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Testimony: 

Before the Subcommittee on Readiness, Committee on Armed Services, 
House of Representatives: 

United States Government Accountability Office: 
GAO: 

For Release on Delivery Expected at 10:00 a.m. EST: 
Wednesday, December 12, 2007: 

Military Base Realignments and Closures: 

Estimated Costs Have Increased and Estimated Savings Have Decreased: 

Statement of Brian J. Lepore: 
Director Defense Capabilities and Management: 

GAO-08-341T: 

GAO Highlights: 

Highlights of GAO-08-341T, a report to the Subcommittee on Readiness, 
Committee on Armed Services, House of Representatives. 

Why GAO Did This Study: 

The Department of Defense (DOD) is currently implementing 
recommendations from the 2005 Base Realignment and Closure (BRAC) 
round, which is the fifth round undertaken by DOD since 1988. The 2005 
round is, by GAOís assessment, the biggest, most complex, and costliest 
BRAC round ever, in part because, unlike previous rounds, the Secretary 
of Defense viewed the 2005 round as an opportunity not only to achieve 
savings but also to assist in transforming the department. GAOís 
testimony addresses (1) GAOís role in the BRAC process, and (2) how 
DODís current cost and savings estimates to implement the 2005 
recommendations compare to the 2005 Defense Base Closure and 
Realignment Commissionís (the Commission) cost and savings estimates. 

This testimony is based primarily on the report GAO issued yesterday 
(GAO-08-159) on the overall changes to DODís cost and savings estimates 
for the 2005 BRAC round. To analyze these changes, GAO compared the 
Commissionís estimates in its 2005 report to DODís estimates in its 
fiscal year 2008 BRAC budget submission. This testimony is also based 
on several reports GAO has issued on the implementation of selected 
recommendations, and GAOís prior work assessing the 2005 decision-
making process. GAOís work was performed in accordance with generally 
accepted government auditing standards. 

What GAO Found: 

GAO has played two long-standing roles in the BRAC process. First, as 
requested by congressional committees in the 1988 round or mandated by 
law since 1990, GAO has served as an independent and objective observer 
of the BRAC process and has assessed and reported on DODís decision-
making processes leading up to proposed realignment and closure 
recommendations. GAO reported in its assessment of the 2005 round that 
DODís decision-making process for developing its recommendations was 
generally logical, well documented, and reasoned. However, GAO 
identified some limitations with cost and savings estimates, some BRAC 
recommendations having lengthy payback periods, and some with limited 
savings relative to implementation costs. GAOís second role has focused 
on reviewing the implementation of realignment and closure actions once 
the BRAC recommendations became effective in November 2005. GAO has 
issued several reports on DODís implementation of its 2005 BRAC 
recommendations. GAO will continue to review the implementation of the 
2005 BRAC recommendations, including a final report to be issued within 
1 year after the end of the 6-year BRAC implementation period, which 
ends in September 2011. 

DOD plans to spend more and save less than originally estimated for the 
2005 BRAC round. DODís cost estimates to implement the 2005 
recommendations, as reported in its fiscal year 2008 BRAC budget 
submission, have increased by 48 percent, from $21 billion to $31 
billion, for the 6-year implementation period. Nearly two-thirds of the 
expected cost increase is due to increased military construction costs. 
For example, the expected military construction cost to close Fort 
Monmouth, New Jersey, has increased by more than $550 million, largely 
because the Army decided to build new facilities instead of renovating 
existing facilities at one location and share existing facilities at 
another location. GAO believes there is potential for further cost 
increases due to uncertainty in whether the Armyís new initiative 
designed to reduce construction costs will achieve the planned results. 
While projected costs have increased, projected net annual recurring 
savings have decreased about 5 percent, from $4.2 billion to $4.0 
billion annually. DOD attributed the decrease in its savings estimate 
primarily to changes in initial assumptions or plans. GAO believes that 
DODís reported savings estimates may be overstated by $1.85 billion 
largely because the estimates include savings from military personnel 
entitlements without a corresponding reduction in end strength. As a 
result of the increases in costs and decreases in savings, GAOís 
analysis shows that accumulated savings are projected to offset 
accumulated costs in 2017 rather than 2013 as projected by the 
Commission. The time required for accumulated savings to offset 
accumulated costs would increase to 2025 with the exclusion of the 
expected savings from military personnel entitlements and Cannon Air 
Force Base, New Mexico, that GAO questions. While the overall payback 
period for DODís BRAC recommendations is less than 20 years, the number 
of individual recommendations that are not expected to pay back within 
20 years has increased from 30, as estimated by the Commission, to 73, 
based on DODís fiscal year 2008 budget submission. 

To view the full product, including the scope and methodology, click on 
[hyperlink, http://www.GAO-08-341T]. For more information, contact 
Brian J. Lepore (202) 512-4523 orleporeb@gao.gov. 

[End of section] 

Mr. Chairman and Members of the Subcommittee: 

I appreciate the opportunity to be here today to discuss the projected 
costs and savings associated with implementing the 2005 Base 
Realignment and Closure (BRAC) round. The Department of Defense (DOD) 
is currently implementing recommendations from the 2005 BRAC round, 
which is the fifth BRAC round undertaken by DOD since 1988. Based on 
our work to date, the 2005 round is the biggest, most complex, and 
costliest BRAC round ever, in part because, unlike previous rounds, the 
Secretary of Defense viewed the 2005 round as an opportunity not only 
to achieve savings but also to assist in transforming the department. 
As a result, the 2005 round differs from previous rounds in terms of 
the number of actions, projected costs to implement the actions, and 
projected savings. My testimony today addresses (1) GAO's role in the 
BRAC process and (2) how DOD's cost and savings estimates for the 2005 
round, as reported in its fiscal year 2008 BRAC budget submission, 
compare to the 2005 Defense Base Closure and Realignment Commission's 
(the Commission) cost and savings estimates. 

My testimony is based largely on our report reviewing the changes to 
the overall cost and savings estimates associated with the 2005 
recommendations, which we issued yesterday.[Footnote 1] In that report 
we found that estimated costs to implement the 2005 BRAC round have 
increased and estimated savings have decreased. To analyze the changes 
in the estimated costs and savings, we compared the Commission's 
estimates, as reported in the Commission's 2005 report,[Footnote 2] to 
DOD's estimates in its fiscal year 2008 BRAC budget submission. 
Additionally, we reported that DOD's projected net annual recurring 
savings may be overstated by 46 percent due to the lack of a 
distinction between savings from transferring military personnel from 
one location to another, which do not produce tangible savings outside 
of the military personnel account, and savings from reduced operating 
costs that will make funds available for other uses. We recommended 
that DOD better explain its net annual recurring savings; DOD concurred 
with this recommendation and plans to address it in its next budget 
submission. I will more fully discuss the findings of our cost and 
savings report that we released yesterday later in my statement. My 
testimony is also based on our prior work assessing the 2005 BRAC 
decision-making process issued in July 2005, as statutorily required, 
and several reports we have issued over the past year on the 
implementation of selected recommendations. Our work was performed in 
accordance with generally accepted government auditing standards. A 
listing of our related products is at the end of this statement. 

Summary: 

GAO has played two long-standing roles in the BRAC process. First, as 
requested by congressional committees in the 1988 round or mandated by 
law since 1990, we have served as an independent and objective observer 
of the BRAC process and have assessed and reported on DOD's decision- 
making processes leading up to proposed realignment and closure 
recommendations. In our assessment of the 2005 round, we reported that 
DOD's decision-making process for developing its recommendations was 
generally logical, well documented, and reasoned. Our assessment of the 
process does not constitute endorsement of any recommendations as it 
was the Commission's responsibility, not ours, to approve DOD's 
recommendations. We identified some limitations with cost and savings 
estimates, some recommendations that will take longer than expected to 
recoup up-front costs, and some with limited savings relative to 
implementation costs. Our second role has focused on reviewing the 
implementation of realignment and closure actions once the 
recommendations became effective, just as we review the effectiveness 
and efficiency of numerous programs authorized or mandated by Congress. 
In addition to the report we issued yesterday, we have issued several 
reports on DOD's implementation of its 2005 BRAC recommendations 
affecting the Air National Guard, Army Reserve components, and business 
process reengineering in the Navy and the Defense Logistics Agency. We 
will continue to review DOD's implementation of the 2005 
recommendations, and the House Armed Services Committee directs us to 
monitor and report annually on DOD's progress with a final report to be 
issued within 1 year after the end of the 6-year BRAC implementation 
period, which ends in September 2011.[Footnote 3] 

