Improved Cost Information and Analysis Needed to Guide Overseas Military Posture Decisions
GAO-12-711: Published: Jun 6, 2012. Publicly Released: Jun 6, 2012.
What GAO Found
Although the Department of Defense (DOD) has conducted some analysis to support two recent global posture decisions, the full cost implications of these decisions are unknown.
- Forward deployment and permanent stationing of U.S. Navy ships in Rota. The Navy considered three options: (1) deploying ships to the region from U.S. bases, (2) forward stationing ships and crews overseas, and (3) deploying ships to the region and rotating crews from U.S. bases. The Navy concluded that forward stationing ships was the most efficient option, but GAO found that it did not fully consider the option to rotate crews from U.S. bases and, in a classified analysis, it used different assumptions for forward stationing versus deploying from the United States. These assumptions could affect the results of the analysis and have long-term cost implications. GAOs Cost Estimating and Assessment Guide states that a business case or cost-benefit analysis finds the best value solution by presenting facts and supporting details among competing alternatives, including the life cycle costs and benefits, and sensitivity to changes in assumptions. Without an analysis that controls for differing assumptions or considers factors such as complete life cycle costs, the long-term costs associated with its decision to forward station ships will remain unknown.
- Reduction of U.S. Army force structure in Europe. The planned reductions of U.S. Army forces in Europe will likely save money; however, decisions that could affect the extent of the savings are pending. For example, a 2010 Army analysis found $2 billion in savings over 10 years by returning forces from Germany, but assumed that new facilities estimated at $800 million would need to be built in the United States to house them. However, present planned reductions in overall Army end strength could eliminate the need for new construction. Further, DOD announced that it will rotate forces from the United States to Europe, but the nature of the rotationswhich could include significant costs depending on their size and frequencyhas not yet been defined. According to DOD officials, until such determinations are made, the savings to DOD will remain uncertain.
DOD has taken steps to align posture initiatives with strategy and cost, but continues to lack comprehensive and consistent cost estimates of initiatives. DODs evolving posture process links initiatives with defense goals. Stakeholders from key DOD entities prioritize the initiatives in a voting process based on strategic criteria; cost is discussed, but not voted on. Furthermore, combatant commands did not completely and consistently report cost data in their theater posture plans because of the lack of readily available cost information. GAO found two primary reasons for this: unclear roles and responsibilities of key DOD organizations that have access to the cost data needed to compile and report comprehensive cost estimates and lack of a standardized format to compile and report cost data from component commands. Until these cost data are comprehensively compiled and reported, DOD and congressional decision makers will be unable to assess the true cost of posture initiatives.
Why GAO Did This Study
In January 2012, DOD issued new strategic guidance on defense budget priorities, indicating that it must rebalance its overseas force postureincluding the forward stationing of Navy ships in Spain for ballistic missile defense and the reduction of U.S. Army forces in Europein the face of deficit reduction. Similarly, DOD reported in its 2011 Global Defense Posture Report to Congress that savings associated with permanently stationing forces in the United States rather than overseas are often offset by such factors as increased rotational costs. Based on direction from the Senate Armed Services Committee, GAO evaluated the extent to which DOD has (1) conducted analysis to support recent overseas posture decisions and (2) developed a process for making posture decisions that align with strategy and consider costs. GAO assessed two recent posture initiatives, DOD plans and guidance related to posture, and theater posture plans from each combatant command.
What GAO Recommends
GAO recommends that DOD conduct a comprehensive cost analysis associated with the Navys decision to station ships in Rota, assess options and costs related to rotating forces in Europe, and clarify roles and responsibilities of key entities to collect cost data on initiatives. DOD generally agreed with GAOs recommendations and identified corrective actions, but additional steps are needed to fully address GAOs recommendation that the Navy further assess options and costs for ballistic missile defense.
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Recommendations for Executive Action
Status: Closed - Not Implemented
Comments: DOD partially concurred with our recommendation to conduct a comprehensive analysis for each course of action the Navy has considered to address mission requirements for ballistic missile defense in the Mediterranean. Although DOD agreed that analysis should be conducted prior to making force posture decisions, they disagreed that further analysis was needed to support the decision to relocate four destroyers to Rota, Spain. Further, DOD has not conducted analysis beyond what was described in this report and restated to GAO in June of 2015 that they have implemented the most cost effective and operationally viable option to provide ballistic missile defense and to meet the demand for large surface combatant presence in the Mediterranean. Lastly, the Navy has implemented this decision by relocating three of the four ships to Rota, with the fourth scheduled to arrive later this year. As such, additional analysis is both unlikely to occur or alter the initial decision.
