oversight

Military Base Realignments and Closures: Key Factors Contributing to BRAC 2005 Results

Published by the Government Accountability Office on 2012-03-08.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                             United States Government Accountability Office

GAO                          Testimony
                             Before the Subcommittee on Readiness,
                             Committee on Armed Services, House of
                             Representatives

                             MILITARY BASE
For Release on Delivery
Expected at 11:30 a.m. EST
Thursday, March 8, 2012

                             REALIGNMENTS AND
                             CLOSURES
                             Key Factors Contributing to
                             BRAC 2005 Results
                             Statement of Brian J. Lepore, Director
                             Defense Capabilities and Management




GAO-12-513T
                                             March 8, 2012

                                             MILITARY BASE REALIGNMENTS AND
                                             CLOSURES
                                             Key Factors Contributing to BRAC 2005 Results
Highlights of GAO-12-513T, a testimony
before the Subcommittee on Readiness,
Committee on Armed Services, House of
Representatives



Why GAO Did This Study                       What GAO Found
The Department of Defense (DOD) has          GAO identified several factors and challenges that contributed to the Department
faced long-term challenges in                of Defense’s (DOD) implementation of Base Realignment and Closure (BRAC)
managing and halting degradation of          2005 and the results achieved. In contrast to other BRAC rounds that were
its portfolio of facilities and reducing     primarily focused on achieving savings by reducing excess infrastructure, the
unneeded infrastructure to free up           Secretary of Defense identified three goals for BRAC 2005. Specifically, BRAC
funds to better maintain the facilities it   2005 was intended to (1) transform the military, (2) foster jointness, and (3)
still uses and to meet other needs.          reduce excess infrastructure to produce savings. These goals and the primary
Costs to build and maintain the              selection criteria’s focus on enhancing military value led DOD to identify
defense infrastructure represent a
                                             numerous recommendations that were designed to be transformational and
significant financial commitment.
                                             enhance jointness, thereby adding to the complexity the BRAC Commission and
DOD’s management of its support
infrastructure is on GAO’s high-risk list,
                                             DOD faced in finalizing and implementing the recommendations. Some
in part because of the challenges DOD        transformational-type recommendations needed sustained attention by DOD and
faces in reducing its unneeded excess        significant coordination and planning among multiple stakeholders. To improve
and obsolete infrastructure. DOD plans       oversight of implementation of the recommendations, the Office of the Secretary
to reduce force structure and the            of Defense (OSD) required business plans for each BRAC 2005 recommendation
President will request that Congress         to better manage implementation. In addition, DOD developed recommendations
authorize the base realignment and           that were interdependent on each other. However, this led to challenges across
closure (BRAC) process for 2013 and          multiple recommendations when delays in completing one recommendation led
2015. The Secretary of Defense stated        to delays in completing others. Specifically, DOD had to synchronize the
that the BRAC process is the only            relocations of over 123,000 people with about $24.7 billion in new construction or
effective way to achieve needed              renovation at installations. Given the complexity of some BRAC
infrastructure savings.                      recommendations, OSD directed the services to periodically brief it on
This testimony discusses (1) key             implementation challenges. Furthermore, the scale of BRAC 2005 posed a
factors and challenges that contributed      number of challenges to the Commission as it conducted its independent review.
to BRAC 2005 implementation and              For example, it reported that DOD’s recommendations were of unprecedented
results and (2) the most recent              scope and complexity, compounding the difficulty of its review. Moreover, the
estimated costs and savings                  interdependent nature of some recommendations made it difficult for the
attributable to BRAC 2005. To do this        Commission to evaluate the effect on installations that were both gaining and
work, GAO reviewed its previous work         losing units simultaneously. Finally, the effect on communities from installation
and selected documents related to            growth has led to challenges. For example, communities experiencing growth
BRAC 2005 such as BRAC business              were hindered in their ability to effectively plan for off-base support such as
plans that laid out the requisite actions,   adequate roads and schools due to inconsistent information from DOD around
timing of those actions, and DOD’s           the 2007 time frame.
estimated costs and savings
associated with implementing each            DOD’s fiscal year 2011 BRAC 2005 budget submission to Congress shows that
recommendation, briefings on BRAC            costs to implement the BRAC recommendations grew from $21 billion originally
implementation status prepared by the        estimated by the BRAC Commission in 2005 dollars to about $35.1 billion in
military services, and budget                current dollars, an increase of about $14.1 billion, or 67 percent. In constant
justification materials submitted to         2005 dollars, costs increased to $32.2 billion, an increase of 53 percent. Costs
Congress. GAO also interviewed               increased mostly due to military construction as DOD identified the need for new
current and former officials from DOD        and renovated facilities to enhance capabilities. In 2005, the Commission
and the BRAC Commission involved in          estimated net annual recurring savings of $4.2 billion and a 20-year net present
the development, review, and                 value savings by 2025 of $36 billion. GAO’s analysis shows annual recurring
implementation of BRAC                       savings are now about $3.8 billion, a decrease of 9.5 percent, while the 20-year
recommendations.                             net present value savings are now about $9.9 billion, a decrease of 73 percent.
View GAO-12-513T. For more information,      As such, DOD will not recoup its up-front costs until 2018.
contact Brian Lepore at (202) 512-4523 or
leporeb@gao.gov.