DOD plans to spend more and save less than originally estimated for the 
2005 BRAC round. Based on DOD's fiscal year 2008 budget submission, 
DOD's cost estimates to implement the 2005 recommendations have 
increased by 48 percent through the 6-year implementation period, from 
$21 billion to $31 billion, compared to the Commission's cost 
estimates.[Footnote 4] Our analysis indicates that nearly two-thirds of 
the $10 billion cost increase is due to increased projected military 
construction costs, while inflation, environmental restoration costs, 
and other costs, such as operations and maintenance, account for the 
remaining one-third of the cost increase. Six recommendations account 
for half of the increase in military construction costs. For example, 
the military construction cost to relocate the Army's armor school from 
Fort Knox, Kentucky, to Fort Benning, Georgia, increased by nearly $670 
million because the Army identified additional projects that were not 
included in the original cost estimates.[Footnote 5] Additionally, the 
projected military construction cost to support the relocation of 
personnel from Fort Monmouth, New Jersey, has increased by more than 
$550 million, largely because the Army needed to build new facilities 
instead of renovating existing facilities at one location and build new 
facilities instead of sharing existing facilities at another 
location.[Footnote 6] Overall, we believe there is potential for 
further increases in construction costs due to uncertainty in whether 
the Army's new initiative designed to reduce construction costs will 
achieve the planned results. If the Army is unable to achieve these 
reduced costs, the effect on BRAC implementation costs could be 
considerable and costs would rise. While DOD's projected onetime costs 
have increased, projected net recurring savings as reported in DOD's 
fiscal year 2008 budget submission have decreased about 5 percent, from 
$4.2 billion to $4.0 billion annually, compared to the Commission's 
estimates.[Footnote 7] DOD attributed the decrease in its savings 
estimates primarily to changes in initial assumptions or plans. Based 
on our work to date, DOD's annual recurring savings estimate may be 
overstated by about 46 percent due to the inclusion of $1.85 billion in 
military personnel entitlements--such as salaries and housing 
allowances--for military personnel that DOD plans to shift to other 
positions but does not plan to eliminate. While DOD disagrees with us, 
we do not believe that transferring personnel to other locations 
produces tangible dollar savings outside the military personnel 
accounts that DOD can use to fund other defense priorities since these 
personnel will continue to receive salaries and benefits. Because DOD's 
BRAC budget submission does not explain the difference between net 
annual recurring savings attributable to military personnel 
entitlements, which personnel would still receive, and net annual 
recurring savings from reduced operating costs that would make funds 
available for other uses, DOD could generate a false sense that all of 
its reported savings could be used to fund other defense priorities. As 
such, we recommended in the report that we issued yesterday that DOD 
better explain its net annual recurring savings--a recommendation with 
which DOD has concurred and plans to address in its next budget 
submission. Finally, our analysis shows that accumulated savings are 
projected to offset accumulated costs in 2017--12 years after the 
beginning of the implementation period for the 2005 round, which is 4 
years longer than the Commission's estimate of 2013. This extended 
payback period includes the savings estimates from military personnel 
entitlements and Cannon Air Force Base, New Mexico, that we question, 
which if excluded, would increase the time needed to recoup up-front 
costs still further to 19 years, or the year 2025. While DOD should 
reach the overall break-even point for its 2005 recommendations in less 
than 20 years, the number of individual recommendations that are not 
expected to break even within 20 years has increased from 30, as 
estimated by the Commission, to 73, based on DOD's fiscal year 2008 
budget submission. 

Background: 

DOD has undergone four BRAC rounds since 1988 and is currently 
implementing its fifth round.[Footnote 8] In May 2005, the Secretary of 
Defense made public more than 200 recommendations that DOD estimated 
would generate net annual recurring savings of about $5.5 billion 
beginning in fiscal year 2012. In making its 2005 realignment and 
closure proposals, DOD applied legally mandated selection criteria that 
included military value as the primary consideration, as well as 
expected costs and savings, economic impact to local communities, 
community support infrastructure, and environmental impact. Military 
value, which includes such considerations as an installation's current 
and future mission capabilities, condition, ability to accommodate 
future needs, and cost of operations, was the primary consideration for 
making recommendations as mandated by BRAC law and as reported by both 
DOD and the Commission. Additionally, the Secretary of Defense 
established three goals for the 2005 BRAC round: (1) transforming DOD 
by aligning the infrastructure with the defense strategy, (2) fostering 
jointness across DOD, and (3) reducing excess infrastructure and 
producing savings. 

The 2005 round is unlike previous BRAC rounds due to the Secretary of 
Defense's emphasis on transformation and jointness, rather than just 
reducing excess infrastructure. For example, as part of its efforts to 
transform its forces, the Army included actions to restation forces 
from Europe and Korea to domestic installations, which were part of its 
larger review of bases worldwide. The 2005 round also differs from 
previous BRAC rounds in terms of the number of closure and realignment 
actions. While the number of major closures and realignments is a 
little greater than individual previous rounds, the number of minor 
closures and realignments is significantly greater than those in all 
previous rounds combined, as shown in table 1.[Footnote 9] DOD plans to 
execute over 800 closure and realignment actions as part of the 2005 
BRAC round, which is more than double the number of actions completed 
in the prior four rounds combined. The large increase in the number of 
minor closures and realignments is primarily attributable to the more 
than 500 actions involving the Army National Guard and Army Reserve, 
representing over 60 percent of the BRAC actions. 

Table 1: Comparison of BRAC 2005 with Previous Rounds: 

Round: 1988; 
Major closures: 16; 
Major realignments: 4; 
Minor closures and realignments: 23; 
Total actions: 43; 
Costs through implementation (dollars in billions): $2.7; 
Net annual recurring savings (dollars in billions): $0.9. 

Round: 1991; 
Major closures: 26; 
Major realignments: 17; 
Minor closures and realignments: 32; 
Total actions: 75; 
Costs through implementation (dollars in billions): 5.2; 
Net annual recurring savings (dollars in billions): 2.0. 

Round: 1993; 
Major closures: 28; 
Major realignments: 12; 
Minor closures and realignments: 123; 
Total actions: 163; 
Costs through implementation (dollars in billions): 7.6; 
Net annual recurring savings (dollars in billions): 2.6. 

Round: 1995; 
Major closures: 27; 
Major realignments: 22; 
Minor closures and realignments: 57; 
Total actions: 106; 
Costs through implementation (dollars in billions): 6.5; 
Net annual recurring savings (dollars in billions): 1.7. 

Round: Total; 
Major closures: 97; 
Major realignments: 55; 
Minor closures and realignments: 235; 
Total actions: 387; 
Costs through implementation (dollars in billions): $22.0; 
Net annual recurring savings (dollars in billions): $7.2. 

Round: 2005; 
Major closures: 22[A]; 
Major realignments: 33[A]; 
Minor closures and realignments: 757[B]; 
Total actions: 812; 
Costs through implementation (dollars in billions): $31.2[C]; 
Net annual recurring savings (dollars in billions): $4.0[C]. 

Source: Defense Base Closure and Realignment Commission, DOD, and GAO 
analysis of Commission and DOD data. 

[A] The number of major realignments and closures is as reported by the 
Commission in 2005. 

[B] An individual base may be affected by more than 1 realignment. 

[C] Cost and savings estimates for the 2005 round are DOD's estimates 
as reported in the fiscal year 2008 BRAC budget submission. 

[End of table] 

Also, as shown in table 1, the 2005 round is expected to cost more to 
implement than all of the previous BRAC rounds combined and save more 
than any single round. I will discuss the projected costs and savings 
of the 2005 round later in my statement. 

As in all previous BRAC rounds, DOD used the Cost of Base Realignment 
Actions (COBRA) model to provide a standard quantitative approach to 
compare estimated costs and savings across various proposed 
recommendations. The COBRA model relies to a large extent on standard 
factors and averages but is not intended to and consequently does not 
present budget quality estimates. As a result, COBRA-developed cost and 
savings estimates cannot be assumed to represent the actual costs that 
Congress will need to fund through appropriations to complete 
implementation of BRAC recommendations, nor will they fully reflect the 
savings intended to be achieved after implementation. In other words, 
as we reported in our review of the 1995 and 2005 BRAC rounds,[Footnote 
10] the costs identified in COBRA are most likely to be different than 
the costs that DOD will actually incur and Congress will be asked to 
fund to complete implementation. We have examined COBRA in the past, as 
well as during our review of the 2005 BRAC round, and, given the 
quality of the data and assumptions used in the model, found it to be a 
generally reasonable estimator for comparing potential costs and 
savings among alternative closure and realignment scenarios with the 
caveat that the estimates do not represent budget-quality data, as we 
previously reported in our assessments of the 1995 and 2005 BRAC 
rounds. In this and previous BRAC rounds, DOD subsequently developed 
budget-quality estimates after BRAC decisions were made. 

The Commission was an independent body that reviewed and had the 
authority to change the Secretary's recommendations if it determined 
that the Secretary deviated substantially from the legally mandated 
selection criteria and DOD's force structure plan. After the 
Commission's review in 2005, it forwarded a list of 182 recommendations 
for base closures or realignments to the President. The Commission 
estimated that its recommendations would cost $21 billion and generate 
net annual recurring savings of $4.2 billion beginning in fiscal year 
2012. The Commission's recommendations were accepted in their entirety 
by the President and Congress,[Footnote 11] and became effective on 
November 9, 2005. The BRAC legislation requires DOD to complete closure 
and realignment actions within a 6-year time frame ending September 15, 
2011. 

