Defense Infrastructure: Documentation Lacking to Fully Support How DOD Determined Specifications for the Landstuhl Replacement Medical Center

Highlights

What GAO Found

Department of Defense (DOD) officials considered current beneficiary population data, contingency operations, and most of the expected changes in troop strength when planning for the replacement medical center. However, recently announced posture changes in January 2012 have yet to be assessed for their impact on the facility. DOD estimates that the replacement medical center will provide health care for nearly 250,000 beneficiaries. A majority of those who are expected to receive health care from the center come from within a 55-mile radius of the facility. DOD officials told us that because the replacement medical center was designed for peacetime operations—with the capacity to expand to meet the needs of contingency operations—reductions in ongoing contingency operations in Afghanistan would not have an impact on facility requirements. At the time of this review, DOD officials said they were in the process of assessing proposed changes in posture to better understand their possible impact on the sizing of the replacement medical center.

DOD officials incorporated patient quality of care standards as well as environmentally friendly design elements in determining facility requirements for the replacement medical center. DOD also determined the size of the facility based on its projected patient workload. Internal control standards require the creation and maintenance of adequate documentation, which should be clear and readily available for examination to inform decision making. However, GAO’s review of the documentation DOD provided in support of its facility requirements showed (1) inconsistencies in how DOD applied projected patient workload data and planning criteria to determine the appropriate size for individual medical departments, (2) some areas where the documentation did not clearly demonstrate how planners applied criteria to generate requirements, and (3) calculation errors throughout. Without clear documentation of key analyses—including information on how adjustments to facility requirements were made—and without correct calculations, stakeholders and decision makers lack reasonable assurances that the replacement medical center will be appropriately sized to meet the needs of the expected beneficiary population in Europe.

DOD’s process for developing the approximately $1.2 billion cost estimate for the replacement medical center was substantially consistent with many cost estimating best practices, such as cross-checking major cost elements to confirm similar results. However, DOD minimally documented the data sources, calculations, and estimating methodologies it used in developing the cost estimate. Additionally, DOD anticipates that the new facility will become the hub of a larger medical-services-related campus, for which neither cost estimates nor time frames have yet been developed. Without a cost estimate for the facility that includes detailed documentation, DOD cannot fully demonstrate that the proposed replacement medical center will provide adequate health care capacity at the current estimated cost. Further, DOD and Congress may not have the information they need to make fully informed decisions about the facility.

Why GAO Did This Study

Landstuhl Regional Medical Center (LRMC) is DOD’s only tertiary medical center in Europe that provides specialized care for servicemembers, retirees, and their dependents. Wounded servicemembers requiring critical care are medically evacuated from overseas operations to the 86th Medical Group clinic at Ramstein Air Base to receive stabilization care before being transported to LRMC for intensive care. According to DOD, both facilities were constructed in the 1950s and are undersized to meet current and projected workload requirements. DOD plans to consolidate both facilities into a single medical center at an estimated cost of $1.2 billion. In this report, GAO (1) describes how DOD considered changes in posture and the beneficiary population when developing facility requirements, (2) assesses DOD’s process for determining facility requirements, and (3) reviews DOD’s process to develop the facility’s cost estimate. GAO examined posture planning documentation, beneficiary demographic data, plans for the replacement medical center, and relevant DOD guidance, as well as interviewed relevant DOD officials.

Recommendations

GAO recommends that DOD provide clear and thorough documentation of how it determined the facilitys size and cost estimate, correct any calculation errors, and update its cost estimate to reflect these corrections and recent posture changes. In commenting on a draft of this report, DOD concurred with GAOs recommendations and stated that it has conducted a reassessment of the project that will be released once approved by the Secretary of Defense.