                                                                                     United States Government Accountability Office
Chairman Forbes, Ranking Member Bordallo, and Members of the
Subcommittee:

Thank you for the opportunity to testify today on the Department of
Defense’s (DOD) latest round of base realignments and closures (BRAC),
commonly referred to as BRAC 2005. GAO has two long-standing roles in
the BRAC process. First, as requested by congressional committees for
the 1988 BRAC round and mandated by law since 1990, we have served
as an independent and objective observer of the BRAC process and have
assessed and reported on DOD’s decision-making processes leading up
to proposed realignment and closure recommendations. We have
operated in a real-time setting and had access to significant portions of
the process as it evolved. Second, once the recommendations became
binding, our role has been to review DOD’s efforts to implement the
recommendations, just as we routinely review the efficiency and
effectiveness of many other congressionally mandated or authorized
programs across the government. As such, we have issued about 50
reports related to the BRAC 2005 round and prior BRAC rounds since
1989 (see related GAO products at the end of this testimony) in addition
to our statutorily required report providing a detailed analysis of the BRAC
2005 selection process and the Secretary of Defense’s proposed
realignment and closure recommendations to the BRAC Commission. 1

DOD has faced long-term challenges in managing its portfolio of facilities,
halting degradation of facilities, and reducing unneeded infrastructure to
free up funds to better maintain the facilities it still uses and to meet other
needs. DOD has about 500 permanent installations in the United States
that comprise more than 300,000 buildings and about 200,000 other
structures with a replacement value of more than $800 billion. Costs to
build and maintain the defense infrastructure represent a significant
financial commitment. However, closing unneeded defense facilities has
historically been difficult because of public concern about the economic
effects of closures on communities, the perceived lack of impartiality of
the decision-making process, and legal requirements. DOD’s


1
 GAO, Military Bases: Analysis of DOD’s 2005 Selection Process and Recommendations
for Base Closures and Realignments, GAO-05-785 (Washington, D.C.: July 1, 2005).
Legislation authorizing the BRAC 2005 round maintained the requirement, applicable to
DOD’s three previous rounds in 1991, 1993, and 1995, that we provide a detailed analysis
of the Secretary’s proposed recommendations and the selection process. We were
required (Pub. L. No. 107-107, Title XXX, § 3001 (2001)) to report to the Congress and
BRAC Commission by July 1, 2005.




Page 1                                                                      GAO-12-513T
management of its support infrastructure is on our high-risk list, in part
due to the challenges DOD faces in eliminating unneeded infrastructure.
The BRAC process is designed to overcome obstacles to eliminating
unneeded infrastructure and to help DOD match needed infrastructure to
the force structure and to support military missions. We reported in 2005
that DOD established and generally followed a logical and reasoned
process for formulating its BRAC 2005 recommendations. 2

As the Secretary of Defense testified before both the Senate and House
Armed Services Committees 3 weeks ago, the President will request
Congress to again authorize the BRAC process, for 2013 and 2015. The
Secretary acknowledged that the BRAC process is controversial but
stated that it is the only effective way to achieve needed infrastructure
savings, and that the upcoming request comes as a result of DOD plans
to reduce its force structure. 3

As directed by the House Armed Services Committee in its report
accompanying the National Defense Authorization Act for 2008, 4 we have
been reviewing BRAC 2005 to monitor implementation of the
recommendations and identify lessons that could be used to improve
future BRAC rounds should Congress authorize additional rounds. 5 My
testimony today is based on work completed to date, and I will identify (1)
key factors and challenges that contributed to BRAC 2005
implementation and results and (2) the most-recent estimated costs and
savings attributable to BRAC 2005. We will also be reporting on lessons
learned from the BRAC 2005 round later this year.

To identify some of the key factors and challenges that contributed to
BRAC 2005 implementation and results, we reviewed our previous work



2
GAO-05-785.
3
 Hearing to Receive Testimony on the Defense Authorization Request for Fiscal Year
2013 and the Future Years Defense Program, before the Senate Armed Services
Committee, 112th Cong. (Feb. 14, 2012) (written prepared statement of Leon E. Panetta,
Secretary of Defense), and Hearing to Receive Testimony on the Fiscal Year 2013
National Defense Authorization Budget Request from the Department of Defense, before
the House Armed Services Committee, 112th Cong. (Feb. 15, 2012) (written prepared
statement of Leon E. Panetta, Secretary of Defense).
4
Pub. L. No. 110-181 (2008).
5
H.R. Rep. No. 110-146 (2007), at 514.




Page 2                                                                     GAO-12-513T
and key documents related to BRAC 2005, such as BRAC business plans
that laid out the actions and timing of those actions to implement the
recommendations, briefings prepared by the military services on the
implementation status of the recommendations, and other key
documents. We interviewed the Chairman of the 2005 BRAC Commission
and members of the Commission’s executive staff, key military
department officials involved in BRAC 2005, and the former Deputy
Under Secretary of Defense (Installations and Environment) who oversaw
BRAC 2005 when DOD developed the recommendations that were sent
to the Commission. We also interviewed representatives of five of the
seven joint cross-service groups: Headquarters and Support Activities,
Industrial, Medical, Supply and Storage, and Technical. We performed
our work at the Office of the Secretary of Defense (OSD), Basing
Directorate; the military departments; and other relevant offices.

To identify the current estimated costs and savings, we used DOD’s
annual BRAC 2005 budget submissions to Congress to conduct our
analyses of BRAC costs and savings. To evaluate changes in projected
net annual recurring savings from the BRAC Commission’s original
estimates in 2005 through to fiscal year 2011, we used data OSD
provided on estimated savings in fiscal year 2012 because these data
more fully captured the expected savings. 6 We calculated the 20-year net
present value savings by applying the same formulas and discount rate of
2.8 percent that the BRAC Commission used in 2005 to calculate the
savings. Although the Office of Management and Budget prescribes the
use of slightly different assumptions to calculate these estimates today,
we used the factors and assumptions used by the BRAC Commission for
consistency. To assess the reliability of DOD’s BRAC cost and savings
data, we tested computer-generated data for errors, reviewed relevant
documentation, and discussed data quality control procedures with
officials at the OSD Basing Directorate. We determined that the data used
were sufficiently reliable for the purposes of addressing the objectives of
this testimony. We performed this work from March 2011 to March 2012
in accordance with generally accepted government auditing standards.
Those standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our audit objectives. We believe that


6
 OSD expected to have completed all of the recommendations by September 15, 2011,
thus by fiscal year 2012 savings estimates should be complete and not subject to further
change.




