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GAO Issues Report: Additional DOD Actions Could Better Support Military Foster and Adoptive Families
WASHINGTON, Aug. 21 -- The Government Accountability Office has issued a report (GAO-21-438) entitled "Military Families: Additional DOD Actions Could Better Support Military Foster and Adoptive Families".The report was sent to Sen. Jack Reed, D-Rhode Island, chairman, Sen. James M. Inhofe, R-Oklahoma, ranking member of the Senate Armed Services Committee, Sen. Jon Tester, D-Montana, chairman, Sen. Richard C. Shelby, R-Alabama, ranking member of the Senate Appropriations subcommittee on Defense, Rep. Adam Smith, D-Washington, chairman, Rep. Mike Rogers, R-Alabama, ranking member of the House ... Show Full Article WASHINGTON, Aug. 21 -- The Government Accountability Office has issued a report (GAO-21-438) entitled "Military Families: Additional DOD Actions Could Better Support Military Foster and Adoptive Families". The report was sent to Sen. Jack Reed, D-Rhode Island, chairman, Sen. James M. Inhofe, R-Oklahoma, ranking member of the Senate Armed Services Committee, Sen. Jon Tester, D-Montana, chairman, Sen. Richard C. Shelby, R-Alabama, ranking member of the Senate Appropriations subcommittee on Defense, Rep. Adam Smith, D-Washington, chairman, Rep. Mike Rogers, R-Alabama, ranking member of the HouseArmed Services Committee, McCollum, chairman, and Rep. Ken Calvert, R-California, ranking member of the House Appropriations subcommittee on Defense, on Aug. 19, 2021. Here are excerpts of summaries associated with the report.
What GAO Found: "National data from the Department of Defense (DOD) between 2016 and 2020 suggest that very few military families-2,174-fostered or sought to adopt relative to the total active-duty servicemember population, which was 1.3 million in 2019. The distribution of servicemembers by service branch who fostered or sought to adopt was generally similar to the distribution of the overall servicemember population, with more Army servicemembers fostering or seeking to adopt. These servicemembers were also deployed at a similar rate as the overall active-duty servicemember population. Officers fostered or sought to adopt children at over three times the rate of enlisted servicemembers.
DOD, the Department of Health and Human Services (HHS), and selected state and local agencies provide some targeted supports to assist military families who foster or adopt, such as adoption-related leave (see figure https://www.gao.gov/products/gao-21-438). Other DOD supports, such as non-medical counseling and Children and Youth programs, are available to all military families, including foster and adoptive families. However, military and child welfare officials and families GAO interviewed reported limited awareness of available military supports, which are spread across multiple programs and offices. Absent efforts to centralize and promote available supports, DOD may be missing an opportunity to meet the needs of foster and adoptive families.
Almost all military families GAO interviewed reported frequent moves, deployments, or enrollment in DOD's benefits system as challenges to fostering and adopting. Many families said moves or deployments resulted in delays or interruptions in the foster or adoption process, which child welfare officials GAO interviewed said they were sometimes able to mitigate, such as by expediting the adoption process or allowing a deployed parent to complete required training virtually. In addition, 12 of the 29 families GAO interviewed reported challenges enrolling their foster or pre-adoptive child in the DOD system that allows the child to obtain certain military benefits and services, which they said caused delays or prevented many families from accessing such services. DOD issued guidance on enrolling children in its system, but we found key parts of the guidance related to enrolling foster children to be inconsistent with DOD regulations. In addition, most DOD officials GAO spoke with at selected installations who are responsible for enrollments said they have little experience enrolling either foster or pre-adoptive children. Until DOD revises the guidance on enrolling foster children to ensure consistency with regulations and promotes awareness of eligibility and documentation requirements for enrolling both foster and pre-adoptive children in DOD's benefits system, foster and adoptive families may continue to face challenges obtaining services for which they are eligible."
Why GAO Did This Study: "Active-duty servicemembers in the U.S. military may expand their family by fostering or adopting a child from the foster care system, or through a private adoption. A U.S. House of Representatives Committee report accompanying the National Defense Authorization Act for Fiscal Year 2020 included a provision for GAO to examine these families.
This report examines (1) the number and characteristics of military foster and adoptive servicemembers, (2) what foster- and adoption-related supports federal, and selected state and local agencies provide to military families and families' use of supports, and (3) challenges these families face. GAO reviewed relevant federal laws, regulations, and guidance and analyzed data on active-duty servicemembers. GAO conducted virtual visits with officials at a nongeneralizable group of four military installations, and with officials at state and local agencies involved in foster care and adoption in four states, selected for a high number of active-duty members and varying installation sizes and geographic locations. GAO held virtual discussion groups with 29 military foster and adoptive families. GAO also interviewed officials from DOD, HHS, and national organizations."
What GAO Recommends: "GAO is making three recommendations to DOD: to centralize information on available supports, revise guidance on enrolling a foster child in its benefits system, and promote awareness of guidance on enrolling foster and pre-adoptive children. DOD generally agreed with the recommendations."
