Environmental Cleanup at DOD:

Better Cost-Sharing Guidance Needed at Government-Owned, Contractor-Operated Sites

NSIAD-97-32: Published: Mar 27, 1997. Publicly Released: Apr 17, 1997.

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Pursuant to a congressional request, GAO examined the Department of Defense's (DOD) policies and practices regarding cleanup of environmental contamination at government-owned, contractor-operated (GOCO) plants, as a followup to its previous reports that showed inconsistent policies and practices on cost sharing. GAO reviewed nine higher-cost case studies at the Defense Logistics Agency (DLA) and the military services to: (1) assess the consistency of cost-sharing practices across DOD; and (2) compare the service cleanup estimates against DOD's.

GAO noted that: (1) the services' policies and practices for having contractors share cleanup costs still vary widely; (2) notwithstanding GAO's recommendations to do so, DOD has not given the services adequate guidance for making decisions on whether and when to seek recovery of environmental cleanup costs incurred by DOD from contractors and other parties at GOCO facilities; (3) the Army authorized indemnifying its operating contractors from cleanup costs at ammunition plants; (4) the Navy policy requires cost-recovery efforts, but has not initiated timely requests for cost sharing or followed up; (5) the Air Force is beginning to seek participation in cleanup costs from its operating contractors; (6) regarding cleanup at GOCO facilities GAO visited, DOD's fiscal year (FY) 1994 report to Congress included cleanup costs that were closer to the military services' supporting data than DOD's reported FY 1993 estimates; (7) DOD's estimates for cleaning up the 78 GOCO facilities increased from $1.4 billion in FY 1993 to $3.6 billion in 1994, but decreased somewhat to $3.3 billion in 1995; (8) although DOD and the services have addressed GAO's recommendations to improve cost information, their estimates of past and projected costs still differ, and not all costs were included; (9) for example, the 1995 estimate decreased in part because DOD excluded $19.1 million in unfunded Navy cleanup requirements that should have been reported, and DLA cleanup costs totalling $101 million in FY 1994 that would be funded by customer surcharges; (10) GAO also found many additional expenses that were not included in either DOD or service cost estimates; (11) because Superfund holds parties liable for the billions of dollars needed to remediate past contamination regardless of wrongdoing, it is important that DLA and the services deal with potentially responsible parties on the basis of consistent policy and accurate data; (12) however, the lack of DOD guidance on cost sharing has permitted inconsistencies in approaches to cost-sharing, and the potential for some parties to be held responsible for cleanup costs, while others in similar situations are not; and (13) if cost-sharing agreements are reached, omissions in historical information and cost data may inhibit the recovery of all appropriate costs.

Matter for Congressional Consideration

  1. Status: Closed - Implemented

    Comments: The SASC, in its National Defense Authorization Act for fiscal year 1998 report, dated June 17, 1997, recommends a provision that directs the Secretary of Defense to follow all the recommendations made in the report. Furthermore, the provision states that the committee recommends cleanup funding should be reduced by $30 million in fiscal year 1998 and that GAO is expected to continue its review of DOD cost-recovery efforts and report to the committee by February 1, 1998.

    Matter: Congress may wish to call upon the Secretary of Defense to issue guidance to address inconsistencies in cost-sharing approaches and to promote future consistent treatment of all parties in cost recovery decisions.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: DOD partially concurred, stating that the Annual Report to Congress is prepared to meet the requirements of 10 USC 2706(a), and is not intended to represent all expenses associated with other funding sources other than the Defense Environmental Restoration or Base Closure and Realignment Accounts. However, GAO's report stated that excluding all cleanup expenses of an entire agency such as DLA because money to pay those expenses came from a different federal account could materially understate cleanup costs. This recommendation is being closed because a SASC Defense Authorization Act report provision directs the Secretary of Defense to implement the recommendation and GAO to continue its review of the issue and report to the committee by February 1, 1998. The same SASC provision recommends a $30-million reduction to cleanup funding in fiscal year 1998 due to inefficiencies and mismanagement in DOD's inaction on third-party cleanup cost-recovery.

    Recommendation: So that sufficient data will be available for cost-sharing negotiations and program oversight, the Secretary of Defense should direct the military services and DLA to provide consistent estimates, including all cleanup costs for DOD's environmental reports to Congress, regardless of the source of funds.

