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entitled 'Military Bases: Observations on DOD's 2005 Base Realignment 
and Closure Selection Process and Recommendations' which was released 
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Statement Before the Defense Base Closure and Realignment Commission: 

United States Government Accountability Office: 

GAO: 

For Release on Delivery Expected at 10:30 a.m. EDT: 

Monday, July 18, 2005: 

Military Bases: 

Observations on DOD's 2005 Base Realignment and Closure Selection 
Process and Recommendations: 

Statement of David M. Walker: 

Comptroller General of the United States: 

GAO-05-905: 

GAO Highlights: 

Highlights of GAO-05-905, a statement before the Defense Base Closure 
and Realignment Commission: 

Why GAO Did This Study: 

On May 13, 2005, the Department of Defense (DOD) submitted 222 base 
realignment and closure (BRAC) recommendations, involving an 
unprecedented 837 BRAC actions, to the Defense Base Closure and 
Realignment Commission for its review. DOD expects the proposals, if 
approved, would generate net annual recurring savings of about $5.5 
billion beginning in fiscal year 2012 and net savings of nearly $50 
billion over a 20-year period, despite an expected cost of over $24 
billion to implement the recommendations. The Commission is charged 
with reviewing these proposals and submitting its own list to the 
President by September 8, 2005. The Commission requested GAO to provide 
testimony before the Commission summarizing the results of its report, 
issued on July 1, 2005, on the 2005 BRAC process. This statement 
presents GAO views on (1)whether DODís selection process in developing 
BRAC actions was logical and reasoned, (2) selected issues regarding 
the recommendations, and (3) certain challenges associated with 
implementing the BRAC recommendations, if approved. 

What GAO Found: 

DOD established and generally followed a logical and reasoned process 
for assessing its bases and considering potential BRAC actions. The 
process was organized in a largely sequential manner with an emphasis 
on ensuring that reliable data were obtained and used, with special 
audit assistance from military service audit agencies and the DOD 
Inspector General. Despite some overlap in data collection and other 
phases of the process, the three military departments and seven joint 
cross-service groups generally followed the sequential BRAC process to 
evaluate facilities and functions, and identify recommendations in 
their respective areas. DODís analytical process also addressed 
requirements of the BRAC legislation regarding the certification of 
data, basing its analysis on its 20-year force structure plan and 
emphasizing use of military value criteria as a primary basis for 
decision makingóincluding consideration of such facets as homeland 
defense and surge capabilitiesó-which the Congress added for emphasis 
in 2005. 

GAO did, however, identify a number of issues with the proposed 
recommendations that may warrant attention by the BRAC Commission. For 
example, while GAO believes savings could be achieved from DODís 
proposals, there are certain limitations associated with the magnitude 
of the savings projected by DOD. About 47 percent, or $2.5 billion of 
DODís projected net annual recurring savings is associated with 
eliminating jobs currently held by military personnel. However, rather 
than reducing end-strength, DOD indicates the positions are expected to 
be reassigned to other areas, which may enhance capabilities but also 
reduce or eliminate dollar savings available for other uses. Sizeable 
savings are also projected from efficiency measures and other actions 
related to a variety of recommendations, but underlying assumptions 
have not been validated and may be difficult to track and achieve over 
time. GAO also identified many recommendations requiring far longer 
periods of time for savings to offset the costs associated with 
implementing the recommendations than was typical in the 1995 BRAC 
round, raising questions about the cost/benefit ratio of selected 
recommendations. 

There are significant implementation challenges that lie ahead, to the 
extent proposed recommendations are approved, which could have a 
bearing on the ultimate savings realized and overall success of the 
BRAC round. They include the need for (1) transition planning to 
minimize the adverse impacts on operations, including steps to mitigate 
the potential loss of specialized human capital skills; (2) mechanisms 
to monitor implementation of recommendations in line with approved 
actions, along with mechanisms to ensure the tracking and periodic 
updating of savings that DOD expects from implementing the 
recommendations; (3) plans to address and adequately fund environmental 
restoration of unneeded property in order to expedite property transfer 
and put property to productive reuse; and (4) assistance for both 
losing and gaining communities affected by BRAC recommendations, 
including costs to DOD and other federal agencies. 

What GAO Recommends: 

GAO is not making new recommendations in this statement. However, in 
its July 1, 2005 report on the BRAC process (GAO-05-785), GAO 
recommended that DOD establish mechanisms for tracking and updating 
BRAC savings estimates. DOD agreed. 

www.gao.gov/cgi-bin/getrpt?GAO-05-905. 

To view the full product, click on the link above. For more 
information, contact Barry W. Holman at (202) 512-5581 or 
holmanb@gao.gov. 

[End of section] 

Mr. Chairman and Members of the Commission: 

I appreciate the opportunity to be here today to provide you with the 
results of our work on the defense base realignment and closure (BRAC) 
2005 selection process and recommendations. First, I would like to 
commend you, Mr. Chairman, and your fellow Commissioners for 
undertaking the very important, complex and controversial task of 
reviewing the Department of Defense's (DOD) list of proposed 
recommendations and recognizing you have to forward your 
recommendations to the President in September of this year. I am well 
aware that your task is especially demanding, given the limited time in 
which you have to do your work and the broad scope of your 
responsibilities. However, I would like to point out that your work is 
of critical importance since, while reasonable people can and will 
differ on specific recommendations, it is clear that DOD must reduce 
its excess support infrastructure in order to generate savings for 
higher priority needs, including the military and business 
transformation efforts in light of 21ST century trends and challenges. 

We have frequently reported in recent years on the long-term challenges 
DOD faces in managing its portfolio of facilities, halting degradation 
of facilities, and reducing unneeded infrastructure to free up funds to 
better maintain enduring facilities and meet other needs. Because of 
these long-standing issues, DOD's management of its support 
infrastructure has been included in our list of high-risk areas since 
1997. While the previous four rounds of closures and realignments have 
helped reduce excess infrastructure and generate savings, DOD's 
infrastructure costs continue to consume a larger-than-necessary 
portion of the DOD budget, and as a result, DOD has not been able to 
devote funds to more critical needs. 

While the 2005 BRAC round affords the department an additional 
opportunity to further reduce infrastructure and generate savings, it 
will not, in itself, be sufficient to stem the overall rising costs of 
DOD's operations and much more will need to be done to transform the 
department. It is critical that DOD continue to search out ways to 
reduce unnecessary spending and significantly improve its business 
processes. Further, it must recognize that tough choices need to be 
made in connection with a variety of initiatives (e.g., weapons 
systems) and areas (e.g., health care) that are not affordable or 
sustainable over the longer term, given our large and growing long-term 
deficits. Moreover, reducing unnecessary defense costs and creating 
more efficiency within DOD is an important step in addressing the 
nation's growing fiscal imbalances. Over the long term, the nation's 
growing fiscal imbalances, if left unchecked, will ultimately impede 
our economic growth; have an adverse impact on our future standard of 
living; and in due course, affect our ability to address key national 
and homeland security needs. These factors create the need to make 
choices at a national level that will only become more difficult the 
longer they are postponed. 

Now, if I could turn your attention to the specifics of the 2005 BRAC 
round. On May 13, 2005, the Secretary of Defense publicly announced his 
list of recommended realignment and closure actions. The department's 
list consists of 222 recommendations involving an unprecedented 837 
closure and realignment actions--including 33 major base closures and 
30 major realignments, plus numerous other closures and realignments. 
The department expects that these recommendations, if approved, would 
generate net annual recurring savings of about $5.5 billion beginning 
in fiscal year 2012 and nearly $50 billion in net present value savings 
over a 20-year period, despite an up-front expected cost of over $24 
billion to implement those recommended actions. In my testimony today, 
I will address (1) whether DOD's selection process in developing the 
recommended actions was logical and reasoned; (2) selected issues 
regarding the recommendations that the BRAC Commission may wish to 
consider as part of its analysis of DOD's recommendations; and (3) 
certain challenges we see in implementing DOD's proposed BRAC 
recommendations, if they are approved. 

To analyze the BRAC selection process and the proposed recommendations, 
we monitored various aspects of the process as it evolved over time 
leading up to and following the public release of the Secretary of 
Defense's recommendations. We sought to assure ourselves that DOD 
followed a logical, reasoned, and well-documented decision-making 
process leading to the proposed recommendations. With the approval of 
the large number of recommendations occurring in the final weeks of the 
process, the broad scope and complexity of the recommendations, and the 
limited time available for us to report our results, we generally 
focused greater attention following the announcement of the proposed 
closures and realignments on those issues affecting more than one 
recommendation than on issues pertaining to the implementation of 
individual recommendations. However, as time permitted, we visited 
selected installations to better gauge the operational and economic 
impact of the proposed recommendations. We generally experienced good 
access to relevant documentation and to key senior officials and staff 
involved in the BRAC process. 

My statement is based primarily on our July 1, 2005, report on the 2005 
BRAC selection process and recommendations, which was provided to you 
at that time.[Footnote 1] Our work was performed in accordance with 
generally accepted government auditing standards. 