Page 3                                                                       GAO-12-513T
                           the evidence obtained provides a reasonable basis for our findings and
                           conclusions based on our audit objectives.



Background
Congress Established the   The BRAC 2005 process consisted of a series of legislatively prescribed
BRAC Process               steps as follows:

                           DOD proposed the selection criteria. DOD was required to propose the
                           selection criteria to be used to develop and evaluate the candidate
                           recommendations, consistent with considerations specified in the statute
                           authorizing BRAC 2005. 7 The criteria were to be made available for public
                           comment in the Federal Register. 8 Congress subsequently codified the
                           eight final BRAC selection criteria used in BRAC 2005. 9 The BRAC
                           statute directed GAO to evaluate the selection criteria. 10 Figure 1 displays
                           the eight criteria. Importantly, Congress specified that the first four criteria
                           relating to enhancing military value were to be the priority criteria.




                           7
                            The statute authorizing BRAC 2005, Pub. L. No. 107-107, § 3002 (2001), amended the
                           Defense Base Closure and Realignment Act of 1990 by inserting a new section, § 2913,
                           which established “military value” as the primary consideration for BRAC
                           recommendations and specified a number of considerations for determining military value,
                           along with other selection criteria.
                           8
                           DOD spelled out its final criteria at 69 Fed. Reg. 6948 (2004).
                           9
                            Congress codified the criteria as adopted by DOD, with only minor modification. Ronald
                           W. Reagan National Defense Authorization Act for Fiscal Year 2005, Pub. L. No. 108-375,
                           § 2832 (2004).
                           10
                            GAO, Military Base Closures: Assessment of DOD’s 2004 Report on the Need for a
                           Base Realignment and Closure Round, GAO-04-760 (Washington, D.C.: May 17, 2004).




                           Page 4                                                                      GAO-12-513T
Figure 1: Selection Criteria for the BRAC 2005 Round




DOD developed a force structure plan and infrastructure inventory.
Congress required the Secretary of Defense to develop and submit to
Congress a force structure plan laying out the numbers, size, and
composition of the units that constitute U.S. defense forces—for example,
divisions, ships, and air wings—based on the Secretary’s assessment of
the probable national security threats over the ensuing 20 year period,




Page 5                                                         GAO-12-513T
and an inventory of global military installations. 11 The BRAC statute
directed GAO to evaluate the force structure plan and infrastructure
inventory. 12

Secretary of Defense was required to provide certain certifications. On
the basis of the force structure plan, infrastructure inventory, and
accompanying analyses, the Secretary of Defense was required to certify
whether the need existed for the closure or realignment of military
installations. If the Secretary certified that the need existed, he was also
required to certify that the round of closures and realignments would
result in annual net savings for each of the military departments beginning
not later than fiscal year 2011. The BRAC statute directed GAO to
evaluate the need for the 2005 BRAC round. 13

DOD began to develop options for closure or realignment
recommendations. The military departments developed service-specific
installation closure and realignment options. In addition, OSD established
seven joint cross-service teams, called joint cross-service groups, to
develop options across common business-oriented functions, such as
medical services, supply and storage, and administrative activities. These
closure and realignment options were reviewed by DOD’s Infrastructure
Executive Council—a senior-level policy-making and oversight body for
the entire process. Options approved by this council were submitted to
the Secretary of Defense for his review and approval. DOD developed
hundreds of closure or realignment options for further analysis, which
eventually led to DOD’s submitting over 200 recommendations to the
BRAC Commission for analysis and review. The BRAC statute directed
GAO to analyze the recommendations of the Secretary and the selection
process, and we issued our report to the congressional defense
committees on July 1, 2005. 14



11
  Section 3001 of the National Defense Authorization Act for Fiscal Year 2002, Pub. L.
No. 107-107 (2001), amended § 2912 of the Defense Base Closure and Realignment Act
of 1990, Pub. L. No. 101-510 (1990), to, among other things, require DOD to develop a
20-year force structure plan. In prior BRAC rounds, the force structure plan was required
to project the needed force structure for a 6-year period.
12
 GAO-04-760.
13
 GAO-04-760.
14
 GAO-05-785.




Page 6                                                                       GAO-12-513T
BRAC Commission performed an independent review of DOD’s
recommendations. After DOD selected its base closure and realignment
recommendations, it submitted them to the BRAC Commission, which
performed an independent review and analysis of DOD’s
recommendations. The Commission could approve, modify, reject, or add
closure and realignment recommendations. Also, the BRAC Commission
provided opportunities to interested parties, as well as community and
congressional leaders, to provide testimony and express viewpoints. The
Commission then voted on each individual closure or realignment
recommendation, and those that were approved were included in the
Commission’s report to the President. In 2005, the BRAC Commission
reported that it had rejected or modified about 14 percent of DOD’s
closure and realignment recommendations.

President approved BRAC recommendations. After receiving the
recommendations, the President was to review the recommendations of
the Secretary of Defense and the Commission and prepare a report by
September 23, 2005, containing his approval or disapproval of the
Commission’s recommendations as a whole. Had the President
disapproved of the Commission’s recommendations, the Commission
would have had until October 20, 2005, to submit a revised list of
recommendations to the President for further consideration. If the
President had not submitted a report to Congress of his approval of the
Commission’s recommendations by November 7, 2005, the BRAC
process would have been terminated. The President submitted his report
and approval of the 2005 Commission’s recommendations on September
15, 2005.

Congress allowed the recommendations to become binding. After the
President transmitted his approval of the Commission’s recommendations
to Congress, the Secretary of Defense would have been prohibited from
implementing the recommendations if Congress had passed a joint
resolution of disapproval within 45 days of the date of the President’s
submission or the adjournment of Congress for the session, whichever
was sooner. Since Congress did not pass such a resolution, the
recommendations became binding in November 2005.

Congress established clear time frames for implementation. The BRAC
legislation required DOD to complete recommendations for closing or
realigning bases made in BRAC 2005 by September 15, 2011—6 years
from the date the President submitted his approval of the
recommendations to Congress. Figure 2 displays the timeline of the
BRAC 2005 round.


