The Ukraine Connection

Summary of Mark Sandy’s Deposition Testimony

By Eric Halliday
Monday, December 2, 2019, 3:51 PM

Editor’s note: This is one of many summaries of depositions released by House impeachment investigators. The others are available here.

Mark Sandy testified before Congress in the ongoing impeachment inquiry on Nov. 16. Below is a summary of his testimony, as compiled from the transcript of his deposition.

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Mark Sandy is the deputy associate director for national security at the Office of Management and Budget (OMB), a position he has held since 2013. He has more than two decades of public service experience, including serving as a career civil servant in three separate presidential administrations, both Republican and Democratic. He has served in the Navy Reserve for 21 years.

Sandy described the organizational layout of the National Security Division (NSD) of OMB, which has responsibility for overseeing the budget and programs of the Department of Defense, the National Nuclear Security Administration, the intelligence community and the Department of Veterans Affairs. His immediate supervisor is Michael Duffey, the associate director of the Resource Management Organization at OMB, who is a political appointee.

In his current role, Sandy was responsible until recently for approving apportionments—legal documents “which basically set parameters on agencies’ use of appropriated funds.” There are two different types of security assistance for Ukraine, and Sandy explained that he could speak only to the Department of Defense Ukraine Security Assistance Initiative (USAI), not Foreign Military Financing administered by the Department of State. The USAI appropriation in fiscal 2019 was $250 million.

The congressional notification for the first tranche of that aid was issued on March 5, 2019. Sandy did not see the congressional notification for the second tranche, but he knew that it was issued in May. Before the second congressional notification, he was not aware that any concerns had been raised about the USAI funds during the interagency process. Sandy testified that he could not recall any precedent in which a hold had been placed on security assistance after the congressional notification had been sent.

Sandy first learned of a hold on military support funding for Ukraine on either July 18 or 19, which was shortly after he returned from leave he had taken beginning on July 8. After Sandy returned from leave on July 18, Duffey informed him of “the President’s direction to hold military support funding for Ukraine.” Sandy does not specifically remember whether that conversation occurred on July 18 or July 19, but it was within those two days. They spoke in a hallway after a meeting at the Eisenhower Executive Office Building. Duffey told Sandy that he had “communicated [President Trump’s] direction” to the Department of Defense and that he wanted to “create an apportionment that would implement the hold.”

Duffey and Sandy spoke on the phone on July 19 about the Ukraine aid. During that call, Duffey “expressed a desire to create an apportionment that would implement the hold.” Sandy responded by emphasizing that such an apportionment “would raise a number of questions that we would need to address” and advised Duffey that they would need to consult with the OMB Office of General Counsel about those questions “first.”

Specifically, Sandy told Duffey that they would need to discuss with legal counsel how the apportionment request would be affected by the Impoundment Control Act. Because Duffey told him that “there was no clear guidance” on the duration of the hold, Sandy was concerned that the funds would not be distributed before their period of availability expired on Sept. 30, which would violate the act. Duffey acknowledged that Sandy would consult the OMB Office of General Counsel about those concerns, but Sandy was doing so “on [his] own initiative.”

Sandy first reached out to the Office of General Counsel on the evening of Friday, July 19, and then scheduled a phone call for the morning of Monday, July 22. Sandy and OMB counsel exchanged a series of email messages throughout that weekend and into the week of July 22, with the concluding email sent on July 24. NSD staff also were in contact with the OMB Budget Review Division during the week of July 22 to discuss the best way to craft the hold. One staff member of the Budget Review Division expressed concerns that the hold would violate the Impoundment Control Act.

On July 22, Duffey forwarded to Sandy a July 12 email from Robert Blair, the senior adviser to Acting White House Chief of Staff Mick Mulvaney. Blair was Duffey’s predecessor at OMB, where he was Sandy’s immediate supervisor. In the July 12 email, Blair informed Duffey of President Trump’s decision to place a hold on the military support funding for Ukraine.

Sandy also had several conversations with Elaine McCusker, the deputy comptroller at the Department of Defense, during this period beginning when Sandy called her on the evening of July 22. They spoke about how the Impoundment Control Act could affect the requested hold and how they could “institute a temporary hold consistent with” the act. McCusker believed that the hold would not cause any issues for a brief period of time.