Summary: 

DOD's decision-making process for evaluating its facilities and 
studying potential recommendations was generally logical, well 
documented, and reasoned, although there were delays in making the 
supporting data available to the Commission and to the public after the 
Secretary announced his proposed recommendations on May 13, 2005. DOD 
established a structured and largely sequential process for obtaining 
and analyzing data that provided an informed basis for identifying and 
evaluating BRAC options. At the same time, initial difficulties in 
obtaining complete and accurate data in a timely manner often added to 
overlap and varying degrees of concurrency between data collection 
efforts and other steps in the process. That notwithstanding, DOD's 
process relied on certified data[Footnote 2] and the use of various 
analytical models to evaluate the data. Further, as the military 
services and joint cross-service groups assessed the importance of 
installations, facilities, and functions, they were consistent in 
following the key considerations set forth in the BRAC law--such as 
military value--although they varied somewhat in their analytical 
approaches based on unique aspects of the functions being evaluated. As 
Congress mandated, DOD prepared and considered its 20-year force 
structure plan in completing its BRAC analysis.[Footnote 3] Further, 
DOD focused on the military value selection criteria as the predominant 
decision-making factor, including legislatively mandated emphasis for 
this BRAC round on such elements as homeland defense and surge 
capability. As in previous rounds, military judgment was also 
interwoven throughout the process. While the effort to ensure the 
accuracy of the voluminous amounts of data used in the process proved 
challenging for the services and joint cross-service groups, the DOD 
Inspector General and the military service audit agencies played key 
roles in pointing out data limitations, fostering corrections, and 
improving the accuracy of the data used in the process through their 
validation efforts, and generally found the data sufficiently reliable 
to support BRAC decision making. 

While we believe savings could be achieved, there are certain 
limitations associated with DOD's savings projection. Much of the 
projected net annual recurring savings (47 percent) is associated with 
eliminating jobs currently held by military personnel. However, rather 
than reducing end-strength levels, DOD indicates the positions are 
expected to be reassigned to other areas, which may enhance 
capabilities but also reduce or eliminate dollar savings available for 
other uses. Furthermore, about $500 million of the net annual recurring 
savings is based on business process reengineering efforts, but some 
assumptions supporting the expected efficiency gains have not been 
validated; while savings are likely to be realized, the precise 
magnitude of the savings is uncertain. For example, one of DOD's 
recommendations--to create fleet readiness centers in the Navy by 
integrating different levels of maintenance to reduce repair time--is 
estimated to yield $215 million in net annual recurring savings as a 
result of overhead efficiencies, but such assumptions have not been 
validated and actual savings likely will be shaped by how the 
recommendation is implemented. We have also identified issues regarding 
lengthy payback periods associated with some proposals, which is the 
time required to recoup up-front investment costs for closing or 
realigning a facility or function and vacating lease space. 
Collectively, the issues we identified suggest the potential for 
reduced savings that are likely to be realized in the short term during 
the implementation period, which could further reduce net annual 
recurring savings realized in the long term. The short-term impact is 
that these reduced savings could adversely affect DOD's plans for using 
them to help offset the up-front investment costs required to implement 
the recommendations and could further reduce or eliminate the amount of 
dollar savings available for transformation and modernization purposes. 

Significant challenges lie ahead for implementing BRAC recommendations 
that I would like to bring to the Commission's attention--challenges 
that if not adequately met, could greatly affect how successful the 
BRAC round will be viewed retrospectively. First, a need exists for 
proper transition planning to minimize the impact of the loss of 
specialized human capital skills in implementing recommended actions 
for ongoing defense operations. For example, if the decision is made to 
close the Naval Shipyard Portsmouth, Maine, with the expected loss of 
skilled personnel associated with maintaining nuclear-powered 
submarines at the shipyard, these skills, which Navy officials stated 
may take up to 8 years to fully develop, will need to be replicated at 
other shipyards assuming the future workloads. A similar concern was 
expressed by Army officials exist regarding the planned closure of Fort 
Monmouth, New Jersey. Second, as we previously recommended, DOD needs 
to establish mechanisms to monitor implementation of the 
recommendations, including the tracking and periodic updating of 
savings estimates. This was not a routine practice in the previous BRAC 
rounds. Third, DOD needs to ensure that it has plans to adequately 
address and fund the environmental restoration of unneeded property in 
order to expedite property transfer to other users. Our prior work on 
the previous rounds has shown that environmental restoration 
constraints have delayed the services from rapidly transferring 
unneeded property to other users that can put the property to 
productive reuse. Finally, as has been the practice in previous rounds, 
there will likely be a need for assistance from various sources for 
communities losing large numbers of jobs and personnel as a result of 
BRAC recommendations. This time, assistance will also be needed by 
communities faced with a significant influx of personnel, if the 
relevant BRAC recommendations are approved, including costs to DOD and 
other federal agencies. 

Background: 

The legislation authorizing the 2005 BRAC round, enacted as part of the 
National Defense Authorization Act for Fiscal Year 2002, required DOD 
to give priority to selection criteria dealing with military value and 
added elements of specificity to criteria previously used by DOD in 
prior BRAC rounds.[Footnote 4] In large measure, the final criteria 
closely followed the criteria DOD employed in previous rounds, with 
greater specificity added in some areas, as required by Congress. To 
ensure that the selection criteria were consistently applied, the 
Office of the Secretary of Defense (OSD) established a common 
analytical framework to be used by the three military departments and 
the seven joint cross-service groups.[Footnote 5] Each service and 
group adapted this framework, in varying degrees, to its individual 
activities and functions in evaluating facilities and functions and 
identifying closure and realignment options. Despite the diversity of 
bases and cross-service functions analyzed, each of the groups was 
expected to first analyze capacity and military value of its respective 
facilities or functions, and then to identify and evaluate various 
closure and realignment scenarios and provide specific recommendations. 
The analysis relied on data calls to obtain certified data to assess 
such factors as maximum potential capacity, current capacity, current 
usage, excess capacity, and capacity needed to meet surge requirements. 

The military value analysis consisted of assessments of operational and 
physical characteristics of each installation, or specific functions on 
an installation related to a specific joint cross-service group's area 
of responsibility. These would include an installation's or function's 
current and future mission capabilities, physical condition, ability to 
accommodate future needs, and cost of operations. This analysis also 
relied on data calls to obtain certified data on the various attributes 
and metrics used to assess each of the four military value criteria and 
permit meaningful comparisons between like installations or facilities 
with reference to the collective military value selection criteria. 

The scenario development and analysis phase focused on identifying 
various realignment and closure scenarios for further analysis. These 
scenarios were to be derived from consideration of the department's 20- 
year force structure plan, capacity analysis, military value analysis, 
and, as appropriate, the exercise of military judgment through 
consideration of transformational options, applicable guiding 
principles, objectives, or policy imperatives identified by individual 
military services or joint cross-service groups. 

The BRAC 2005 round is different from previous base closure rounds in 
terms of number of actions, projected implementation costs, and 
estimated annual recurring savings. While the number of major closures 
and realignments is just a little greater than those in individual 
previous rounds, the number of minor closures and realignments, as 
shown in table 1, is significantly greater than those in all previous 
rounds combined.[Footnote 6] DOD data indicate that over 200,000 
military and civilian personnel jobs, exclusive of personnel returning 
from overseas locations, will be affected by the implementation of the 
DOD's BRAC recommended actions, if they are approved. Further, it is 
likely that thousands of contractor personnel will be similarly 
affected. 

Table 1: Comparison of BRAC 2005 with Previous Rounds: 

Dollars in billions. 

Round: 1988; 
Major bases: Closure: 16; 
Major bases: Realignments: 4; 
Minor closures and realignments: 23; 
Total actions: 43; 
Costs: $2.7; 
Net annual recurring savings: $0.9. 

Round: 1991; 
Major bases: Closure: 26; 
Major bases: Realignments: 17; 
Minor closures and realignments: 32; 
Total actions: 75; 
Costs: $5.2; 
Net annual recurring savings: $2.0. 

Round: 1993; 
Major bases: Closure: 28; 
Major bases: Realignments: 12; 
Minor closures and realignments: 123; 
Total actions: 163; 
Costs: $7.6; 
Net annual recurring savings: $2.6. 

Round: 1995; 
Major bases: Closure: 27; 
Major bases: Realignments: 22; 
Minor closures and realignments: 57; 
Total actions: 106; 
Costs: $6.5; 
Net annual recurring savings: $1.7. 

Total (for previous BRAC rounds); 
Major bases: Closure: 97; 
Major bases: Realignments: 55; 
Minor closures and realignments: 235; 
Total actions: 387; 
Costs: $22.0; 
Net annual recurring savings: $7.2. 

Total (for 2005 BRAC round); 
Major bases: Closure: 33; 
Major bases: Realignments: 30; 
Minor closures and realignments: 774; 
Total actions: 837; 
Costs: $24.4; 
Net annual recurring savings: $5.5. 

Source: DOD. 