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August 19, 2021
To: Congressional Committees
Approximately 1.3 million active-duty servicemembers are in the U.S. military and some choose to expand their family through fostering or adopting a child while stationed at a U.S. military installation./1 Individuals, including servicemembers, may become foster parents or adopt a child from the foster care system, or through a private adoption agency or attorney. While the Department of Health and Human Services (HHS) administers programs that support foster care and adoptions of children from foster care, the Department of Defense (DOD) supports servicemembers and their families' needs through a variety of readiness and quality-of-life programs. Military families may face additional challenges when adopting or fostering due in part to their frequent relocations within and outside of the U.S. In March 2019, DOD issued a report that identified challenges servicemembers may face during the adoption or fostering process related to deployments and transfers and changes to schedules, assignments, and deployments, among others./2 The U.S. House of Representatives Committee on Armed Services report accompanying the National Defense Authorization Act for Fiscal Year 2020 included a provision for GAO to examine the number of military foster and adoptive families, challenges these families face, support services available to them, and actions federal agencies can take to better prepare and support these families./3 This report examines (1) what is known about the number and characteristics of military foster and adoptive servicemembers; (2) what foster- and adoption-related supports federal and selected state and local agencies provide that are specific to military families and families' use of these supports; and (3) challenges that military foster and adoptive families face.
We relied on several methodologies to inform our objectives. At the federal level, we reviewed relevant federal laws, regulations, guidance, and program documents, and interviewed officials from DOD's headquarters and program offices under the service branches (Army, Navy, Marine Corps, and Air Force) and HHS's Children's Bureau, an office of the Administration for Children and Families. To examine what is known about the number of military foster and adoptive families, we analyzed DOD data for the time period covering 2016 through 2020, including data on enrollments of eligible foster children and children in the process of being adopted (pre-adoptive) by servicemembers from the Defense Enrollment Eligibility Reporting System (DEERS)./4 To examine the characteristics of servicemembers with a foster or pre-adoptive child dependent and servicemembers' use of certain military supports available to foster and adoptive families, we also analyzed other DOD data covering the same time period, including data on servicemember deployments from the Contingency Tracking System; data on payments made to servicemembers for reimbursement of adoption-related expenses from the Adoption Reimbursement System; and data on adoption and foster care consultations from the Case Management System./5
To help inform all of our research objectives and gather additional information about foster- and adoption-related supports specific to military families, we conducted virtual visits to four selected states: California, Colorado, Florida, and Georgia. Within these states, we visited a nongeneralizable group of four selected military installations serving active-duty members within the four service branches, as well as selected state and local child welfare and private placement agencies located in these states, between September 2020 and October 2020./6 We selected military installations within states with a high number of active-duty servicemembers, and aimed for variation across the sites in installation size and geographic location. In the four selected states, we interviewed officials from relevant state and local agencies, and representatives from military programs and offices that provide supports and services to families at their installations./7 Because we relied on a nongeneralizable sample of sites and states, the views of the entities we interviewed do not represent the views of all states, localities, and installations providing foster- and adoption-related supports that are specific to military families.
To gather information about use of available supports and challenges faced by military foster and adoptive families, we conducted virtual discussion groups with 29 military families from the four service branches who engaged in the fostering or adoption process in the U.S. while on active-duty status./8 Our criteria for selecting discussion group participants included individuals who: (1) had experience with fostering a child, adopting from foster care, or privately adopting a U.S. citizen child within the last 5 years; and (2) were active-duty servicemembers or married or partnered with one during the fostering or domestic adoption process. To obtain additional information on available supports and challenges faced by military foster and adoptive families, we interviewed representatives from national-level organizations that have a perspective on families who foster or adopt.
In this report, we defined and used qualifiers, such as "a few," "some," "many," "most," and "almost all" to quantify responses from military foster and adoptive families and officials across federal, military, and selected state and local agencies./9 We also assessed efforts by DOD to communicate necessary quality information to achieve its objectives against Standards for Internal Control in the Federal Government for information and communication and other relevant criteria./10 For more information on our scope and methodology, see appendix I.
We conducted this performance audit from March 2020 through August 2021 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.
See footnotes here: https://www.gao.gov/assets/gao-21-438.pdf
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Conclusions
Although the process to foster or adopt is complex and sometimes lengthy for any individual or family, servicemembers and their families may face particular difficulties due to the frequent moves and deployments inherent in military service. DOD plays an important role in ensuring that servicemembers and their families have the supports needed for maintaining stability, resilience, and work-life balance wherever they are stationed. DOD provides some assistance specific to those servicemembers and families pursing foster care or adoption, and makes available other supports to any servicemember, which may also address the needs of foster and adoptive families. However, with supports spread across multiple programs and offices and limited outreach on and awareness of these supports among foster and adoptive families as well as military programs and child welfare agencies assisting these families, DOD may potentially miss opportunities to support and meet the needs of this population.
In addition, DOD allows servicemembers and their families with eligible foster or pre-adoptive children the opportunity to access these military services and benefits through enrollment in its military benefits system, DEERS. However, a lack of clarity in DOD's guidance and inconsistencies between the guidance and DOD regulations on the required documentation for enrollment of foster children, as well as a lack of familiarity and experience enrolling both foster and pre-adoptive children among personnel responsible for enrolling eligible family members in DEERS, have created barriers for families to access these services. Without ensuring that the guidance on foster child enrollment is consistent with DOD regulations and regularly promoting awareness of information on the eligibility and required documents to enroll foster and pre-adoptive children in DEERS, some families may not be able to access the supports and services for which they are eligible, potentially resulting in unmet needs for both families and their children.
