GAO has designated Department of Defense (DOD) support infrastructurewhich refers to activities that support DODs ability to meet its missions, such as training, logistics, and force managementas a high-risk area and identified installation support as one key support infrastructure category where opportunities existed for savings. Installation support includes personnel and activities that fund, equip, and maintain facilities from which defense forces operate. GAO has stated that reducing the cost of excess infrastructure activities is critical to making effective use of scarce resources and maintaining high levels of military capabilities.
In a recommendation submitted for the 2005 base realignment and closure (BRAC) round, DOD proposed to the BRAC Commission that the department consolidate 26 military installations operated by individual military services into 12 joint bases to take advantage of opportunities for efficiencies arising from such consolidation and elimination of similar support services on bases located close to one another. DOD estimated that by taking this action it could save about $2.3 billion over a 20-year period, with $601 million in savings by the end of the implementation period in fiscal year 2011.
In its justification for the recommendation, DOD noted, among other things, that because the installations either shared a common boundary or were located close to at least one other installation and performed common support functions, there was a significant opportunity to reduce duplication of similar support services, which could produce savings. DOD noted that consolidating installations located close to one another could allow for, among other things, reduced manpower and facilities requirements, for example by reducing unnecessary management personnel and achieving greater economies of scale. DOD also noted that further savings could come from consolidation of service contract requirements, from establishing a single space management authority to increase utilization of facilities and infrastructure, and from reducing the number of base support vehicles and equipment.
GAO has continued to monitor DODs ability to achieve economies of scale and savings by consolidating and eliminating similar installation support services at joint bases.
In March 2009, GAO reported that the cost of installation support at joint bases was expected to increase rather than decrease, due in part to the adoption of new common standards for installation service support. These common standards established expected levels of support services on the joint bases in diverse areas from airfield operations to grounds maintenance, and replaced the previous service-specific support standards.
GAO found that the new common standards required higher levels of funding in some cases than the previous standards. In addition, GAO found that the military services approach to implementing joint basing would result in additional administrative costs and the loss of some existing installation support efficiencies. For example, additional costs for installation administration were expected at the six joint bases where the Air Force was the lead for providing installation support because the Air Force established an additional organizational unit at those bases to manage installation support.
GAO recommended that to address the expected increased installation support costs from joint basing implementation, the Secretary of Defense should direct the Deputy Under Secretary of Defense (Installations and Environment) to periodically review administrative costs as joint basing is implemented to minimize any additional costs and prevent the loss of existing installation support efficiencies. DOD partially agreed with this recommendation, but stated that it already had a process to periodically review joint basing costs as part of its planning, program, budget, and execution system, and that the joint base memorandums of agreement required periodic reviews of mission and resource impacts. DOD stated that further action to implement the recommendation was not necessary because the department had established a process to review costs as part of its regular budget process. However, GAO stated that DODs intended cost reviews would occur only after joint base implementation, and therefore GAO continued to believe DOD needed to also review costs during the implementation of the joint bases to avoid losing cost efficiencies.
In November 2012, GAO reported that the Office of the Secretary of Defense (OSD) had not developed an implementation plan to guide joint bases in their efforts to achieve the cost savings and efficiencies arising from consolidation and elimination of duplicate support services that were envisioned in DODs recommendation to the BRAC Commission on joint basing. Moreover, although DOD originally estimated that the department could achieve a savings of $2.3 billion over a 20-year period by establishing joint bases, GAOs most recent analysis, reported in June 2012, showed that the 20-year savings estimate had fallen by nearly 90 percent to about $249 million. Moreover, although joint base officials provided GAO with some anecdotal examples of efficiencies that have been achieved at joint bases, it is unclear whether DOD has achieved any significant cost savings to date, in part due to its adoption of more costly common support standards, higher projected administrative costs, and weaknesses in its approach to tracking costs and estimated savings. Despite these implementation challenges, DOD may be able to achieve significant savings through joint basing if it adopts a more rigorous and comprehensive department-wide approach to managing this initiative. Such an approach should include developing specific implementation goals, plans, and timelines; improving its efforts to track costs and savings; and more broadly sharing and applying lessons learned across the joint bases.
Officials in the Office of the Deputy Under Secretary of Defense (Installations and Environment) said they did not have a plan in place to guide the efforts to achieve cost savings and efficiencies by consolidating and eliminating duplicate support services at the joint bases because joint basing is a relatively new initiative and they are still resolving implementation issues and working to achieve cultural change. Moreover, DOD indicated that the department made a conscious decision to defer near-term savings to better ensure success for the long term. However, without an implementation plan for achieving efficiencies and cost savings, DOD is not well positioned to realize significant cost savings.