[End of table]

The large increase in minor closures and realignments is attributable 
partly to actions involving the Army National Guard, Army Reserve, and 
Air National Guard and vacating leased space. 

DOD's projected cost to implement the proposed actions is $24.4 billion 
compared to a $22 billion total from the four previous rounds through 
2001, the end of the 6-year implementation period for the 1995 BRAC 
round.[Footnote 7] The increase in costs is due partly to significant 
military construction and moving costs associated with Army 
recommendations to realign its force structure, and to recommendations 
to move activities from leased space onto military installations. For 
example, the Army projects that it will need about $2.3 billion in 
military construction funds to build facilities for the troops 
returning from overseas. Likewise, DOD projects that it will need an 
additional $1.3 billion to build facilities for recommendations that 
include activities being moved from leased space. 

DOD Developed a Generally Logical and Reasoned Process for Making BRAC 
Decisions: 

DOD's decision-making process for evaluating its facilities and 
studying potential recommendations was generally logical, well 
documented, and reasoned, although there were delays in making the 
supporting data available to the Commission and to the public after the 
Secretary announced his proposed recommendations on May 13, 2005. In 
establishing the framework for the 2005 BRAC round, DOD provided 
overall policy guidance for the BRAC process, including a requirement 
that its components develop and implement internal control plans to 
ensure the accuracy and consistency of their data collection and 
analyses. These plans also helped to ensure the overall integrity of 
the process and the information upon which OSD considered each group's 
recommendations. OSD also established a common analytical framework 
used by each military department to analyze its service-unique 
functions and by each of the seven joint cross-service groups to 
analyze its common business-oriented functions. The military 
departments and each joint cross-service group adapted this framework, 
in varying degrees, to its individual activities and functions in 
evaluating facilities and functions that shaped its analysis. The 
process began with a set of sequential steps by assessing capacity and 
military value, developing and analyzing scenarios, then identifying 
candidate recommendations, which led to the final list of 
recommendations. Military judgment also played a role throughout the 
process. Figure 1 illustrates the overall sequential analytical process 
generally employed to develop BRAC recommendations. 

Figure 1: Analytical Process Leading to BRAC Recommendations: 

[See PDF for image]

[A] A scenario is a proposal that has been declared for formal analysis 
by a military department or joint cross-service group deliberative body 
and is officially accounted for and tracked by the Office of the 
Secretary of Defense (OSD). 

[End of figure]

It must be noted, however, that while the process largely followed the 
sequential process, initial difficulties associated with obtaining 
complete and accurate data in a timely manner added to overlap and 
varying degrees of concurrency between data collection efforts and 
other steps in the process. To assist in the process for analyzing and 
developing recommendations, the military services and joint cross- 
service groups used various analytical tools that helped to ensure a 
more consistent approach to BRAC analysis and decision making. For 
example, all of the groups used the DOD-approved Cost of Base 
Realignment Actions (COBRA) model to calculate costs, savings, and 
return on investment for BRAC scenarios and, ultimately, for the final 
222 BRAC recommendations. DOD has used the COBRA model in each of the 
previous BRAC rounds and, over time, has improved upon its design to 
provide better estimating capability. In our past and current reviews 
of the COBRA model, we found it to be a generally reasonable estimator 
for comparing potential costs and savings among various BRAC options. 

BRAC Process Incorporated Key Legislative Requirements: 

The BRAC process follows a historical analytical framework with many 
elements of the process being carried forward or building upon lessons 
learned from previous rounds. For example, the selection process 
essentially followed a framework similar to that employed in previous 
BRAC rounds, with more specificity in selected military value areas 
like surge and homeland defense as required by Congress. At the same 
time, DOD incorporated into its analytical process other legal 
considerations for formulating its realignment and closure 
recommendations. As required by BRAC legislation, DOD certified the 
data used in the selection process and based its recommendations on the 
congressional specified selection criteria, its 20-year force structure 
plan, and gave priority consideration to the military value criteria. 

DOD collected capacity and military value data that were certified as 
to their accuracy by hundreds of persons in senior leadership positions 
across the country.[Footnote 8] These certified data were obtained from 
corporate databases and from hundreds of defense installations. In 
total, DOD projects that it collected over 25 million pieces of data as 
part of the BRAC process.[Footnote 9] Given the extensive volume of 
requested data from the 10 separate groups (3 military departments and 
7 joint cross-service groups), we noted that the data collection 
process was quite lengthy and required significant efforts to help 
ensure data accuracy. In some cases, coordinating data requests, 
clarifying questions and answers, controlling database entries, and 
other issues led to delays in the data-driven analysis DOD originally 
envisioned. As such, some groups had to develop strategy-based 
proposals. As time progressed, however, these groups reported that they 
obtained the needed data, for the most part, to inform and support 
their scenarios. At the same time, because of data limitations, a few 
of the joint cross-service groups relied on some data from commercially 
available databases to support their decision making. While it was 
difficult for these data to be validated in a fashion similar to most 
other DOD collected-data, the data came from widely used databases and 
were approved by the chairs of the relevant joint cross-service groups. 

Each of the military services and the seven joint cross-service groups 
considered DOD's 20-year force structure plan in its analysis. DOD 
based its force structure plan for BRAC purposes on an assessment of 
probable threats to national security during a 20-year period beginning 
with fiscal year 2005. DOD provided this plan to Congress in March 
2004, and as authorized by the statute, it subsequently updated it 1 
year later in March 2005. Based on our analysis, updates to the force 
structure affected some ongoing BRAC analyses. For example, the 
Industrial Joint Cross-Service Group reassessed its data pertaining to 
overhauling and repairing ships based on the updated force structure 
and decided that one of its two smaller shipyards--Naval Shipyard Pearl 
Harbor or Naval Shipyard Portsmouth--could close. However, as you know, 
much debate continues over the size of the Navy's future force 
structure. 

DOD gave primary consideration to its military value selection criteria 
in its process. Specifically, military value refers to the first four 
selection criteria: an installation's current and future mission 
capabilities, condition, ability to accommodate future needs, and cost 
of operations. The manner in which each military service or joint cross-
service group approached its analysis of military value varied 
according to the unique aspects of the individual service or cross- 
service function. These groups typically assessed military value by 
identifying multiple attributes or characteristics related to each 
military value criterion, then identifying qualitative metrics and 
measures and associated questions to collect data to support the 
overall military value analysis. For example, figure 2 illustrates how 
the Headquarters and Support Activities Joint Cross-Service Group 
linked several of its military value attributes, metrics, and data 
questions to the mandated military value criteria. 

Figure 2: Selected Attributes, Metrics, and Data Questions Used to 
Assess Military Value for Major Administrative and Headquarters 
Activities: 

[See PDF for image]

[A] The BRAC military value criteria are the first four BRAC selection 
criteria. 

[B] Military value attributes are characteristics of each criterion. 
The major administrative and headquarters activities subgroup used a 
total of 14 military value attributes. 

[C] Military value metrics are measures for the attributes. The major 
administrative and headquarters activities subgroup used a total of 20 
military value metrics. 

[D] The major administrative and headquarters activities subgroup used 
a total of 31 data call questions. 

[End of figure]

Based on congressional direction, there was enhanced emphasis on two 
aspects of military value--an installation's ability to serve as a 
staging area for homeland defense missions and its ability to meet 
unanticipated surge.[Footnote 10] Each military department considered 
homeland defense roles in its BRAC analysis and coordinated with the 
U.S. Northern Command--a unified command responsible for homeland 
defense and civil support. Our analysis shows that all three military 
departments considered homeland defense needs, with the Air Force 
recommendations having the most impact. According to Air Force 
officials, the U.S. Northern Command identified specific homeland 
defense missions assigned to the Air Force, which it incorporated into 
its decision-making process. Navy officials likewise discussed the 
impact of potential BRAC scenarios on the Navy's maritime homeland 
defense mission with U.S. Northern Command, U.S. Strategic Command, and 
the U.S. Coast Guard. In this regard, for example, the Navy decision to 
retain Naval Air Station Point Mugu, California, was influenced, in 
part, because the U.S. Coast Guard wanted to consolidate its West Coast 
aviation assets at this installation for homeland defense purposes. 
According to Army officials, most of the Army's role in supporting 
homeland defense is carried out by the Army National Guard. The U.S. 
Northern Command reviewed the recommendations and found no unacceptable 
risk to the homeland defense mission and support to civil authorities. 

DOD left it to each military service and joint cross-service group to 
determine how surge would be considered in its analysis. Generally, all 
the groups considered surge by retaining a certain percentage of 
infrastructure, making more frequent use of existing infrastructure, or 
retaining difficult-to-reconstitute assets. For example, the Technical 
Joint Cross-Service Group set aside 10 percent of its facility 
infrastructure for surge, while the Industrial Joint Cross-Service 
Group factored additional work shifts in its analysis. The military 
services retained difficult-to-reconstitute assets as the primary 
driver to satisfying the statutory requirement to consider surge 
capability. Both the Army and Navy gave strong consideration to 
infrastructure that would be difficult to reconstitute, such as large 
tracts of land for maneuver training purposes or berthing space for 
docking ships. For example, the Navy has a finite number of ships and 
aircraft and would likely have to increase operating tempo to meet 
surge needs. The Air Force addressed surge by retaining sufficient 
capacity to absorb temporary increases in operations, such as 
responding to emergencies or natural catastrophic events like hurricane 
damage, and the capacity to permanently relocate all of its aircraft 
stationed overseas in the United States if needed. 