During this time, Duffey forwarded Sandy another email from Blair, in which Duffey asked Blair about the reason behind the hold. Blair declined to answer but said that the hold should go into effect and then the issue could be revisited with the president at a later time.

On July 25, OMB issued its first USAI apportionment with the hold restricting the funding obligations through Aug. 5. The hold was incorporated into the document as a footnote. Sandy “worked very carefully on the footnote” to address his concerns about the Impoundment Control Act, including consulting with OMB counsel. Between July 25 and Aug. 5, Sandy also sought guidance from McCusker and policy officials at the National Security Council (NSC).

During their July interactions, Duffey did not give Sandy any rationale behind President Trump’s request. When Sandy asked, Duffey explained he was not aware of the rationale but would try to get more information and then share that information with Sandy and his staff. The motivation behind the request was “an open question” throughout late July and all of August, but it was not necessary for Sandy and his team to know. They “execute based upon direction, even if it’s not always explained to [them].”

On July 26, there was a deputies-level meeting among NSC officials in which Duffey represented OMB. Sandy and his staff prepared Duffey for that meeting “by raising a number of questions that [they] thought” should be discussed: the reason, extent, and duration of the hold, as well as the legal implications of implementing the follow-up action. They advised him about potential public messaging issues if the hold were to become public knowledge as well as the potential notification of Congress about the hold. At the deputy-level NSC meeting, OMB—through Duffey—expressed President Trump’s decision to institute the hold. Every other agency wanted to lift the hold. The meeting did not provide any clarity about the hold or the motivation behind it.

On Tuesday, July 30, Acting Director of OMB Russell Vought made Duffey the approving official for apportionments—taking that responsibility away from Sandy. Duffey explained to Sandy and the NSD staff that “leadership” was increasingly interested “in tracking the uses of money closely,” so Duffey wanted to become “more involved in daily operations.” After Duffey became the approving official, he had a number of interactions with McCusker at the Department of Defense. She was concerned that the apportionment money could not be spent appropriately if the hold were not lifted. Sandy was not directly involved in the subsequent conversations between Duffey and McCusker.

Sandy was asked if he suspected any sort of hidden purpose behind Duffey becoming the approving official, but Sandy said that he took Duffey at his word. Sandy has never seen any OMB division’s apportionment authority removed by a political appointee. Similarly, he cannot remember another comparable incident during his time at OMB in which he and his staff did not know for months the rationale behind the hold-up of a significant amount of assistance.

In an Aug. 7 memorandum to Vought, Sandy and his staff recommended that the hold be removed for three reasons. First, “the assistance to Ukraine is consistent with the national security strategy”; second, the program provided a benefit to the effort to oppose Russian aggression; and third, the program had bipartisan support. Duffey agreed with these policy recommendations. The memo was a “joint effort” between NSD, the International Affairs Division of OMB and the OMB Office of General Counsel.

In early August, the Department of Defense no longer felt that it could meet its funding obligations before the end of the year if the hold remained in place and asked OMB to remove a section of the footnote in the apportionment documents, which had previously asserted that the Department of Defense could do so. Defense officials were worried that the hold would violate the Impoundment Control Act. In the end, roughly $35 million was unobligated at the end of the fiscal year. Sandy testified that those funds would have expired if Congress had not passed a provision in the continuing resolution extending the deadline so that the $35 million could be obligated past Sept. 30.

From early August until Sept. 12, OMB approved another half-dozen or so apportionments extending the hold, all in line with the original footnote hold, which precluded obligation of funds for a limited period of time but enabled planning and casework to continue. This type of hold was unusual in Sandy’s experience. Duffey consulted with the OMB general counsel’s office before approving those apportionments, and Sandy confirmed that the general counsel’s office signed off on the apportionments.

Eventually, in early September, Duffey told Sandy via email that the hold was caused by “the President’s concern about other countries not contributing more to Ukraine.” Around that time, Blair stopped by Sandy’s office and told him the same reason. Sandy and his NSD staff also received a number of email requests from Duffey, at Blair’s prompting, asking for information about the contributions of other countries to Ukraine. In response to those requests, Sandy and his staff provided that information to Duffey via email.

Sandy knows of at least two OMB colleagues who resigned because of concerns about the hold. One worked in the Legal Division and had expressed reservations that the hold violated the Impoundment Control Act, and another worked in a different division.