GAO's Role in the BRAC Process: 

GAO has two long-standing roles in the BRAC process. First, as 
requested by congressional committees for the 1988 BRAC round and 
mandated by law since 1990, we have served as an independent and 
objective observer of the BRAC process and have assessed and reported 
on DOD's decision-making processes leading up to proposed realignment 
and closure recommendations. The law authorizing the 2005 BRAC round 
required us to independently assess DOD's process and recommendations 
and to submit a report by July 1, 2005.[Footnote 12] To make an 
informed and timely assessment, we operated in a real-time setting and 
had access to significant portions of the process as it evolved, thus 
affording the department an opportunity to address any concerns we 
raised in a timely manner. From our vantage point, we were looking to 
see to what extent DOD followed a logical, well-reasoned, and well- 
documented process, where we could see a logical flow between DOD's 
analysis and its proposed recommendations. In our July 2005 report, we 
stated that DOD's decision-making process for developing its 
recommendations was generally logical, well documented, and 
reasoned.[Footnote 13] We also stated that DOD established a structured 
and largely sequential process for obtaining and analyzing data that 
provided an informed basis for identifying and evaluating BRAC options. 
Our conclusion does not constitute endorsement of any recommendation, 
as it was the Commission's responsibility, not ours, to approve DOD's 
recommendations. However, we identified some limitations with DOD's 
cost and savings estimates, some recommendations having lengthy payback 
periods, and some recommendations with limited savings relative to 
costs. 

Once the recommendations become effective, our role is to review DOD's 
efforts to implement the realignment and closure actions, just as we 
routinely review the efficiency and effectiveness of congressionally 
mandated or authorized programs across the government. We generally do 
our BRAC work under the authority of the Comptroller General to conduct 
reviews on his own initiative because of the broad congressional 
interest in the base closure process, which allows us to provide 
information broadly and generally without restriction.[Footnote 14] 
Yesterday we issued our most recent report reviewing the changes to the 
overall cost and savings estimates associated with the 2005 
recommendations, which I will discuss later in my statement. We have 
previously reported on DOD's efforts to implement recommendations 
affecting the Air National Guard, Army reserve components, business 
process reengineering efforts in the Navy and Defense Logistics Agency, 
and environmental restoration costs.[Footnote 15] These reports, as 
well as the report we issued yesterday, show that although DOD is 
making progress in implementing BRAC recommendations, it is facing some 
implementation challenges, such as synchronizing personnel movements 
with planned infrastructure improvements and the need to coordinate 
actions among multiple services and agencies. We will continue to 
review DOD's implementation of the 2005 recommendations,[Footnote 16] 
and the House Armed Services Committee directs us to monitor and report 
annually on DOD's progress and issue a final report within 1 year after 
the end of the 6-year BRAC implementation period, which ends in 
September 2011.[Footnote 17] 

Estimated Costs Have Increased and Savings Have Decreased: 

DOD plans to spend more and save less than originally estimated for the 
2005 round, as we discuss in the report we issued yesterday. Based on 
DOD's fiscal year 2008 BRAC budget submission, estimated onetime costs 
have increased by 48 percent through the 6-year implementation period 
compared to the Commission's cost estimates and could continue to 
increase.[Footnote 18] On the other hand, DOD's projected net savings 
have decreased about 5 percent compared to the Commission's estimates 
and may be overstated due to the inclusion of savings for transferring 
military personnel positions while continuing to pay the same salary 
and benefits.[Footnote 19] As a result, savings from the 2005 round are 
projected to offset costs in 2017--4 years longer than the BRAC 
Commission estimate. If the estimated savings from military personnel 
entitlements and Cannon Air Force Base, New Mexico, that we question 
are excluded, the round will not reach the break-even point until the 
year 2025. 

Estimated Onetime Costs Have Increased and Could Continue to Increase: 

Since the BRAC Commission issued its cost and savings projections in 
2005, DOD's cost estimates to implement the 2005 recommendations, as 
reported in DOD's fiscal year 2008 budget submission, have increased by 
48 percent, from $21 billion to $31 billion.[Footnote 20] The majority 
of the projected cost increase is due to increased military 
construction requirements, as shown in table 2. 

Table 2: Increases in Onetime Costs: 

Category: Military construction; 
Amount (dollars in millions): $6,451; 
Percentage: 64. 

Category: Inflation; 
Amount (dollars in millions): 2,589; 
Percentage: 25. 

Category: Environmental cleanup[A]; 
Amount (dollars in millions): 589; 
Percentage: 6. 

Category: Other (including operations and maintenance); 
Amount (dollars in millions): 506; 
Percentage: 5. 

Category: Total; 
Amount (dollars in millions): $10,135; 
Percentage: 100. 

Source: GAO analysis of DOD data. 

Note: Totals may not sum due to rounding. 

[A] Additional environmental cleanup costs typically are incurred after 
the implementation period. 

[End of table] 

Two of the cost elements listed in table 2--inflation and environmental 
cleanup--were intentionally not considered in the initial estimates 
produced by COBRA. Inflation, which accounts for 25 percent of the 
increase, was not included in the Commission's analysis because costs 
were presented in constant dollars.[Footnote 21] Further, expected 
environmental cleanup cost estimates, which account for about 6 percent 
of the cost increase, were not included in the Commission's analysis 
because DOD has had a long-standing policy of not considering 
environmental cleanup costs in its BRAC decision making. We have agreed 
with DOD's position that such costs are a liability to DOD regardless 
of its base closure recommendations. Some environmental restoration may 
be necessary to protect human health and safety, whether or not a base 
is closed. While such costs are not included in the COBRA model, they 
are included in developing BRAC implementation budgets and recorded as 
a BRAC cost. We reported in January 2007 that environmental cleanup 
costs are likely to increase and Congress does not have full visibility 
over the total expected cost of DOD's BRAC-related environmental 
cleanup efforts.[Footnote 22] 

A limited number of recommendations account for the majority of the 
increase in military construction costs. Specifically, six 
recommendations associated with moving activities from leased space to 
military installations, closing and realigning Army installations, and 
realigning medical activities account for half of the increase in 
military construction costs: 

* Activities in leased space: The military construction cost for the 
recommendation to consolidate the National Geospatial-Intelligence 
Agency at Fort Belvoir, Virginia, has increased by nearly $350 million, 
in part because the agency identified the need for additional 
supporting facilities, such as a technology center and additional 
warehouse space[Footnote 23]. Likewise, the military construction cost 
for the recommendation to move various DOD activities from leased space 
to Fort Belvoir and Fort Lee, Virginia more than doubled to nearly $1 
billion, an increase of more than $500 million, largely because of 
changes to facilities at the receiving location[Footnote 24]s. For 
example, DOD determined a parking garage, rather then a parking lot, 
was needed to accommodate the increase in personnel at Fort Belvoir, 
which increased the original estimate of $3 million to $160 million. 

* Closing and realigning Army installations: The military construction 
cost for the recommendation to relocate the Army's armor school from 
Fort Knox, Kentucky, to Fort Benning, Georgia, to support the creation 
of a maneuver school has increased by nearly $670 million--98 percent 
of the total increase in onetime costs for this recommendation--largely 
because the Army identified about $400 million in additional projects 
that were not originally included in the cost estimates, such as 
training ranges, medical facilities, and a child development center, as 
well as $280 million in infrastructure support, such as water, sewer, 
and gas lines.[Footnote 25] Further, the military construction cost for 
the recommendation to close Fort Monmouth, New Jersey has more than 
doubled to almost $1 billion--an increase of more than $550 million-- 
due to the need to build new facilities rather than renovate existing 
facilities at Aberdeen Proving Ground, Maryland, ($375 million) and 
build new facilities rather than share facilities at West Point, New 
York, to accommodate the U.S. Army Military Academy Preparatory School 
($175 million).[Footnote 26] 

* Realigning medical activities: The military construction cost for the 
recommendation to realign the Walter Reed Army Medical Center in the 
District of Columbia and relocate medical care functions to the 
National Naval Medical Center, Bethesda, Maryland, and Fort Belvoir, 
Virginia, has increased by almost $440 million to over $1 billion, 
largely because of additional facilities needs, such as a parking 
structure and a larger addition to the medical center, that were not 
included in the original estimate.[Footnote 27] Likewise, the military 
construction cost for the recommendation to consolidate medical 
enlisted training and establish the San Antonio Regional Medical Center 
at Fort Sam Houston, Texas, has increased by almost $540 million, 
largely because planning officials identified requirements to move 
inpatient care functions that were not in the original 
estimate.[Footnote 28] Additionally, DOD determined that more 
instructional and laboratory space was required to accommodate the 
increased number of students expected to receive medical training at 
Fort Sam Houston. The number of students expected to attend the center 
annually was underestimated by more than 2,700 students, or 44 percent. 