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Recommendations for Executive Action
We are making the following three recommendations:
The Secretary of Defense should provide a centralized location for and promote awareness of information about foster and adoption-related policies and available DOD supports to better assist military foster and adoptive families. For example, the Secretary of Defense could provide such information through Military OneSource, using a designated point person on an installation, or through an existing installation program office. (Recommendation 1)
The Secretary of Defense should ensure that the Secretary of the Air Force revise AFI 36-3026, Volume 1, in cooperation with other DOD components as appropriate, to make it consistent with Department of Defense regulations on the required documents to enroll foster children in DEERS. (Recommendation 2)
The Secretary of Defense should ensure that the Secretaries of the military departments identify opportunities to regularly promote awareness of accurate information and guidance that includes accurate information on enrolling both foster and pre-adoptive children to all staff responsible for DEERS enrollments. For example, the military departments could coordinate with relevant offices to promote awareness of the guidance through annual trainings or other training mechanisms. (Recommendation 3)
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Agency Comments and Our Evaluation
We provided a draft of this report to DOD and HHS for review and comment. DOD provided written comments, which are reproduced in appendix III, as well as technical comments, which we incorporated as appropriate. HHS did not provide any comments.
In its written comments, DOD generally concurred with our three recommendations. In response to our first recommendation to centralize information on available supports, DOD stated that it will explore opportunities to enhance existing information on foster and adoptive resources on Military OneSource and promote awareness of these resources. DOD also stated that it will ensure the Secretaries of the military departments explore the identification of an installation level office or point of contact for foster and adoptive family assistance.
In response to our second recommendation to revise the information in the AFI on enrolling a foster child in its benefits system, DOD agreed that foster- and adoption-related policy developed and implemented by the Secretaries of the military departments should be consistent with DOD's policy. However, DOD suggested that the Secretary of the Air Force should take the lead in revising the AFI, in cooperation with other DOD components as appropriate, as this document is issued under the authority of the Secretary of the Air Force. We therefore revised our recommendation to direct it to the Secretary of the Air Force.
In response to our third recommendation to promote awareness of guidance on enrolling foster and pre-adoptive children, DOD agreed with promoting awareness of guidance that includes accurate information on enrolling both foster and pre-adoptive children in DEERS. DOD stated that it will ensure steps are taken to examine department-wide training and evaluate operational guidance for the personnel responsible for DEERS enrollment. However, DOD stated that the responsibility for promoting awareness of this information falls within the purview of the Secretaries of the military departments, which oversee the operation of sites that are responsible for DEERS enrollment. We therefore revised our recommendation to direct it to the Secretaries of the military departments.
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The text of the GAO report is available at https://www.gao.gov/products/gao-21-438
GAO Issues Report: DOD Can Improve Processes for Monitoring Long-Standing Issues
WASHINGTON, Aug. 19 -- The Government Accountability Office has issued a report (GAO-21-486) entitled "Defense Nuclear Enterprise: DOD Can Improve Processes for Monitoring Long-Standing Issues".The report was sent to Sen. Jack Reed, D-Rhode Island, chairman, Sen. James M. Inhofe, R-Oklahoma, ranking member of the Senate Committee, Sen. Jon Tester, D-Montana, chairman, Sen. Richard C. Shelby, R-Alabama, ranking member of the Senate Appropriations Subcommittee on Defense, Rep. Adam Smith, D-Washington, chairman, Rep. Harold Rogers, R-Kentucky, ranking member of the House Armed Services Armed Services ... Show Full Article WASHINGTON, Aug. 19 -- The Government Accountability Office has issued a report (GAO-21-486) entitled "Defense Nuclear Enterprise: DOD Can Improve Processes for Monitoring Long-Standing Issues". The report was sent to Sen. Jack Reed, D-Rhode Island, chairman, Sen. James M. Inhofe, R-Oklahoma, ranking member of the Senate Committee, Sen. Jon Tester, D-Montana, chairman, Sen. Richard C. Shelby, R-Alabama, ranking member of the Senate Appropriations Subcommittee on Defense, Rep. Adam Smith, D-Washington, chairman, Rep. Harold Rogers, R-Kentucky, ranking member of the House Armed Services Armed ServicesCommittee, Rep. Betty McCollum, D-Minnesota, chairman, and Rep. Ken Calvert, R-California, ranking member of the House Appropriations Subcommittee on Defense, on Aug. 18, 2021. Here are excerpts of summaries associated with the report.
What GAO Found: "The Department of Defense (DOD) continues to make progress implementing the recommendations from the 2014 nuclear enterprise reviews and the 2015 nuclear command, control, and communications enterprise review. From the 2014 reviews, DOD identified 175 recommendations. From these 175, DOD identified 247 actions it referred to as sub-recommendations, meaning that a recommendation made to multiple DOD components would be counted as one sub-recommendation for each of those components. Since GAO's March 2020 report, DOD has closed an additional nine of these sub-recommendations, and recommended 11 sub-recommendations for final closure. DOD has also closed one additional recommendation from the 13 made in its 2015 review, with four of the remaining five recommended for final closure.
Regarding the 2014 recommendations related to nuclear security forces, DOD identified initial metrics and milestones for tracking the progress addressing the identified challenges, but GAO found that a key measure for many of the recommendations contained unreliable data. Additionally, more recent reviews of security forces have identified additional metrics and milestones that could help DOD in assessing the progress of recommendation implementation. However, DOD has not reassessed these measures to determine if they are appropriate. As a result, DOD is not in a position to effectively measure progress or assess whether the actions taken have addressed the underlying issues.