Page 7                                                       GAO-12-513T
Figure 2: Timeline of BRAC 2005 Round




                                        GAO identified several factors and challenges that contributed to DOD’s
Key Factors and                         implementation of BRAC 2005 and the results achieved. In contrast to
Challenges Affecting                    other BRAC rounds that were primarily focused on achieving savings by
                                        reducing excess infrastructure, the Secretary of Defense identified three
DOD and the                             goals for BRAC 2005. Specifically, BRAC 2005 was intended to transform
Commission in BRAC                      the military, foster jointness, and reduce excess infrastructure to produce
                                        savings. These goals and the primary selection criteria’s focus on
2005                                    enhancing military value led DOD to identify numerous recommendations
                                        that were designed to be transformational and enhance jointness, thereby
                                        adding to the complexity the Commission and DOD faced in finalizing and
                                        implementing the BRAC recommendations. Some key challenges that
                                        have confronted or continue to confront DOD or the Commission in
                                        regard to BRAC 2005 are as follows.

                                        Some transformational-type BRAC recommendations required sustained
                                        senior leadership attention and a high level of coordination among many
                                        stakeholders to complete by the required date. The consolidation of
                                        supply, storage, and distribution functions within the Defense Logistics
                                        Agency is an example of an atypical use of the BRAC process. The



                                        Page 8                                                          GAO-12-513T
supply, storage, and distribution BRAC recommendation is
transformational because it focuses on complex business process
reengineering efforts involving the transfer of personnel and management
functions. As we previously reported, 15 the Defense Logistics Agency was
faced with the potential for disruptions to depot operations during
implementation of the BRAC consolidation recommendation and took
certain steps we have identified as best practices to minimize the
potential for disruption. These included committing sustained high-level
leadership and including relevant stakeholders in an organizational
structure to address implementation challenges as they arose. To
implement the BRAC recommendations, the agency had to develop
strategic agreements with the services that ensured that all stakeholders
agreed on its plans for implementation, and had to address certain human
capital and information technology challenges.

Similarly, another type of transformational BRAC recommendation that
required sustained senior leadership attention was the establishment of
the Navy’s Fleet Readiness Centers. DOD expects this BRAC
recommendation to produce significant savings; however, as we
reported, 16 this BRAC recommendation required sustained senior
leadership attention to ensure effective completion. Our prior work states
that sustained leadership is necessary to achieve workforce
reorganizations and agency goals. 17

Implementation of some transformational BRAC recommendations—
especially those where a multitude of organizations and units all had roles
to play to ensure the achievement of the goals of the recommendation—
illustrated the need to involve key stakeholders and effective planning.
For example, to transform the reserve forces in many states, the Army
had planned to implement 44 BRAC recommendations to construct
125 new Armed Forces Reserve Centers by September 15, 2011.


15
  GAO, Military Base Realignments and Closures: DOD Needs to Update Savings
Estimates and Continue to Address Challenges in Consolidating Supply-Related
Functions at Depot Maintenance Locations, GAO-09-703 (Washington, D.C.: July 9,
2009).
16
  GAO, Military Base Closures: Projected Savings from Fleet Readiness Centers Are
Likely Overstated and Actions Needed to Track Actual Savings and Overcome Certain
Challenges, GAO-07-304 (Washington, D.C.: June 29, 2007).
17
 GAO, Human Capital: Key Principles for Effective Strategic Workforce Planning,
GAO-04-39 (Washington, D.C.: Dec. 11, 2003).




Page 9                                                                     GAO-12-513T
As we previously reported, the Army identified several potential
challenges, including completing all of the construction within the
statutory implementation period, changing force structure and mission
requirements that could affect the capacity of the new centers, and
realizing efficiencies based on limited testing of new construction
processes. 18 Conversely, as we also previously reported, the Air Force
used a consultative process that involved stakeholders to assign new
missions to units that would lose flying missions as a result of 37 BRAC
recommendations affecting 56 Air National Guard installations. 19 As a
result of this consultative process, Air National Guard units affected by
BRAC 2005 were assigned replacement missions, of which 83 percent
were highest priority, mission-critical missions, or a new flying mission.
However, implementation of these BRAC recommendations led to other
challenges that required significant stakeholder coordination. These
challenges included the capacity of Air National Guard headquarters to
develop new unit staffing documents, the need to retrain personnel for an
intelligence mission at a rate that exceeded the capacity of the relevant
school, and that Air National Guard Headquarters had not identified
bridge missions for all units that will face a delay between losing their old
flying mission and the startup of their replacement mission.

Establishing a specific organizational structure to overcome likely
obstacles and help achieve desired goals. OSD emphasized the need for
joint cross-service groups to analyze common business-oriented
functions for BRAC 2005, an approach made more important by the
desire to develop transformational BRAC recommendations. As with the
1993 and 1995 BRAC rounds, these joint cross-service groups performed
analyses and developed closure and realignment options in addition to
those developed by the military services. However, our evaluation of
DOD’s 1995 round indicated that the joint cross-service groups submitted
options through the military services for approval, resulting in few being
approved. 20 Conversely, the number of BRAC recommendations


18
  GAO, Military Base Realignments and Closures: Plan Needed to Monitor Challenges for
Completing More Than 100 Armed Forces Reserve Centers, GAO-07-1040 (Washington,
D.C.: Sept. 13, 2007).
19
  GAO, Military Base Closures: Management Strategy Needed to Mitigate Challenges and
Improve Communication to Help Ensure Timely Implementation of Air National Guard
Recommendations, GAO-07-641 (Washington, D.C.: May 16, 2007).
20
 GAO, Military Bases: Lessons Learned From Prior Base Closure Rounds,
GAO/NSIAD-97-151 (Washington, D.C.: July 25, 1997).