Based on our analysis, the projected costs for the 2005 round could 
continue to increase because of uncertainty over U.S. Army Corps of 
Engineers efforts to reduce construction costs by 15 percent. The Army 
has already incorporated a 15 percent reduction into a majority of its 
BRAC construction estimates based on the U.S. Army Corps of Engineers' 
efforts to reengineer its process to manage and contract for military 
construction projects and budgeted accordingly. While U.S. Army Corps 
of Engineers officials expressed optimism that these cost savings will 
be realized and preliminary results are promising, these results are 
based on limited experience.[Footnote 29] In September 2007 we reported 
that the Army could be challenged in realizing the cost savings from 
this transformation effort.[Footnote 30] If the Army is unable to 
achieve its projected 15 percent savings overall, the effect on overall 
BRAC construction costs could be considerable because the Army is 
expected to incur 60 percent ($12 billion) of the estimated BRAC 
construction costs. 

Moreover, BRAC implementing officials expressed concern that 
construction costs have the potential to increase in areas such as San 
Antonio, Texas, and the National Capital Region, Washington, D.C., that 
are already experiencing high commercial construction demands. DOD 
estimates it will cost about $3.4 billion for BRAC-related construction 
in the National Capital Region and about $1.3 billion in San Antonio, 
Texas, alone. U.S. Army Corps of Engineers officials expressed concern 
about the effect construction demand might have on bid proposals given 
the sizable amount of construction to take place in a limited amount of 
time to meet the BRAC statutory completion time frame. The large volume 
of anticipated BRAC construction combined with ongoing reconstruction 
due to damage from Hurricane Katrina could also lead to increased 
construction costs, according to service officials from various 
installations. 

Annual Savings Have Decreased and May Be Overstated: 

After DOD has implemented the 2005 BRAC recommendations, based on 
estimates in its fiscal year 2008 BRAC budget submission, DOD expects 
to save about $4.0 billion annually--a 5 percent decrease from the $4.2 
billion the Commission estimated.[Footnote 31] DOD attributed the 
decrease in its savings estimate primarily to changes in initial 
assumptions or plans. For example: 

* $80 million decrease in the estimated savings to close three chemical 
demilitarization depots,[Footnote 32] largely because the Army does not 
expect to close these facilities within the BRAC statutory 
implementation time frame because DOD must complete the chemical 
demilitarization mission first to comply with treaty obligations before 
these facilities can close and completion necessitates these facilities 
to remain open after 2011. We raised this issue in our July 2005 
assessment of the 2005 round.[Footnote 33] 

* $70 million decrease in the estimated savings of establishing joint 
bases at multiple locations, largely because the Army did not include 
its share of the expected savings due to unresolved issues concerning 
joint base operations, while the other services included the COBRA- 
generated savings in DOD's fiscal year 2008 budget submission. 

* $50 million decrease in the estimated savings for realigning the 
Defense Logistics Agency's supply, storage, and distribution network, 
largely because of the need to retain higher inventory levels than 
anticipated and less personnel elimination. 

While a better, more precise estimate of net annual recurring savings 
for the 2005 round may not be known until 2012, based on our work to 
date we believe that the net annual recurring savings estimates 
included in DOD's fiscal year 2008 budget submission may be overstated 
by 46 percent because DOD's estimates include (1) $1.85 billion in 
estimated savings from military personnel entitlements without a 
corresponding reduction in end strength, with personnel continuing to 
receive pay and benefits accounted for as savings, (2) $60 million from 
closing Cannon Air Force Base, New Mexico, although the base will 
actually remain open, and (3) erroneously reporting $25 million in 
onetime savings as annual recurring savings for the recommendation to 
establish fleet readiness centers. 

DOD's estimated annual recurring savings resulting from BRAC may be 
overstated by about 46 percent. About $2.17 billion of DOD's total 
estimated annual recurring savings of about $4 billion is due to 
eliminated overhead expenses such as the costs to operate and maintain 
closed or realigned bases that will no longer be operated or maintained 
by DOD and reductions in civilian salaries for positions that are 
eliminated, which will free up funds that DOD can then use for other 
defense priorities. However, DOD's annual recurring savings estimate 
also includes $1.85 billion in military personnel entitlements--such as 
salaries and housing allowances--for military personnel that DOD plans 
to shift to other positions rather than eliminate. DOD considers these 
savings because they allow DOD to transfer these military personnel to 
other positions. We agree that transferring military personnel to other 
positions may enhance capabilities and allow DOD to redirect freed up 
resources to another area of need. However, while DOD disagrees with 
us, we do not believe that such transfers produce a tangible dollar 
savings that DOD can apply to fund other defense priorities outside the 
military personnel accounts because these personnel will remain in the 
end strength and will continue to receive salaries and benefits. 
Because DOD's BRAC budget submission does not explain the difference 
between net annual recurring savings attributable to military personnel 
entitlements for personnel that will continue to receive pay and 
benefits and net annual recurring savings from no longer operating and 
maintaining closed bases that will make funds available for other uses, 
DOD could generate a false sense that all of its reported savings could 
be used to fund other defense priorities. As such, in the report we 
issued yesterday, we recommended that DOD explain its estimated savings 
to Congress, thus providing more transparency over these savings. DOD 
concurred with our recommendation and has stated that it will take 
action to address our recommendation in its next BRAC budget 
submission. 

Additionally, DOD claimed about $60 million in annual recurring savings 
for closing Cannon Air Force Base, New Mexico, although the base will 
actually remain open to support a new mission.[Footnote 34] DOD 
recommended closing Cannon in its May 2005 submission to the 
Commission. However, in September 2005, the Commission recommended 
closing Cannon unless the Secretary of Defense identified a new mission 
for the base by December 31, 2009, and relocated the base's fighter 
wing elsewhere. Subsequently, DOD announced in June 2006 that Cannon 
would remain open and some Air Force Special Operations units would 
relocate to Cannon. Nevertheless, DOD still reported about $60 million 
in annual recurring savings for categories such as base operation and 
facilities maintenance. Officials at the Air Force BRAC office told us 
that they claimed these savings because they disestablished the fighter 
wing at Cannon.[Footnote 35] We are currently reviewing the 
implementation of this recommendation and plan to issue a report in 
January 2008. 

Finally, in June 2007 we reported that the Navy erroneously reported 
$25 million in onetime savings associated with inventory reductions as 
annual savings in the recommendation to establish fleet readiness 
centers.[Footnote 36] DOD officials agreed with our analysis and agreed 
to update their savings estimate. 

DOD Will Take Longer to Recoup Up-Front Costs: 

As a result of the increasing costs and decreasing savings for the 2005 
BRAC round, our analysis of the Commission's cost and savings estimates 
and DOD's estimates included in its fiscal year 2008 budget submission 
shows that the time required to recoup up-front investment costs, also 
called the payback period, has lengthened from 8 years, initially 
breaking even in 2013 to 12 years, breaking even in 2017, as shown in 
figure 1. 

Figure 1: Comparison of Time to Recoup BRAC Costs Using the 
Commission's and DOD's Fiscal Year 2008 Budget Estimates: 

[See PDF for image] 

Six-year statutory implementation period is from 2006 through 2001. 

Fiscal Year: 2006; 
Cumulative net savings based on DOD current estimates: 0.1; 
Cumulative one-time costs based on DOD current estimates: 1.5; 
Cumulative net savings based on BRAC Commission estimates: 0.2; 
Cumulative one-time costs based on BRAC Commission estimates: 3.5. 

Fiscal Year: 2007; 
Cumulative net savings based on DOD current estimates: 0.6; 
Cumulative one-time costs based on DOD current estimates: 6.9; 
Cumulative net savings based on BRAC Commission estimates: 1.1; 
Cumulative one-time costs based on BRAC Commission estimates: 11.5. 

Fiscal Year: 2008; 
Cumulative net savings based on DOD current estimates: 1.6; 
Cumulative one-time costs based on DOD current estimates: 14.5; 
Cumulative net savings based on BRAC Commission estimates: 3.3; 
Cumulative one-time costs based on BRAC Commission estimates: 16.8. 

Fiscal Year: 2009; 
Cumulative net savings based on DOD current estimates: 3.4; 
Cumulative one-time costs based on DOD current estimates: 21.7; 
Cumulative net savings based on BRAC Commission estimates: 7.0; 
Cumulative one-time costs based on BRAC Commission estimates: 19.4. 

Fiscal Year: 2010: 
Cumulative net savings based on DOD current estimates: 6.0; 
Cumulative one-time costs based on DOD current estimates: 26.7; 
Cumulative net savings based on BRAC Commission estimates: 11.4; 
Cumulative one-time costs based on BRAC Commission estimates: 20.8. 

Fiscal Year: 2011; 
Cumulative net savings based on DOD current estimates: 9.2; 
Cumulative one-time costs based on DOD current estimates: 28.6; 
Cumulative net savings based on BRAC Commission estimates: 15.5; 
Cumulative one-time costs based on BRAC Commission estimates: 21.0. 

Fiscal Year: 2012; 
Cumulative net savings based on DOD current estimates: 12.6; 
Cumulative one-time costs based on DOD current estimates: 28.6; 
Cumulative net savings based on BRAC Commission estimates: 19.8; 
Cumulative one-time costs based on BRAC Commission estimates: 21.0. 