In November 2018, GAO found that DOD had taken steps to improve nuclear enterprise oversight in response to the 2014 reviews. However, GAO found a key organization lacked clear roles, responsibilities, and methods to collaborate with other nuclear oversight organizations. Subsequently, in January 2021, DOD created a new entity, the Secretary of Defense Nuclear Transition Review, to take over responsibility for oversight of the defense nuclear enterprise (see figure https://www.gao.gov/products/gao-21-486). However, DOD has not defined specific roles and responsibilities for this organization or how it will communicate internally and with other organizations.
In addition, DOD and the military services have made some progress in identifying areas for monitoring the health of the nuclear enterprise, but DOD has not identified the means by which it will monitor long-standing issues related to the long-term health of the enterprise."
Why GAO Did This Study: "In 2014, the Secretary of Defense directed two reviews of DOD's nuclear enterprise. The reviews made recommendations to address long-standing issues with leadership, investment, morale, policy, and procedures, as well as other shortcomings adversely affecting the nuclear deterrence mission. In 2015, DOD conducted a review focused on nuclear command, control, and communications systems, resulting in additional recommendations.
The National Defense Authorization Act for Fiscal Year 2017 included a provision for GAO to review DOD's processes for addressing these recommendations. GAO assessed the extent to which DOD has (1) made progress implementing the recommendations; (2) evaluated the metrics and milestones for implementing the 2014 nuclear enterprise review recommendations related to nuclear security forces; and (3) implemented oversight mechanisms, including developing an approach for monitoring long-standing issues. GAO reviewed documents and interviewed DOD officials on the recommendations' status and DOD's oversight."
What GAO Recommends: "GAO is making four recommendations for DOD to provide guidance to require its components to assess implementation metrics and milestones; and document roles, responsibilities, and communication methods for the new oversight group, as well as a means to monitor long-standing nuclear enterprise issues. DOD concurred with all of the recommendations."
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August 18, 2021
To: Congressional Committees
In 2014, as a response to incidents involving the nation's nuclear forces and their senior leadership, the Secretary of Defense directed both an internal Department of Defense (DOD) review and an independent review of the DOD nuclear enterprise. The DOD nuclear enterprise includes Air Force intercontinental ballistic missiles; Air Force nuclear-capable bombers and tactical fighters; Navy ballistic missile submarines; and the supporting infrastructure and personnel to build, maintain, and control these assets. Nuclear security force personnel prevent unauthorized access, damage, loss, theft, sabotage, or compromise of nuclear weapons and infrastructure.
The two 2014 reviews examined DOD's nuclear deterrent mission and the two resulting reports identified long-standing issues with leadership, organization, investment, morale, policy, and procedures, as well as other shortcomings that were adversely affecting the mission and long-term health of the enterprise./1 The Commander of U.S. Strategic Command-- the DOD combatant command responsible for planning for and the employment of U.S. nuclear weapons--also identified additional areas for improvement in a 2014 memorandum./2 Together, the two 2014 reports and the memorandum (hereafter referred to collectively as the 2014 nuclear enterprise reviews) had 175 recommendations to address DOD's management of nuclear personnel, security requirements for nuclear weapons, and the availability of key equipment and support parts, among other issues./3
In 2015, DOD conducted a review focused on nuclear command, control, and communications (NC3) systems, which resulted in another report containing 13 additional recommendations (hereafter referred to as the 2015 NC3 report)./4 The 2015 NC3 report made recommendations to address diffused responsibility, accountability, and authority for the NC3 enterprise; ineffective management of the acquisition and sustainment of some NC3 systems; and a lack of institutional training and personnel management programs.
The National Defense Authorization Act for Fiscal Year 2017 includes a provision for us to review--during each of fiscal years 2017 through 2021--DOD's processes for addressing the recommendations of the 2014 nuclear enterprise reviews and the 2015 NC3 report, and to provide a briefing to the congressional defense committees on the results of our review./5 For fiscal years 2016-2020, we reported on DOD's overall progress implementing, tracking, and evaluating the recommendations from the 2014 reviews and the 2015 report. We also reported on different issue areas related to the 2014 and 2015 recommendations. For example, we reported on the program used to ensure the reliability of personnel with access to nuclear weapons and materials, governance and oversight organizations, and the sustainment and maintenance of major programs./6
In November 2018, for example, we recommended that DOD clarify roles, responsibilities, and methods of communication and collaboration for key defense nuclear enterprise oversight bodies, including the Nuclear Deterrent Enterprise Review Group (NDERG)./7 In March 2020, we recommended, among other things, that the Director of Cost Assessment and Program Evaluation (CAPE) coordinate with other stakeholders to update the guidance for the methods of tracking and evaluating the implementation of the 2014 nuclear enterprise review recommendations and require DOD components to keep information current. We also recommended that the Under Secretary of Defense for Acquisition and Sustainment update applicable guidance for the methods of tracking and evaluating the implementation of the 2015 NC3 report recommendations and require DOD components to keep information complete and current.
DOD concurred with our recommendations, and we report on their implementation status in this report. Information on the status of our prior recommendations to DOD regarding the 2014 nuclear enterprise reviews and 2015 NC3 report is presented in appendix I.
In this report we assess the extent to which DOD has (1) made progress implementing the recommendations in the 2014 nuclear enterprise reviews and the 2015 NC3 report; (2) evaluated the metrics and milestones for implementing the 2014 nuclear enterprise review recommendations related to nuclear security force issues; and (3) implemented oversight mechanisms, including identifying roles, responsibilities, and communication methods for the oversight of the defense nuclear enterprise, and developing an approach for monitoring long-standing issues.
