oversight

Defense Infrastructure: Demolition of Unneeded Buildings Can Help Avoid Operating Costs

Published by the Government Accountability Office on 1997-05-13.

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

                   United States General Accounting Office

GAO                Report to the Chairman, Subcommittee
                   on Military Installations and Facilities,
                   Committee on National Security,
                   House of Representatives

May 1997
                   DEFENSE
                   INFRASTRUCTURE
                   Demolition of
                   Unneeded Buildings
                   Can Help Avoid
                   Operating Costs




GAO/NSIAD-97-125
             United States
GAO          General Accounting Office
             Washington, D.C. 20548

             National Security and
             International Affairs Division

             B-276460

             May 13, 1997

             The Honorable Joel Hefley
             Chairman, Subcommittee on Military Installations
               and Facilities
             Committee on National Security
             House of Representatives

             Dear Mr. Chairman:

             This report responds to your request that we examine selected aspects of
             the services’ management of facilities infrastructure and their use of
             demolition as an approach to reducing excess facilities and avoiding
             unnecessary operating costs. This report addresses (1) the services’
             funding obligations for maintenance and repair over the last 10 years,
             changes in building square footage in space to be maintained, and the
             impact of the changes on facility maintenance and repair; (2) the potential
             for demolition to reduce excess facilities infrastructure and avoid
             recurring costs; (3) the services’ plans for demolition; and (4) their overall
             infrastructure management strategies.


             Since the mid-1980s, the Department of Defense (DOD) has undergone
Background   significant reductions in its budget, personnel, force structure, and basing
             infrastructure. From fiscal years 1987 to 1996, DOD’s overall budget was
             reduced in real terms by 31 percent. By fiscal year 1996, active military and
             civilian personnel were reduced by 32 and 26 percent, respectively. During
             the same period, there were significant reductions in the stationing of U.S.
             forces overseas and increased reliance on power projection of forces from
             bases in the United States. In addition, DOD and the services completed
             four rounds of domestic base realignment and closure (BRAC) actions
             between 1988 and 1995 that, when fully implemented, were expected to
             reduce the number of major domestic bases by approximately 21 percent
             by 2001.

             Despite reductions in DOD’s basing infrastructure, various DOD and service
             officials have continued to indicate that they still have excess, aging
             facilities and insufficient funding to maintain, repair, and update them. At
             the same time, other DOD officials are looking for reductions in
             infrastructure costs to free up funding for weapon system modernization.




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                   Over the past 10 years, the reduction in the number of DOD facilities
Results in Brief   worldwide, as measured by square footage of space, was only about
                   10 percent. This amount is much less than expected, considering the
                   amount of budget reductions and the execution of four base realignment
                   and closure rounds since 1988. However, funding by the services for real
                   property maintenance during the same time period decreased almost
                   40 percent.1 As a result, installations have growing backlogs of deferred
                   maintenance and repair projects.

                   DOD and the services do not currently have complete, reliable information
                   on the costs associated with either maintaining their current facilities
                   infrastructure or with infrastructure reduction options. Such information
                   will be needed to develop a departmentwide strategic plan that considers
                   difficult infrastructure options to meet requirements of the Government
                   Performance and Results Act.2 It will also be critical to meet the
                   requirements for more complete disclosure of the costs, associated with
                   facilities’ deferred maintenance and demolition in financial statements,
                   called for by the Chief Financial Officers Act of 1990.

                   Each of the services is recognizing the importance of demolition as an
                   option for eliminating old, excess buildings that are relatively costly to
                   maintain and a drain on declining operation and maintenance funding. The
                   Army has given the greatest emphasis to demolition in recent years,
                   demolishing about 39 million square feet of space since 1992. Demolition
                   offers a viable option for further infrastructure reductions and millions of
                   dollars in savings, but it requires an up-front cost. In fiscal year 1997, the
                   services plan to spend about $50 million of operation and maintenance
                   funds to demolish excess space. Data related to previous demolition
                   projects suggests that demolition costs can be recouped within a few
                   years, thereafter avoiding millions of dollars in recurring maintenance and
                   repair costs and utility costs. However, future demolition costs are
                   expected to rise as the services move beyond demolition of simple World
                   War II-era wooden structures to other structures in which environmental
                   factors, such as asbestos and lead paint removal, will likely play an
                   increasing role.