As noted earlier, the BRAC process used in 2005 followed a historical 
analytical framework with many elements of the process being carried 
forward or building upon lessons learned from previous rounds. We have 
noted previously in examining lessons learned from prior BRAC rounds 
the general agreement that this framework has served the BRAC decision- 
making process well, even as improvements were made to the process for 
each BRAC round.[Footnote 11] If future BRAC rounds are held, as 
suggested by the Secretary of Defense in transmitting his 2005 BRAC 
recommendations to the Commission, we believe it will be important to 
document lessons learned from this round to determine what actions 
might be needed to strengthen the process for the future. We believe 
that will be especially important given the broad range of realignment 
actions proposed for this BRAC round, compared with previous rounds. 

DOD Audit Agencies Helped to Improve the Accuracy of Data Used during 
the BRAC Process: 

The DOD Inspector General and the services' audit agencies played an 
important role in ensuring that the data used in the BRAC analyses were 
accurate and certified by cognizant senior officials. Through extensive 
audits of the capacity, military value, and scenario data collected 
from field activities, these audit agencies notified various BRAC teams 
of data discrepancies for corrective action. The audit activities 
included validation of data, compliance with data certification 
requirements employed throughout the chain of command, and examination 
of the accuracy of the analytical data. While the auditors initially 
encountered problems with regard to data accuracy and the lack of 
supporting documentation for certain questions and data elements, most 
of these concerns were resolved. In addition, the auditors worked to 
ensure certified information was used for BRAC analysis. These audit 
agencies also reviewed other facets of the process, including the 
various internal control plans, the COBRA model, and other modeling and 
analytical tools that were used in the development of recommendations. 

Issues Related to DOD's Recommendations: 

We identified issues regarding various DOD's recommendations that may 
warrant further attention by the BRAC Commission. The issues we are 
highlighting in this statement relate to cost and savings estimates, 
lengthy payback periods for many recommendations, and efforts to move 
DOD organizations out of leased space onto military bases. Other issues 
are further discussed in our July 1, 2005, report on the 2005 BRAC 
process. 

Issues Related to Projected Savings: 

DOD projects that its proposed recommendations will produce nearly $50 
billion in 20-year net present value savings, with net annual recurring 
savings of about $5.5 billion. While we believe the 2005 BRAC process 
could produce savings for DOD, we must emphasize that the majority of 
the projected savings are related to a small percentage of the 
recommendations (see app. I). Also, a large portion of projected 
savings are related to military personnel reductions but the lack of 
planned end-strength reductions reduces dollar savings available for 
other purposes. Also, we believe there is uncertainty regarding the 
magnitude of savings likely to be realized in other areas, given 
unvalidated assumptions regarding expected efficiency gains from 
business process reengineering efforts and projected savings from 
sustainment, recapitalization, and base operating support.[Footnote 12] 
Table 2 summarizes the projected one-time cost, the cost or savings 
anticipated during the 6-year implementation period for the closure or 
realignment, the estimated net annual recurring savings, and the 
projected 20-year net present value cost or savings of DOD's 
recommendations.[Footnote 13]

Table 2: Projected Costs and Savings from BRAC 2005 Recommendations: 

Fiscal year 2005 constant dollars in millions. 

DOD component: Army; 
One-time (cost): ($9,963.4); 
Net implementation (cost) or savings: ($8,519.1); 
Net annual recurring (cost) or savings[A]: $497.6; 
20-year net present value (cost) or savings[B]: ($3,038.6). 

DOD component: Navy; 
One-time (cost): ($2,099.8); 
Net implementation (cost) or savings: $440.7; 
Net annual recurring (cost) or savings[A]: $753.5; 
20-year net present value (cost) or savings[B]: $7,713.7. 

DOD component: Air Force; 
One-time (cost): ($1,883.1); 
Net implementation (cost) or savings: $2,635.5; 
Net annual recurring (cost) or savings[A]: $1,248.5; 
20-year net present value (cost) or savings[B]: $14,560.3. 

DOD component: Joint cross-service groups; 
One-time (cost): ($10,466.1); 
Net implementation (cost) or savings: $1,372.8; 
Net annual recurring (cost) or savings[A]: $2,985.1; 
20-year net present value (cost) or savings[B]: $29,569.1. 

Total; 
One-time (cost): ($24,412.4); 
Net implementation (cost) or savings: ($4,070.1); 
Net annual recurring (cost) or savings[A]: $5,484.7; 
20-year net present value (cost) or savings[B]: $48,804.5. 

Source: GAO analysis of DOD data. 

[A] Projected annual recurring savings after the 6-year implementation 
period. 

[B] DOD used a 2.8 percent discount rate to calculate net present 
value. 

[End of table]

Table 2 also shows the Navy, Air Force, and joint cross-service groups 
all projecting net savings within the 6-year implementation period, as 
well as significant 20-year net savings. In contrast, because of the 
nature of the Army's proposed actions and costs, such as providing 
infrastructure for troops returning from overseas and the consolidation 
and recapitalization of reserve facilities, the Army does not achieve 
net savings either during the implementation period or within 20 years. 

As figure 3 shows, 47 percent of the net annual recurring savings can 
be attributed to projected military personnel reductions. About 40 
percent ($2.1 billion) of the projected net annual recurring savings 
can be attributed to savings from operation and maintenance activities, 
which include terminating or reducing property sustainment and 
recapitalization, base operating support, and civilian payroll. 

Figure 3: Estimated Net annual recurring savings: $

[See PDF for image] --graphic text: 

Pie chart with five items.

Dollars in millions. 

Military personnel: $2,530: 47%; 
Civilian personnel: $1,271: 24%; 
All other savings: $699: 13%; 
Sustainment and recapitalization: $457: 9%; 
Base operations support: $400: 7%. 

Source: GAO. 

Note: Analysis does not include data from one classified 
recommendation. 

[End of figure]

Furthermore, about $500 million of the "other" savings is based on 
business process reengineering efforts, but some of the assumptions 
supporting the expected efficiency gains have not been validated. Also, 
a significant portion of the projected savings involving sustainment 
and recapitalization is for space being vacated as functions and 
activities are moved from one base to another. However, in various 
instances, plans for the vacated space are uncertain as is the 
magnitude of the projected savings. 

Military Personnel Savings: 

Much of the projected net annual recurring savings (47 percent) is 
associated with eliminating positions currently held by military 
personnel; but end-strength levels will not be reduced as DOD indicates 
the positions are expected to be reassigned to other areas. Without 
reducing end-strength levels, there are no dollar savings from military 
personnel that can be applied elsewhere. At best, these freed-up 
resources could be viewed as a cost avoidance, if the resources are 
redeployed to an area of need and, as a result help offset any expected 
congressional action to otherwise authorize an increase in end- 
strength. On the other hand, if an increase in end-strength is not 
planned and you are simply redirecting the freed-up resources to 
another area of need, it could be viewed as enhancing capabilities and 
achieving more effective utilization of your personnel resources, not 
dollar savings. 

For example, although the Air Force projects net annual recurring 
savings of about $732 million from eliminating about 10,200 military 
positions, Air Force officials stated the active duty positions will be 
reassigned to relieve stress on high demand career fields and the 
reserve positions to new missions yet to be identified. Likewise, the 
Army is projecting savings from eliminating about 5,800 military 
positions, but it has no plans to reduce its end strength. Finally, the 
Navy is projecting it will eliminate about 4,000 active duty military 
positions, which a Navy official noted will help it achieve the end- 
strength reductions already planned. As we noted during our review of 
DOD's process during the 1995 BRAC round, since these personnel will be 
assigned elsewhere rather than taken out of the force structure, they 
do not represent dollar savings that can be readily reallocated outside 
the personnel accounts.[Footnote 14] Not recognizing that these are not 
dollar savings that can be readily applied elsewhere could create a 
false sense of savings available for use in other areas traditionally 
cited as beneficiaries of BRAC savings, such as making more funds 
available for modernization and better maintenance of remaining 
facilities. 

Sustainment, Recapitalization, and Base Operating Support Savings: 

DOD is also projecting savings from the sustainment and 
recapitalization of facilities that are scheduled to be demolished, as 
well as from facilities that might remain in DOD's real property 
inventory when activities are realigned from one base to another. For 
example, the Industrial Joint Cross-Service Group is claiming about $20 
million in annual recurring savings from the recapitalization of 
facilities at installations responsible for destroying chemical weapons 
at three locations recommended for closure.[Footnote 15] However, the 
Army had already expected to demolish these chemical destruction 
facilities upon completing the destruction of the chemical weapons at 
each site and the Army has not identified future missions for these 
installations. As a result, we do not believe it is appropriate for the 
Industrial Joint Cross-Service Group to claim any recapitalization 
savings related to these installations. 