For objective one, we reviewed the centralized DOD tracking tool for the 2014 nuclear enterprise review recommendations, and the tracking tool for the 2015 NC3 report recommendations used by the Office of the Under Secretary of Defense for Acquisition and Sustainment. We also reviewed the recommendations from the 2014 nuclear enterprise reviews and the 2015 NC3 report, and applicable implementation and tracking guidance./8 We interviewed officials from the Air Force, the Navy, and other DOD components regarding the status of the recommendations and the use of the tracking tools. We evaluated the reliability of the data found in DOD's tracking tools for the 2014 and 2015 recommendations by comparing the contents from the tools with the original recommendations as written in the 2014 reviews and 2015 report as well as information obtained from other agency documentation and interviews with agency officials. We concluded that the data were reliable for tracking whether recommendations were in progress, awaiting review for possible closure, or closed.
To address our second objective, we focused on DOD's efforts to address the numerous recommendations related to improving the nuclear security forces because we had not previously reported on many of these efforts.
We defined "nuclear security forces" as Department of the Air Force and Department of the Navy (including the Marine Corps) personnel that safeguard nuclear assets and facilities associated with operational units in the U.S./9 We identified and reviewed recommendations and sub-recommendations from the 2014 nuclear enterprise reviews that related either directly to the Air Force, Navy, or Marine Corps nuclear security forces or that included these forces as part of a larger population included within the recommendations' scope (e.g., recommendations concerning readiness or career development issues). We identified 42 recommendations, comprising 56 sub-recommendations, that were directed to or affected the nuclear security forces.
For each of those sub-recommendations, we compared the metrics and milestones that were in DOD's centralized tracking tool with applicable guidance, such as a 2016 Deputy Secretary of Defense memorandum, Transition of Nuclear Enterprise Review Tracking Responsibilities, which assigned tracking responsibilities; the CAPE analytic guidance attached to that memorandum; and the NDERG charter. We determined that internal control components on the use of quality information and monitoring activities were significant to this engagement./10 We collected and reviewed additional documentation, such as documentation used by the military services, to validate the personnel requirements for the security posts for each Air Force installation with operational nuclear forces in the U.S. We also reviewed Air Force assessments of the security forces conducted since 2014, such as the Interagency Security Forces Review. We interviewed officials from the Air Force's and Navy's headquarters offices and security force units at each of the nuclear enterprise installations hosting missile, bomber, or submarine platforms about security force challenges and efforts to mitigate the underlying challenges associated with the sub-recommendations we identified. We held separate interviews with unit leadership and a selection of non-leadership personnel from security force units./11 These personnel conduct the day-to-day security mission at Navy and Air Force facilities with operational nuclear forces in the U.S. Our interview questions were based on the original sub-recommendations and reported actions taken to determine what steps DOD and the military services have taken to mitigate the underlying challenges of those recommendations, and their effects.
We also obtained data from command climate surveys conducted with these units from 2014 through 2019 and assessed the reliability of these data and the appropriateness of their use as a metric for DOD to assess progress implementing the 2014 nuclear enterprise review recommendations. We identified a number of issues that limit the effectiveness of using these data as a metric for assessing DOD's progress implementing the 2014 recommendations--including data entry errors, missing data, and low response rates. Therefore, we concluded data from the command climate surveys was unreliable for assessing progress implementing the 2014 recommendations.
For our third objective, we assessed governance and oversight issues for the defense nuclear enterprise given the changing conditions in DOD's relevant structures since we last reported on these issues in 2018./12 We defined "long-standing issues" as the issues that DOD has identified to aid in monitoring the long-term health of the nuclear enterprise. They are not directly tied to the 2014 nuclear enterprise review recommendations, but generally stem from them. We reviewed documents associated with DOD's nuclear enterprise governance structure and interviewed DOD and service officials about the status of the NDERG and Secretary of Defense Nuclear Transition Review (SNTR)./13 We also reviewed applicable guidance, such as the Charter of the Nuclear Deterrent Enterprise Review Group; the 2016 Deputy Secretary of Defense memorandum; CAPE's January 2018 updated guidance on risk; and a January 2021 Acting Secretary of Defense memorandum./14 We determined that selected leading practices for enhancing collaboration--in particular, agreeing on roles and responsibilities and developing mechanisms to monitor, evaluate, and report on results--were relevant for assessing DOD's structures and practices for nuclear enterprise governance./15 We also determined that the internal control components on the use of quality information and monitoring activities were significant to this engagement./16 We assessed the documentation of DOD's nuclear enterprise governance structures against this principle, in particular the importance of identifying methods for the use and communication of quality information with stakeholders./17
Appendix II provides a complete list of offices we met with or obtained information from during our review.
We conducted this performance audit from January 2020 to August 2021 in accordance with generally accepted government auditing standards.
Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.
See footnotes here: https://www.gao.gov/assets/gao-21-486.pdf
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Conclusions
In 2014 and 2015, DOD identified hundreds of recommendations to address issues across the defense nuclear enterprise. The processes and tools established by the department to aid in tracking both the progress in implementing these recommendations as well as the ultimate effectiveness of those efforts to address underlying problems can continue to serve DOD well. However, DOD has not updated these tools to include appropriate metrics and milestones to aid in the department's assessment, including identifying metrics in the tools that are ill-suited for this purpose and no longer relying on those metrics to measure progress.
