Defense Infrastructure:

Continued Management Attention Is Needed to Support Installation Facilities and Operations

GAO-08-502: Published: Apr 24, 2008. Publicly Released: Apr 24, 2008.

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The Department of Defense (DOD) manages and operates about 577,000 structures worldwide, valued at about $712 billion. DOD has worked for several years to develop models that can reliably estimate the installation support funds needed to sustain these facilities, and plans to spend over $55 billion to support these facilities and operate its bases in fiscal year 2008. Because GAO has identified support infrastructure as a high-risk area that affects DOD's ability to devote funds to other more critical needs, GAO initiated this review under the Comptroller General's authority. This report discusses (1) the reliability of the annual funding estimates produced by the facilities sustainment model, (2) DOD's progress in meeting funding goals for facility sustainment and recapitalization, (3) the extent to which DOD has addressed deferred facility sustainment funding needs, and (4) the status of DOD's efforts to develop a new installation services model. To address these objectives, GAO reviewed the accuracy and support for the model's key inputs, analyzed pertinent documents, and visited eight judgmentally selected installations.

Although the facilities sustainment model, implemented in 2003, provides a consistent and reasonable framework for preparing estimates of DOD's annual facility sustainment funding requirements, accuracy and supportability issues with two of the model's key inputs have affected the reliability of the model's estimates. First, regarding the inventory quantity input, GAO found that the services had not complied with DOD regulations requiring verification of each real property inventory record. Without the verifications, DOD lacked assurance that the model used accurate inventory quantities, and GAO's analysis identified inaccuracies in some quantities used by the model. Second, regarding the sustainment cost factor input, GAO identified issues concerning some cost factors used by the model. For example, an independent study reported that only 13 of 45 cost factors evaluated were deemed to be reasonably accurate and adequately supported. Until DOD improves the accuracy of these two inputs, the model's estimates of facility sustainment funding requirements will not be as reliable as possible. The military services have not met all of DOD's goals for funding facility sustainment and recapitalization at levels to prevent deterioration and ensure that facilities are restored and modernized. Service officials stated that they generally did not meet the sustainment funding goals because resources were limited and programs such as force modernization often had higher funding priority. Although the services achieved more success in meeting DOD's goal to fund recapitalization, funding remains an issue with the Army, the Navy, and the Air Force reporting recapitalization backlogs of over $50 billion at the end of fiscal year 2007. DOD has not taken actions to estimate and address its deferred facility sustainment requirements. In fiscal years 2005 through 2007, the services did not fund over $3.5 billion of their estimated annual facility sustainment requirements. The services do not have consistent estimates of their deferred sustainment requirements or plans to deal with these needs because DOD has not provided adequate guidance to clearly define deferred sustainment requirements, or direct the services to measure, track, and address these needs. As a result, DOD's plans to address facility sustainment requirements do not include all deferred sustainment requirements, which could result in continued facility deterioration and increased future recapitalization costs. DOD's progress in developing a new model to estimate funding requirements for installation services, such as airfield and port operations, has been slow. Although DOD's goal is to establish common standards and metrics for installation services by the end of 2008, the services had agreed on common definitions and standards for only 2 of 29 areas by the end of 2007. DOD officials stated that reaching agreement has been difficult for several reasons, such as differences among the services in how tasks for installation services are performed and managed. Without a reliable model, DOD cannot provide the Congress with a clear basis for making funding decisions.

Recommendations for Executive Action

  1. Status: Closed - Not Implemented

    Comments: In written comments on a draft of this report, DOD concurred with our recommendation related to deferred facility sustainment requirements stating that it had issued guidance in September 2007 that revised the definition of facility quality ratings to represent deferred sustainment and restoration, revised its methodology for estimating deferred maintenance in its financial reports by using the facility quality ratings, and planned to develop program guidance with the fiscal year 2011 budget process to establish goals to address deferred sustainment requirements. As noted in this report, we were aware of the September 2007 guidance. However, we made our recommendation because our review found that the guidance did not provide a clear definition of deferred facility sustainment requirements, details to the military services on how to implement the revised quality rating guidance, or sufficient details to ensure that future financial reporting of deferred maintenance would be consistent with reporting requirements. We continue to believe that additional guidance is needed to provide a clear definition of deferred facility sustainment requirements, direct the military services to consistently measure and track deferred sustainment needs, and ensure that the military services' financial reporting and disclosure information regarding deferred facility maintenance is consistent with financial reporting requirements. In February 2011, DOD indicated that it planned no further action in response to the recommendation.

    Recommendation: To improve the support provided for DOD's facilities and installation services, the Secretary of Defense should direct the Deputy Under Secretary of Defense Installations and Environment) to, in order to increase the reliability of the facilities sustainment model, address deferred facility sustainment funding requirements, and advance progress towards implementing the installation services model issue guidance to the military services that (1) provides a clear definition of deferred facility sustainment requirements and explains when deferred facility sustainment becomes a facility restoration requirement, (2) directs the military services to consistently measure and track deferred sustainment needs, (3) establishes a goal to address deferred facility sustainment needs, and (4) ensures that the military services' financial reporting and disclosure information regarding deferred facility maintenance is consistent with financial reporting requirements.