DOD is also projecting savings from the recapitalization and 
sustainment of facilities in cases where functions or activities would 
be realigned from one base to another. However, it is not clear to what 
extent the proposed realignments would result in an entire building or 
portion of a building being vacated, or if entire buildings were 
vacated, whether they would be declared excess and removed from the 
military services' real property inventory. Our analysis shows that the 
supply and storage group's recommendations project about $100 million 
in sustainment and recapitalization savings from realigning defense 
distribution depots. The group estimates its recommendations will 
vacate about 27 million square feet of storage space. Supply and 
storage officials told us their goal is to vacate as much space as 
possible by rewarehousing inventory and by reducing personnel spaces, 
but they do not have a specific plan for what will happen to the space 
once it is vacated. In addition, until these recommendations are 
ultimately approved and implemented, DOD will not be in a good position 
to know exactly how much space is available or how this space will be 
disposed of or utilized. As a result, it is uncertain how much of the 
estimated $100 million in annual recurring savings will actually occur. 

Savings Based on Business Process Reengineering: 

DOD projected net annual recurring savings in the "other" category as 
shown in figure 3 include about $500 million that is based on business 
process reengineering efforts. Our analysis indicates that four 
recommendations--one from the Industrial Joint Cross-Service Group and 
three from the Supply and Storage Joint Cross-Service Group--involve 
primarily business process reengineering efforts. However, the expected 
efficiency gains from these recommendations are based on assumptions 
that are subject to some uncertainty and have not been validated. 

Our analysis indicates that $215 million, or 63 percent, of the 
estimated net annual recurring savings from the Industrial Joint Cross- 
Service Group recommendation to create fleet readiness centers within 
the Navy is based on business reengineering efforts that would result 
in overhead efficiencies. Although the data suggest there is the 
potential for savings, we believe the magnitude of the savings is 
somewhat uncertain because the estimates are based on assumptions that 
have undergone only limited testing. Realizing the full extent of the 
savings would depend on actual implementation of the recommended 
actions and modifications to the Navy's supply system. The industrial 
group and the Navy assumed that combining depot and intermediate 
maintenance levels would reduce the time needed for an item to be 
repaired at the intermediate level, which in turn would reduce the 
number of items needing to be kept in inventory, as well as the number 
of items being sent to a depot for repair. These assumptions, which 
were the major determinant of the realignment savings, were reportedly 
based on historical data and pilot projects and have not been 
independently reviewed or verified by the Naval Audit Service, the DOD 
Inspector General, or us. 

Furthermore, our analysis indicates that $291 million, or about 72 
percent, of the net annual recurring savings expected from the Supply 
and Storage Joint Cross-Service Group's three recommendations are also 
based on business process reengineering. In the COBRA model, the 
savings are categorized as procurement savings and are based on the 
expanded use of performance-based logistics and reductions to duplicate 
inventory.[Footnote 16] Supply and storage group staff said that these 
savings accrue from reduced contract prices because the Defense 
Logistics Agency (DLA) will have increased buying power since it is 
responsible for purchasing many more items that before were purchased 
by each of the services. In addition, savings accrue from increased use 
of performance-based agreements,[Footnote 17] a key component of 
performance-based logistics. The group estimates DLA can save 2.8 cents 
on each contract dollar placed on performance-based agreements. In 
addition, savings result from reductions in the amount of stock that 
must be held in inventory. Supply and storage staff said that these 
savings are attributable to reductions in the cost of money, cost of 
stock losses due to obsolescence, and cost of storage. The group 
estimates that together these factors save about 17 percent of the 
estimated value of the acquisition cost of the stock that is no longer 
required to be held in inventory. These savings estimates, for the most 
part, are based on historical documentation provided by DLA, which time 
did not allow us to validate. The extent to which these same savings 
will be achieved in the future is uncertain. As noted above, how these 
actions are implemented could also affect savings. We are concerned 
that this is another area that could lead to a false sense of savings 
and lead to premature reductions in affected budgets in advance of 
actual savings being fully realized, as has sometimes occurred in past 
efforts to achieve savings through business process reengineering 
efforts. 

Transformation Cited as Justification for Many Recommendations despite 
Lack of Clear Agreement on Transformational Options: 

While furthering transformation was one of the BRAC 2005 goals, there 
was no agreement between DOD and its components on what should be 
considered a transformational effort. As part of the BRAC process, the 
department developed over 200 transformational options for stationing 
and supporting forces as well as for increasing operational efficiency 
and effectiveness. The OSD BRAC office narrowed this list to 77 
options, but agreement was not reached within the department on these 
options, so none of them were formally approved. Nonetheless, each 
service and joint cross-service group was permitted to use the 
transformational options as appropriate to support its candidate 
recommendations. Collectively, these draft options did not provide a 
clear definition of transformation across the department. The options 
ranged from those that seemed to be service specific to those that 
suggested new ways of doing business. For example, some 
transformational options included reducing the number of Army Reserve 
regional headquarters; optimizing Air Force squadrons; and co-locating 
various functions such as recruiting, military and civilian personnel 
training, and research, development and acquisition and test and 
evaluation, across the military departments. In contrast, some options 
suggested consideration of new ways of doing business, such as 
privatizing some functions and establishing a DOD agency to oversee 
depot-level reparables. 

While the transformational options were never formally approved, our 
analysis indicates that many of DOD's recommendations reference one or 
more of the 77 transformational options as a resulting benefit of the 
proposed actions. For example, 15 of the headquarters and support 
activities group recommendations reference the option to minimize 
leased space and move organizations in leased space to DOD-owned space. 
Likewise, 37 of the Army reserve component recommendations reference 
the option to co-locate guard and reserve units at active bases or 
consolidate guard and reserve units that are located in proximity to 
one another at one location. Conversely, a number of the scenarios that 
were initially considered but not adopted reference transformational 
options that could have changed existing business practices. For 
example, the education and training group developed a number of 
scenarios--privatizing graduate education programs and consolidating 
undergraduate fixed and rotary wing pilot training--based on the draft 
transformational options, but none were ultimately approved by the 
department. 

Some Proposals Have Lengthy Payback Periods: 

Many of the 222 recommendations DOD made in the 2005 round are 
associated with lengthy payback periods, which, in some cases, call 
into question whether the department would be gaining sufficient 
monetary value for the up-front investment cost required to implement 
its recommendations and the time required to recover this investment. 
Our analysis indicates that 143, or 64 percent, of DOD's 
recommendations are associated with payback periods that are 6 years or 
less while 79, or 36 percent, of the recommendations are associated 
with lengthier paybacks that exceed the 6-year mark or never produce 
savings. Furthermore, our analysis shows that the number of 
recommendations with lengthy payback periods varied across the military 
services and the joint cross-service groups, as shown in table 3. 

Table 3: Payback Periods for BRAC Recommendations by DOD Component: 

DOD component: Army; 
Number of recommendations: 56; 
Payback period: Immediate to 6 years: 26; 
Payback period: 7 to 9 years: 3; 
Payback period: 10 years and greater: 22; 
Payback period: Never: 5. 

DOD component: Navy; 
Number of recommendations: 53[A]; 
Payback period: Immediate to 6 years: 45; 
Payback period: 7 to 9 years: 2; 
Payback period: 10 years and greater: 6; 
Payback period: Never: 0. 

DOD component: Air Force; 
Number of recommendations: 42; 
Payback period: Immediate to 6 years: 29; 
Payback period: 7 to 9 years: 6; 
Payback period: 10 years and greater: 7; 
Payback period: Never: 0. 

DOD component: Education and training; 
Number of recommendations: 9; 
Payback period: Immediate to 6 years: 5; 
Payback period: 7 to 9 years: 0; 
Payback period: 10 years and greater: 3; 
Payback period: Never: 1. 

DOD component: Headquarters and support activities; 
Number of recommendations: 21; 
Payback period: Immediate to 6 years: 14; 
Payback period: 7 to 9 years: 2; 
Payback period: 10 years and greater: 5; 
Payback period: Never: 0. 

DOD component: Industrial; 
Number of recommendations: 17; 
Payback period: Immediate to 6 years: 13; 
Payback period: 7 to 9 years: 3; 
Payback period: 10 years and greater: 1; 
Payback period: Never: 0. 

DOD component: Intelligence; 
Number of recommendations: 2; 
Payback period: Immediate to 6 years: 0; 
Payback period: 7 to 9 years: 2; 
Payback period: 10 years and greater: 0; 
Payback period: Never: 0. 

DOD component: Medical; 
Number of recommendations: 6; 
Payback period: Immediate to 6 years: 3; 
Payback period: 7 to 9 years: 1; 
Payback period: 10 years and greater: 2; 
Payback period: Never: 0. 

DOD component: Supply and storage; 
Number of recommendations: 3; 
Payback period: Immediate to 6 years: 3; 
Payback period: 7 to 9 years: 0; 
Payback period: 10 years and greater: 0; 
Payback period: Never: 0. 

