Military Base Realignments and Closures:
DOD Faces Challenges in Implementing Recommendations on Time and Is Not Consistently Updating Savings Estimates
GAO-09-217: Published: Jan 30, 2009. Publicly Released: Jan 30, 2009.
The 2005 Base Realignment and Closure (BRAC) round is the biggest, most complex, and costliest BRAC round ever. In addition to base closures, many recommendations involve realignments, such as returning forces to the United States from bases overseas and creating joint bases. However, anticipated savings remained an important consideration in justifying the need for the 2005 BRAC round. The House report on the National Defense Authorization Act for Fiscal Year 2008 directed GAO to monitor BRAC implementation. Therefore, GAO assessed (1) challenges that might affect timely completion of recommendations, (2) any changes in DOD's reported cost and savings estimates since fiscal year 2008, and (3) the potential for estimates to continue to change. To address these objectives, GAO reviewed documentation and interviewed officials in the Office of the Secretary of Defense (OSD), the services' BRAC offices, and the Army Corps of Engineers; visited installations implementing some of the more costly realignments or closures; and analyzed BRAC budget data for fiscal years 2008 and 2009.
DOD has made progress in implementing the BRAC 2005 round but faces challenges in its ability to meet the September 15, 2011, statutory completion deadline. DOD expects almost half of the 800 defense locations implementing BRAC recommendations to complete their actions in 2011; however, about 230 of these almost 400 locations anticipate completion within the last 2 weeks of the deadline. Further, some of these locations involve some of the most costly and complex BRAC recommendations, which have already incurred some delays and thus have little leeway to meet the 2011 completion date if any further delays occur. Also, DOD must synchronize relocating about 123,000 personnel with an estimated $23 billion in facilities that are still being constructed or renovated, but some delays have left little time in DOD's plans to relocate these personnel by the deadline. Finally, delays in interdependent recommendations could have a cascading effect on other recommendations being completed on time. OSD recently issued guidance requiring the services and defense agencies to provide status briefings to improve oversight of issues affecting timely implementation of BRAC recommendations. However, this guidance did not establish a regular briefing schedule or require the services to provide information about possible mitigation measures for any BRAC recommendations at risk of not meeting the statutory deadline. DOD's fiscal year 2009 BRAC budget submission shows that DOD plans to spend more to implement recommendations and save slightly less compared to the 2008 BRAC budget. DOD's 2009 estimate of one-time costs to implement this BRAC round increased by $1.2 billion to about $32.4 billion. Net annual recurring savings estimates decreased by almost $13 million to about $4 billion. Also, GAO's calculations of net present value, which includes both expected cost and savings over a 20-year period ending in 2025 and takes into account the time value of money, show that implementing the 2005 BRAC recommendations is expected to save $13.7 billion. This compares to an estimated $15 billion in net present value savings based on last year's BRAC budget and the BRAC Commission's reported estimate of about $36 billion. Although DOD is about 3? years into the 6-year implementation period, the potential remains for BRAC cost estimates to continue to increase, but the potential for changes in savings estimates is unclear. Greater than expected inflation and increased market demands for construction materials could cause estimated construction costs to increase, although the extent of this increase is uncertain given today's economic market conditions. However, the potential for changes in savings estimates is unclear because BRAC headquarters officials at both the Army and the Air Force told us they do not plan to update their savings estimates regardless of factors that may cause those estimates to change, and OSD is not enforcing its own regulation requiring them to do so. Hence, congressional and defense decision makers could be left with an unrealistic sense of the savings this complex and costly BRAC round may actually produce, an issue that could be important in considering whether another round of BRAC may be warranted.
Recommendations for Executive Action
Status: Closed - Implemented
Comments: Based on our analysis that the military services and defense agencies were planning to complete a very large number of BRAC actions near the statutory deadline, we discussed with OSD BRAC officials the need for briefings so they could be updated on the status of BRAC implementation in October 2008. Exploring a potential GAO recommendation with OSD, we said that taking such action would provide them better oversight of BRAC implementation and that they could take action, as necessary, to help ensure BRAC completion on time. Subsequently, the Deputy Under Secretary of Defense for Installations & Environment issued a memo in November 2008 requiring the military services and defense agencies to do what we had suggested--provide OSD BRAC office status briefings. Quoting from OSD's memo, these briefings are needed "to ensure senior leadership was apprised of significant issues impacting BRAC implementation by the statutory deadline." As such, OSD's BRAC office took direct and immediate action based on our stated observations to enhance OSD's oversight of the BRAC program. The first round of BRAC status briefings to OSD took place in December 2008.
Recommendation: To enhance OSD's role in overseeing the implementation of BRAC 2005 recommendations and managing challenges that could impact DOD's ability to achieve full BRAC implementation by the statutory deadline, the Secretary of Defense should direct the Under Secretary of Defense (Acquisition, Technology and Logistics) to modify the recently issued guidance on the status of BRAC implementation to (1) establish a briefing schedule with briefings as frequently as OSD deems necessary to manage the risk that a particular recommendation may not meet the statutory deadline, but as a minimum, at 6-month intervals, through the rest of the BRAC 2005 implementation period, a schedule that would enable DOD to continually assess and respond to the challenges identified by the services and defense agencies that could preclude recommendation completion by September 15, 2011, and (2) require the services and defense agencies to provide information on possible mitigation measures to reduce the effects of those challenges.
Agency Affected: Department of Defense
Status: Closed - Implemented
Comments: In January 2009, we reported that some of the military services were not updating their BRAC 2005 savings estimates periodically, as required by DOD's Financial Management Regulation. Outdated savings estimates undermine the ability of Congress to monitor savings, a key indicator of success in BRAC implementation. We therefore recommended that DOD take steps to improve the military services' and DOD agencies' compliance with DOD's regulation requiring that BRAC savings be updated on a regular basis. In response to our recommendation, on August 5, 2010, the Deputy Undersecretary of Defense (Installations and Environment) issued a guidance memo to the military services and DOD agencies regarding BRAC 2005 Final Business Plans, and Other Reporting Requirements. Among other things, the August 5, 2010 guidance emphasized to the military services and defense agencies that it is imperative that the final financial displays for BRAC 2005 contain updated projections of recurring savings. As a result, DOD took steps to improve compliance with DOD's regulation requiring that BRAC savings be updated on a regular basis, thus Congress will have more visibility over the true projected savings from BRAC 2005, and be in a better position to determine the success of this BRAC round.
Recommendation: To ensure that BRAC savings estimates are based on the best projection of what savings will actually accrue from approved realignments and closures, the Secretary of Defense should direct the Under Secretary of Defense (Acquisition, Technology and Logistics); the Under Secretary of Defense (Comptroller); and the military service secretaries to take steps to improve compliance with DOD's regulation requiring updated BRAC savings estimates.
Agency Affected: Department of Defense