Military Bases:

Cost to Maintain Inactive Ammunition Plants and Closed Bases Could Be Reduced

NSIAD-97-56: Published: Feb 20, 1997. Publicly Released: Feb 20, 1997.

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Pursuant to a congressional request, GAO reviewed two issues related to the Department of Defense's (DOD) management of real property, focusing on the: (1) opportunities to reduce the cost of maintaining inactive Army ammunition plants; and (2) same issue as it relates to military bases among all the services that were closed during the 1988 and 1991 base realignment and closure (BRAC) process.

GAO found that: (1) the annual cost of maintaining the Army's inactive ammunition plants, which totalled about $118 million since 1990, has decreased over the years; (2) this decrease is the result of various initiatives, including downsizing projects, reduced maintenance requirements, more rigorous contract negotiations with operating contractors, and the Armament Retooling and Manufacturing Support (ARMS) Act of 1992; (3) the ARMS program provides financial incentives to ammunition plant contractors to reuse idle capacities by attracting commercial tenants to the facility; (4) the contractors act as landlords with authority to lease buildings and equipment to commercial producers, and the revenue generated is used to offset the ammunition plants' maintenance costs; (5) it should be noted that, while the ARMS initiative has offset some of the Army's maintenance costs, maintaining ammunition plants in inactive status still represents a significant cost to the federal government; (6) while some initial investments will likely be necessary, the Army could further decrease its infrastructure costs by disposing of unneeded property; (7) the Kansas, Louisiana, and Sunflower plants, three of the six inactive plants retained for replenishment purposes, contain 37,000 acres of unneeded land, facilities, and infrastructure that could be declared excess; (8) none of the four inactive plants retained for their unique capabilities, Badger, Indiana, Longhorn, and Volunteer, are needed because alternative sources exist to provide the capabilities these plants provide; (9) the overall cost to maintain bases closed in the 1988 and 1991 rounds was approximately $290 million through fiscal year 1996; (10) no trends in costs are discernable because most bases have been closed only a few years and because costs at individual bases vary widely, given their different sizes, varying infrastructure, and diverse locations; (11) maintenance costs are higher than they need to be because DOD does not tie maintenance levels to the amount of time it takes to transfer bases to the community. The services seldom reduce the maintenance levels, even when progress toward reuse is slow; (12) continuing maintenance at initial levels keeps maintenance costs high and reduces the savings from base closure; (13) contractors at inactive ammunition plants and closed bases GAO visited were satisfying the terms outlined in their maintenance contract; and (14) GAO observed peeling paint and disassembled production lines at several ammunition plants; however, these conditions were within contract maintenance requirements.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: The Army initiated reports of excess on the seven plants, which were approved by the Secretary of the Army, and has turned the plants over to GSA to begin the disposal process.

    Recommendation: The Secretary of the Army should begin the disposal determination process for: (1) all excess real property not needed for replenishment requirements at the Kansas, Louisiana, and Sunflower Army Ammunition plants; and (2) all inactive plants retained only for their unique capabilities when those capabilities can be adequately provided by other sources. An integral part of this process will be identifying the costs involved in accomplishing the disposal of unneeded properties.

    Agency Affected: Department of Defense: Department of the Army

  2. Status: Closed - Implemented

    Comments: DOD states that the military departments are pursuing various initiatives to reduce maintenance costs at closing installations. They have, for example, reduced maintenance costs by: (1) transferring properties to communities via economic development conveyances before closure dates; (2) negotiating minimum facility maintenance levels with local reuse authorities; and (3) establishing temporary leases and cooperative agreements with local reuse authorities. DOD has recently received authority to transfer property by deed, with certain caveats, prior to environmental restoration of the property.

    Recommendation: The service secretaries should establish incentives for communities to speed up the transfer of closed bases. Specifically, after the initial maintenance period has elapsed, which varies by BRAC rounds, the services should establish criteria for a phased drawdown of maintenance until minimum maintenance levels are reached.

    Agency Affected: Department of Defense: Department of the Air Force

  3. Status: Closed - Implemented

    Comments: DOD states that the military departments are pursuing various initiatives to reduce maintenance costs at closing installations. They have, for example, reduced maintenance costs by: (1) transferring properties to communities via economic development conveyances before closure dates; (2) negotiating minimum facility maintenance levels with local reuse authorities; and (3) establishing temporary leases and cooperative agreements with local reuse authorities. The Navy has implemented a plan to reduce caretaker budgets to a 10-percent funding level over a 6-year period beginning with the base closure date. DOD has also recently received authority to transfer property by deed, with certain caveats, prior to the environmental restoration of the property.

    Recommendation: The service secretaries should establish incentives for communities to speed up the transfer of closed bases. Specifically, after the initial maintenance period has elapsed, which varies by BRAC rounds, the services should establish criteria for a phased drawdown of maintenance until minimum maintenance levels are reached.

    Agency Affected: Department of Defense: Department of the Navy

  4. Status: Closed - Implemented

    Comments: DOD states that the military departments are pursuing various initiatives or incentives to reduce maintenance costs at closing installations and transfer the property more quickly. They have, for example, reduced maintenance costs by: (1) transferring properties to communities via economic development conveyances before closure dates; (2) negotiating minimum facility maintenance levels with local reuse authorities; and (3) establishing temporary leases and cooperative agreements with local reuse authorities. DOD has also recently received authority to transfer property by deed, with certain caveats, prior to environmental restoration of the property.

    Recommendation: The service secretaries should establish incentives for communities to speed up the transfer of closed bases. Specifically, after the initial maintenance period has elapsed, which varies by BRAC rounds, the services should establish criteria for a phased drawdown of maintenance until minimum maintenance levels are reached.

    Agency Affected: Department of Defense: Department of the Army

 

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