Fiscal Year: 2013: 
Cumulative net savings based on DOD current estimates: 16.0; 
Cumulative one-time costs based on DOD current estimates: 28.6; 
Cumulative net savings based on BRAC Commission estimates: 24.0; 
Cumulative one-time costs based on BRAC Commission estimates: 21.0. 

Fiscal Year: 2014; 
Cumulative net savings based on DOD current estimates: 19.3; 
Cumulative one-time costs based on DOD current estimates: 28.6; 
Cumulative net savings based on BRAC Commission estimates: 28.2; 
Cumulative one-time costs based on BRAC Commission estimates: 21.0. 

Fiscal Year: 2015; 
Cumulative net savings based on DOD current estimates: 22.7; 
Cumulative one-time costs based on DOD current estimates: 28.6; 
Cumulative net savings based on BRAC Commission estimates: 32.4; 
Cumulative one-time costs based on BRAC Commission estimates: 21.0. 

Fiscal Year: 2016; 
Cumulative net savings based on DOD current estimates: 26.1; 
Cumulative one-time costs based on DOD current estimates: 28.6; 
Cumulative net savings based on BRAC Commission estimates: 36.7; 
Cumulative one-time costs based on BRAC Commission estimates: 21.0. 

Fiscal Year: 2017; 
Cumulative net savings based on DOD current estimates: 29.5; 
Cumulative one-time costs based on DOD current estimates: 28.6; 
Cumulative net savings based on BRAC Commission estimates: 40.9; 
Cumulative one-time costs based on BRAC Commission estimates: 21.0. 

Fiscal Year: 2018;
Cumulative net savings based on DOD current estimates: 32.8; 
Cumulative one-time costs based on DOD current estimates: 28.6; 
Cumulative net savings based on BRAC Commission estimates: 45.1; 
Cumulative one-time costs based on BRAC Commission estimates: 21.0. 

Fiscal Year: 2019; 
Cumulative net savings based on DOD current estimates: 36.2; 
Cumulative one-time costs based on DOD current estimates: 28.6; 
Cumulative net savings based on BRAC Commission estimates: 49.4; 
Cumulative one-time costs based on BRAC Commission estimates: 21.0. 

Fiscal Year: 2020; 
Cumulative net savings based on DOD current estimates: 39.6; 
Cumulative one-time costs based on DOD current estimates: 28.6; 
Cumulative net savings based on BRAC Commission estimates: 53.6; 
Cumulative one-time costs based on BRAC Commission estimates: 21.0. 

Fiscal Year: 2021; 
Cumulative net savings based on DOD current estimates: 42.9; 
Cumulative one-time costs based on DOD current estimates: 28.6; 
Cumulative net savings based on BRAC Commission estimates: 57.8; 
Cumulative one-time costs based on BRAC Commission estimates: 21.0. 

Fiscal Year: 2022; 
Cumulative net savings based on DOD current estimates: 46.3; 
Cumulative one-time costs based on DOD current estimates: 28.6; 
Cumulative net savings based on BRAC Commission estimates: 62.0; 
Cumulative one-time costs based on BRAC Commission estimates: 21.0. 

Fiscal Year: 2023; 
Cumulative net savings based on DOD current estimates: 49.7; 
Cumulative one-time costs based on DOD current estimates: 28.6; 
Cumulative net savings based on BRAC Commission estimates: 66.3; 
Cumulative one-time costs based on BRAC Commission estimates: 21.0. 

Fiscal Year: 2024; 
Cumulative net savings based on DOD current estimates: 53.0; 
Cumulative one-time costs based on DOD current estimates: 28.6; 
Cumulative net savings based on BRAC Commission estimates: 70.5; 
Cumulative one-time costs based on BRAC Commission estimates: 21.0. 

Fiscal Year: 2025; 
Cumulative net savings based on DOD current estimates: 56.4; 
Cumulative one-time costs based on DOD current estimates: 28.6; 
Cumulative net savings based on BRAC Commission estimates: 74.7; 
Cumulative one-time costs based on BRAC Commission estimates: 21.0. 

DOD current estimates indicate cumulative savings will exceed 
cumulative costs in fiscal year 2013. 

BRAC Commission estimates indicate cumulative savings will exceed 
cumulative costs in fiscal year 2017. 

Source: GAO analysis of DOD and BRAC data. 

[End of table] 

[End of figure] 

This extended payback period includes the savings estimates that we 
question. When the estimated savings from military personnel 
entitlements and Cannon Air Force Base, New Mexico, are removed, the 
payback period increases to 19 years, breaking even in 2025. In prior 
rounds, it has taken DOD about 6Ĺ years to recoup up-front costs for 
implementing BRAC actions. 

While the overall payback period for DOD's BRAC recommendations is less 
than 20 years, our analysis showed that, as a result of increasing 
costs and decreasing savings, the number of recommendations that do not 
pay back within 20 years increased from 30 recommendations in the 
Commission's report to 73 recommendations in DOD's fiscal year 2008 
budget request. (See app. I for a listing of these recommendations.) 
About half of these recommendations primarily involve closing or 
realigning National Guard or Reserve facilities and nearly 20 percent 
primarily involve closing or realigning active duty Army installations. 
In our July 2005 report we noted that DOD officials acknowledged that 
the additional objectives of fostering jointness and transformation had 
some effect on generating recommendations with longer payback 
periods.[Footnote 37] Our analysis indicates there were a total of 6 
recommendations that did not pay back within 20 years for the three 
most recent BRAC rounds, in contrast to the 73 that do not pay back in 
20 years in the 2005 round. 

Mr. Chairman, this concludes my statement. I would be pleased to answer 
any questions you or any members may have at this time. 

Contact and Acknowledgments: 

For further information regarding this statement, please contact Brian 
J. Lepore at (202) 512-4523. Contact points for our Offices of 
Congressional Relations and Public Affairs may be found on the last 
page of this testimony. GAO staff making major contributions to this 
testimony are included in appendix II. 

[End of section] 

Appendix I: BRAC Recommendations DOD Expects Not to Pay Back over a 20- 
Year Period (Fiscal Years 2006 through 2025): 

The 2005 Defense Base Closure and Realignment Commission (the 
Commission) estimated that 30 recommendations would not pay back-- 
meaning recoup up-front costs--within 20 years. Our analysis of the 
Department of Defense's (DOD) fiscal year 2008 Base Realignment and 
Closure (BRAC) budget submission shows that 73 recommendations will not 
pay back within 20 years. Table 3 shows a list of these 73 
recommendations, the Commission's reported estimates, and DOD's 
estimates of the 20-year cost. Positive dollar amounts indicate a cost, 
while negative dollar amounts, shown in parentheses, indicate a 
savings. 

Table 3: BRAC Recommendations DOD Expects Not to Pay Back over a 20- 
Year Period, Fiscal Years 2006 through 2025, (Constant fiscal year 2005 
dollars in millions): 

Recommendation: Realign Operational Army (Integrated Global Presence 
and Basing Strategy)*; 
Commission's reported 20-year net present value estimates[A]: 
$7,846.70; 
DOD's fiscal year 2008 budget 20-year net present value estimates[A]: 
$5,833.87. 

Recommendation: Realign Fort Hood, TX*; 
Commission's reported 20-year net present value estimates[A]: 980.40; 
DOD's fiscal year 2008 budget 20-year net present value estimates[A]: 
1,671.42. 

Recommendation: Close National Geospatial-Intelligence Agency leased 
locations and realign others at Fort Belvoir, VA; 
Commission's reported 20-year net present value estimates[A]: (535.10); 
DOD's fiscal year 2008 budget 20-year net present value estimates[A]: 
1,376.91. 

Recommendation: Realign Fort Bragg, NC*; 
Commission's reported 20-year net present value estimates[A]: 639.16; 
DOD's fiscal year 2008 budget 20-year net present value estimates[A]: 
704.00. 

Recommendation: Realign to establish Joint Strike Fighter initial joint 
training site at Eglin Air Force Base, FL*; 
Commission's reported 20-year net present value estimates[A]: 226.30; 
DOD's fiscal year 2008 budget 20-year net present value estimates[A]: 
504.47. 

Recommendation: Establish San Antonio Regional Medical Center and 
realign enlisted medical training to Fort Sam Houston, TX; 
Commission's reported 20-year net present value estimates[A]: (476.20); 
DOD's fiscal year 2008 budget 20-year net present value estimates[A]: 
468.00. 

Recommendation: Realign Martin State Air Guard Station, MD*; 
Commission's reported 20-year net present value estimates[A]: 353.66; 
DOD's fiscal year 2008 budget 20-year net present value estimates[A]: 
430.00. 

Recommendation: Co-locate miscellaneous OSD, defense agency, and field 
activity leased locations; 
Commission's reported 20-year net present value estimates[A]: (256.41); 
DOD's fiscal year 2008 budget 20-year net present value estimates[A]: 358.51. 

Recommendation: Co-locate military department investigation agencies 
with DOD Counterintelligence and Security Agency at Marine Corps Base 
Quantico, VA; 
Commission's reported 20-year net present value estimates[A]: (166.36); 
DOD's fiscal year 2008 budget 20-year net present value estimates[A]: 206.82. 

