Troubling Trends in DOD’s Weapon Programs

Photo of Four F-35 Aircraft FlyingThe Department of Defense’s 82 largest complex programs cost an estimated $1.69 trillion. We annually assess how DOD is managing and overseeing these major acquisition programs in our “Quick Look” reports.

In today’s WatchBlog, we discuss some of our observations from this year’s “Quick Look” at DOD. Listen to our podcast with Director Shelby Oakley, and then read on to learn about what we found.

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Costs trending up

In the past few years, we found that newer programs seemed to be doing a better job staying within budget estimates than programs had in the past. However, in this year’s assessment, we found that this trend was slipping for DOD’s major programs.

Most troubling is that DOD’s newer programs—those started after major acquisition reforms were adopted in 2010 to limit cost increases—now show overall recent cost growth.

Older programs, less competition

One of the primary drivers of the overall cost increase in the portfolio is that programs in this year’s portfolio are about 4 months older than last year and nearly 3 years older than in 2012. This is partly because DOD increased quantities of older systems and introduced new capabilities and upgrades by adding on to existing programs (such as with the F-35 Lightning II Joint Strike Fighter and the Virginia Class Submarine)—making these programs longer and costlier on average—instead of starting new ones.

However, this approach runs counter to a best practice—new capabilities should be structured as separate acquisition programs in order to improve transparency and accountability.

The Virginia Class Submarine (SSN 774 Block V)

Photo of Virginia Class Submarine (SSN 774 Block V)

Additionally, DOD’s contracts are often awarded without full and open competition. We found that DOD did not compete 67% of its major contracts. It also awarded 47% of its contracts to 5 corporations. A competitive environment saves money, which could mean the department is overpaying for goods and services.

Image Showing DOD Programs Competed One-Third of Currently Reported Major Contracts with Nearly Half of Awards Concentrated within Five Companies

Key acquisition practices

We’ve reported on DOD’s acquisition management for years, particularly examining how the Department’s weapons programs move through 3 important phases: technology development, system development, and production. These phases matter because moving forward without adequate knowledge for the next phase can derail a program. For example, weapon programs that enter development before their technologies are mature can later experience costly, time consuming design changes if those technologies don’t ultimately work exactly as initially planned.

However, we found that most of the 45 programs we surveyed moved through the acquisition lifecycle without collecting some key information in these stages.

Image Showing the Department of Defense (DOD) Acquisition Process

This lack of knowledge can affect the entire acquisition lifecycle of a program. Our work has linked such knowledge deficits to the risk of unexpected costs.

Moving forward

DOD has room to reverse the negative cost trends through strong leadership and insistence that programs implement knowledge-based best practices. However, this need for effective leadership comes at a time when DOD is making widespread reforms to how it oversees acquisition programs.

At the direction of Congress, DOD has decentralized oversight of its programs in an effort to speed up its processes. Oversight is now primarily the responsibility of the Army, Navy, and Air Force, and it is therefore up to the military services to ensure that programs implement knowledge-based best practices.

Want to know more? Check out our full reports on acquisition reform and DOD’s major weapons systems.


  • Questions on the content of this post? Contact Shelby Oakley at oakleys@gao.gov.
  • Comments on GAO’s WatchBlog? Contact blog@gao.gov.
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Finding Common Ground on Flood Insurance Reform

Photo Showing Marine Debris in the Florida KeysAs we enter the peak of hurricane season, many homeowners have wisely chosen to protect their properties by purchasing flood insurance.

However, the nation’s taxpayers remain largely unprotected as the National Flood Insurance Program (NFIP) is poised to continue to take on more debt.

Today’s WatchBlog looks at the nation’s flood insurance program, and what could be done to fix it.

How we got here

Congress created NFIP in 1968 with 2 competing goals: keeping flood insurance affordable and the program fiscally solvent. However, a historical focus on affordability has come at the expense of solvency.

In particular, Congress has required the program to charge discounted premium rates to many policyholders, even though these rates do not reflect the full risk of flood losses. This has led to a shortfall in revenue, and NFIP has not had sufficient funds to pay claims.

