GAO Report Highlights Actions Needed to Ensure DOD Considers Climate Risks to Contractors

8/12/2020

Climate change is predicted to have a critical impact on all aspects of the economy. Particularly notable is the impact that climate-related risks will have for national defense and the defense industrial base – particularly as it relates to the maintenance of national security. While the effects are already being felt, they are projected to intensify in the future.

Over the past decade, the Department of Defense (DOD) has consistently identified climate change a threat to its operations and installations. As recently as January 2019, DOD stated the effects of climate change constitute a ‘national security issue posing potential impacts to the department’s missions, operational plans, and installations’. Within this context, the Government Accountability Office (GAO) was requested by Congress to review ‘potential threats to national security resulting from the effects of climate change on defense contractors and the defense supply chain’. On July 27, 2020, GAO publicly released its report on the subject.

GAO’s report examines the extent to which DOD factors climate related risks faced by contractors in relation to its (1) acquisition and supply processes; and (2) mission assurance principles. For the purposes of its audit, GAO reviewed DOD guidance, conducted interviews with contractors, and reviewed DOD risk-identification actions over June 2019 – Jun 2020. GAO also reviewed the Federal Acquisition Regulation (FAR) and Defense Federal Acquisition Regulation Supplement (DFARS) to determine how they accounted for the identification or assessment of climate-related risks. Overall, the GAO report noted that the DOD had taken several steps – including the issuance of specific directives on the subject – to account for the effects of climate change on current and future operations. However, GAO found that there was scope for improvement. Particularly, GAO found that:

DOD has not systematically incorporated consideration of climate change into its acquisition and supply processes, consequently limiting the military departments’ ability to best consider the potential effects on their own operations from climate-related risks faced by their contractors as part of these processes. Specifically, DOD and the military departments have not updated their acquisition and supply guidance to outline how officials throughout DOD are to implement the provisions of DOD’s climate change directive.

GAO noted that, till such time the DOD and military departments revised their approach, “DOD risks continuing to conduct acquisition analysis and planning, including the development of life-cycle sustainment analyses and plans, and managing its supply chains without consideration of climate-related risks that can disrupt acquisition and supply processes.” This, the GAO report notes, has the potential to compromise DOD mission fulfilment going forward. In order to mitigate this risk, the GAO made several recommendations to ensure that the DOD better accounts for climate-related risks (extracted verbatim where possible):

  1. The Secretary of Defense should ensure that the Under Secretary of Defense for Acquisition and Sustainment implements DOD Directive 4715.21 by updating, as appropriate, relevant DOD guidance related to acquisition and supply processes to incorporate the directive’s provisions pertaining to those processes;
  2. The Secretaries of the Army, Navy, and Air Force should implement DOD Directive 4715.21 on climate change adaptation and resilience by updating, as appropriate, relevant departmental guidance related to acquisition and supply processes to incorporate the directive’s provisions pertaining to those processes;
  3. The Secretary of Defense should ensure that the Under Secretary of Defense for Policy, in coordination with the Under Secretary of Defense for Acquisition and Sustainment, the Secretaries of the military departments, and any other governmental and private-sector partners, as appropriate, determine what approaches may be feasible in conducting mission assurance related assessments of commercially owned facilities, and issue new or update existing guidance, based upon the determination of what approaches may be feasible, to clarify the steps that DOD officials involved in the mission assurance process may take to apply the mission assurance framework to commercially owned facilities, as appropriate, to include consideration of risks related to climate change and extreme weather.

This report provides valuable indications on the way ahead for the DOD in considering climate-related risks as part of its contracting process. Going forward, the DIB can expect climate-related concerns to be an increasingly important factor in the contract award process. Members of the DIB should carefully consider and contribute to ongoing discussions on the subject as, given indications in the report, contract award and fulfilment practices are likely to evolve to more fully to account for climate-related risk.

Topics: Contracting, Acquisition

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