Until the department updates these tools, it is not positioned to effectively measure what progress has been made or assess whether the actions taken have addressed the underlying issues that gave rise to the original recommendations before closing these recommendations.
Additionally, while DOD has stated that the SNTR will continue the mission of the NDERG to provide senior-level oversight of the defense nuclear enterprise, DOD has not clearly documented the specific roles and responsibilities of the SNTR and its supporting organizations. Without clearly documenting the SNTR's roles and responsibilities for monitoring the long-term health of the nuclear enterprise, DOD may not have oversight of key issues affecting the enterprise that were previously monitored by the NDERG.
Further, DOD has also not documented the methods the SNTR should use for communicating with other defense nuclear enterprise oversight organizations. In the absence of methods for how the SNTR is to communicate with other existing nuclear enterprise oversight organizations, it will be unable to effectively oversee the defense nuclear enterprise in a coordinated, holistic manner that would address problems identified by the 2014 nuclear enterprise reviews or other issues it may need to address in the future.
Finally, DOD has not established the means by which it will monitor longstanding issues that affect the defense nuclear enterprise. Many of the 2014 nuclear enterprise review recommendations that remain open are focused on long-term challenges. These recommendations are reflected in the enduring issues identified by DOD, but it is important that the department provide guidance on how these long-standing issues will be monitored in order to proactively identify and address challenges that may arise.
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Recommendations for Executive Action
We are making the following four recommendations to DOD:
* The Secretary of Defense should ensure that the Director of CAPE-- as the office responsible for providing analytic guidance and overseeing the analysis of the recommendations--in coordination with the Deputy Assistant Secretary of Defense for Nuclear Matters, the Deputy Assistant Secretary of Defense for Nuclear and Missile Defense Policy, and the Joint Staff Deputy Director for Strategic Stability, as other co-chairs of the Nuclear Deterrent Senior Oversight Group, provide guidance that the Nuclear Deterrent Working Group members periodically assess the process and outcome metrics and milestones for the remaining 2014 nuclear enterprise review recommendations to determine whether they are the most appropriate for evaluating implementation progress and whether the actions, once implemented, address the underlying problems. (Recommendation 1) - The Secretary of Defense, in coordination with the Chairman of the Joint Chiefs of Staff, should ensure that the Under Secretary of Defense for Acquisition and Sustainment, the Vice Chairman of the Joint Chiefs of Staff, and the Commander of U.S. Strategic Command, as co-chairs of SNTR's Nuclear Transition Steering Committee, document
* the roles and responsibilities of the SNTR and its supporting organizations, (Recommendation 2)
* how the SNTR will communicate with other organizations that have oversight responsibilities for portions of the nuclear enterprise, (Recommendation 3) and
* guidance that identifies the means for monitoring long-standing issues including the associated metrics and information sources. (Recommendation 4)
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Agency Comments and Our Evaluation
We provided a draft of this report to DOD for comment. In its comments, reproduced in appendix V, DOD concurred with all four of our recommendations. DOD also provided technical comments, which we incorporated as appropriate.
In concurring with our first recommendation, DOD stated that the Deputy Assistant Secretary of Defense for Nuclear Matters will draft updated guidance for the Nuclear Deterrent Working Group members to periodically assess the process and outcome metrics and milestones for the remaining open 2014 nuclear enterprise review recommendations.
In concurring with our second, third, and fourth recommendations, DOD stated that it is working to define and document roles and responsibilities for the SNTR membership, determine how the SNTR and its Nuclear Transition Steering Committee will monitor and receive data on metrics related to the enduring recommendations for the nuclear enterprise and formalize the lines of communication between the SNTR, its Steering Committee, and other existing nuclear oversight bodies.
We are encouraged that DOD is planning to take these actions to address all four of our recommendations. We believe that, once DOD implements our recommendations, the department's leadership will be better positioned to be informed of issues affecting the nuclear enterprise and to coordinate responsibilities and communication within and between nuclear oversight bodies.
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The text of the GAO report is available at https://www.gao.gov/products/gao-21-486
GAO Issues Report: Treasury Quickly Financed Historic Government Response to Pandemic, Is Assessing Risks to Market Functioning
WASHINGTON, Aug. 19 -- The Government Accountability Office has issued a report (GAO-21-606) entitled "Federal Debt Management: Treasury Quickly Financed Historic Government Response to the Pandemic and is assessing Risks to Market Functioning".The report was sent to Sen. Patrick J. Leahy, D-Vermont, chairman, Sen. Richard C. Shelby, R-Alabama, vice chairman of the Senate Appropriations Committee, Sen. Ron Wyden, D-Oregon, chairman, Sen. Mike Crapo, R-Idaho, ranking member of the Senate Finance Committee, Sen. Patty Murray, D-Washington, chairman, Sen. Richard Burr, R-North Carolina, ranking ... Show Full Article WASHINGTON, Aug. 19 -- The Government Accountability Office has issued a report (GAO-21-606) entitled "Federal Debt Management: Treasury Quickly Financed Historic Government Response to the Pandemic and is assessing Risks to Market Functioning". The report was sent to Sen. Patrick J. Leahy, D-Vermont, chairman, Sen. Richard C. Shelby, R-Alabama, vice chairman of the Senate Appropriations Committee, Sen. Ron Wyden, D-Oregon, chairman, Sen. Mike Crapo, R-Idaho, ranking member of the Senate Finance Committee, Sen. Patty Murray, D-Washington, chairman, Sen. Richard Burr, R-North Carolina, rankingmember of the Senate Health, Education, Labor and Pensions Committee, Sen. Gary Peters, D-Michigan, chairman, Sen. Rob Portman, R-Ohio, ranking member of the Senate Homeland Security and Governmental Affairs Committee, Rep. Rosa L. DeLauro, D-Connecticut, chairman, Rep. Kay Granger, R-Texas, ranking member of the House Appropriations Committee, Rep. Frank Pallone Jr., D-New Jersey, chairman, Rep. Cathy McMorris Rodgers, R-Washington, Republican leader of the House Energy and Commerce Committee, Rep. Bennie G. Thompson, D-Mississippi, chairman, Rep. John Katko, R-New York, ranking member of the House Homeland Security Committee, Rep. Carolyn Maloney, D-New York, chairman, Rep. James Comer, R-Kentucky, ranking member of the House Oversight and Reform Committee, Rep. Richard E. Neal, D-Massachusetts, chairman, and Rep. Kevin Brady, R-Texas, Republican leader of the House Ways and Means Committee, on Aug. 17, 2021. Here are excerpts of summaries associated with the report.