Additionally, because Congress has not appropriated funding to pay for this shortfall, NFIP has borrowed from the Treasury (i.e., taxpayers) to do so—to the tune of $36.5 billion since 2005. For these reasons, we placed NFIP on our High Risk List in 2006.

Figure Showing National Flood Insurance Program Annual Year-End Outstanding Debt to Treasury, Fiscal Years 1995-2017

How we fix it

Our April 2017 report outlines a roadmap for comprehensive reform that could improve the program’s solvency and enhance the nation’s resilience to flood risk.

With NFIP’s authorization again set to expire in September 2019, Congress has another opportunity to make significant changes to the program.

One of the main challenges with reform is trying to bridge the seemingly unbridgeable divide of affordability versus solvency. We found that full-risk premium rates for all policies, with appropriated means-based subsidies, could help address this issue because:

  • Full-risk premium rates would remove subsidies from those who don’t need them, helping improve solvency, and also more accurately signal the true flood risk to property owners.
  • Means-based subsidies would ensure that property owners who need help will get it.
  • Having Congress explicitly appropriate for the subsidies would make the true cost of the subsidy transparent to taxpayers.

While comprehensive reform of the program should also address the other issues we’ve identified, addressing the affordability/solvency trade-off could be an important first step to putting NFIP on a sustainable path, while protecting both policyholders and taxpayers.


  • Questions on the content of this post? Contact Alicia Puente Cackley at cackleya@gao.gov.
  • Comments on GAO’s WatchBlog? Contact blog@gao.gov.

 

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Is the Cloud Saving the Government Money?

Photo Showing the Homeland Security Information Network, One Example of a Federal System Using Cloud ServicesHave you ever wondered how the federal government provides important public services—like helping secure major sporting events or providing public access to weather data?

Or how the Treasury manages supplies for printing currency, or the military transports cargo around the world?

The answer: it’s in the cloud. Today’s WatchBlog explores government cloud computing and whether these services save taxpayer money.

Using cloud services

Each year, the federal government spends approximately $90 billion on IT. To deliver better IT services for less money, the government began requiring agencies in 2010 to move to cloud services when feasible.

Cloud services provide access to shared resources (networks, servers, and data storage that multiple agencies can use) more quickly and at a lower cost than individual agencies can.

For example:

  • The Department of Homeland Security migrated its information sharing network to the cloud in 2017—ensuring a continuously available network for law enforcement and emergency response during major sporting events and natural disasters.
  • The National Oceanic and Atmospheric Administration deployed public weather websites to the cloud in 2017 to provide timely access to weather data during hurricanes and other extreme weather events.
  • Treasury migrated its system for tracking paper, ink, and other supplies for printing currency and securities to the cloud in 2012, improving its ability to determine how much currency to produce.
  • DOD’s U.S. Transportation Command began to transition all computer systems that move cargo and passengers worldwide to the cloud in 2018—helping ensure the systems are more secure and continuously available.

Saving money

We reviewed 16 agencies to determine how much they saved after moving to cloud services.

Between 2014 and April 2019, 13 of the agencies reported that they had saved $291 million in total.

However, officials from the 13 agencies stated they were only able to track some savings data on an ad hoc basis for certain cloud investments. In addition, 3 agencies (DOD, State Department, and Social Security Administration) couldn’t provide savings data for any cloud investments.

Agencies identified 3 factors that impacted their efforts to provide savings data:

  • Untracked or hard-to-track savings data. DOD reported that they did not have the management system capability to track these types of data. The State Department reported not having reliable data because they were developing a tracking capability.
  • Moving to the cloud resulted in no savings. Several agencies reported that they did not save money because cloud services either enabled them to buy previously unavailable capabilities or necessitated new requirements, both of which resulted in no savings.
  • OMB guidance doesn’t require agencies to explicitly report cloud savings. Multiple agencies reported that they had to specifically collect these data to meet our data request.

As a result, agencies couldn’t provide savings data for 84% of the cloud investments that we reviewed. It is therefore likely that agency-reported cloud savings data were underreported.

Moving forward

OMB reported that agencies don’t have to specifically identify savings related to cloud computing unless they choose to do so.

We recommended that OMB improve its guidance on reporting cloud savings and that agencies track cloud savings.