DOD component: Technical; 
Number of recommendations: 13; 
Payback period: Immediate to 6 years: 5; 
Payback period: 7 to 9 years: 5; 
Payback period: 10 years and greater: 3; 
Payback period: Never: 0. 

DOD component: Total; 
Number of recommendations: 222; 
Payback period: Immediate to 6 years: 143; 
Payback period: 7 to 9 years: 24; 
Payback period: 10 years and greater: 49; 
Payback period: Never: 6. 

DOD component: Percentage; 
Number of recommendations: 100; 
Payback period: Immediate to 6 years: 64; 
Payback period: 7 to 9 years: 11; 
Payback period: 10 years and greater: 22; 
Payback period: Never: 3. 

Source: GAO analysis of DOD data. 

[A] While the DOD BRAC report lists 21 Navy recommendations, several of 
these have multiple actions, thus bringing the total to 53 
recommendations. 

[End of table]

As shown in table 3, the Army has five recommendations and the 
education and training group has one recommendation that never payback, 
as described below: 

* Army realignment of a special forces unit from Fort Bragg, North 
Carolina, to Eglin Air Force Base, Florida;

* Army realignment of a heavy brigade from Fort Hood, Texas, to Fort 
Carson, Colorado;

* Army realignment of a heavy brigade to Fort Bliss, Texas, and 
infantry and aviation units to Fort Riley, Kansas;

* Army reserve component consolidations in Minnesota;

* Army reserve component consolidations in North Dakota; 
and: 

* Education and Training Joint Cross-Service Group's establishment of 
Joint Strike Fighter aircraft training at Eglin Air Force Base, 
Florida. 

According to Army officials, these five recommendations have no payback 
because, in part, they must build additional facilities to accommodate 
the return of about 47,000 forces currently stationed overseas to the 
United States as part of DOD's Integrated Global Presence and Basing 
Strategy initiative. According to the education and training group, its 
one recommendation with no payback period is due to the high military 
construction costs associated with the new mission to consolidate 
initial training for the Joint Strike Fighter aircraft for the Navy, 
the Marine Corps, and the Air Force. 

We also identified some portions of DOD's individual recommendations 
that are associated with lengthy payback periods for certain BRAC 
actions but are imbedded within larger, bundled recommendations. The 
following example illustrates this point. 

* A proposal initially developed by the Headquarters and Support 
Activities Joint Cross-Service Group to move the Army Materiel Command 
from Fort Belvoir, Virginia, to Redstone Arsenal, Alabama, had more 
than a 100-year payback period with a net cost over a 20-year period. 
However, the proposal did not include some expected savings that if 
included, would have reduced the payback period to 32 years. 
Concurrently, the group developed a separate proposal to relocate 
various Army offices from leased and government-owned office space onto 
Fort Sam Houston, Texas, which would have resulted in a 3-year payback 
period. The headquarters group decided to combine these two stand-alone 
proposals into one recommendation, resulting in an expected 20-year net 
present value savings of about $123 million with a 10-year payback. 

Vacating Leased Space: 

Fifteen of the Headquarters and Support Activities Joint Cross-Service 
Group's recommendations include a one-time savings of over $300 million 
from moving activities from leased space onto military installations. 
These recommendations, if approved, would reduce total DOD leased space 
within the National Capital Region[Footnote 18] from 8.3 million square 
feet to about 1.7 million square feet, or by 80 percent. While our 
prior work generally supports the premise that leased property is more 
expensive than government-owned property, the recommendations related 
to vacating leased space also raise questions about a limitation in 
projected savings and impact on local communities. 

The one-time cost savings represents costs expected to be avoided in 
the future by moving from leased facilities into government owned and 
protected facilities rather than upgrading existing leased space to 
meet DOD's antiterrorism/force protection standards.[Footnote 19] 
According to a DOD official, after the June 1996 Khobar Tower bombing 
incident in Dhahran, Saudi Arabia, the department created a task force 
of mostly engineers to develop minimum force protection standards for 
all DOD-occupied locations. The official also stated that the standards 
were not the result of a formal threat assessment. The force protection 
standards for leased buildings apply only where DOD personnel occupy at 
least 25 percent of the net interior usable area; only to the portion 
of the building occupied by DOD personnel; to all new leases that are 
executed on or after October 1, 2005, and to leases renewed or extended 
on or after October 1, 2009. 

Initially, the joint cross-service group prepared military value data 
call questions that could determine whether a leased location met the 
force protection requirements. However, group officials stated that 
most of these questions were discarded because of inconsistencies in 
how the questions were answered. As noted in our July 1 report, we have 
also learned that the Pentagon Force Protection Agency will shortly 
begin 10-month antiterrorism and force protection vulnerability 
assessments of about 60 DOD-occupied leased buildings in the National 
Capital Region. One could question whether this action should not have 
been completed prior to recommending a broad-based divestiture of 
leased space.[Footnote 20]

Another significant issue related to the leased space, at least in the 
National Capital Region, is the impact of such a major divestiture of 
leased space on community infrastructure. Four of the Headquarters and 
Support Activities Joint Cross-Service Group's recommendations involve 
moving personnel from leased space to Fort Belvoir, Virginia, 
increasing Fort Belvoir's population by about 10,700.[Footnote 21] The 
recommendations include military construction projects to build 
facilities for these personnel on Fort Belvoir. In addition, the 
recommendations include $55 million to improve roads and other 
infrastructure in the area surrounding the base. However, it is 
uncertain at this time whether this will be sufficient to fully support 
the impact on the surrounding community's infrastructure or the 
likelihood that local governments will seek federal assistance to help 
communities reduce the impact--costs that will have the effect of 
increasing one-time costs and offsetting short-term savings from the 
recommendations. 

Significant Challenges Ahead for Implementing BRAC Recommendations: 

While we realize that the BRAC Commission is charged with reviewing 
DOD's proposed list of recommended BRAC actions and submitting its own 
list to the President by September 8, 2005, there are significant 
challenges ahead for implementing BRAC recommendations which I would 
like to bring to the Commission's attention--challenges that will 
likely affect how successful this BRAC round could be viewed 
historically. These challenges include the need for (1) transition 
planning to minimize the impact of the loss of specialized human 
capital skills in implementing recommended actions on ongoing defense 
operations; (2) mechanisms to monitor implementation, including the 
tracking and periodic updating of savings that DOD expects from 
implementing BRAC recommendations; (3) plans to address and adequately 
fund environmental restoration of unneeded property in order to 
expedite property transfer and put property to productive reuse; and 
(4) assistance for both losing and gaining communities affected by the 
BRAC recommendations. 

Transition Plans for Minimizing Disruption of Operations due to Loss of 
Specialized Skills: 

A significant challenge facing the department is the need for 
transition plans to address the human capital skills that are likely to 
be lost and in need of replacement in order to provide for 
uninterrupted operations as BRAC recommendations are implemented. In 
its cost and savings analyses, the department estimated in most 
instances that, as a standard factor in its COBRA model, about 75 
percent of the personnel at a facility being closed or realigned would 
move to the gaining installation receiving the mission or workload. 

However, in some cases, this percentage may be overstated resulting in 
less actual movement than anticipated, which may in turn present 
challenges for gaining bases. For example, Industrial Joint-Cross 
Service Group officials told us that based on the Navy's prior 
experience in closing shipyards, they did not expect many personnel to 
move to other shipyards if the Portsmouth shipyard were closed. They 
further told us that because it takes about 8 years for personnel to 
become fully proficient in maintaining nuclear-powered submarines, this 
would present a challenge for the other yards to replicate the loss in 
skills due to the unwillingness of workers to move with the relocated 
workload. Officials at Fort Monmouth, New Jersey, expressed similar 
concerns regarding the planned closure of the base and plans for a 
large portion of the work to be transferred to the Aberdeen Proving 
Ground in Maryland. Information provided by these officials suggest 
that the potential loss of a large retirement age population must be 
balanced against the impact on ongoing mission activities providing 
real-time assistance to warfighters and transformation initiatives. 

In other cases, the loss of personnel skills at a location may cause 
some concern but may not be as difficult to reconstitute. For example, 
DOD projects that about 7,400 personnel would move under the proposal 
to consolidate the Defense Finance and Accounting Service from 26 to 3 
sites. While the actual number of personnel that may move is unknown, a 
Defense Finance and Accounting Service official stated that the 
accounting skills required are available at the receiving sites. Our 
analysis indicates that over 4,590, or 62 percent, of the workforce at 
the 26 sites are classified as accounting-related civilian positions at 
General Schedule grade 11 or below. 

Should there be recommendations where the loss of personnel is 
extensive, particularly for those skills requiring extensive education, 
training, and experience, it could prove challenging to the department 
to satisfactorily provide for the replacement of these critical skills. 
In this regard, it is important that the department develop transition 
plans that would recognize the loss of human capital skills and provide 
for replacement capability to minimize disruption of ongoing defense 
operations. Without such a plan, the department could be at risk in 
providing the necessary support to our military forces. 