Page 10                                                                  GAO-12-513T
                                      developed by the joint cross-service groups increased significantly in the
                                      BRAC 2005 round. This was due, in part, to high-level leadership
                                      ensuring that the options were reviewed by a DOD senior-level group,
                                      known as the Infrastructure Steering Group, rather than the military
                                      services. As shown in figure 3, the Infrastructure Steering Group was
                                      placed organizationally on par with the military departments.

Figure 3: DOD’s BRAC Leadership Structure




                                      Page 11                                                          GAO-12-513T
DOD had to develop BRAC oversight mechanisms to improve
accountability for implementation of the BRAC recommendations. For the
first time, OSD required the military departments to develop business
plans to better inform OSD of financial and status of implementation
details for each of the BRAC 2005 recommendations and to facilitate
OSD oversight. These business plans included information such as a
listing of all actions needed to implement each recommendation;
schedules for personnel relocations between installations; and updated
cost and savings estimates by DOD based on more accurate and current
information. This approach permitted senior-level intervention if warranted
to ensure completion of the BRAC recommendations by the statutory
completion date. Additionally, OSD recognized that the business plans
would serve as the foundation for the complex program management
necessary to implement the particularly complex transformational BRAC
2005 recommendations, and to delineate resource requirements and
generate military construction requirements.

Interdependent recommendations affected DOD’s ability to meet the
statutory deadline. Many of the BRAC 2005 recommendations were
interdependent and had to be completed in a sequential fashion within the
statutory implementation period. In cases where interdependent
recommendations required multiple relocations of large numbers of
personnel, delays in completing one BRAC recommendation had a
cascading effect on the implementation of other recommendations.
Specifically, DOD had to synchronize the relocations of over 123,000
people with about $24.7 billion in new construction or renovation.
Commission officials told us that unlike prior BRAC rounds where each
base was handled by a single integrated recommendation, in BRAC
2005, many installations were simultaneously affected by multiple
interconnected BRAC recommendations. For example, as we have
previously reported, 21 as part of the BRAC recommendation to close Fort
Monmouth, New Jersey, personnel from the Army’s Communications-
Electronics Life Cycle Management Command located at Fort Monmouth
were to relocate to Aberdeen Proving Ground, Maryland. To
accommodate the incoming personnel from Fort Monmouth, Army
officials planned to renovate facilities that were occupied at the time by a
training activity that was to relocate to Fort Lee, Virginia, as part of


21
  GAO, Military Base Realignments and Closures: Army Is Developing Plans to Transfer
Functions from Fort Monmouth, New Jersey, to Aberdeen Proving Ground, Maryland, but
Challenges Remain, GAO-08-1010R (Washington, D.C.: Aug. 13, 2008).




Page 12                                                                  GAO-12-513T
another BRAC recommendation. However, delays in completing new
facilities at Fort Lee delayed the relocation of the training activity from
Aberdeen, which in turn delayed the renovation of the Aberdeen facilities
to support the Fort Monmouth closure. Similarly, two buildings at Fort
Belvoir, Virginia, were to house certain Army organizations moving from
leased space as part of a BRAC recommendation. However, the buildings
at Fort Belvoir were occupied at the time by the Army Materiel Command,
which was to relocate to Huntsville, Alabama, as part of another BRAC
recommendation. Construction delays at the Huntsville location delayed
the command’s ability to move, which in turn delayed renovation of the
space they were to vacate, consequently holding up the ability of the new
occupants to relocate from the leased space. Given the complexity of
these interdependent recommendations, OSD required the military
services and defense agencies to periodically brief it on implementation
challenges and progress.

Some complex sets of individual actions were combined within individual
BRAC recommendations, complicating the Commission’s review process.
The scale of BRAC 2005 posed a number of challenges to the
Commission as it did its independent review. First, the Commission
reported that it assessed closure and realignment recommendations of
unprecedented scope and complexity. Further, the executive staff of the
BRAC Commission told us that their task was made more difficult and
complex because many of the proposed recommendations put forward for
BRAC 2005 represented the DOD goals of furthering transformation and
fostering jointness, in addition to the more traditional base closures and
realignments. Moreover, many of the proposed BRAC recommendations
that DOD presented to the Commission for review were made up of
multiple individual actions, unlike prior rounds in which each base was
handled by a single integrated recommendation, according to the BRAC
Commission. The executive staff of the Commission also told us that it
was more difficult to assess the costs and the amount of time for the
savings to offset implementation costs since many of the
recommendations contained multiple interdependent actions, all of which
needed to be reviewed. Table 1 compares the number of individual
actions embedded within the BRAC 2005 recommendations with the
number of similar actions needed to implement the recommendations in
the prior rounds. The table shows that the number of individual BRAC
actions was larger in BRAC 2005 (813) than that from the four prior
BRAC rounds combined (387).




Page 13                                                         GAO-12-513T
Table 1: BRAC Actions for All BRAC Rounds

                                    Major base          Major       Minor closures            Total
Round                                 closures   realignments     and realignments          actions
1988                                       16               4                       23            43
1991                                       26              17                       32            75
1993                                       28              12                      123           163
1995                                       27              22                       57           106
Total for four                             97              55                      235           387
prior rounds
BRAC 2005                                  24              24                      765           813
Source: GAO analysis of DOD data.

Notes: For BRAC 2005, DOD defined major base closures as those that had a plant replacement
value exceeding $100 million, and defined major base realignments as those that had a net loss of
400 or more military and civilian personnel. In prior BRAC rounds, closures and realignments were
often difficult to tabulate precisely, and GAO relied on DOD’s characterization of which bases were
considered to be major in the absence of a consistent definition.