                   1
                    This report focuses on operation and maintenance (O&M) funding for real property maintenance, the
                   principal source of such funding. It also focuses on facilities infrastructure, excluding family housing.
                   2
                    The Government Performance and Results Act (P.L. 103-62) requires federal agencies to develop
                   agencywide strategic plans. The plans must describe how an agency intends to achieve its goals
                   through its activities and its human, capital, information, and other resources, such as facilities.
                   Agencies must also prepare annual performance plans that include measurable performance goals and
                   indicators for measuring performance.



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                       The services differ in the extent to which they have developed formal
                       demolition programs. The Army uses the greatest amount of funding for
                       demolition and is planning the most aggressive demolition program.
                       Conversely, the Air Force has the least centralized program and relies on
                       installation commanders to identify and fund demolition efforts. Although
                       requiring specific funding for demolition could strengthen program
                       emphasis and management and ensure that demolition occurs, it could
                       also limit the services’ flexibility to shift funds within their own operation
                       and maintenance accounts to meet the most pressing operational needs.
                       Most service officials do not want to require funding to be used
                       exclusively for demolition but would rather continue to use operation and
                       maintenance funding specifically for demolition as they deem necessary.

                       Overall strategic plans for maintenance and repair of facilities
                       infrastructure at the service headquarters and Office of Secretary of
                       Defense levels appeared to be limited. The plans lacked comprehensive
                       strategies for facilities revitalization, replacement, and maintenance tied to
                       measurable goals, specific time frames, and expected funding.


                       In the past 10 years, maintenance and repair obligations for facilities,
Faster Reductions in   excluding family housing, have fallen faster than the square footage of
Funding Than in        space maintained by the services. Various DOD and service officials are
Space to Be            concerned about the impact of declining budgets on infrastructure
                       condition.
Maintained
                       The O&M appropriation account provides the principal source of funds the
                       services use to pay for day-to-day activities at the installations and bases,
                       including maintenance and repair of most facilities.3 From fiscal years
                       1987 to 1996, total O&M annual budget authority declined 25 percent in real
                       terms, reflecting the overall decline in defense spending.4 However, annual
                       O&M obligations for facilities maintenance and repair, excluding family
                       housing, declined 38 percent in real terms during the same period—a



                       3
                        Maintenance and repair activities can be funded from different sources. Thus, because of difficulties
                       in combining all funding sources for maintenance and repair to make meaningful comparisons with
                       other infrastructure data, this report focuses principally on O&M funding and other comparable
                       infrastructure data for analyses.
                       4
                        This report focuses on obligations rather than budget requests or appropriations because obligations
                       provide an accounting of how funds are used for maintenance and repair activities. In addition,
                       although information on actual expenditures and costs would be preferable over obligations, DOD has
                       acknowledged that its inability to accumulate accurate and complete cost information is a
                       departmentwide problem.



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                                       much steeper decline than that for total O&M obligations.5 Table 1 shows
                                       changes in obligations for each service between fiscal years 1987 and 1996
                                       (in fiscal year 1997 dollars).6

Table 1: Percent Change in O&M
Obligations for Maintenance and        Fiscal year 1997 dollars in millions
Repair Between Fiscal Years 1987 and   Service                                               FY 1987         FY 1996        Percent change
1996
                                       Army                                                   $2537.4        $1,288.4                      –49
                                       Air Force                                              2,764.9         1,709.7                      –38
                                       Navy                                                   1,404.3         1,014.8                      –28
                                       Marine Corps                                             451.8           440.1a                      –3
                                       Total                                                 $7,158.4        $4,453.0                      –38
                                       a
                                        The Marine Corps’ fiscal year 1996 obligations are actually much higher than the previous year
                                       due to a one-time increase of about $100 million for maintenance and repair that year. In fiscal
                                       year 1995, the Corps’ obligations for maintenance and repair were about $294 million. Over the
                                       10-year period, the Corps’ obligations for maintenance and repair peaked in fiscal year 1988 and
                                       did not approach that level again until fiscal year 1996.

                                       Source: Our analysis of service data.



                                       Although servicewide maintenance and repair obligations fell about
                                       38 percent between fiscal years 1987 and 1996, reductions in square feet of
                                       space owned and managed by the services in the United States and
                                       overseas were much less—about 10 percent.7 Figure 1 shows the percent
                                       change in facilities square footage by service during that time.