Mechanisms for Monitoring Implementation and Tracking and Updating 
Savings Estimates: 

As noted in our July 1, 2005, report, the department has proposed 
various BRAC actions involving business process changes and other 
actions, such as in joint basing, where likely savings will very much 
depend on implementation actions, the details of which are yet to be 
developed. We believe it will be important that DOD monitor 
implementation of these actions to ensure compliance with proposed 
actions. With respect to savings estimates, we believe it is also 
critical that the department devise a mechanism to track and 
periodically update its savings estimates from the final 
recommendations in order to provide not only Congress but the public 
with a full accounting of the dollars saved through the BRAC process. 
Our interest in this area is evidenced by our recommendation in our 
July 2005, report to provide for this. However, given the problems in 
tracking savings from the previous rounds, and the large volume of BRAC 
actions that are more oriented to realignments and business process 
engineering rather than closures, along with our concerns about claimed 
military personnel savings, we believe it is of paramount importance 
that DOD put in place a process to track and periodically update its 
savings estimates. 

Plans for Addressing Environmental Restoration: 

In accordance with long-standing DOD practice in previous rounds, 
estimated environmental restoration costs for bases undergoing closure 
or realignment are not included in DOD's cost and savings analyses. 
Such costs are excluded for comparative purposes based on DOD's 
position that restoration is a liability that the department must 
address regardless of whether a base is kept open or closed. 
Nevertheless, DOD did give consideration to such costs in addressing 
selection criterion 8, and included available information on estimated 
restoration costs as part of the data supporting its BRAC 
recommendations. DOD data indicate that estimated restoration costs for 
its 33 major base closures would be about $949 million, as shown in 
table 4. 

Table 4: Estimated Environmental Restoration Costs for DOD's 
Recommended Major Base Closures: 

Dollars in millions. 

Military service: Army; 
Number of major closures: 14; 
Estimated environmental restoration costs[A]: $723.3. 

Military service: Navy; 
Number of major closures: 9; 
Estimated environmental restoration costs[A]: $154.5. 

Military service: Air Force; 
Number of major closures: 10; 
Estimated environmental restoration costs[A]: $71.3. 

Total; 
Number of major closures: 33; 
Estimated environmental restoration costs[A]: $949.1. 

Source: GAO analysis of DOD data. 

[A] Estimated costs include some costs not specifically reported in 
DOD's May 2005 report to the Defense Base Closure and Realignment 
Commission. While the Army and Navy generally reported these costs, the 
Air Force did not but its costs were noted in supporting documentation. 

[End of table]

As shown in the table 4, the Army is expected to incur the largest 
share of estimated restoration costs due to the proposed closure of 
several ammunition plants and chemical depots. While the DOD BRAC 
report does not specifically identify the potential for additional 
restoration costs at DOD installations, available supporting 
documentation does identify some additional costs. For example, the 
Army estimated that range restoration at Hawthorne Army Depot could 
cost between $27 million to $147 million in addition to the $383 
million reported and included in the estimates in table 4. Further, the 
Army recognizes that additional restoration costs could be incurred at 
six additional locations that have ranges and chemical munitions, but 
these costs have not yet been determined. 

More recent environmental restoration cost data indicate that the 
estimates are increasing. As noted in a June 2005 Congressional 
Research Service report,[Footnote 22] the estimates for the recommended 
33 major base closures have increased by nearly $600 million to over 
$1.5 billion. Estimated costs to complete environmental restoration now 
exceed $100 million at each of the following proposed major closures: 
Hawthorne Army Depot, Nevada ($465 million); Otis Air National Guard 
Base, Massachusetts ($373 million); Fort Monroe, Virginia ($201 
million); and Deseret Chemical Depot, Utah ($180 million). 

Service officials told us that the projected cost estimates for 
environmental restoration are lower, in general, than evidenced in 
previous rounds, because the environmental conditions of today's bases 
are much better than those closed or realigned in previous rounds, 
primarily because of DOD's ongoing active base environmental 
restoration program. Nonetheless, our prior work has indicated that as 
closures are implemented, more intensive environmental investigations 
occur and additional hazardous conditions may be uncovered that could 
result in additional, unanticipated restoration and higher costs. 
Finally, the services' preliminary estimates are based on restoration 
standards that are applicable for the current use of the base property. 
Because reuse plans developed by communities receiving former base 
property sometimes reflect different uses for the property, this could 
lead to more stringent and thus more expensive restoration in many 
cases. 

While it is uncertain at this point what the ultimate restoration costs 
at BRAC-affected bases will be, it is likely that environmental 
restoration has the potential to slow the transfer of unneeded base 
property freed up by the BRAC process to communities surrounding those 
bases. Our prior work has shown that environmental restoration is the 
primary impediment to the transfer of unneeded property to others for 
reuse. In our January 2005 report[Footnote 23] we noted that, as of 
September 30, 2004, the reasons why most of the 140,000 acres from the 
prior four rounds remained untransferred were due to issues regarding 
environmental restoration. Such delays in the transfer of property have 
adverse effects on BRAC communities, as this property cannot be put to 
productive reuse. In this regard, we believe it is critical that the 
department adequately plan for and fund environmental restoration 
requirements to provide for the expedited transfer of unneeded property 
to others for subsequent reuse. 

Assistance for BRAC-Affected Communities: 

The recommended actions for the 2005 BRAC round will have varying 
degrees of impact on communities surrounding bases undergoing a closure 
or realignment. While some will face economic recovery challenges as a 
result of a closure and associated losses of base personnel, others, 
which expect large influxes of personnel due to increased base 
activity, face a different set of challenges involving community 
infrastructure necessary to accommodate growth. These communities may 
likely require assistance from various sources to help them address the 
many challenges facing them as they plan for either economic recovery 
or infrastructure growth as a result of recommended BRAC actions. 

DOD data indicate that most economic areas across the country are 
expected to be affected very little by DOD's recommended actions, but a 
few could face substantial impact. Almost 83 percent of the 244 
economic areas affected by BRAC recommendations fall between a 1 
percent loss in employment and a 1 percent gain in employment.[Footnote 
24] However, for some of these areas, the projected impact is fairly 
significant, ranging up to a potential direct and indirect loss of up 
to nearly 21 percent. In this regard, six communities--Cannon Air Force 
Base, New Mexico; Hawthorne Army Depot, Nevada; Naval Support Activity 
Crane, Indiana; Submarine Base New London, Connecticut; Eielson Air 
Force Base, Alaska; and Ellsworth Air Force Base, South Dakota--had 
negative employment impacts ranging from 8.5 percent to 20.5 percent. 

Our prior work has shown that a variety of factors will affect how 
quickly communities are able to rebound from the negative economic 
consequences of closures and realignments. They include such factors as 
trends associated with the national, regional, and local economies; 
natural and labor resources; effective planning for reuse of base 
property; and federal, state, and local government assistance to 
facilitate transition planning and execution. Our prior work has shown 
that most communities surrounding closed bases in the previous rounds 
have been faring well in relation to key national economic indicators-
-unemployment rate and the average annual real per capita income growth 
rates.[Footnote 25] In our January 2005 report, for example, we further 
reported that while some communities surrounding closed bases were 
faring better than others, most have recovered or were continuing to 
recover from the impact of BRAC, with more mixed results recently, 
allowing for some negative impact from the economic downturn nationwide 
in recent years. 

The 2005 round, however, also has the potential to significantly affect 
a number of communities surrounding installations, which are expected 
to experience considerable growth in the numbers of military, civilian, 
and civilian support personnel. DOD indicated that about 20 
installations are expected to experience a net gain of over 2,000 
military and civilian personnel. This is particularly evident for 
several Army bases, such as Fort Belvoir, Virginia which is expected to 
have a net gain of over 20,000 military and civilian personnel, where 
personnel increases are likely to place additional demands on community 
services, such as providing adequate housing, schools, and other 
infrastructure support, for which the communities may not have adequate 
resources in the short term. 

Based on the experience from the previous BRAC rounds, we believe it is 
likely that additional federal costs are likely to be incurred, 
although these costs are not required to be included in DOD's cost and 
savings analyses, for providing assistance to BRAC-affected 
communities. These costs include transition assistance, planning 
grants, and other assistance made available to communities by DOD and 
other federal agencies. As we reported in January 2005,[Footnote 26] in 
the previous four BRAC rounds, DOD's Office of Economic Adjustment, the 
Department of Labor, the Economic Development Administration within the 
Department of Commerce, and the Federal Aviation Administration 
provided nearly $2 billion in assistance through fiscal year 2004 to 
communities and individuals, and according to DOD officials, these 
agencies are slated to perform similar roles for the 2005 round. We 
believe it is important that those agencies that have traditionally 
provided assistance are prepared and adequately budget for the 
necessary funds to provide assistance to those communities affected by 
the BRAC 2005 process. As previously discussed, the number of bases in 
the 2005 BRAC round that will gain several thousand personnel from the 
recommended actions could increase pressure for federal assistance to 
mitigate the impact on community infrastructure, such as schools and 
roads, with the potential for more costs than in the prior rounds. 