    Agency Affected: Department of Defense

  2. Status: Closed - Implemented

    Comments: In written comments on a draft of this report, DOD concurred with our recommendation that it revert to the previously used ratio analysis method to calculate the values of those sustainment cost factors that are not based on independent data sources. DOD stated that it will adopt the GAO-preferred method to inflate the small number of sustainment cost factors generated by ratios beginning in fiscal year 2009. As noted in this report, the "GAO-preferred" method is the method that can result in greater accuracy of the sustainment cost factor values. Also, regarding the "small" number of sustainment cost factors generated by ratios, as noted in this report, DOD has used a ratio analysis to estimate the sustainment cost factors for approximately one-third of DOD's 448 facility categories. In June 2009, DOD revised its analysis to incorporate its previously used ratio analysis method consistent with our recommendation. The change has been incorporated into the FY 2009 cost factors and will continue for future fiscal year cost factor issuances.

    Recommendation: To improve the support provided for DOD's facilities and installation services, the Secretary of Defense should direct the Deputy Under Secretary of Defense (Installations and Environment) to, in order to increase the reliability of the facilities sustainment model, address deferred facility sustainment funding requirements, and advance progress towards implementing the installation services model revert to the previously used ratio analysis method to calculate the values of those sustainment cost factors that are not based on independent data sources.

    Agency Affected: Department of Defense

  3. Status: Closed - Implemented

    Comments: In written comments on a draft of this report, DOD concurred with our recommendation that it maintain documentation regarding the basis for the sustainment cost factors used by the model to include the calculations used to determine each factor as well as the reasons for any changes from year to year. DOD stated that it has maintained documentation for sustainment cost factors since the inception of the facilities sustainment model. However, as noted in this report and as we discussed with DOD officials during our review, the documentation did not always show the basis for the sustainment cost factors, the calculations used to determine each factor, or the reasons for any changes from year to year and that is the basis for our recommendation. DOD also stated that it has revised its documentation standards to improve the level of detail and accessibility. If fully implemented, DOD's action should result in an improved audit trail documenting the basis for each factor's value. In June 2009, DOD instituted procedures to document supporting calculations and reasons for changing cost factors from year to year.

    Recommendation: To improve the support provided for DOD's facilities and installation services, the Secretary of Defense should direct the Deputy Under Secretary of Defense (Installations and Environment) to, in order to increase the reliability of the facilities sustainment model, address deferred facility sustainment funding requirements, and advance progress towards implementing the installation services model maintain documentation regarding the basis for the sustainment cost factors used by the model to include the calculations used to determine each factor as well as the reasons for any changes from year to year.

    Agency Affected: Department of Defense

  4. Status: Closed - Implemented

    Comments: In written comments on a draft of this report, DOD concurred with our recommendation to monitor and ensure compliance with guidance requiring verification of real property inventory records. In response, DOD implemented in September 2009 a new data element to its real property inventory records--the asset review date--to provide visibility of the most recent inspection date for each real property asset. According to DOD, this data element provides a direct means of identifying verification dates in the inventory and taking action to update them as required. In addition, to enhance visibility of the review requirement, DOD stated that it now produces an asset review analysis report as part of its validation process for military real property records.

    Recommendation: To improve the support provided for DOD's facilities and installation services, the Secretary of Defense should direct the Deputy Under Secretary of Defense (Installations and Environment) to, in order to increase the reliability of the facilities sustainment model, address deferred facility sustainment funding requirements, and advance progress towards implementing the installation services model monitor and ensure compliance with guidance requiring verification of real property inventory records.

    Agency Affected: Department of Defense

  5. Status: Closed - Not Implemented

    Comments: In written comments on a draft of this report, DOD partially concurred with our recommendation to establish a milestone for implementing the installation services model for use in estimating DOD's installation services funding requirements and provide adequate senior level oversight to ensure that the milestone is met. DOD stated that it had established a milestone to implement an installation services model in support of the fiscal year 2012 budget and had made initial progress toward that goal. However, DOD stated that the development process had revealed several obstacles that may require it to reevaluate the goal for at least some installation service functions. Although we believe that DOD's action to establish an implementation goal is a step in the right direction, we also recommended and continue to believe that adequate senior level oversight is needed to ensure that an installation services model is implemented as soon as possible. DOD's comments did not explain to what extent it plans to do this. In June 2009, DOD stated that DOD had suspended work on the Installation Services Model because of a lack of necessary performance standards, manpower staffing standards, and available financial data for each installation service function led to this decision. However, development of the Common Output Levels of Service (COLS) for installation services supporting implementation of the BRAC 2005 Joint Basing decision may provide a more robust framework to develop a viable installation services model. In February 2011, DOD stated that it was monitoring the COLS metrics reported quarterly from the twelve joint bases for some 49 installation functions. However, a new milestone had not been set for implementing the installation services model and DOD provided no assurance that a new milestone would be established. For this reason and because DOD-IG closed the recommendation in February 2011, we closed this recommendation as not implemented.

    Recommendation: To improve the support provided for DOD's facilities and installation services, the Secretary of Defense should direct the Deputy Under Secretary of Defense Installations and Environment) to, in order to increase the reliability of the facilities sustainment model, address deferred facility sustainment funding requirements, and advance progress towards implementing the installation services model establish a milestone for implementing the installation services model for use in estimating DOD's installation services funding requirements.

    Agency Affected: Department of Defense

 

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