Military Base Closures:

U.S. Financial Obligations in the Philippines

NSIAD-92-51: Published: Jan 22, 1992. Publicly Released: Jan 22, 1992.

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Pursuant to a congressional request, GAO determined the potential U.S. financial obligations to the Philippines when the United States closes two military facilities there, focusing on: (1) the costs of separation allowances and contract termination; (2) whether the United States can recover any equipment for reuse elsewhere; and (3) whether the United States has any obligation for environmental cleanup or restoration.

GAO found that: (1) U.S. liabilities for separation allowances totalled approximately $71.3 million, as of March 31, 1991; (2) Air Force and Navy activities underfunded severance pay liabilities by $12.9 million; (3) with the exception of Navy industrial fund's $10.1-million liability, the Department of Defense (DOD) stated that it had sufficient resources available to cover the shortfall; (4) most activities had not set aside funds for the $15.5 million in sick and annual leave liabilities because, under DOD policy, those liabilities are not funded until they are ready to be paid; (5) U.S. liabilities for contract termination costs are estimated to be $3.7 million; (6) the United States has invested $2.199 billion in military facilities in the Philippines, and the Air Force plans to remove 75 percent of the removable property and declare the balance excess to U.S. requirements; and (7) the Air Force and Navy have identified significant environmental damage at the bases, basing agreement does not impose responsibility upon the United States.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: On February 18, 1992, the DOD Comptroller directed the Navy and Air Force, under the leadership of the Defense Finance and Accounting Service, to review remaining unliquidated balances in all merged accounts scheduled for cancellation by the end of fiscal year 1993. The Navy and the Air Force are currently reviewing the balances in the merge account.

    Recommendation: To ensure that the correct amount of funds needed to pay actual severance liabilities are maintained in the proposed new foreign national employees' separation account, the Secretary of Defense should direct the Navy and the Air Force to reconcile severance pay liabilities with the remaining obligations held in the M account so that only obligated funds for which current liabilities exist are transferred from the M account to the new foreign national employees' separation account.

    Agency Affected: Department of Defense

  2. Status: Closed - Implemented

    Comments: On July 31, 1992, the Assistant Secretary of Defense for International Security Affairs reported that the Navy will ensure funds are available to support Navy industrial fund severance pay liabilities.

    Recommendation: The Secretary of the Navy should direct the Navy Comptroller to ensure that funds will be available to cover severance pay liabilities related to the Navy industrial fund.

    Agency Affected: Department of Defense: Department of the Navy

  3. Status: Closed - Implemented

    Comments: On January 8, 1992, the DOD Comptroller Office issued guidance to military commands concerning obligating and reconciling funds to the foreign national employee separation pay account.

    Recommendation: To ensure that the correct amount of funds needed to pay actual severance liabilities are maintained in the proposed new foreign national employee's separation account, the Secretary of Defense should direct the Navy and the Air Force to annually reconcile actual severance pay liabilities with obligations recorded in the new foreign national employees' separation account and either deobligate or obligate funds, as necessary to match current liabilities.

    Agency Affected: Department of Defense

 

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