Large size of BRAC 2005 may have contributed to the challenges
confronting the Commission. The Commission executive staff that we
interviewed said that they would have benefited from expertise built up
during the multiple successive smaller BRAC rounds that occurred in
1991, 1993, and 1995, since the Commission staff stayed in place from
one round to the next. However, because 10 years had elapsed since the
last BRAC round, many Commission staff were new to BRAC in 2005 and
had steep learning curves. This may have been compounded by the large
number and variety of BRAC actions DOD presented to them for review.
For example, the Commission reported that it struggled to fully
understand the net impact on bases that were both gaining and losing
missions at the same time, as in the interdependent BRAC
recommendations discussed above. While the Commission had the
authority to modify a BRAC recommendation, the Commission staff
expressed concern that rejecting one action of a recommendation could
potentially set off a cascade of effects rippling across several other
proposed recommendations because of the interdependency of the
individual actions.




Page 14                                                                                  GAO-12-513T
                       The effect on communities from installation growth has led to challenges
                       for the communities to ensure the provision of adequate services to the
                       installation. DOD’s Office of Economic Adjustment 22 and DOD have
                       devoted more resources to communities experiencing significant growth
                       as a result of the consolidation that occurred under BRAC 2005. This is a
                       change from prior BRAC rounds, when Office of Economic Adjustment
                       assistance was more focused on helping communities cope with the
                       closure of an installation than its growth. While some of the growth is
                       attributable to initiatives other than BRAC, including increases in Army
                       and Marine Corps force structure after 2007 and plans to rebase some
                       overseas forces to the United States, BRAC has contributed with the
                       transfer of about 123,000 positions from one installation to another within
                       the 6-year BRAC implementation period. As we have previously reported,
                       communities experiencing growth were hindered in their ability to
                       effectively plan for off-base support such as adequate roads and schools
                       due to inconsistent information from DOD around the 2007 time frame. 23
                       Further, DOD has missed opportunities to offer high-level leadership to
                       communities affected by the growth, suggesting the need for more
                       attention to this issue if a future set of BRAC recommendations leads to
                       installation growth rather than closure. 24

                       Our analysis of DOD’s fiscal year 2011 BRAC 2005 budget submission to
Costs to Implement     Congress and each annual submission throughout the BRAC 2005
BRAC 2005 Increased    implementation period shows that one-time implementation costs grew
                       from $21 billion originally estimated by the BRAC Commission in 2005 to
as Estimated Savings   about $35.1 billion, an increase of about $14.1 billion, or 67 percent. 25 In
Decreased              constant 2005 dollars, costs increased to about $32.2 billion, an increase


                       22
                         The Office of Economic Adjustment is the primary DOD office responsible for providing
                       assistance to communities, regions, and states affected by significant defense actions
                       including base closures and realignments.
                       23
                         GAO, Defense Infrastructure: Challenges Increase Risks for Providing Timely
                       Infrastructure Support for Army Installations Expecting Substantial Personnel Growth,
                       GAO-07-1007 (Washington, D.C.: September 13, 2007).
                       24
                         GAO, Defense Infrastructure: High-Level Leadership Needed to Help Communities
                       Address Challenges Caused by DOD-Related Growth, GAO-08-665 (Washington, D.C.:
                       June 17, 2008); Defense Infrastructure: High-Level Federal Interagency Coordination Is
                       Warranted to Address Transportation Needs beyond the Scope of the Defense Access
                       Roads Program, GAO-11-165 (Washington, D.C.: Jan. 26, 2011).
                       25
                         The $35.1 billion in one-time implementation cost is in current dollars, which includes
                       inflation, while the BRAC Commission estimate of $21 billion is in constant 2005 dollars.




                       Page 15                                                                       GAO-12-513T
of 53 percent. According to an OSD analysis of the increase in costs,
about $10 billion of the increase was attributable to construction for
additional facilities, increasing total military construction costs to about
$24.7 billion. In contrast, military construction costs for the four prior
BRAC rounds combined amounted to less than $7 billion. In a March
2010 testimony, the Deputy Under Secretary of Defense (Installations and
Environment) characterized the military construction for BRAC 2005 as a
major engine of recapitalization. 26 Other reasons for the cost increases
include inflation and increased operations and maintenance,
environmental restoration, and other costs.

Some cost increases have been attributed to unexpected expenses. For
example, DOD’s cost to implement the recommendation to close the
Walter Reed Medical Center in Washington, D.C., and relocate medical
care functions to the National Naval Medical Center, Bethesda, Maryland,
and Fort Belvoir, Virginia, increased from about $989 million to about $2.7
billion due to higher military construction costs and other higher than
anticipated costs for moving and purchasing equipment, as we previously
reported. 27 Moreover, military construction costs to close Fort Monmouth,
New Jersey, increased by $613.2 million from the BRAC Commission
estimate. One part of this recommendation included relocating the U.S.
Army Military Academy Preparatory School from Fort Monmouth to West
Point, New York, and part of the reason for the cost growth was that the
scope of the facility construction increased from approximately 80,000
square feet to more than 250,000 square feet, and planning officials
identified the need to spend additional money for rock removal needed for
site preparation.

In 2005, the Commission estimated that BRAC 2005 would produce net
annual recurring savings of $4.2 billion with 20-year net present value
savings of $36 billion. However, our analysis of DOD’s fiscal year 2011
BRAC 2005 budget submission to Congress shows that BRAC 2005 net
annual recurring savings are now expected to be about $3.8 billion, a


26
  Hearing on Base Realignment and Closure, before the House Appropriations
Committee, Subcommittee on Military Construction, Veterans Affairs and Related
Agencies, 111th Cong. (March 17, 2010) (statement of Dr. Dorothy Robyn, Deputy Under
Secretary of Defense (Installations and Environment)).
27
  GAO, Military Base Realignments and Closures: Estimated Costs Have Increased While
Savings Estimates Have Decreased Since Fiscal Year 2009, GAO-10-98R (Washington,
D.C.: Nov. 13, 2009).




