by requesting that USAID/OFDA track all 
international donations accepted by FEMA. With their daily status 
reports, USAID/OFDA demonstrated that they were tracking donations and 
maintaining accountability. Third, it was FEMA's highest priority to 
ensure that international donations accepted into the United States 
were safe. This was demonstrated by FEMA requesting CBP assistance and 
ensuring resources that did not meet U.S. regulations were not 
distributed. Fourth, although FEMA incorporated DOD into the ad-hoc 
mechanism, FEMA only had oversight over donations that were accepted 
under FEMA's gift acceptance authority, not donations that were 
accepted or received through military-to-military channels. 

The following are DHS' responses to GAO's recommendations. 

Recommendation: Develop policies, procedures, and plans to help ensure 
international cash donations for disaster relief and assistance are 
accepted and used appropriately as needed. 

Response: Concur. DHS is already developing a system to manage 
international cash donations working in coordination with the 
Department of Treasury and Office of Management and Budget (OMB). 

Recommendation: Consider cash management options as discussed in the 
conclusions section and place international cash donations in an 
account that would pay interest while decisions are pending on their 
use to maintain the purchasing power of those donations. 

Response: Concur. Recommendation is consistent with what FEMA did 
during Hurricane Katrina. On September 6, 2005, FEMA established an 
interest bearing account to hold international funds and began 
identifying programs and needs that would not be eligible for FEMA 
assistance but could benefit from monetary donations. 

Recommendation: Maintain oversight of foreign donated in-kind assets by 
tracking them from receipt to disbursement, to reasonably assure that 
assistance is delivered where it is intended. 

Response: Generally concur. FEMA is in agreement with this 
recommendation if the term disbursement refers to FEMA's responsibility 
of ensuring that international in-kind donations are tracked from the 
point that USAID receives the donations and transports them to a 
federal staging area or a non-federal entity (e.g. state distribution 
center). Per normal procedures, FEMA will keep a record of receipt of 
items received at a federal staging area. Moreover, per normal 
procedures, FEMA will track the distribution of commodities to the 
point they are physically delivered to one of our state/local partners 
or organizations. From this point forward, it is not FEMA's 
responsibility to track the disbursement of in-kind donations as that 
responsibility is transferred to the state/local partner or 
organization that received the goods for distribution in the field. 

It is important to note that during and in the aftermath of Hurricane 
Katrina, FEMA made considerable efforts to ensure that international 
donations were tracked: 

1) USAID/OFDA provided FEMA with daily status reports on international 
donations. 

2) FEMA and USAID/OFDA agreed that it was USAID/OFDA's responsibility 
to track incoming international in-kind donations. 

3) FEMA kept records when FEMA took receipt of international in-kind 
donations from USAID/OFDA. 

Recommendation: Establish plans for the acceptance of foreign donated 
items that include coordinating with regulatory agencies, such as USDA 
and FDA in advance in order to prevent the acceptance of items that are 
prohibited from distribution in the United States, regardless of 
waivers that might be established to expedite the importing of foreign 
assistance; these plans should also include DOS obtaining information 
on acceptable or non acceptable items in order to communicate to the 
international community what is needed or what can not be accepted. 

Response: Generally concur. Recommendation is consistent with what FEMA 
did during Hurricane Katrina. FEMA made constant requests to DOS to 
obtain more information on international donations in order to 
determine whether or not these donations could or could not be formally 
accepted and integrated into our response operations. FEMA also took 
every precaution to ensure that international donations were safe to be 
distributed in the United States. 

Recommendation: Establish within the National Response Plan or other 
appropriate plans, clearly delineated policies and procedures to ensure 
that foreign military offers of assistance for domestic disasters are 
routed through the DOS to ensure they are safeguarded and used as 
intended. 

Response: Concur. It is important to coordinate all offers or donations 
from foreign governments and/or foreign military organizations through 
DOS for official acceptance or denial and to ensure appropriate 
diplomatic considerations. 

Recommendation: Develop and issue internal Department of Defense (DOD) 
guidance to commanders on the agreed upon process to route assistance 
through DOS. 

Response: Concur. For international donations accepted under FEMA gift 
acceptance authority, it is FEMA's understanding that DOD will 
coordinate through the international donation mechanism, which is being 
developed by the inter-agency working group. 

Sincerely, 

Signed by: 

Steven J. Pecinovsky: 
Director: 
Departmental GAO/OIG Liaison Office: 

[End of section] 

Appendix IV: GAO Contacts and Staff Acknowledgments: 

GAO Contacts: 

Davi M. D'Agostino (202) 512-5431 McCoy Williams (202) 512-9095: 

Acknowledgments: 

In addition to those named above, Kay Daly, Kate Lenane, Charles 
Perdue, Jay Spaan, Lorelei St James, Pamela Valentine, Cheryl Weissman, 
and Leonard Zapata made key contributions to this report. 