Recommendation: Consolidate correctional facilities into joint regional 
correctional facilities; 
Commission's reported 20-year net present value estimates[A]: (11.22); 
DOD's fiscal year 2008 budget 20-year net present value estimates[A]: 
167.36. 

Recommendation: Co-locate miscellaneous Air Force leased locations and 
National Guard Headquarters leased locations; 
Commission's reported 20-year net present value estimates[A]: (308.18); 
DOD's fiscal year 2008 budget 20-year net present value estimates[A]: 
162.62. 

Recommendation: Realign Great Falls International Airport Air Guard 
Station, MT*; 
Commission's reported 20-year net present value estimates[A]: 7.23; 
DOD's fiscal year 2008 budget 20-year net present value estimates[A]: 
155.24. 

Recommendation: Realign Otis Air National Guard Base, MA, and Lambert-
St. Louis International Airport Air Guard Station, MO; 
Commission's reported 20-year net present value estimates[A]: (305.40); 
DOD's fiscal year 2008 budget 20-year net present value estimates[A]: 
148.29. 

Recommendation: Realign to create joint centers of excellence for 
chemical, biological, and medical research and development and 
acquisition; 
Commission's reported 20-year net present value estimates[A]: (39.54); 
DOD's fiscal year 2008 budget 20-year net present value estimates[A]: 
138.20. 

Recommendation: Reserve Component Transformation, NY*; 
Commission's reported 20-year net present value estimates[A]: 46.50; 
DOD's fiscal year 2008 budget 20-year net present value estimates[A]: 
97.16. 

Recommendation: Realign March Air Reserve Base, CA; 
Commission's reported 20-year net present value estimates[A]: (6.10); 
DOD's fiscal year 2008 budget 20-year net present value estimates[A]: 
92.88. 

Recommendation: Co-locate defense and military department adjudication 
activities; 
Commission's reported 20-year net present value estimates[A]: (11.30); 
DOD's fiscal year 2008 budget 20-year net present value estimates[A]: 
87.88. 

Recommendation: Reserve Component Transformation, MA*; 
Commission's reported 20-year net present value estimates[A]: 60.40; 
DOD's fiscal year 2008 budget 20-year net present value estimates[A]: 
80.37. 

Recommendation: Relocate miscellaneous Department of the Navy leased 
locations; 
Commission's reported 20-year net present value estimates[A]: (164.68); 
DOD's fiscal year 2008 budget 20-year net present value estimates[A]: 
79.55. 

Recommendation: Reserve Component Transformation, AR*; 
Commission's reported 20-year net present value estimates[A]: 38.20; 
DOD's fiscal year 2008 budget 20-year net present value estimates[A]: 
79.15. 

Recommendation: Realign Nashville International Airport Air Guard 
Station, TN*; 
Commission's reported 20-year net present value estimates[A]: 261.30; 
DOD's fiscal year 2008 budget 20-year net present value estimates[A]: 
60.46. 

Recommendation: Realign to relocate undergraduate pilot and navigator 
training; 
Commission's reported 20-year net present value estimates[A]: (174.20); 
DOD's fiscal year 2008 budget 20-year net present value estimates[A]: 
50.11. 

Recommendation: Relocate Army headquarters and field operating 
activities; 
Commission's reported 20-year net present value estimates[A]: (122.90); 
DOD's fiscal year 2008 budget 20-year net present value estimates[A]: 
48.46. 

Recommendation: Reserve Component Transformation, OH*; 
Commission's reported 20-year net present value estimates[A]: 1.30; 
DOD's fiscal year 2008 budget 20-year net present value estimates[A]: 
47.46. 

Recommendation: Realign Naval Station Newport, RI; 
Commission's reported 20-year net present value estimates[A]: (2.10); 
DOD's fiscal year 2008 budget 20-year net present value estimates[A]: 
43.29. 

Recommendation: Close Deseret Chemical Depot, UT; 
Commission's reported 20-year net present value estimates[A]: (407.45); 
DOD's fiscal year 2008 budget 20-year net present value estimates[A]: 
39.72. 

Recommendation: Realign to create an integrated weapons and armaments 
specialty site for guns and ammunition at Picatinny Arsenal, NJ; 
Commission's reported 20-year net present value estimates[A]: (51.78); 
DOD's fiscal year 2008 budget 20-year net present value estimates[A]: 
38.06. 

Recommendation: Reserve Component Transformation, TX; 
Commission's reported 20-year net present value estimates[A]: (133.20); 
DOD's fiscal year 2008 budget 20-year net present value estimates[A]: 
37.08. 

Recommendation: Realign Defense Intelligence Agency functions; 
Commission's reported 20-year net present value estimates[A]: (52.80); 
DOD's fiscal year 2008 budget 20-year net present value estimates[A]: 
35.47. 

Recommendation: Realign Bradley International Airport Air Guard 
Station, CT; 
Commission's reported 20-year net present value estimates[A]: (17.78); 
DOD's fiscal year 2008 budget 20-year net present value estimates[A]: 
34.82. 

Recommendation: Reserve Component Transformation, WY*; 
Commission's reported 20-year net present value estimates[A]: 9.00; 
DOD's fiscal year 2008 budget 20-year net present value estimates[A]: 
32.71. 

Recommendation: Reserve Component Transformation, OR*; 
Commission's reported 20-year net present value estimates[A]: 19.80; 
DOD's fiscal year 2008 budget 20-year net present value estimates[A]: 
31.97. 

Recommendation: Reserve Component Transformation, VT*; 
Commission's reported 20-year net present value estimates[A]: 41.70; 
DOD's fiscal year 2008 budget 20-year net present value estimates[A]: 
29.54. 

Recommendation: Reserve Component Transformation, IN*; 
Commission's reported 20-year net present value estimates[A]: 6.10; 
DOD's fiscal year 2008 budget 20-year net present value estimates[A]: 
27.20. 

Recommendation: Consolidate media organizations into a new agency for 
media and publications at Fort Meade, MD; 
Commission's reported 20-year net present value estimates[A]: (89.00); 
DOD's fiscal year 2008 budget 20-year net present value estimates[A]: 
26.93. 

Recommendation: Reserve Component Transformation, MN*; 
Commission's reported 20-year net present value estimates[A]: 17.10; 
DOD's fiscal year 2008 budget 20-year net present value estimates[A]: 
26.93. 

Recommendation: Reserve Component Transformation, CT*; 
Commission's reported 20-year net present value estimates[A]: 47.50; 
DOD's fiscal year 2008 budget 20-year net present value estimates[A]: 
26.01. 

Recommendation: Reserve Component Transformation, IL; 
Commission's reported 20-year net present value estimates[A]: (6.50); 
DOD's fiscal year 2008 budget 20-year net present value estimates[A]: 
24.54. 

Recommendation: Reserve Component Transformation, OK; 
Commission's reported 20-year net present value estimates[A]: (63.80); 
DOD's fiscal year 2008 budget 20-year net present value estimates[A]: 
22.82. 

Recommendation: Realign Niagara Falls Air Reserve Station, NY*; 
Commission's reported 20-year net present value estimates[A]: 1.19; 
DOD's fiscal year 2008 budget 20-year net present value estimates[A]: 
22.65. 

Recommendation: Realign to relocate Army Prime Power School training at 
Fort Leonard Wood, MO; 
Commission's reported 20-year net present value estimates[A]: (0.80); 
DOD's fiscal year 2008 budget 20-year net present value estimates[A]: 
22.05. 

Recommendation: Realign to establish centers for rotary wing air 
platform Development, and Acquisition, Test and Evaluation Center at 
Patuxent River, MD and Redstone Arsenal, AL*; 
Commission's reported 20-year net present value estimates[A]: 11.80; 
DOD's fiscal year 2008 budget 20-year net present value estimates[A]: 
20.53. 

Recommendation: Realign to establish centers for fixed wing air 
platform research, development, and acquisition, test and evaluation at 
Wright Patterson Air Force Base, OH and Naval Air Weapons Station China 
Lake, CA; 
Commission's reported 20-year net present value estimates[A]: (17.90); 
DOD's fiscal year 2008 budget 20-year net present value estimates[A]: 
17.71. 

Recommendation: Reserve Component Transformation, PR; 
Commission's reported 20-year net present value estimates[A]: (8.60); 
DOD's fiscal year 2008 budget 20-year net present value estimates[A]: 
15.75. 

Recommendation: Realign Portland International Airport Air Guard 
Station, OR*; 
Commission's reported 20-year net present value estimates[A]: 19.93; 
DOD's fiscal year 2008 budget 20-year net present value estimates[A]: 
14.80. 

Recommendation: Realign Capital Airport Air Guard Station, IL; 
Commission's reported 20-year net present value estimates[A]: (1.62); 
DOD's fiscal year 2008 budget 20-year net present value estimates[A]: 
14.47. 

Recommendation: Realign Andrews Air Force Base, MD; 
Commission's reported 20-year net present value estimates[A]: (69.98); 
DOD's fiscal year 2008 budget 20-year net present value estimates[A]: 
13.95. 