To learn more, read our full report.


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Following the Paper Trail of Federal Retirement Processing

Photo of 2019 FERS Retirement FormThe Office of Personnel Management receives over 100,000 federal retirement applications each year. But the time it takes to process these applications can often be delayed. In fact, between 2014 and 2017, OPM didn’t meet its goal of processing most applications within 60 days. Today’s WatchBlog explores some of the reasons why from our recent report.

The retirement application paper trail

OPM manages the federal retirement program, which covers more than 2.4 million active employees. Almost 32% of federal employees who were on board at the end of FY17 would be eligible to retire in the next 5 years.

When employees are ready to retire, they submit retirement applications in paper form to their agency’s human resources office. The process is complete when an individual begins receiving regular monthly benefit payments.

Figure Showing Overview of Federal Retirement Application Process

Over several decades, OPM has attempted to move away from paper-based functions and replace antiquated information systems. However, the agency has experienced numerous challenges and has a history of undertaking modernization projects that didn’t yield the intended outcomes.

Compiling accurate information

Agencies we interviewed use 3 strategies to compile accurate retirement applications: they provide retirement counseling; conduct retirement application training on various topics, like retirement eligibility; and have procedures for compiling applications, such as checklists.

Figure Showing Selected Agencies Use Three Strategies to Compile Accurate Retirement Applications

Nonetheless, OPM officials told us that about 10% of applications are missing information such as a form or signature.

Why the delay?

Between 2014 and 2017, OPM didn’t meet its goal of processing most retirement applications within 60 days. OPM identified 3 main reasons for processing delays and has taken actions for each area.

  1. Continued reliance on paper applications and manual processing contributes to delays. While OPM has developed a strategic vision for modernizing the application process, it was unable to provide estimated time frames or costs.
  2. Insufficient staffing is a problem, particularly during peak season, according to OPM. To address this issue, OPM uses overtime pay and has hired additional staff. However, OPM generally doesn’t assess the effectiveness of these actions or whether they reduce delays.
  3. Incomplete applications also increase processing time. OPM provides assistance to agencies through guidance, communication through liaisons and email, and monthly error reports to agencies which include information on the type of error found and the volume of applications with the same error. However, agency officials we interviewed said that parts of the error report weren’t user-friendly, which may limit its usefulness in improving retirement applications.

Further actions OPM can take

We made 6 recommendations for additional actions OPM can take to improve retirement processing times. For example, OPM should:

  • develop a retirement IT modernization plan for initial project phases
  • develop and implement policies for assessing staffing strategies intended to improve processing times
  • determine if there are cost-effective ways to make the retirement application error report more user-friendly

Read our report to learn more.


  • Questions on the content of this post? Contact Yvonne Jones at jonesy@gao.gov.
  • Comments on GAO’s WatchBlog? Contact blog@gao.gov.
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Increased Federal Role in the Housing Finance System

housing thumbnailHousing finance is a complex, multi-trillion-dollar industry that played a major role in the 2007-2009 financial crisis. Two of our recent reports analyzed changes in the market since the crisis and their effect on taxpayers. We discuss our findings in today’s WatchBlog.

The process of pooling mortgages

After lenders make mortgage loans to homebuyers, they often sell the loans to third parties who pool these loans into mortgage-backed securities. Investors can then buy and trade these securities, similar to stocks and corporate bonds.

This process is intended to provide lenders with funding to make more loans and offer lower interest rates to borrowers.

Government’s expanding role in housing finance

The main federal entities involved in housing finance include:

  • Fannie Mae and Freddie Mac, which are government-sponsored enterprises (i.e., congressionally chartered private corporations that are publicly owned) that issue securities and guarantee the payment of principal and interest to investors in the event that borrowers default.
  • Ginnie Mae, which is a federally owned corporation within the Department of Housing and Urban Development that guarantees securities that are composed entirely of federally insured mortgages. Unlike Fannie Mae and Freddie Mac, Ginnie Mae doesn’t issue securities.

Leading up to the 2007-09 financial crisis, some borrowers defaulted on their mortgages and Fannie Mae and Freddie Mac suffered losses because of their guarantee to pay securities investors. In 2008, the federal government took control of Fannie Mae and Freddie Mac out of concern their failure could upset U.S. financial stability.