[End of section] 

Related GAO Products: 

Hurricane Katrina: Status of the Health Care System in New Orleans and 
Difficult Decisions Related to Efforts to Rebuild It Approximately 6 
Months After Hurricane Katrina. [Hyperlink, http://www.gao.gov/cgi-
bin/getrpt?GAO-06-576R]. Washington, D.C.: March 28, 2006. 

Agency Management of Contractors Responding to Hurricanes Katrina and 
Rita. [Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-06-461R]. 
Washington, D.C.: March 15, 2006. 

Hurricane Katrina: GAO's Preliminary Observations Regarding 
Preparedness, Response, and Recovery. [Hyperlink, 
http://www.gao.gov/cgi-bin/getrpt?GAO-06-442T]. Washington, D.C.: March 
8, 2006. 

Emergency Preparedness and Response: Some Issues and Challenges 
Associated with Major Emergency Incidents. [Hyperlink, 
http://www.gao.gov/cgi-bin/getrpt?GAO-06-467T]. Washington, D.C.: 
February 23, 2006. 

Disaster Preparedness: Preliminary Observations on the Evacuation of 
Hospitals and Nursing Homes Due to Hurricanes. [Hyperlink, 
http://www.gao.gov/cgi-bin/getrpt?GAO-06-443R]. Washington, D.C.: 
February 16, 2006. 

Investigation: Military Meals, Ready-To-Eat Sold on eBay. [Hyperlink, 
http://www.gao.gov/cgi-bin/getrpt?GAO-06-410]. Washington, D.C.: 
February 13, 2006. 

Expedited Assistance for Victims of Hurricanes Katrina and Rita: FEMA's 
Control Weaknesses Exposed the Government to Significant Fraud and 
Abuse. [Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-06-403T]. 
Washington: D.C., February 13, 2006. 

Statement by Comptroller General David M. Walker on GAO's Preliminary 
Observations Regarding Preparedness and Response to Hurricanes Katrina 
and Rita. [Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-06-365R]. 
Washington, D.C., February 1, 2006. 

Federal Emergency Management Agency: Challenges for the National Flood 
Insurance Program. [Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-06-
335T]. Washington, D.C.: January 25, 2006. 

Hurricane Protection: Statutory and Regulatory Framework for Levee 
Maintenance and Emergency Response for the Lake Pontchartrain Project. 
GAO-06-322T. Washington, D.C.: December 15, 2005. 

Hurricanes Katrina and Rita: Provision of Charitable Assistance. GAO- 
06-297T. Washington, D.C.: December 13, 2005. 

Army Corps of Engineers: History of the Lake Pontchartrain and Vicinity 
Hurricane Protection Project. [Hyperlink, http://www.gao.gov/cgi-
bin/getrpt?GAO-06-244T]. Washington, D.C.: November 9, 2005. 

Hurricanes Katrina and Rita: Preliminary Observations on Contracting 
for Response and Recovery Efforts. [Hyperlink, http://www.gao.gov/cgi-
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Hurricanes Katrina and Rita: Contracting for Response and Recovery 
Efforts. [Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-06-235T]. 
Washington, D.C.: November 2, 2005. 

Federal Emergency Management Agency: Oversight and Management of the 
National Flood Insurance Program. [Hyperlink, http://www.gao.gov/cgi-
bin/getrpt?GAO-06-183T]. Washington, D.C.: October 20, 2005. 

Federal Emergency Management Agency: Challenges Facing the National 
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bin/getrpt?GAO-06-174T]. Washington, D.C.: October 18, 2005. 

Federal Emergency Management Agency: Improvements Needed to Enhance 
Oversight and Management of the National Flood Insurance Program. 
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-06-119]. Washington, 
D.C.: October 18, 2005. 

Army Corps of Engineers: Lake Pontchartrain and Vicinity Hurricane 
Projection Project. [Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-
05-1050T]. Washington, D.C.: September 28, 2005. 

Hurricane Katrina: Providing Oversight of the Nation's Preparedness, 
Response, and Recovery Activities. [Hyperlink, http://www.gao.gov/cgi-
bin/getrpt?GAO-05-1053T]. Washington, D.C.: September 28, 2005. 

[End of section] 

(350767): 

FOOTNOTES 

[1] In-kind donations are non-cash items such as food, clothing, 
blankets, and tents that were donated by foreign countries to the U.S. 
government. Foreign military donations came directly from foreign 
militaries to the United States and included such items as the use of 
amphibious ships, divers, and pumps. 

[2] The NRP assigns various agencies with lead roles and supporting 
roles during a disaster. The role that an agency would play depends on 
the nature of the disaster. 