Recommendation: Realign Mansfield-Lahm Air Guard Station, OH; 
Commission's reported 20-year net present value estimates[A]: (79.57); 
DOD's fiscal year 2008 budget 20-year net present value estimates[A]: 
13.57. 

Recommendation: Realign Naval Shipyard Detachments; 
Commission's reported 20-year net present value estimates[A]: (20.70); 
DOD's fiscal year 2008 budget 20-year net present value estimates[A]: 
11.68. 

Recommendation: Realign Rock Island Arsenal, IL; 
Commission's reported 20-year net present value estimates[A]: (13.80); 
DOD's fiscal year 2008 budget 20-year net present value estimates[A]: 
11.68. 

Recommendation: Realign to establish joint center for religious 
training and education at Fort Jackson, SC; 
Commission's reported 20-year net present value estimates[A]: (11.90); 
DOD's fiscal year 2008 budget 20-year net present value estimates[A]: 
9.63. 

Recommendation: Realign to consolidate ground vehicle development and 
acquisition in a joint center at Detroit Arsenal, MI; 
Commission's reported 20-year net present value estimates[A]: (17.10); 
DOD's fiscal year 2008 budget 20-year net present value estimates[A]: 
8.93. 

Recommendation: Close Umatilla Chemical Depot, OR; 
Commission's reported 20-year net present value estimates[A]: (347.88); 
DOD's fiscal year 2008 budget 20-year net present value estimates[A]: 
8.60. 

Recommendation: Realign Fairchild Air Force Base, WA; 
Commission's reported 20-year net present value estimates[A]: (6.74); 
DOD's fiscal year 2008 budget 20-year net present value estimates[A]: 
8.56. 

Recommendation: Realign Hector International Airport Air Guard Station, 
ND; Commission's reported 20-year net present value estimates[A]: 
(12.92); DOD's fiscal year 2008 budget 20-year net present value 
estimates[A]: 8.02. 

Recommendation: Reserve Component Transformation, MT*; 
Commission's reported 20-year net present value estimates[A]: 4.30; 
DOD's fiscal year 2008 budget 20-year net present value estimates[A]: 
7.87. 

Recommendation: Relocate Air Force Real Property Agency; 
Commission's reported 20-year net present value estimates[A]: (7.90); 
DOD's fiscal year 2008 budget 20-year net present value estimates[A]: 
7.83. 

Recommendation: Reserve Component Transformation, ND*; 
Commission's reported 20-year net present value estimates[A]: 8.00; 
DOD's fiscal year 2008 budget 20-year net present value estimates[A]: 
7.10. 

Recommendation: Realign Ellington Field Air Guard Station, TX; 
Commission's reported 20-year net present value estimates[A]: (2.71); 
DOD's fiscal year 2008 budget 20-year net present value estimates[A]: 
6.33. 

Recommendation: Close Navy Supply Corps School Athens, GA*; 
Commission's reported 20-year net present value estimates[A]: 1.36; 
DOD's fiscal year 2008 budget 20-year net present value estimates[A]: 
5.19. 

Recommendation: Close W.K. Kellogg Airport Air Guard Station, MI; 
Commission's reported 20-year net present value estimates[A]: (11.16); 
DOD's fiscal year 2008 budget 20-year net present value estimates[A]: 
4.50. 

Recommendation: Close Newport Chemical Depot, IN; 
Commission's reported 20-year net present value estimates[A]: (132.61); 
DOD's fiscal year 2008 budget 20-year net present value estimates[A]: 
4.10. 

Recommendation: Realign Ship Intermediate Maintenance Activity Norfolk, 
VA; 
Commission's reported 20-year net present value estimates[A]: (104.30); 
DOD's fiscal year 2008 budget 20-year net present value estimates[A]: 
3.99. 

Recommendation: Realign Key Field Air Guard Station, MS; 
Commission's reported 20-year net present value estimates[A]: (2.56); 
DOD's fiscal year 2008 budget 20-year net present value estimates[A]: 
3.92. 

Recommendation: Reserve Component Transformation, DE*; 
Commission's reported 20-year net present value estimates[A]: 0.90; 
DOD's fiscal year 2008 budget 20-year net present value estimates[A]: 
3.71. 

Recommendation: Realign to create an air integrated weapons and 
armaments research, development, and acquisition, test and evaluation 
center at Eglin Air Force Base, FL; 
Commission's reported 20-year net present value estimates[A]: (17.90); 
DOD's fiscal year 2008 budget 20-year net present value estimates[A]: 
3.65. 

Recommendation: Realign Springfield-Beckley Municipal Airport Air Guard 
Station, OH; 
Commission's reported 20-year net present value estimates[A]: (5.41); 
DOD's fiscal year 2008 budget 20-year net present value estimates[A]: 
2.72. 

Recommendation: Reserve Component Transformation, CA; 
Commission's reported 20-year net present value estimates[A]: (46.00); 
DOD's fiscal year 2008 budget 20-year net present value estimates[A]: 
2.41. 

Recommendation: Reserve Component Transformation, TN*; 
Commission's reported 20-year net present value estimates[A]: 1.10; 
DOD's fiscal year 2008 budget 20-year net present value estimates[A]: 
1.93. 

Recommendation: Realign Boise Air Terminal Air Guard Station, ID; 
Commission's reported 20-year net present value estimates[A]: (57.04); 
DOD's fiscal year 2008 budget 20-year net present value estimates[A]: 
1.78. 

Recommendation: Realign to consolidate sea vehicle development and 
acquisition to Naval Surface Warfare Center Carderock Division, MD, and 
Naval Sea Systems Command, DC; 
Commission's reported 20-year net present value estimates[A]: (2.00); 
DOD's fiscal year 2008 budget 20-year net present value estimates[A]: 
1.32. 

Recommendation: Realign Officer Training Command, Naval Air Station 
Pensacola, FL; 
Commission's reported 20-year net present value estimates[A]: (7.61); 
DOD's fiscal year 2008 budget 20-year net present value estimates[A]: 
0.35. 

Recommendation: Realign Single Drill Sergeant School to Fort Jackson, 
SC; 
Commission's reported 20-year net present value estimates[A]: (31.35); 
DOD's fiscal year 2008 budget 20-year net present value estimates[A]: 
0.12. 

Source: Commission and DOD data. 

Note: * indicates recommendations which were estimated by the 
Commission to not pay back within the 20-year period. In addition to 
the recommendations included in the table, the Commission reported that 
the following recommendations would not pay back within the 20-year 
period: Reserve Component Transformation, NH; Realign Army Reserve 
Command and Control - Southwest; Realign Fort Smith Municipal Airport 
Air Guard Station, AR; Realign Beale Air Force Base, CA; and Close Navy 
Broadway Complex, San Diego, CA. With the exception of the 
recommendation to close Navy Broadway Complex, which is not included in 
DOD's fiscal year 2008 BRAC budget submission, DOD estimates that these 
recommendations will pay back within 20 years in its fiscal year 2008 
BRAC budget submission. 

[A] Positive dollar amounts indicate an estimated cost over the 20-year 
period. Negative dollar amounts, shown in parentheses, indicate an 
estimated savings over the 20-year period. 

[End of table] 

[End of section] 

Appendix II GAO Contact and Staff Acknowledgments: 

GAO Contact: 

Brian J. Lepore, (202) 512-4523 or leporeb@gao.gov. 

Acknowledgments: 

In addition to the individual named above, Hilary Murrish Benedict, 
Susan Ditto, Mike Kennedy, Tom Mahalek, Julie Matta, Charlie Perdue, 
Jim Reifsnyder, Laura Talbott, and Ben Thompson made key contributions 
to this statement. 

[End of section] 

Related GAO Products: 

Military Base Realignments and Closures: Cost Estimates Have Increased 
and Are Likely to Continue to Evolve. GAO-08-159. Washington, D.C.: 
December 11, 2007. 

Military Base Realignments and Closures: Impact of Terminating, 
Relocating, or Outsourcing the Services of the Armed Forces Institute 
of Pathology. GAO-08-20. Washington, D.C.: November 9, 2007. 

Military Base Realignments and Closures: Transfer of Supply, Storage, 
and Distribution Functions from Military Services to Defense Logistics 
Agency. GAO-08-121R. Washington, D.C.: October 26, 2007. 

Defense Infrastructure: Challenges Increase Risks for Providing Timely 
Infrastructure Support for Army Installations Expecting Substantial 
Personnel Growth. GAO-07-1007. Washington, D.C.: September 13, 2007. 

Military Base Realignments and Closures: Plan Needed to Monitor 
Challenges for Completing More than 100 Armed Forces Reserve Centers. 
GAO-07-1040. Washington, D.C.: September 13, 2007. 

Military Base Realignments and Closures: Observations Related to the 
2005 Round. GAO-07-1203R. Washington, D.C.: September 6, 2007. 

Military Base Closures: Projected Savings from Fleet Readiness Centers 
Are Likely Overstated and Actions Needed to Track Actual Savings and 
Overcome Certain Challenges. GAO-07-304. Washington, D.C.: June 29, 
2007. 