Even though the market has largely recovered, the federal role in the housing market has increased. Fannie Mae, Freddie Mac, and Ginnie Mae issue or guarantee about 95% of new mortgage-backed securities, compared to about 50% in 2006.

Figure Showing Single-Family Mortgage-Backed Security Issuance, Federal and Private, 2003-2017, Adjusted for Inflation

Ginnie Mae’s risk to taxpayers

Notably, Ginnie Mae’s market share has grown dramatically. In 2007, it guaranteed $500 billion of mortgage-backed securities, and in 2018, it guaranteed $2 trillion—exposing it and taxpayers to a greater risk of loss.

Our recent report found that Ginnie Mae faces resource and risk management challenges:

  • Ginnie Mae operates with a limited staffing budget and relies heavily on contractors.
  • Ginnie Mae has not assessed whether its mortgage-backed securities guaranty fee—which, among other things, helps ensure timely payment to investors—is set at an appropriate level in light of its growing risk exposure.
  • HUD faces challenges in its oversight of Ginnie Mae.

To address these challenges, we recommended that Ginnie Mae review its staffing practices and conduct additional risk management analysis. We also suggested that Congress consider legislation to address these challenges and to reform Ginnie Mae’s oversight structure so it can better address its risks.

The need for housing finance reform

A decade after the crisis, Fannie Mae and Freddie Mac remain under government control—leaving taxpayers on the hook for any potential losses. Our recent report found that lack of action to resolve the long duration of the government’s takeover of Fannie Mae and Freddie Mac has led to uncertainty among market participants.

Congress and others have suggested different ways to reform the system to lessen the government’s role and address weaknesses. We reviewed 14 reform proposals and found that while they generally included certain key elements—such as addressing fiscal exposure—many proposals didn’t have clear goals or a system-wide focus. For instance, 7 proposals didn’t consider how reform might impact other federal entities, including Ginnie Mae.

We suggested that Congress consider legislation for the future federal role in housing finance that has clear goals and considers Ginnie Mae.

We also continue to include housing finance on our high-risk list.


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The Secret Service’s IT Workforce

In addition to protecting the President, the Secret Service also investigates and prevents financial and electronic crimes—such as identity theft, counterfeiting, and computer-based attacks on the nation’s financial, banking, and telecommunications infrastructure. To do this, it relies heavily on its IT infrastructure and workforce.

In May, the Secret Service welcomed a new director, James Murray, who inherited a number of longstanding workforce issues, such as low employee morale and retention issues.

We recently looked at how the Secret Service is managing these issues for its IT workforce. Today’s WatchBlog explores.

Planning and management

There are a number of leading practices that can help federal agencies effectively plan and manage their workforces. We found that the Secret Service has fully implemented some of these leading practices in its IT department.

For example, the agency has worked to determine root causes of employee morale problems by analyzing employee survey results using techniques like comparing demographic groups, benchmarking against similar organizations, and linking findings to action plans. Additionally, officials have established and tracked metrics for improving low employee morale, and begun to provide regular performance feedback.

Room for improvement

However, the Secret Service hasn’t fully implemented other leading practices related to strategic planning, recruitment and hiring, training and development, employee morale, and performance management.

For instance:

  • The Secret Service has taken steps to establish a strategic workforce planning process for its IT workforce. However, its Office of the Chief Information Officer (OCIO) did not reliably determine the number of IT employees it needs to support the office’s functions.
  • The OCIO implemented recruiting and hiring plans but had not established and tracked metrics for monitoring the effectiveness of these recruitment and hiring activities for its IT workforce.
  • The OCIO was in the process of developing a training program for its IT employees but had not yet defined required training for these staff.
  • The Secret Service has established and tracked metrics for improving low morale; however, it had not demonstrated sustained improvement in the morale of its IT staff.
  • The Secret Service requires leadership to make distinctions between levels of staff performance. However, the performance plans for IT staff did not identify performance expectations related to all technical competencies.

We recommended 9 actions the Secret Service should take to improve the management of its IT workforce, including regularly analysis to ensure that its employees have the necessary skills.