Recommendations for Executive Action

Agency Affected	Recommendation	Status
Department of Defense	To ensure that the replacement medical center is appropriately sized to meet the health care needs of beneficiaries in a cost-effective manner, as part of the facility's recertification process, the Secretary of Defense should direct the Assistant Secretary of Defense (Health Affairs) to provide sufficient and clear documentation on how medical planners applied DOD criteria to determine the facility's requirements, including how and why medical planners made adjustments to the criteria.	Closed – Implemented DoD acknowledged that there were some deficiencies in the documentation of the HCRA, including deviations from published criteria. While the planning team may have had legitimate reasons for making adjustments, assumptions and data used to draw conclusions about facility sizing were not always clearly documented. DoD stated that it had recently conducted a reassessment of the original $1.2 billion project submitted in the FY12 President's Budget request. This new analysis was conducted in a manner separate and independent of the analysis reviewed by GAO. The Department believes this new analysis (called the Recertification Report) responds to GAO's recommendations by utilizing the most current data including recently announced force structure changes and by providing a documented audit trail of how the scope, size, and costs were developed. Specifically DOD stated that the assumptions that serve as the basis for sizing three courses of action (COA) are clearly stated. Data trails are explicit and when there are deviations from existing criteria, a rationale is provided. At the time of our review DOD had not yet made the Recertification Report available for our review. Subsequently, DOD provided GAO with a copy of the Recertification Report for review and on April 1, 2013 DOD officials met with GAO to discuss details of the new analysis. According to DOD officials, specific steps were taken to ensure that there was sufficient and clear documentation on how medical planners applied DOD criteria to determine the facility's requirements, based on our recommendation. In addition to the depth of documentation in the Recertification Report itself, DOD officials provided us with supplemental documentation used to generate the requirements. For example, DOD provided GAO with a spreadsheet that showed a summary of the process for moving from requirements, to space, to cost. Additionally, as a specific example, they provided documentation that showed the process used to generate requirements for primary care exam rooms. As a result of the details contained in the Recertification Report as well as the supporting documentation, we believe DOD has implemented the intent of the recommendation and provided a much clearer link between criteria and the resulting facility's requirements than the original HCRA.
Department of Defense	To ensure that the replacement medical center is appropriately sized to meet the health care needs of beneficiaries in a cost-effective manner, as part of the facility's recertification process, the Secretary of Defense should direct the Assistant Secretary of Defense (Health Affairs) to correct any calculation errors and show what impact, if any, these errors had on the sizing of the facility.	Closed – Implemented DoD acknowledges that the HCRA contained some calculation errors. DOD stated in its Agency comments that all calculations Had since been re-computed as part of the recently completed re-assessment and efforts had been made to ensure their accuracy and consistency. DoD stated that it had recently conducted a reassessment of the original $1.2 billion project submitted in the FY12 President's Budget request. This new analysis was conducted in a manner separate and independent of the analysis reviewed by GAO. The Department believes this new analysis responds to GAO's recommendations by utilizing the most current data including recently announced force structure changes and by providing a documented audit trail of how the scope, size, and costs were developed. Accordingly, DOD believed that the likelihood of similar calculation errors in the re-assessment is extremely low. Sizing of the COAs in the re-assessment are based on a series of calculations that can be readily duplicated and confirmed. At the time of our review DOD had not yet made the new analyses (called the Recertification Report) available for our review. DOD has subsequently provided GAO with a copy of the Recertification Report and met with the engagement team on April 1, 2013 to discuss GAO's recommendations. As a result of GAO's analysis and recommendations, DOD officials told us they took additional steps to minimize errors in the Recertification Report. Specifically, for the calculation of the facility's requirements, DOD used their most experienced and senior officials/analysts to start the process. The draft requirements were then reviewed by a DOD contractor to look for calculation errors and mistakes. According to DOD officials, by taking this additional step, they identified a few transposing errors that they were able to fix. DOD officials told us that having a DOD contractor review the calculations was also helpful because of their external views on the subject. Once the calculations were finalized and incorporated into a draft report, DOD used its standard reporting/reviewing process to review the document for consistency and editorial issues, but also incorporated a more robust review than the process used in the original HCRA. DOD Included officials from throughout the DOD community, including the Army and the current Landstuhl Regional Medical Center. DOD officials told us that this increased participation throughout the review process was a direct result of GAO's review and recommendations. AS a result, we believe that DOD has taken steps to introduce a more rigorous review process into the development of its requirements and met the intent of our recommendation.
Department of Defense	In light of recently announced posture changes and potential adjustments that may need to be made in facility requirements based on correcting identified calculation errors in the original documentation, the Secretary of Defense should direct the Assistant Secretary of Defense (Health Affairs) to revise the cost estimate for the center, incorporating the best practices outlined in the GAO Cost Estimating and Assessment Guide to (1) reflect these potential posture changes, (2) update it with the revised calculations as part of the recertification process, and (3) more thoroughly document the data, assumptions, calculations, and methodology used to develop specific cost elements.	Closed – Implemented According to DOD officials, DOD has taken steps to incorporate posture changes, verify requirement calculations, and provide thorough documentation of the steps taken in submitting its revised cost estimate of the Landstuhl replacement facility. DOD's reassessment of the original $1.2 billion project submitted in the FY12 President's Budget is referred to as the Recertification Report. According to DOD, this report was conducted in a manner separate and independent of the analysis reviewed by GAO. The Department believes this new analysis responds to GAO's recommendations by utilizing the most current data including recently announced force structure changes and by providing a documented audit trail of how the scope, size, and costs were developed. The facility acquisition and life cycle costs have been revised to reflect force structure changes known as of 1 May 2012. Sizing is based on revised calculations that accurately reflect projected population and workload. The impact of these changes on space requirements have been addressed and reflected in the COAs. Data assumptions, calculations, and methodology have been documented in a manner more consistent with the GAO Cost Estimating and Assessment Guide. At the time of our review DOD had not yet made the new analyses available for our review. DOD subsequently provided GAO with a copy of the Recertification Report and met with the engagement team on April 1, 2013 to provide additional follow-up information and documentation. The Recertification report itself clearly shows the recalculation of requirements based on updated known posture changes. DOD also updated the Recertification Report with revised calculations and took steps to ensure that the calculations were accurate and error-free. As a result of the posture changes and revised calculations, the Recertification Report showed that the revised project would cost an estimated $210 million less than the original proposal ($1.2 billion versus 990 million). Lastly, through our review of the Recertification Report and discussions with DOD officials, it was clear that they were very careful to make sure there was sufficient and thorough documentation of the data, assumptions, calculations, and methodology used to develop the specific cost elements in the Recertification Report. The supporting analytical documentation used to generate the report shows each of the 72 different medical departments/functional areas in the facility, the space that would be required to complete the tasks for each of the functional areas, the cost-per-square-foot calculations, and how these costs affected the overall cost of the facility. As a specific example, DOD provided GAO the spreadsheet for primary care exam rooms requirements. AS a result, we believe DOD met the intent of our recommendation and as a result resized the size of the facility resulting in cost savings of $210 million.