    Agency Affected: Department of Defense

  2. Status: Closed - Implemented

    Comments: DOD partially concurred, stating that it should not be required to gather data on non-DERP costs incurred by agencies and organizations outside of DOD. DOD has neither the manpower nor the funds to develop and populate limited-use databases. DOD agrees that timely and accurate cost data available within the Department should be collected and maintained. DOD feels it is meeting this objective through its present accounting systems and financial records. However, case studies addressed in the report indicate that this was not happening. This recommendation is being closed because a SASC Defense Authorization Act report provision directs the Secretary of Defense to implement the recommendation and GAO to continue its review of the issue and report to the committee by February 1, 1998. The same SASC provision recommends a $30-million reduction to cleanup funding in fiscal year 1998 due to inefficiencies and mismanagement in DOD's inaction on third-party cleanup cost-recovery.

    Recommendation: So that sufficient data will be available for cost-sharing negotiations and program oversight, the Secretary of Defense should direct the military services and DLA to gather and maintain the most timely and accurate DOD cost data available in DLA, military service, and other agencies' records.

    Agency Affected: Department of Defense

  3. Status: Closed - Implemented

    Comments: DOD partially concurred, stating that this is being done. In the normal Preliminary Assessment/Site Inspection phase of the cleanup process identifies potentially responsible parties and informed decisions are made as to whether cost recovery is prudent and cost effective. However, cases studies addressed in the report indicate that this was not happening. This recommendation is being closed due to action taken by the Senate Armed Services Committee (SASC) in its Defense Authorization Act report for fiscal year 1998. A SASC report provision directs the Secretary of Defense implement the recommendation and GAO to continue its review of the issue and report to the committee by February 1, 1998. The same SASC provision recommends a $30-million reduction to cleanup funding in fiscal year 1998 due to inefficiencies and mismanagement in DOD's inaction on third-party cleanup cost-recovery.

    Recommendation: So that sufficient data will be available for cost-sharing negotiations and program oversight, the Secretary of Defense should direct the military services and DLA to obtain all relevant data regarding other responsible parties identified, whether or not wrongdoing is an issue.

    Agency Affected: Department of Defense

  4. Status: Closed - Implemented

    Comments: DOD partially concurred, stating that this is being done, in that the normal Preliminary Assessment/Site Inspection phase of the cleanup process identifies potentially responsible parties, and informed decisions are made as to whether cost recovery is prudent and cost effective. However, case studies addressed in the report indicate that this was not happening. This recommendation is being closed due to action taken by the Senate Armed Services Committee (SASC) in its Defense Authorization Act report for fiscal year 1998. A SASC report provision directs the Secretary of Defense implement the recommendation and GAO to continue its review of the issue and report to the committee by February 1, 1998. The same SASC provision recommends a $30-million reduction to cleanup funding in fiscal year 1998 due to inefficiencies and mismanagement in DOD's inaction on third-party cleanup cost-recovery.

    Recommendation: So that sufficient data will be available for cost-sharing negotiations and program oversight, the Secretary of Defense should direct the military services and DLA to identify, to the extent it has not already been done, whether parties other than the government were involved with any contamination as part of environmental cleanup preliminary assessments at GOCO facilities.

    Agency Affected: Department of Defense

  5. Status: Closed - Implemented

    Comments: DOD partially concurred, stating that policy provides the proper level of consistency among the military components while permitting the flexibility necessary for site-specific assessment and decisionmaking to ensure fair treatment of all parties. It is DOD policy to comply with the Federal Acquisition Regulation (FAR). In the absence of FAR guidance on how to treat environmental cleanup costs, services and DLA have taken different approaches to deciding whether and when to seek contributions from contractors and other parties. This recommendation is being closed because a Senate Armed Services Committee (SASC) Defense Authorization Act report provision directs the Secretary of Defense to implement the recommendation and GAO to continue its review of the issue and report to the committee by February 1, 1998. The same SASC provision recommends a $30-million reduction to cleanup funding in fiscal year 1998 due to inefficiencies and mismanagement in DOD's inaction on third-party cleanup cost-recovery.

    Recommendation: To address the inconsistencies in cost-sharing approaches and the potential for disparate treatment of other responsible parties described in this and past reports, the Secretary of Defense should issue guidance to DOD components to resolve current disparities and to promote future consistent treatment of all parties in cost recovery decisions.

    Agency Affected: Department of Defense

 

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