To learn more, read our full report.


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Federal Efforts to Combat Elder Abuse

Photo of a Pair of HandsThis Saturday is Elder Abuse Awareness Day. It’s estimated that as many as 1 in 10 adults age 60 and older are abused each year in the United States.

In today’s WatchBlog, we discuss the Department of Justice’s role in combatting a prevalent form of elder abuse—financial exploitation—from our recent report.

How older people are targeted

Elder abuse can include physical, sexual, and emotional abuse; neglect; and financial scams. Such abuse can occur at the hands of trusted individuals, like family, guardians, or caregivers. But it can also be carried out by strangers or international criminal enterprises.

Older adults are particularly attractive targets for financial scams—they tend to have more wealth than younger people, and the incidence of Alzheimer’s and other dementias that impede judgment gets higher with age.

There are many types of financial scams, but most of them are generally designed to deceive victims and convince them to send money to strangers and international criminal networks. For example, scammers may convince victims that their grandchild is in trouble and needs money or trick victims into paying money for taxes they don’t actually owe.Image Showing Examples of Scams Commonly Committed Against Older Adults in the U.S.

 

Government’s role in combatting financial crimes against older adults

State and local governments are at the forefront of investigating and prosecuting all forms of elder abuse. However, the federal government may need to get involved in cases with complex financial crimes, including financial scams.

DOJ plays a lead role in the federal criminal justice system as well as in federal efforts to address elder justice related to financial crimes such as Medicare fraud and international schemes that affect older victims.

We found that DOJ has established several efforts related to elder justice and has dedicated staff to the issue. For example, DOJ investigates and prosecutes financial  crimes against older adults and provides elder justice training and grants to state and local entities.

However, we also found that DOJ’s planning and assessment of its elder justice efforts could be improved. We recommended that DOJ develop goals and outcome measures to improve how DOJ works on elder abuse issues.

Want to know more? Check out our key issues page on elder abuse.


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Are Tax Practitioners Protecting Your Personal Information?

Image of IRS Form 1040Doing your taxes can be complicated. So it’s no surprise that nearly 90% of taxpayers use either a paid preparer or tax software to prepare and file their taxes each year.

In an age of data breaches and identity theft, how safe is your information after you provide it to one of those third parties? We take a look in today’s WatchBlog.

How fraudsters target third parties

The information that you provide to your paid preparer or tax software package is a potential goldmine for identity thieves because it contains a lot of personal, financial, or federal tax information. Fraudsters may steal this information and use it to collect a fraudulent tax refund or commit other types of crimes.

Figure Showing Example of Successful Identity Theft Refund Fraud Attempt

How is IRS protecting sensitive taxpayer information?

IRS is required by law to protect sensitive financial and taxpayer information that resides on its systems. However, information held by third-party providers generally falls outside of these requirements.

IRS does have some information security controls for third-party providers. However, we found that its efforts don’t provide assurance that taxpayers’ information is being adequately protected. For example:

  • Paid Preparers: IRS seeks to help safeguard information through requirements it has for paid preparers that file returns electronically. However, the agency doesn’t have minimum information security requirements for the systems that paid preparers use because it would need explicit authority to regulate these systems, according to IRS officials.
  • Tax Software Providers: The providers that nearly all taxpayers use voluntarily adhere to a set of security standards, but these controls are not required. IRS also developed 6 standards for tax software providers that allow individuals to prepare their own tax returns (as opposed to using the software that paid preparers use). However, IRS hasn’t substantially updated these requirements since 2010, and they are, at least in part, outdated.

We suggested that Congress consider providing IRS with explicit authority to establish security requirements for paid preparers and others who participate in IRS’s program for e-filing tax returns.

We also made 8 recommendations to IRS to help improve its oversight of taxpayer’s information at third-party providers.

To learn more about our recommendations, check out our report.


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How Social Security is Working to Overcome its IT Management Challenges

The Social Security Administration relies on its IT systems to provide monthly payments to over 64 million Americans. Even with such an important mission, the agency has a history of struggling to manage its IT effectively.

However, SSA has been making significant improvements in IT management recently. Today’s WatchBlog takes a closer look at both SSA’s progress and some of its remaining challenges.