[3] Not all offers of assistance were accepted by the U.S. government. 
For example, one country made an offer of cash that the United States 
did not accept, due to ongoing U.S. sanctions against that country. 

[4] Robert T. Stafford Disaster Relief and Emergency Assistance Act, 42 
U.S.C. §§ 5121-5206 (2000); see § 5201 (b). 

[5] Homeland Security Act of 2002, Pub. L. No. 107-296 (2002). 

[6] The working group included representatives from DOS, FEMA, DHS, 
NSC, and the Office of Management and Budget. Treasury officials also 
told us they participated in the group's initial meeting. 

[7] On March 16, 2006, DOS and the Department of Education signed a 
Memorandum of Agreement regarding the use of $60 million of the 
international cash donations. We did not review the details of this 
agreement. 

[8] The White House, The Federal Response To Hurricane Katrina: Lessons 
Learned (Washington, D.C.: Feb. 23, 2006). 

[9] 42 U.S.C. §§ 5121-5206. 

[10] Homeland Security Act of 2002, Pub. L. No. 107-296 (2002). 

[11] The Homeland Security Council ensures the coordination of all 
homeland security-related activities among executive departments and 
agencies and promotes the effective development and implementation of 
all homeland security policies. 

[12] 42 U.S.C. § 5201(b). 

[13] Homeland Security Presidential Directive 5, "Management of 
Domestic Incidents" (February 2003). 

[14] GAO, Standards for Internal Controls in the Federal Government, 
GAO/AIMD 00-21.3.1 (Washington, D.C.: November 1999). 

[15] 7 U.S.C. §§ 8301-8317. 

[16] 21 U.S.C. § 381. 

[17] FEMA noted in its technical comments that manifest data for 
military planes does not go to CBP and USDA. 

[18] Our scope did not include foreign assistance that was not provided 
to the federal government, such as foreign donations made directly to 
Hurricane Katrina victims, local governments, states, or institutions. 

[19] On March 16, 2006, DOS and the Department of Education signed a 
Memorandum of Agreement regarding the use of $60 million of the 
international cash donations. We did not review the details of this 
agreement. 

[20] Section 5201(b) of Title 42, U.S.C. states, in part, that "At the 
request of the President or his delegate, the Secretary of the Treasury 
may invest and reinvest excess monies in the fund. Such investments 
shall be in public debt securities with maturities suitable for the 
needs of the fund and shall bear interest rates determined by the 
Secretary of the Treasury, taking into consideration current market 
yields on outstanding marketable obligations of the United States of 
comparable maturities. The interest on such investments shall be 
credited to, and form a part of, the fund." 

[21] For example, the U.S. government declined one foreign country's 
offer of monetary assistance due to ongoing U.S. sanctions. 

[22] Treasury assigns various types of account symbols (accounts) to 
agencies for the purposes of classifying receipt, appropriation, 
deposit, trust, and other funds. These accounts are assigned based on 
the nature and characteristics of the transactions they support. 

[23] On March 16, 2006, DOS and the Department of Education signed a 
Memorandum of Agreement regarding the use of $60 million of the 
international cash donations. We did not review the details of this 
agreement. 

[24] FEMA plans to oversee case management grant activities and 
expenses to ensure the grant's objective is met. Additionally, the DHS 
Office of Inspector General (IG) has initiated an audit of the case 
management grant to provide independent oversight throughout the 
grant's existence. 

[25] Interest computed based on an estimated average annual yield of 5 
percent for Treasury Government Account Series from October 21, 2005, 
to February 23, 2006. 

[26] DHS noted in technical comments on a draft of this report that it 
would not subsequently transfer donated funds to another agency for 
purposes other than carrying out the Stafford Act. 

[27] The DOS Task Force included representatives from DOS and 
USAID/OFDA. 

[28] FEMA tasked USAID/OFDA to work with DOS to determine whether 
specific offers were accepted and needed. 

[29] In order to respond to the specific threat to human life and 
national interests posed by the major disaster existing in Louisiana, 
Mississippi, and Alabama, the Commissioner of U.S. Customs and Border 
Protection authorized Port Directors and Directors of Field Operations 
to close temporarily any Customs office or port of entry or take any 
other lesser action that may be necessary to respond to the Katrina 
Disaster. This action was taken pursuant to 19 U.S.C. § 1318(b)(2) and 
19 U.S.C. § 1322(b). 

[30] 9 C.F.R. 94.18. 

[31] As of December 13, 2005, the Department of State provided funding 
for payment of the private warehouse in Little Rock, Arkansas from 
FEMA. The Department of State, through USAID, has amended the contract 
to extend to February 28, 2006. 

[32] DOS officials commented that all MREs will be removed from the 
warehouse by March 31, 2006. 

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