In November 2012, GAO also reported that DOD did not yet have a fully developed method for accurately gathering information on the costs, estimated savings, and efficiencies achieved specifically as a result of joint basing. Although OSD developed a data collection tool, called the Cost and Performance Visibility Framework (the Framework), through which the joint bases reported installation support cost and performance data, GAO found inconsistencies in the way the joint bases reported these data. In addition, the data collection tool did not exclude costs and savings that were not specific to joint basing, and OSD was not yet able to accurately isolate the effects of joint basing on the cost of providing base support services. Without such information, DOD does not have a clear picture of the total costs and estimated savings from joint basing. GAO also found that OSD and the joint bases had some processes in place to identify implementation challenges, but did not always share information among the joint bases, and between OSD and the joint bases, on challenges and possible solutions. Without processes to identify common challenges and share information across the joint bases, DOD will not be in the best position to identify opportunities for greater efficiencies.
GAO has reported that successful organizational transformationssuch as merging components and transforming organizational culturesin both the public and private sectors involve several key practices, including ensuring that top leadership drives the transformation and setting implementation goals, including a timeline to show progress.
These figures are expressed in 2005 dollars to facilitate comparison with the original 20-year savings estimates developed in 2005.
GAO recommended in November 2012 that to achieve cost savings and efficiencies by reducing duplication in providing installation support services, the Secretary of Defense should direct the Deputy Under Secretary of Defense (Installations and Environment) to take the following three actions:
The information contained in this analysis is based on findings from the products in the related GAO products section. In order to assess the extent to which DOD developed and implemented a plan to achieve cost savings and efficiencies at the joint bases, GAO analyzed DOD guidance related to joint base implementation, specifically looking for any measures or reporting processes on efficiencies and cost savings. GAO also reviewed its prior findings on key practices and implementation steps for mergers and organizational transformations. GAO interviewed officials at the military service headquarters and OSD, as well as officials at three selected joint bases, and obtained answers to written questions from the remaining nine joint bases. To select the three joint bases to visit, GAO developed a nonprobability sample based on several factors, including which military department had the lead for providing support services, geographic diversity, and the implementation phase of the base.
In commenting on the November 2012 report on which this analysis is based, DOD disagreed with GAOs recommendation to develop and implement a plan providing measurable goals linked to achieving savings and efficiencies and providing guidance to the joint bases on achieving those savings and efficiencies. DOD stated that establishing such a plan and targets would restrict the authority of local commanders to manage the merger of formerly standalone bases into joint bases. Moreover, the department stated that it should continue with its approach of being patient with obtaining cost savings and efficiencies because it believes this approach is working. However, DODs current position of deferring near-term savings contradicts its original recommendation to the BRAC Commission, which stated that joint basing would produce cost savings that would immediately exceed the implementation costs. Further, the original 20-year savings estimate of more than $2.3 billion has fallen by more than 90 percent, to $249 million. Realization of some of the savings identified in DODs justification for joint basing is attainable by developing guidance and encouraging appropriate practices, goals, and time frames. Therefore, GAOs recommendation continues to have merit, particularly in light of the federal governments fiscal outlook.
DOD partially agreed with the recommendation to continue to develop and refine the Cost and Performance Visibility Framework, stating that the department had already taken some steps to improve the Framework and that it would be impractical to attempt to isolate and distinguish joint basing cost savings from other DOD- or service-wide actions, and DOD identified an alternative process for capturing this information. However, the alternative approach proposed by DOD would produce inaccurate results, whereas refinements in the Framework would position the department to effectively measure savings from joint basing.
Finally, DOD partially agreed with the recommendation to develop a common strategy to expand routine communication among joint bases, and between the joint bases and OSD, to share best practices and lessons learned. DOD stated that there were already mechanisms in place for such communication, and that it was increasing those opportunities. However, according to DODs policy for joint basing, problems should be identified and addressed at the lowest possible level, which can include only officials at any given base, and therefore the majority of issues may not be shared among the bases or with OSD. Thus, additional mechanisms could help the department achieve greater efficiencies from joint basing.
GAO provided a draft of this report section to DOD for review and comment. DOD stated that GAO had given negligible consideration to the departments concerns about GAOs November 2012 report on joint basing. We carefully considered DODs comments; we held several meetings with DOD to discuss our findings and conclusions in the November 2012 report. Our findings and conclusions are based on all of the evidence that DOD provided during the course of our review. Consequently, we continue to believe that our recommendations are still warranted.
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