Smarter IT management

From 2011 to 2018, SSA made improvements in IT management in:

  • Incremental development. Incremental development is a collaborative process that delivers IT programs in small, bite-sized segments over time instead of all at once.
    • In November 2017, we reviewed 10 SSA programs and found that the administration’s chief information officer only certified 3 of them as using adequate incremental development methods.
    • Since we issued that report, SSA has improved its incremental development policies and processes, making it more likely that the agency will see benefits such as reduced risk and easier adoption of emerging technologies.
  • Software license management. Software licenses are agreements that allow organizations to use software in accordance with specified terms and conditions. Effective software license management can help prevent an agency from wasting money by either purchasing too many licenses or too few.
    • In May 2014, we reported that SSA did not follow leading software license management practices. For example, SSA was not keeping track of all of its software licenses in one place.
    • Since then, however, SSA has significantly improved how it manages its software licenses. The agency now has a comprehensive software license inventory, which should help the agency purchase the correct number of licenses for its needs.

Continuing challenges: CIO responsibilities

Despite these improvements, we found that SSA’s policies do not give the CIO all of the responsibilities that federal CIOs are required to have. In August 2018, we reported that the CIO’s responsibilities were particularly lacking in 2 main areas of responsibility:

  • IT workforce. Each year, CIOs are required to assess whether their agency’s IT staff has the skills and knowledge to meet the agency’s IT needs. If not, the CIO must come up with a solution to address any uncovered skill gaps or issues. SSA’s policies did not address this area of CIO responsibility.
  • IT strategic planning. CIOs are required to lead the strategic planning for all IT management functions. In other words, CIOs are in charge of defining organizational IT goals and outlining the ways to reach them. Each year, the CIO is charged with reporting on the agency’s progress towards achieving those goals. We found that SSA’s policies only minimally addressed this area. While SSA does require the CIO to establish IT goals, the policies do not require the annual progress report.

Table Showing Extent to Which Social Security Administration Policies Addressed the Role of the Agency's Chief Information Officer, as of August 2018

SSA agreed that it should address these weaknesses. Doing so would both strengthen the role of its CIO and help SSA continue to overcome its longstanding IT management issues.

To learn more, read our full report.


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Climate Change, Global Migration, and U.S. Government Actions

thumbnail international affairsToday is World Environment Day—a day for learning more about key issues facing the environment, such as climate change, and for thinking about how people interact with the Earth.

In today’s WatchBlog, we discuss our recent report on the potential effects of climate change on global human migration and what some federal agencies are doing about these issues.

How could climate change affect migration?

Climate change may intensify disasters that affect people’s lives such as drought, crop failure, sea level rise, and extreme weather events, according to international and U.S. government sources.

The effects of climate change, in turn, may alter existing migration trends around the world, according to the International Organization for Migration. For example, following a natural disaster such as a hurricane or flood, people may be forced to migrate because their homes are damaged or destroyed.

A complicated choice

Deciding whether to move away from one’s community is complicated in any situation—people must weigh many factors, such as economic opportunities, political stability, personal motives, and demographic pressures.

The effects of climate change add another layer of complexity to this decision. However, there is debate about how directly climate change influences people’s decisions to migrate or stay. For instance, it’s difficult to determine whether climate change is one of the many factors directly affecting people’s decision to migrate or whether it indirectly amplifies those factors.

Are federal agencies addressing climate change as a driver of migration?

We found that the U.S. Agency for International Development, the State Department, and the Department of Defense have activities related to climate change. Although none of these activities specifically focused on the nexus of climate change and migration, they could indirectly address some factors that drive migration. For example, USAID’s efforts to enhance countries’ resilience to the effects of climate change could indirectly address some factors that drive migration.

We also found that the 3 agencies have discussed the link between climate change and migration in agency plans and risk assessments, but the issue hasn’t been a focus of any of these efforts.

For example, State identified migration as a risk in one of its country-level climate change risk assessments in early 2017. However, State subsequently changed its approach and no longer provides clear guidance to its staff on how to assess climate change risks. We recommended that State provide its staff with this guidance.

To learn more, check out our report.


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