What GAO Found: "In response to COVID-19, in March 2020 many investors rapidly sold their Treasury securities for cash. This led to a severe liquidity disruption when prices fell and transaction costs rose for Treasury notes and bonds in the secondary market. The Federal Reserve acted quickly to support market functioning, including purchasing trillions of dollars of Treasury securities.
This market disruption highlighted risks to the Treasury market. For example, growth in federal debt and regulatory changes may reduce broker-dealers' willingness and ability to intermediate trades (facilitate purchases and sales) of Treasury securities for investors. In April 2021 Treasury initiated an interagency effort to examine options that could help mitigate future disruptions in the market.
Following the market disruption, Treasury quickly raised trillions of dollars to fund the federal response to COVID-19. It dramatically increased its issuance of bills--including adding regular, weekly auctions of cash management bills, which have historically been issued irregularly to cover near-term financing gaps. The bills were met with strong investor demand. For example, GAO found almost no difference between cash management bill and other bill yields during this time.
See chart here: https://www.gao.gov/products/gao-21-606
Due to the uncertainty created by COVID-19, Treasury maintained a historically high operating cash balance of around $1.6 trillion. Its stated policy is to hold a level of cash generally sufficient to cover one week of outflows. However, other factors not explicitly reflected in its policy informed how it managed the cash balance during COVID-19. Market participants told GAO that they were unclear about all of these factors. They said that understanding the level and trajectory of the cash balance is important because it affects market expectations for the size of Treasury issuance, supply of bank reserves, and short-term lending rates--all of which inform their business strategies and support market functioning. Additionally, uncertainty about the size of the cash balance can lead to volatility in financial markets. This, in turn, can affect Treasury's borrowing costs."
Why GAO Did This Study: "The federal government's fiscal response to the COVID-19 pandemic dramatically increased the government's borrowing needs. Treasury borrows money needed by issuing Treasury securities. The ability to borrow large amounts of money quickly and cheaply is especially important during a crisis, when government spending tends to increase and revenues tend to decrease. Any disruptions in investor demand for Treasury securities or the functioning of the Treasury market can have costly implications for the federal government and taxpayers.
The CARES Act includes a provision for GAO to report on its monitoring and oversight efforts related to the COVID-19 pandemic. This report examines (1) how the cost and liquidity of Treasury securities changed during COVID-19; (2) actions Treasury is taking to mitigate future disruptions; and (3) the actions Treasury took to finance the federal government's response to the pandemic.
GAO analyzed data on Treasury securities; reviewed agency and market research; and interviewed market participants across key financial sectors (e.g., broker-dealers, banks, mutual and money market funds), market experts, and Treasury and Federal Reserve officials."
What GAO Recommends: "GAO recommends that Treasury clarify the department's policy for managing its operating cash balance to include all relevant factors it considers when determining the appropriate cash balance and communicate this policy to the public. Treasury agreed with the recommendation."
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August 17, 2021
To: Congressional Committees
The Coronavirus Disease 2019 (COVID-19) pandemic substantially damaged the global economy and affected the stability of credit markets.
In response to the unprecedented global crisis caused by COVID-19, Congress passed and the President signed legislation to fund recovery efforts./1 Together, this legislation appropriated about $4.5 trillion across the government to fund COVID-19 response and recovery efforts.
This fiscal response to the pandemic dramatically increased the size of the government's borrowing needs. From April through December 2020, the Department of the Treasury raised a historic $3.8 trillion. In contrast, during the global financial crisis, Treasury borrowed $3.1 trillion over a 2 year period./2
In times of crisis, such as the COVID-19 pandemic, the importance of a strong U.S. Treasury market is essential to fund federal response and recovery efforts. Treasury securities play a vital role in U.S. and global financial markets because of their deep and liquid market and because investors are confident that debt backed by the full faith and credit of the U.S. government will be honored. These features help Treasury issue debt at low cost to finance government operations. The ability to borrow large amounts of money quickly and cheaply is especially important during a crisis, when government spending tends to increase and revenues decrease. Any disruption in demand or market functioning can have costly implications for the government, taxpayers, and the economy.