Page 16                                                                  GAO-12-513T
                     9.5 percent decrease from the Commission’s estimate. The 20-year net
                     present value savings estimated by the Commission in 2005 for this
                     BRAC round have decreased by 73 percent to about $9.9 billion. Some
                     recommendations were acknowledged to be unlikely to produce savings
                     in the 20-year net present value window. For example, the Commission
                     approved 30 recommendations that were based on perceived high
                     military value and were not expected to result in 20-year payback.
                     However, our analysis of DOD’s 2011 BRAC budget data shows that
                     currently 77 out of 182 Commission-approved BRAC 2005
                     recommendations, or about 42 percent, are now not expected to pay back
                     in the same 20-year period. In contrast, only four recommendations DOD
                     developed in all four prior BRAC rounds combined were not expected to
                     result in a 20-year payback. Finally, our analysis of the fiscal year 2011
                     BRAC budget shows that DOD will not recoup its up-front costs to
                     implement BRAC recommendations until 2018—5 years later than the
                     BRAC Commission estimates show it would take to pay back. 28 OSD
                     officials told us that despite producing lower savings than anticipated, the
                     department expects that the implementation of BRAC 2005
                     recommendations will produce capabilities that will enhance military
                     value, defense operations, and defense management.


                     As directed by the House Armed Services Committee’s report
Concluding Remarks   accompanying the National Defense Authorization Act for 2008, we are
                     continuing to analyze the results from BRAC 2005 to identify lessons
                     learned. These lessons may be useful as Congress considers whether to
                     authorize additional BRAC rounds and would similarly be useful to DOD
                     in implementing recommendations from any future rounds. We will be
                     reporting these lessons learned later this year.


                     Chairman Forbes, Ranking Member Bordallo, and Members of the
                     Subcommittee, I thank you for inviting me to testify today. This concludes
                     my prepared statement. I will be pleased to answer any questions that
                     you may have at this time.



                     28
                       Payback period is a metric used by DOD and the BRAC Commission in evaluating
                     individual BRAC recommendations and represents the time required to recoup up-front
                     investment costs to implement BRAC recommendations. Thus, payback is the point at
                     which cumulative savings exceed cumulative costs.




                     Page 17                                                                   GAO-12-513T
                  For future questions about this statement, please contact me on (202)
Contacts and      512-4523 or LeporeB@gao.gov. Individuals making key contributions to
Acknowledgments   this statement include Laura Talbott, Assistant Director; Vijay Barnabas;
                  John Beauchamp; John Clary; Brandon Jones; Greg Marchand; Charles
                  Perdue; Robert Poetta; Paulina Reaves; John Trubey; and Erik Wilkins-
                  McKee.




                  Page 18                                                         GAO-12-513T
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             Excess Facilities: DOD Needs More Complete Information and a Strategy
             to Guide Its Future Disposal Efforts. GAO-11-814. Washington, D.C.:
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             Military Base Realignments and Closures: Review of the Iowa and Milan
             Army Ammunition Plants. GAO-11-488R. Washington. D.C.: April 1,
             2011.

             GAO’s 2011 High-Risk Series: An Update. GAO-11-394T. Washington,
             D.C.: February 17, 2011.

             Defense Infrastructure: High-Level Federal Interagency Coordination Is
             Warranted to Address Transportation Needs beyond the Scope of the
             Defense Access Roads Program. GAO-11-165. Washington, D.C.:
             January 26, 2011.

             Military Base Realignments and Closures: DOD Is Taking Steps to
             Mitigate Challenges but Is Not Fully Reporting Some Additional Costs.
             GAO-10-725R. Washington, D.C.: July 21, 2010.

             Defense Infrastructure: Army Needs to Improve Its Facility Planning
             Systems to Better Support Installations Experiencing Significant Growth.
             GAO-10-602. Washington, D.C.: June 24, 2010.

             Military Base Realignments and Closures: Estimated Costs Have
             Increased while Savings Estimates Have Decreased Since Fiscal Year
             2009. GAO-10-98R. Washington, D.C.: November 13, 2009.

             Military Base Realignments and Closures: Transportation Impact of
             Personnel Increases Will Be Significant, but Long-Term Costs Are
             Uncertain and Direct Federal Support Is Limited. GAO-09-750.
             Washington, D.C.: September 9, 2009.

             Military Base Realignments and Closures: DOD Needs to Update Savings
             Estimates and Continue to Address Challenges in Consolidating Supply-
             Related Functions at Depot Maintenance Locations. GAO-09-703.
             Washington, D.C.: July 9, 2009.

             Defense Infrastructure: DOD Needs to Periodically Review Support
             Standards and Costs at Joint Bases and Better Inform Congress of
             Facility Sustainment Funding Uses. GAO-09-336. Washington, D.C.:
             March 30, 2009.



             Page 19                                                        GAO-12-513T
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Military Base Realignments and Closures: DOD Faces Challenges in
Implementing Recommendations on Time and Is Not Consistently
Updating Savings Estimates. GAO-09-217. Washington, D.C.: January
30, 2009.

Military Base Realignments and Closures: Army Is Developing Plans to
Transfer Functions from Fort Monmouth, New Jersey, to Aberdeen
Proving Ground, Maryland, but Challenges Remain. GAO-08-1010R.
Washington, D.C.: August 13, 2008.

Defense Infrastructure: High-Level Leadership Needed to Help
Communities Address Challenges Caused by DOD-Related Growth.
GAO-08-665. Washington, D.C.: June 17, 2008.

Defense Infrastructure: DOD Funding for Infrastructure and Road
Improvements Surrounding Growth Installations. GAO-08-602R.
Washington, D.C.: April 1, 2008.

Military Base Realignments and Closures: Higher Costs and Lower
Savings Projected for Implementing Two Key Supply-Related BRAC
Recommendations. GAO-08-315. Washington, D.C.: March 5, 2008.

Defense Infrastructure: Realignment of Air Force Special Operations
Command Units to Cannon Air Force Base, New Mexico. GAO-08-244R.
Washington, D.C.: January 18, 2008.

Military Base Realignments and Closures: Estimated Costs Have
Increased and Estimated Savings Have Decreased. GAO-08-341T.
Washington, D.C.: December 12, 2007.