                                       5
                                        Available budget data indicates that further reductions in funding of maintenance and repair are
                                       planned in most services for fiscal years 1998 and 1999. Although budget projections for future years
                                       show an upward trend in funding after 1999, many service officials questioned whether this trend was
                                       likely to occur.
                                       6
                                        Maintenance and repair obligations include spending for facilities measured in square feet and other
                                       types of infrastructure, such as runways, that are measured using different metrics. The services were
                                       unable to break out obligations by type of measurement but told us that the majority of maintenance
                                       and repair obligations were for facilities measured in square feet.
                                       7
                                        This figure excludes property for which title is held by the services but used by defense agencies and
                                       others.


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Figure 1: Percent Change in Facilities Square Footage Between Fiscal Years 1987 and 1996

Millions of square feet
2,000

                                                                                                    -10%


1,500



1,000

                -19%



 500                           -10%
                                               2%



                                                                15%

    0
            Army          Air Force      Navy      Marine Corps                                 Total
                                                Service

                                              1987     1996

                                          Source: Our analysis of service data.




                                          The types of facilities and the relative percentage of subcategories did not
                                          change significantly between fiscal years 1987 and 1995.8 For example, the
                                          Army’s administration buildings comprised about 6 percent of its total
                                          square footage in fiscal year 1987 and accounted for about 8 percent of the
                                          total in fiscal year 1995. Other types of facilities managed by the services
                                          include training, utilities, troop housing, shipyard maintenance, and
                                          communication facilities.

                                          Although combined U.S. and overseas facilities space managed by the
                                          services fell about 10 percent between fiscal years 1987 and 1996, the
                                          percentage change in the continental United States (CONUS) facilities was



                                          8
                                           The services were not able to provide this breakout for fiscal year 1996 in time for our review.



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                                         much smaller—4 percent. Figure 2 shows the percent change in square
                                         footage for CONUS facilities.



Figure 2: Percent Change in Square Footage for CONUS Facilities Between Fiscal Years 1987 and 1996

Millions of square feet
1,600

1,400                                                                                         -4%


1,200

1,000

 800

 600            -10%

 400                           -5%            2%


 200
                                                             15%

    0
            Army          Air Force     Navy      Marine Corps                             Total
                                               Service

                                             1987    1996

                                         Source: Our analysis of service data.




                                         One factor limiting the reduction in square footage to date is facilities yet
                                         to close under the BRAC process.9 Although some BRAC actions call for the
                                         closure of a base, others call for portions of the land and facilities of a
                                         base slated for closure to be transferred to an adjacent base. BRAC closures
                                         are often predicated on construction of new facilities at another base
                                         slated to receive missions from a closing base. Further, quality-of-life
                                         initiatives, such as new and renovated barracks and family housing and


                                         9
                                          Although four rounds of BRAC were held between 1988 and 1995, BRAC legislation provides up to 6
                                         years to close facilities; thus, some BRAC closures may not occur until closer to 2001.



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                           new child care centers, have added square footage requirements. These
                           initiatives will likely continue to add square footage for a number of years.

                           According to the services, square footage will likely decline about an
                           additional 144 million square feet between fiscal years 1997 and 2001 due
                           to remaining BRAC actions.10 DOD officials estimated that the four BRAC
                           rounds would result in about a 21-percent reduction in the plant
                           replacement value for domestic bases.11 Although square footage
                           reductions have been limited, even with the results of four BRAC rounds,
                           DOD still projects that it will realize significant recurring dollar savings
                           from the BRAC process—the largest portion of which are associated with
                           reductions in personnel and base operating costs.


Adequacy of Funding Is a   Absolute standards for funding maintenance and repair activities do not
Growing Concern            exist. However, recommendations of two study groups in recent years
                           offer some perspective on DOD’s current level of funding. DOD’s 1989 report
                           to the Congress recommended that the services annually budget a
                           minimum of 1.75 percent of the plant replacement value for maintenance
                           and repair, excluding backlogs.12

                           A 1990 report from the Building Research Board recommended that
                           federal agencies, including DOD, budget about 2 to 4 percent of the plant
                           replacement value for maintenance and repair.13 The report also suggests
                           that an even higher level of funding would be required to address
                           maintenance and repair backlogs. Since 1990, the report has been widely
                           quoted, but according to a Federal Facilities Council official, many federal

