DOD Needs to Determine and Use the Most Economical Building Materials and Methods When Acquiring New Permanent Facilities
GAO-10-436: Published: Apr 30, 2010. Publicly Released: Apr 30, 2010.
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To meet the challenges associated with a threefold increase in the Army's military construction program between fiscal years 2005 and 2009, the Army adopted numerous changes, including the expanded use of wood materials and modular building methods, designed to reduce building costs and timelines for new facilities. With the changes, the Army set goals to reduce building costs by 15 percent and timelines by 30 percent. The Army, Navy, and Air Force have also faced challenges associated with incorporating both antiterrorism construction standards and sustainable design ("green") goals into new facilities. GAO was asked to (1) assess the Army's progress in meeting its goals, (2) evaluate the merits from the Army's expanded use of wood materials and modular building methods, and (3) examine potential conflicts between antiterrorism construction standards and sustainable design goals. GAO reviewed relevant documentation, interviewed cognizant service officials, analyzed selected construction project data, and visited five Army installations to review facilities built with alternative materials and methods.
The Army set goals to reduce its estimated construction costs by 15 percent and building timelines by 30 percent, but it did not monitor goal achievement and thus did not know to what extent the goals had been met or whether changes made to its military construction program resulted in actual reductions in facility costs. GAO's review of selected project information showed that the Army did reduce the estimated cost of some facility construction projects and shortened building timelines during fiscal years 2007 through 2009, but it did not meet its overall stated goals. For example, GAO found that the average building timeline for one key measurement (design start to ready for occupancy) was reduced by about 11 percent--an improvement, but less than the 30 percent goal. The Army discontinued the numerical goals in fiscal year 2010, and Army officials stated that, although the specific goals might not have been achieved, they believed that the Army's efforts were successful in dampening the escalation of Army facilities' costs and would continue to help ensure cost-effective and timely facilities in future years. The Army appears to have achieved some savings in selected construction projects by expanding the use of wood materials and modular construction methods for some of its facilities, but GAO found little quantitative data on whether the use of these materials and methods will result in savings over the long term compared to the traditional use of steel, concrete, and masonry materials and on-site building methods. Without long-term or life-cycle analyses that consider not only initial construction costs but also possible differences in facility service lives and annual operating and maintenance costs between the construction alternatives, it is not clear that the Army's expanded use of wood materials and modular building methods will achieve the Army's intended purpose of reduced facility costs over the long term. The Navy and the Air Force generally disagreed with the Army's view and believed that the use of wood materials and modular construction will result in facilities with shorter service lives and higher life-cycle costs. However, none of the services had the analyses to support its views. Without additional study and analysis, DOD will not know whether military construction program guidance needs to be changed to ensure that facilities are constructed with materials and methods that meet needs at the lowest cost over the long term. Conflicts between antiterrorism building standards and sustainable design goals exist, but military service officials stated that the conflicts are considered to be manageable. GAO's review of 90 Army, Navy, and Air Force military construction projects, approved during fiscal years 2007 through 2009, showed that although incorporating the standards and the goals in new facilities added to construction costs, 80 of the projects required no special steps or workarounds to meet both the standards and the goals. However, service officials noted that achieving higher levels of sustainability in future construction projects while still meeting the antiterrorism standards would further increase initial facility costs and create additional design challenges.
Recommendations for Executive Action
Status: Closed - Implemented
Comments: In oral comments provided by officials from the Office of the Deputy Under Secretary of Defense (Installations and Environment), DOD stated that it agreed with our recommendation. DOD stated that the department needed to better understand the life-cycle cost implications of different building materials and methods and to use this knowledge in evaluating and comparing total life-cycle cost alternatives. In view of the questions raised during the course of our review, DOD stated that it had already initiated a tri-service panel to develop a template that will objectively evaluate the relative life-cycle costs between competing construction proposals in the facilities acquisition process. When complete, the template is expected to allow prospective project designers to propose alternative construction materials and methods, among other design considerations, to achieve lower life-cycle costs or best overall value. DOD stated that this approach would recognize that the department cannot be solely responsible for determining the life-cycle cost implications of each possible alternative and needs to consider the best available industry knowledge, expertise, and innovation for any particular facility requirement. Nonetheless, DOD stated that it expects to monitor the performance of alternative materials and methods to better inform this process over time.
Recommendation: To address unanswered questions about the merits and long-term costs from the use of alternative construction materials and methods for new common facilities, such as administrative buildings and barracks, the Secretary of Defense should direct the Deputy Under Secretary of Defense (Installations and Environment) to commission a tri-service panel that would be responsible for determining and comparing the estimated life-cycle costs of facilities built with alternative construction materials and methods, including a mix of wood and steel, concrete, and masonry construction materials and on-site and modular construction methods.
Agency Affected: Department of Defense
Status: Closed - Implemented
Comments: In oral comments provided by officials from the Office of the Deputy Under Secretary of Defense (Installations and Environment), DOD stated that it partially agreed with our recommendation that the department use the results of the tri-service panel's determinations to revise DOD's unified facilities criteria or other appropriate military construction guidance, as deemed appropriate, to ensure that new facilities are constructed with the materials and methods that meet requirements at the lowest cost over the long term. DOD stated that it agreed with the general concept that lessons learned should be incorporated into facilities criteria and specifications to the extent practical. However, DOD also stated that in some cases, such as to minimize adverse environmental impacts, facilities might be built with materials or methods that do not result in the lowest cost but in the best value for the department. In short, DOD stated that the use of the lowest-cost materials and methods should be an important consideration in facilities acquisition, but not the overriding goal. Our recommendation was not intended to restrict DOD in its efforts to achieve the best value, but rather to ensure adequate consideration of the long-term merits and economic impacts from building alternatives. We continue to believe that when all costs are considered over the long term, including environmental costs, the best value to DOD will normally be the construction alternative with the lowest life-cycle cost. Further, as stated in our recommendation, when revising its construction guidance based on the tri-service panel's determinations, we believe that DOD should only make revisions that it deems to be appropriate. As a result, we believe DOD's plan to incorporate the tri-service panel's findings into its guidance, as appropriate, will address the intent of the recommendation. In response to our recommendation, the tri-service panel created a "Total Ownership Cost" template that captures major costs involved in a project, and was intended to better incentivize bid design proposals to offer more cost-effective designs and reduce overall life-cycle costs of the facilities. In October 2012, DOD tested the template in two pilot Navy projects. In July 2013, a DOD official told us that, based on feedback from the pilot projects, DOD determined that the tool was helpful to the DOD project team in understanding the specific tradeoffs involved in evaluating the proposals, such as the initial cost of materials and building methods compared to the long term cost of maintaining the facilities using these material and methods. However, DOD did not find the template useful for determining the lowest cost materials and building methods, because more costly materials and building methods may be needed to reduce overall life-cycle cost for the project. Also, DOD's project evaluation process does not put a lot of weight into the cost of materials and methods, because these factors are estimates and are not considered reliable enough to put more weight in the decision-making process. As a result, DOD planned on continuing to use the template and its results on a case-by-case basis when evaluating proposals, but has decided not to issue guidance requiring the use of the template, because the results of the template do not always provide the best value.
Recommendation: The Deputy Under Secretary of Defense (Installations and Environment) should use the results from the tri-service panel's determinations to revise DOD's unified facilities criteria or other appropriate military construction guidance, as deemed appropriate, to ensure that new facilities are constructed with the materials and methods that meet requirements at the lowest cost over the long term.
Agency Affected: Department of Defense: Office of the Deputy Under Secretary of Defense (Installations and Environment)