Military Base Closures: Management Strategy Needed to Mitigate 
Challenges and Improve Communication to Help Ensure Timely 
Implementation of Air National Guard Recommendations. GAO-07-641. 
Washington, D.C.: May 16, 2007. 

Military Base Closures: Opportunities Exist to Improve Environmental 
Cleanup Cost Reporting and to Expedite Transfer of Unneeded Property. 
GAO-07-166. Washington, D.C.: January 30, 2007. 

Military Bases: Observations on DOD's 2005 Base Realignment and Closure 
Selection Process and Recommendations. GAO-05-905. Washington, D.C.: 
July 18, 2005. 

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. 

Military Base Closures: Observations on Prior and Current BRAC Rounds. 
GAO-05-614. Washington, D.C.: May 3, 2005. 

Military Base Closures: Updated Status of Prior Base Realignments and 
Closures. GAO-05-138. Washington, D.C.: January 13, 2005. 

Military Base Closures: Assessment of DOD's 2004 Report on the Need for 
a Base Realignment and Closure Round. GAO-04-760. Washington, D.C.: May 
17, 2004. 

Military Base Closures: Observations on Preparations for the Upcoming 
Base Realignment and Closure Round. GAO-04-558T. Washington, D.C.: 
March 25, 2004. 

[End of section] 

(351121): 

Footnotes: 

[1] GAO, Military Base Realignments and Closures: Cost Estimates Have 
Increased and Are Likely to Continue to Evolve, GAO-08-159 (Washington, 
D.C.: Dec. 11, 2007). 

[2] Defense Base Closure and Realignment Commission, 2005 Base Closure 
and Realignment Commission Report to the President (Arlington, Va.: 
Sept. 8, 2005). 

[3] H.R. Rep. No. 110-146, at 514 (2007). 

[4] The Commission reported its estimates in constant fiscal year 2005 
dollars (i.e., excludes projected inflation), while DOD reported BRAC 
estimates in the fiscal year 2008 President's budget submission in 
current dollars (i.e., includes projected inflation). 

[5] The overall cost of the recommendation to relocate the Army's armor 
school from Fort Knox, Kentucky, to Fort Benning, Georgia, has 
increased by more than $680 million. 

[6] The overall cost of the recommendation to close Fort Monmouth, New 
Jersey, has increased by almost $678 million. 

[7] The Commission reported its estimates in constant fiscal year 2005 
dollars (i.e., excludes projected inflation), while DOD reported BRAC 
estimates in the fiscal year 2008 President's budget submission in 
current dollars (i.e., includes projected inflation). When the effect 
of inflation is eliminated, DOD's estimated net annual recurring 
savings decreased by more than $800 million to about $3.4 billion--a 20 
percent decrease. 

[8] The first round in 1988 was authorized by the Defense Authorization 
Amendments and Base Closure and Realignment Act, as amended (Pub. L. 
No. 100-526, Title II, (1988)). Subsequently, additional BRAC rounds 
were completed in 1991, 1993, and 1995 as authorized by the Defense 
Base Closure and Realignment Act of 1990, as amended (Pub. L. No.101- 
510, Title XXIX (1990)). The latest round--BRAC 2005--was authorized by 
the National Defense Authorization Act for Fiscal Year 2002 (Pub. L. 
No. 107-107, Title XXX (2001)). 

[9] DOD defines major closures as installations recommended for closure 
with plant replacement value exceeding $100 million and major 
realignments as installations losing more than 400 military and 
civilian personnel. Minor closures and realignments are those closures 
and realignments that do not meet the definitions above. 

[10] 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) and 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). 

[11] The President was required to approve or disapprove the 
Commission's recommendations in their entirety by September 23, 2005. 
After they were approved, the recommendations were forwarded to 
Congress, which had 45 days or until the adjournment of Congress to 
disapprove the recommendations on an all-or-none basis; otherwise, the 
recommendations became binding. 

[12] Pub. L. No. 107-107, Title XXX (2001). 

[13] GAO-05-785. 

[14] 31 U.S.C. ß 717. 

[15] GAO, Military Base Closures: Management Strategy Needed to 
Mitigate Challenges and Improve Communication to Help Ensure Timely 
Implementation of Air National Guard Recommendations, GAO-07-641 
(Washington, D.C.: May 16, 2007); Military Base Realignments and 
Closures: Plan Needed to Monitor Challenges for Completing More Than 
100 Armed Forces Reserve Centers, GAO-07-1040 (Washington, D.C.: Sept. 
13, 2007); Military Base Closures: Projected Savings from Fleet 
Readiness Centers Likely Overstated and Actions Needed to Track Actual 
Savings and Overcome Certain Challenges, GAO-07-304 (Washington, D.C.: 
June 29, 2007); Military Base Realignments and Closures: Transfer of 
Supply, Storage, and Distribution Functions from Military Services to 
Defense Logistics Agency, GAO-08-121R (Washington, D.C.: Oct. 26, 
2007); and Military Base Closures: Opportunities Exist to Improve 
Environmental Cleanup Cost Reporting and to Expedite Transfer of 
Unneeded Property, GAO-07-166 (Washington, D.C.: Jan. 30, 2007). 

[16] As part of our ongoing reviews of DOD's implementation of the 2005 
recommendations, we plan to review the methodology of DOD's forthcoming 
report addressing human capital issues related to the closure of Fort 
Monmouth, New Jersey. 

[17] H.R. Rep. No. 110-146, at 514 (2007). 

[18] The BRAC Commission reported its estimates in constant fiscal year 
2005 dollars (i.e., excludes projected inflation), while DOD reported 
BRAC estimates in the fiscal year 2008 President's budget submission in 
current dollars (i.e., includes projected inflation). However, when the 
effect of inflation is eliminated, projected costs have increased $7.5 
billion, or 36 percent. 

[19] The BRAC Commission reported its estimates in constant fiscal year 
2005 dollars (i.e., excludes projected inflation), while DOD reported 
BRAC estimates in the fiscal year 2008 President's budget submission in 
current dollars (i.e., includes projected inflation). However, when the 
effect of inflation is eliminated, projected net annual recurring 
savings have decreased about $800 million, or 20 percent. 

[20] The BRAC Commission reported its estimates in constant fiscal year 
2005 dollars (i.e., excludes projected inflation), while DOD reported 
BRAC estimates in the fiscal year 2008 President's budget submission in 
current dollars (i.e., includes projected inflation). However, when the 
effect of inflation is eliminated, projected costs have increased $7.5 
billion, or 36 percent. 

[21] The increase in costs due to inflation occurred because the 
Commission presented its estimates using constant fiscal year 2005 
dollars, which does not include the effects of projected inflation, 
whereas DOD's budgeted estimates were presented in current dollars 
because budget requests take into consideration projected inflation. 

[22] GAO-07-166. 

[23] The overall cost for the recommendation to consolidate the 
National Geospatial-Intelligence Agency at Fort Belvoir, Virginia, has 
increased by about $974 million. 

[24] The overall cost of the recommendation to move various DOD 
activities from leased space to Fort Belvoir and Fort Lee, Virginia, 
has increased nearly $600 million. 

[25] The overall net cost of the recommendation to relocate the Army's 
armor school from Fort Knox, Kentucky, to Fort Benning, Georgia, has 
increased by more than $680 million. 

[26] The overall cost of the recommendation to close Fort Monmouth, New 
Jersey, has increased by almost $678 million. 

[27] The overall cost of the recommendation to realign the Walter Reed 
Army Medical Center in the District of Columbia and relocate medical 
care functions to the National Naval Medical Center, Bethesda, 
Maryland, and Fort Belvoir, Virginia, has increased by nearly $700 
million. 

[28] The overall cost for the recommendation to consolidate medical 
enlisted training and establish the San Antonio Regional Medical Center 
at Fort Sam Houston, Texas, has increased by about $550 million. 

[29] The U.S. Army Corps of Engineers initiated five construction 
projects in 2006, all of which were awarded under its price limit. 

[30] GAO-07-1040. 

[31] The BRAC Commission reported its estimates in constant fiscal year 
2005 dollars (i.e., excludes projected inflation), while DOD reported 
BRAC estimates in the fiscal year 2008 President's budget submission in 
current dollars (i.e., includes projected inflation). However, when the 
effect of inflation is eliminated, projected net annual recurring 
savings have decreased about $800 million, or 20 percent. 

[32] The three chemical demilitarization depots are Deseret Chemical 
Depot, Utah; Newport Chemical Depot, Indiana; and Umatilla Chemical 
Depot, Oregon. 

[33] GAO-05-785. 

[34] DOD also claimed nearly $200 million in annual savings for 
military personnel entitlements for closing Cannon Air Force Base, 
which is included in the $1.85 billion mentioned above. 

[35] In commenting on a draft of the report we issued yesterday, the 
Air Force BRAC office stated that it claimed these savings because the 
decision to reallocate Air Force resources and mission to Cannon was 
made after the BRAC recommendation was approved and was, therefore, a 
non-BRAC programmatic decision. 

[36] GAO-07-304. 

[37] GAO-05-785. 

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