This concludes my statement. I would be pleased to answer any questions 
you or other members of the Commission may have at this time. 

Contact and Acknowledgments: 

For further information regarding this statement, please contact Barry 
W. Holman at (202) 512-5581. Individuals making key contributions to 
this statement include Nelsie Alcoser, Shawn Arbogast, Raymond Bickert, 
Andrew Edelson, Mike Kennedy, Glenn Knoepfle, Nancy Lively, Warren 
Lowman, Tom Mahalek, David Mayfield, Richard Meeks, Hilary Murrish, 
Charles Perdue, Robert Poetta, Jim Reifsnyder, James Reynolds, and 
Laura Talbott. 

[End of section]

Appendix I: 20-Year Net Present Value Savings from the Top 10 Percent 
of DOD's BRAC 2005 Recommendations: 

Dollars in millions. 

Recommendation: Realign to establish Navy Fleet Readiness Centers; 
20-year net present value savings: $4,724.2. 

Recommendation: Realign supply, storage, and distribution management; 
20-year net present value savings: $2,925.8. 

Recommendation: Realign Eielson Air Force Base, AK; 
20-year net present value savings: $2,780.6. 

Recommendation: Close Cannon Air Force Base, NM; 
20-year net present value savings: $2,706.8. 

Recommendation: Realign Pope Air Force Base, NC; 
20-year net present value savings: $2,515.4. 

Recommendation: Realign to create joint basing; 
20-year net present value savings: $2,342.5. 

Recommendation: Realign Grand Forks Air Force Base, ND; 
20-year net present value savings: $1,982.0. 

Recommendation: Consolidate/co-locate active and reserve personnel and 
recruiting centers for Army and Air Force; 
20-year net present value savings: $1,913.4. 

Recommendation: Realign inventory control points and consolidate depot-
level reparable procurement management; 
20-year net present value savings: $1,889.6. 

Recommendation: Close Ellsworth Air Force Base, SD; 
20-year net present value savings: $1,853.3. 

Recommendation: Close Submarine Base New London, CT; 
20-year net present value savings: $1,576.4. 

Recommendation: Consolidate Defense Finance and Accounting Service; 
20-year net present value savings: $1,313.8. 

Recommendation: Consolidate transportation command components; 
20-year net present value savings: $1,278.2. 

Recommendation: Close Naval Shipyard Portsmouth, ME; 
20-year net present value savings: $1,262.4. 

Recommendation: Close Fort Monmouth, NJ; 
20-year net present value savings: $1,025.8. 

Recommendation: Realign maneuver training; 
20-year net present value savings: $948.1. 

Recommendation: Close Brooks City-Base, TX; 
20-year net present value savings: $940.7. 

Recommendation: Realign to establish Combat Service Support Center at 
Fort Lee, VA; 
20-year net present value savings: $934.2. 

Recommendation: Close Naval Air Station Atlanta, GA; 
20-year net present value savings: $910.9. 

Recommendation: Close Fort McPherson, GA; 
20-year net present value savings: $895.2. 

Recommendation: Close and realign Naval Station Ingleside, TX, and 
Naval Air Station Corpus Christi, TX, respectively; 
20-year net present value savings: $822.2. 

Recommendation: Realign various medical activities by converting 
inpatient services to clinics; 
20-year net present value savings: $818.1. 

Total savings from recommendations listed above: $38,359.6. 

Total savings from all BRAC 2005 submitted recommendations: $48,804.5. 

Percentage of recommendations listed above of all recommendations: 79%. 

Source: GAO analysis of DOD data. 

[End of table] 

FOOTNOTES

[1] GAO, Military Bases: Analysis of DOD's 2005 Selection Process and 
Recommendations for Base Closures and Realignments, GAO-05-785 
(Washington, D.C.: July 1, 2005). 

[2] During the BRAC process, data were certified by senior officials at 
DOD offices and installations. Each official certified that the 
information was accurate and complete to the best of his or her 
knowledge and belief. 

[3] P.L. 101-510, section 2912(a)(1)(A) required DOD to develop a 20- 
year force structure plan as the basis for its BRAC analysis. 

[4] P.L. 107-107, Title XXX (Dec. 28, 2001). 

[5] The seven joint cross-service groups were Education and Training; 
Headquarters and Support Activities; Industrial; Intelligence; Medical; 
Supply and Storage; and Technical. 

[6] DOD defines a major closure as one where plant replacement value 
exceeded $100 million. DOD defines plant replacement value as the cost 
to replace an existing facility with a facility of the same size at the 
same location, using today's building standards. DOD defines a major 
base realignment as one with a net loss of 400 or more military and 
civilian personnel. 

[7] We most recently reported that these costs were $23.3 billion 
through fiscal year 2003 and they excluded an estimated $3.6 billion in 
costs that are needed to complete environmental cleanup at BRAC bases 
in future years. Also, they did not include about $1.9 billion in costs 
incurred by other DOD and federal agencies to provide assistance to 
communities and individuals affected by BRAC as a result of prior BRAC 
rounds. GAO, Military Base Closures: Updated Status of Prior Base 
Realignments and Closures, GAO-05-138 (Washington, D.C.: Jan. 13, 
2005). 

[8] Each official who submitted data for BRAC analysis certified that 
the information was accurate and complete to the best of his or her 
knowledge and belief. 

[9] Noted by the Secretary of Defense in his testimony before the BRAC 
Commission on May 16, 2005. 

[10] Homeland defense and surge considerations are in the military 
value selection criteria 2 and 3, respectively, as reflected in P.L. 
101-510, section 2913(b)(2)&(3). 

[11] GAO, Military Bases: Lessons Learned From Prior Base Closure 
Rounds, NSIAD-97-151 Washington D.C.: July 25, 1997). 

[12] Sustainment refers to recurring maintenance and repair activities 
necessary to keep facilities in good working order. Recapitalization 
refers to major renovation or reconstruction activities (including 
facility replacement) needed to keep facilities modern and efficient in 
an environment of changing standards and missions. Base operating 
support refers to a collection of day-to-day programs, activities, and 
services, such as food services, grounds maintenance, and custodial 
services, needed to keep the bases and installations in running order. 

[13] These projections exclude environmental restoration costs, which 
historically have not been included in BRAC costs and savings analyses 
because restoration is a liability that exists regardless of whether a 
base is closed, but are included in implementation budgets once BRAC 
recommendations have become binding. 

[14] GAO, Military Bases: Analysis of DOD's 1995 Process and 
Recommendations for Closure and Realignment, GAO/NSIAD-95-133 
(Washington, D.C.: Apr. 14, 1995). 

[15] The sites are the Newport Chemical Depot, Indiana; Umatilla 
Chemical Depot, Oregon; and Deseret Chemical Depot, Utah. 

[16] Performance-based logistics is defined as the purchase of weapon 
system sustainment as part of an integrated weapon system package based 
on output measures, such as weapon system availability, rather than 
input measures, such as parts and technical services. 

[17] Performance-based agreements are defined as the negotiated 
agreements between the major stakeholders that formally document the 
performance and support expectations and resources to achieve the 
desired outcome. 

[18] The National Capital Region includes Washington, D.C; the Maryland 
counties of Montgomery and Prince George's; and the Virginia counties 
of Fairfax, Loudoun, and Prince William and the City of Alexandria, 
Virginia. 

[19] Unified Facilities Criteria: DOD Minimum Antiterrorism Standards 
for Buildings (UFC 4-010-01, 8 Oct. 2003). 

[20] After DOD's recommendations were published, we obtained data from 
the General Services Administration indicating that leased termination 
costs associated with 10 leases that are scheduled to expire after the 
BRAC implementation period would be approximately $76 million. 

[21] The Intelligence Joint Cross-Service Group is also proposing to 
move about 8,500 personnel to Fort Belvoir. 

[22] Congressional Research Service, Military Base Closures: Role and 
Costs of Environmental Cleanup, (Washington, D.C.: June, 27, 2005). The 
report used information from the Department of Defense, Defense 
Environmental Programs Annual Report to Congress for FY 2004, dated 
April 2005. 

[23] GAO, Military Base Closures: Updated Status of Prior Base 
Realignments and Closures, GAO-05-138 (Washington, D.C.: Jan. 13, 
2005). 

[24] Some of the recommendations had multiple actions that affected 
more than one economic area. 

[25] GAO, Military Base Closures: Updated Status of Prior Base 
Realignments and Closures, GAO-05-138 (Washington, D.C.: Jan. 13, 
2005); GAO, Military Base Closures: Progress in Completing Actions from 
Prior Realignments and Closures, GAO-02-433 (Washington, D.C.: Apr. 5, 
2002); and GAO, Military Bases: Status of Prior Base Realignment and 
Closure Rounds, GAO/NSIAD-99-36 (Washington, D.C.: Dec. 11, 1998). 

[26] GAO, Military Base Closures: Updated Status of Prior Base 
Realignments and Closures,GAO-05-138 (Washington, D.C.: Jan. 13, 2005). 

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