The CARES Act includes a provision for us to report on our monitoring and oversight efforts of the federal government's response to the COVID19 pandemic./3 This report examines: (1) how the cost and liquidity of Treasury securities changed during the pandemic; (2) actions Treasury is taking to mitigate future disruptions in the Treasury market; and (3) actions Treasury has taken to finance the federal government's response to the COVID-19 pandemic.
To examine how the cost and liquidity of Treasury securities changed during the pandemic, we analyzed market data from Bloomberg, the Federal Reserve System (Federal Reserve), and Treasury, as well as data from the Financial Industry Regulatory Authority's (FINRA) Trade Reporting and Compliance Engine (TRACE) provided by Treasury. We also reviewed analyses, reports, and other documentation on the March 2020 Treasury market disruption by market participants, academics, and Treasury and the Federal Reserve.
To describe actions Treasury is taking to mitigate future market disruptions, we first identified structural challenges to Treasury market functioning by reviewing assessments from Treasury and the Federal Reserve, the International Monetary Fund, academics, and market participants. We conducted further analysis of these challenges using market data from Bloomberg, the Federal Reserve, and Treasury. As part of this, we conducted a multivariate regression analysis to examine how certain structural factors, such as regulatory constraints, were associated with the interest rate that Treasury paid on Treasury securities relative to similar risk-free assets (see appendix I for more details). We interviewed Treasury officials to discuss these and other structural challenges and any actions that they were taking to address them.
To evaluate Treasury's actions to finance the federal response to COVID-19, we analyzed Treasury's debt issuance and cash management activity from January 2020 through May 2021. We also analyzed auction metrics and the scale, timing, term to maturity, and composition of Treasury borrowing during this time. To measure any premium associated with Treasury's issuance of cash management bills (CMB) during COVID-19, we compared CMB yields to yields on benchmark bills with similar maturities (see appendix II for more details). We assessed Treasury's approach against International Monetary Fund and World Bank guidance for public debt management./4
For all of our objectives, we interviewed 18 market participants, including officials from 10 primary dealers and banks, six money market and mutual funds, and two hedge funds. We selected market participants to ensure a diversity of viewpoints, taking into consideration market sector, share of the Treasury market, and recommendations by market experts. We also interviewed 10 subject matter experts in Treasury markets and monetary policy from academia, think tanks, and private research and advisory firms. The views expressed in these interviews are not generalizable to all market participants. We also interviewed officials from Treasury's Office of Debt Management and the Federal Reserve Board of Governors. We reviewed reports, quarterly refunding materials, and other agency documents./5
To assess the reliability of data used in this study, we reviewed related documentation and traced data from source documents, where possible and appropriate. We also corroborated the results of our data analyses with interviews and other sources, when possible. We used data sets that are commonly used by Treasury, researchers, and other market analysts to examine Treasury markets and auction performance. On the basis of our assessment, we determined the data are sufficiently reliable for the purpose of this review.
We conducted this performance audit from July 2020 to August 2021 in accordance with generally accepted government auditing standards.
Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.
See footnotes here: https://www.gao.gov/assets/gao-21-606.pdf
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Conclusions
The shock of COVID-19 to financial markets led to a severe disruption in the Treasury market in March 2020, prompting a swift response by the Federal Reserve. The disruption exposed structural challenges in the market, such as pressures on broker-dealer intermediation and principal trading firms' activity during periods of stress. These challenges pose risks to the liquidity and efficiency of the U.S. Treasury market at a time when debt issuance--and the amount of Treasury securities outstanding--is expected to grow.
Disruptions in market functioning could reduce investor demand for Treasury securities and negatively affect Treasury's ability to borrow money at the lowest cost over time. Treasury's recent announcement of an interagency effort to analyze the March 2020 disruption and consider options to address structural challenges is an important initial step in helping to mitigate future disruptions and support the long-term health of the Treasury market.
To help finance the federal response to the COVID-19 pandemic, Treasury successfully raised trillions of dollars in a very short time.
Treasury dramatically increased its issuance of Treasury bills in April and May 2020 and established routine auctions of cash management bills (CMB). Treasury bills were met with strong demand by investors looking for liquid and safe assets. Our analysis of CMBs and benchmark bill yields during COVID-19 found that Treasury did not pay a premium--as it has in the past--for its use of CMBs to raise additional cash to help finance the government's response to the pandemic.
However, Treasury could be more transparent about how it implements its cash management policy. Market participants that we spoke with from across multiple sectors said they were uncertain about the factors affecting the trajectory of the cash balance, which reached historically high levels as Treasury managed the uncertain fiscal outlook caused by COVID-19. Investors monitor the size of the cash balance to anticipate changes in the size of Treasury issuance, the supply of bank reserves, and short-term lending rates. Clear and transparent communication about how it manages its operating cash balance would help Treasury's broader efforts to support liquidity and market functioning, which are fundamental to Treasury meeting its primary debt management goal to borrow at the lowest cost over time.
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Recommendations for Executive Action
The Secretary of the Treasury should clarify the department's policy for managing the operating cash balance to include all relevant factors it considers when determining the appropriate cash balance and communicate the policy to the public. (Recommendation 1)
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Agency Comments
We provided a draft of this report to Treasury and the Federal Reserve for review and comment. In its comments, reproduced in appendix III, Treasury agreed with our recommendation and said it would work to improve transparency and implement the recommendation. Treasury and the Federal Reserve also provided technical comments, which we incorporated as appropriate.
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The text of the GAO report is available at https://www.gao.gov/products/gao-21-606