Recommendation: To identify future funding requirements and improve the posture planning process, the Secretary of Defense should direct the Secretary of the Navy to conduct a comprehensive analysis for each course of action the Navy has considered to address mission requirements for ballistic missile defense in the Mediterranean that compares all options the Navy considered and either applies consistent operational assumptions or controls for different operational assumptions and includes the long-term life cycle costs and annual operating costs associated with forward stationing.
Agency Affected: Department of Defense
Status: Closed - Implemented
Comments: We have identified the significant costs associated with maintaining permanent Army forces in Europe and recommended that DOD identify alternatives that may lead to cost savings. In September 2010 (GAO-10-745R), we recommended that DOD identify mission requirements and analyze alternatives to better align permanent forces to address those requirements. In their official comments, DOD concurred with our recommendation. Amid growing calls from Congress for force reductions in Europe--based partly on GAO's work including GAO-11-131--DOD announced in January of 2012 that they would be removing two brigade combat teams from Europe beginning in fiscal year 2013, as well as a number of support units that were no longer strategically necessary on a permanent basis. They also announced that they may implement a temporary rotational force presence as necessary to address future mission requirements. This decision reduced the total number military and civilian personnel permanently stationed in Germany and allowed the further consolidation and closure of DOD-maintained facilities. In June of 2012 (GAO-12-711), we recommended that DOD identify the costs associated with implementing a rotational force strategy to include an analysis of facility requirements to support the personnel temporarily in Europe. DOD concurred with this recommendation and has worked to identify the approximate costs of both the force reduction and rotational force plan. Army officials explained that they expect to realize approximately $500 million per year in operational and support costs associated with removing two brigades from Europe and spend approximately $35-40 million per year rotating forces temporarily. Based on these Army estimates, DOD can expect to save approximately $2.3 billion in savings through fiscal year 2017. This number represents FY2013 present value and includes the total estimated operations and maintenance savings associated with reducing two brigade combat teams (BCT) from the force structure minus the estimated cost of annually rotating forces to Europe. The Army will also likely realize additional savings associated with lowered personnel and equipping requirements as a result of the smaller support force structure and additional infrastructure reductions but those savings are not included in this accomplishment report. Lastly, in June of 2015 DOD explained to GAO that the Army has implemented the rotational force plan to meet strategic requirements in Europe.
Recommendation: To identify future funding requirements and improve the posture planning process, the Secretary of Defense should direct the Secretary of the Army to identify and assess options to rotate forces in Europe and their associated costs, including the impacts on future basing in Europe.
Agency Affected: Department of Defense
Status: Closed - Implemented
Comments: DOD has issued guidance through the Joint Chiefs of Staff clarifying the posture planning process and the key cost elements in posture change proposals, as we recommended in June 2012 in our report Force Structure: Improved Cost Information and Analysis Needed to Guide Overseas Military Posture Decisions (GAO-12-711). In that report, we found that DOD and Combatant Commands do not have a consistent process for identifying and reporting comprehensive posture change proposal cost information and that key organizations lack clarity regarding their roles and responsibilities during this process. We recommended that DOD should clarify the roles and responsibilities of key OSD organizations, the military departments, and the service component commands, and establish a standardized reporting format to include in applicable guidance for key DOD organizations to use to ensure that cost information is consistently summarized and reported to inform the posture planning process. DOD agreed with our recommendation regarding the importance of identifying comprehensive cost information during the posture planning process and reporting those costs to decision makers. Further, DOD agreed that clarifying the roles and responsibilities among key process stakeholders would be beneficial, and stated that actions would be taken to address these matters. In April 2015, the Chairman of the Joint Chiefs of Staff issued an instruction entitled Coordination of Overseas Force Structure Changes and Host Nation Notification that clarifies the roles and responsibilities of key organizations in the posture planning process, and the key cost elements to be included in posture change proposals. Specifically, the instruction highlights the key roles and responsibilities of process stakeholders as well as cost data expected for inclusion in posture change proposal packages. DOD's formal response to our report and later correspondence with DOD officials clearly indicate that DOD's action was influenced by our recommendation. DOD's guidance addresses the intent of our recommendation, and as a result, DOD is positioned to make better informed posture decisions based on the standardized approach and thorough cost data included in the posture planning processes.
Recommendation: To identify future funding requirements and improve the posture planning process, the Secretary of Defense should clarify the roles and responsibilities of key OSD organizations, the military departments, and the service component commands, and establish a standardized reporting format to include in applicable guidance for key DOD organizations to use to ensure that cost information is consistently summarized and reported to inform the posture planning process.
Agency Affected: Department of Defense