Military Base Realignments and Closures: Cost Estimates Have
Increased and Are Likely to Continue to Evolve. GAO-08-159.
Washington, D.C.: December 11, 2007.

Military Base Realignments and Closures: Impact of Terminating,
Relocating, or Outsourcing the Services of the Armed Forces Institute of
Pathology. GAO-08-20. Washington, D.C.: November 9, 2007.

Military Base Realignments and Closures: Transfer of Supply, Storage,
and Distribution Functions from Military Services to Defense Logistics
Agency. GAO-08-121R. Washington, D.C.: October 26, 2007.




Page 20                                                        GAO-12-513T
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Defense Infrastructure: Challenges Increase Risks for Providing Timely
Infrastructure Support for Army Installations Expecting Substantial
Personnel Growth. GAO-07-1007. Washington, D.C.: September 13,
2007.

Military Base Realignments and Closures: Plan Needed to Monitor
Challenges for Completing More Than 100 Armed Forces Reserve
Centers. GAO-07-1040. Washington, D.C.: September 13, 2007.

Military Base Realignments and Closures: Observations Related to the
2005 Round. GAO-07-1203R. Washington, D.C.: September 6, 2007.

Military Base Closures: Projected Savings from Fleet Readiness Centers
Are Likely Overstated and Actions Needed to Track Actual Savings and
Overcome Certain Challenges. GAO-07-304. Washington, D.C.: June 29,
2007.

Military Base Closures: Management Strategy Needed to Mitigate
Challenges and Improve Communication to Help Ensure Timely
Implementation of Air National Guard Recommendations. GAO-07-641.
Washington, D.C.: May 16, 2007.

Military Base Closures: Opportunities Exist to Improve Environmental
Cleanup Cost Reporting and to Expedite Transfer of Unneeded Property.
GAO-07-166. Washington, D.C.: January 30, 2007.

Military Bases: Observations on DOD’s 2005 Base Realignment and
Closure Selection Process and Recommendations. GAO-05-905.
Washington, D.C.: July 18, 2005.

Military Bases: Analysis of DOD’s 2005 Selection Process and
Recommendations for Base Closures and Realignments. GAO-05-785.
Washington, D.C.: July 1, 2005.

Military Base Closures: Observations on Prior and Current BRAC
Rounds. GAO-05-614. Washington, D.C.: May 3, 2005.

Military Base Closures: Updated Status of Prior Base Realignments and
Closures. GAO-05-138. Washington, D.C.: January 13, 2005.

Military Base Closures: Assessment of DOD’s 2004 Report on the Need
for a Base Realignment and Closure Round. GAO-04-760. Washington,
D.C.: May 17, 2004.


Page 21                                                       GAO-12-513T
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Military Base Closures: Observations on Preparations for the Upcoming
Base Realignment and Closure Round. GAO-04-558T. Washington, D.C.:
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Defense Infrastructure: Long-term Challenges in Managing the Military
Construction Program. GAO-04-288. Washington, D.C.: February 24,
2004.

Military Base Closures: Better Planning Needed for Future Reserve
Enclaves. GAO-03-723. Washington, D.C.: June 27, 2003.

Defense Infrastructure: Changes in Funding Priorities and Management
Processes Needed to Improve Condition and Reduce Costs of Guard and
Reserve Facilities. GAO-03-516. Washington, D.C.: May 15, 2003.

Defense Infrastructure: Changes in Funding Priorities and Strategic
Planning Needed to Improve the Condition of Military Facilities
GAO-03-274. Washington, D.C.: February 19, 2003.

Defense Infrastructure: Greater Management Emphasis Needed to
Increase the Services’ Use of Expanded Leasing Authority. GAO-02-475.
Washington, D.C.: June 6, 2002.

Military Base Closures: Progress in Completing Actions from Prior
Realignments and Closures. GAO-02-433. Washington, D.C.: April 5,
2002.

Military Base Closures: Overview of Economic Recovery, Property
Transfer, and Environmental Cleanup. GAO-01-1054T. Washington, D.C.:
August 28, 2001.

Military Base Closures: DOD’s Updated Net Savings Estimate Remains
Substantial. GAO-01-971. Washington, D.C.: July 31, 2001.

Military Base Closures: Lack of Data Inhibits Cost-Effectiveness of
Analyses of Privatization-in Place Initiatives. GAO/NSIAD-00-23.
Washington, D.C.: December 20, 1999.

Military Bases: Status of Prior Base Realignment and Closure Rounds.
GAO/NSIAD-99-36. Washington, D.C.: December 11, 1998.

Military Bases: Review of DOD’s 1998 Report on Base Realignment and
Closure. GAO/NSIAD-99-17. Washington, D.C.: November 13, 1998.


Page 22                                                         GAO-12-513T
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           Navy Depot Maintenance: Privatizing Louisville Operations in Place Is Not
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           GAO/NSIAD-97-151. Washington, D.C.: July 25, 1997.

           Military Base Closures: Reducing High Costs of Environmental Cleanup
           Requires Difficult Choices. GAO/NSIAD-96-172. Washington, D.C.:
           September 16, 1996.

           Military Bases: Closure and Realignment Savings Are Significant, but Not
           Easily Quantified. GAO/NSIAD-96-67. Washington, D.C.: April 8, 1996.

           Military Bases: Analysis of DOD’s 1995 Process and Recommendations
           for Closure and Realignment. GAO/NSIAD-95-133S. Washington, D.C.:
           April 14, 1995.

           Military Bases: Analysis of DOD’s Recommendations and Selection
           Process for Closures and Realignments. GAO/NSIAD-93-173.
           Washington, D.C.: April 15, 1993.

           Military Bases: Observations on the Analyses Supporting Proposed
           Closures and Realignments. GAO/NSIAD-91-224. Washington, D.C.: May
           15, 1991.

           Military Bases: An Analysis of the Commission’s Realignment and
           Closure Recommendations. GAO/NSIAD-90-42. Washington, D.C.:
           November 29, 1989.




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           Page 23                                                       GAO-12-513T
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