                           10
                             This figure also includes reductions in family housing, which we were unable to break out separately
                           for the Army and the Air Force. If these reductions occur, then the CONUS facilities reductions would
                           increase to 14 percent. However, even that amount is not likely because of increases in square footage
                           in future years not related to BRAC, but we were unable to obtain data on precise amounts for such
                           increases.
                           11
                            Plant replacement value is defined as the cost to replace current facilities using today’s construction
                           costs and standards.
                           12
                              Renewing the Built Environment, Department of Defense, March 1989. This study, sponsored by the
                           Office of the Secretary of Defense (OSD), found that differences exist in how the services calculate
                           plant replacement value. A triservice study team reviewing plant replacement value in 1994
                           recommended that OSD hire a contractor to review all of the services’ databases, assign uniform
                           facility category codes, and establish a standard unit of measurement. OSD did not hire a contractor
                           because of the cost. Therefore, the plant replacement values presented here can provide a useful frame
                           of reference, but they should not be considered absolute.
                           13
                              Committing to the Cost of Ownership, Building Research Board, National Research Council, 1990.
                           The study was requested by the Federal Facilities Council, which operates under the auspices of the
                           Board on Infrastructure and the Constructed Environment of the National Research Council. The
                           council is the operating arm of the Academy of Engineering and the National Academy of Sciences.



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                                        agencies have not been able to use it because it is too general. In 1996, the
                                        Federal Facilities Council initiated a study to develop more specific
                                        guidelines. According to a council official, the study should be completed
                                        by January 1998.

                                        In contrast with these recommended funding levels, the services’
                                        obligations for maintenance and repair activities in fiscal year 1996
                                        equaled 1.3 percent of the applicable plant replacement value. Table 2
                                        indicates the level of maintenance and repair funding as a percentage of
                                        plant replacement value.

Table 2: O&M-Funded Maintenance
and Repair as a Percent of Plant        Fiscal year 1996 dollars in millions
Replacement Value in Fiscal Year 1996                                   Facilities plant     Maintenance and          Percent of plant
                                        Service                     replacement value       repair obligations      replacement value
                                        Army                                    $134,409                 $1,257                        0.9
                                        Air Force                                113,940                   1,668                       1.5
                                        Navy                                      59,900                     990                       1.6
                                        Marine Corps                              25,760                     429a                      1.7a
                                        Total                                   $334,009                 $4,344                        1.3
                                        a
                                         The Marine Corps experienced a one-time increase of about $100 million for maintenance and
                                        repair in 1996. Without this increase, the percent of plant replacement value represented by
                                        maintenance and repair would be about 1.2 percent.

                                        Source: Our analysis of service data.



                                        According to a Federal Facilities Council official, there is no industry
                                        standard for maintenance and repair funding on a square footage basis.
                                        The official indicated that funding requirements vary by building type, age,
                                        and level of use. The Army has developed a model that suggests, in the
                                        aggregate, $4 per square foot is required; this figure includes some funding
                                        to begin addressing deferred maintenance and repair.

                                        Our analysis of current spending levels found that O&M obligations for
                                        maintenance and repair declined by 31 percent, from $3.89 per square foot
                                        in fiscal year 1987 to $2.69 in fiscal year 1996. However, table 3 shows the
                                        differences in obligations between the services.




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Table 3: Percent Change in
Maintenance and Repair Obligations     Service                                            FY 1987        FY 1996       Percent change
per Square Footage of Facility Space   Army                                                  $3.07          $1.93                    –37
Between Fiscal Years 1987 and 1996
                                       Air Force                                             $5.46          $3.73                    –32
                                       Navy                                                  $3.39          $2.41                    –29
                                                                                                                  a
                                       Marine Corps                                          $4.82          $4.10                    –15a
                                       a
                                        The Marine Corps experienced a one-time increase of about $100 million for needed
                                       maintenance and repair in 1996, which temporarily increased the dollar-per-square foot amount in
                                       1996. Without this additional funding, the dollar-per-square foot amount would have been about
                                       $2.76, and the percentage change would have been –43 percent.

                                       Source: Our analysis of service data.



                                       The impact of reduced funding on the services’ infrastructure is not clear.
                                       Installation officials we contacted during this review cited increases in
                                       backlogs of deferred maintenance and repair projects in recent years;
                                       however, reliable composite information was not available due to
                                       differences in how the services develop and maintain this data. Further,
                                       recent efforts by OSD to develop a comprehensive system for performing
                                       facilities condition assessments have not been successful. Even though the
                                       services have their own approaches to performing condition assessments,
                                       each of these systems has important limitations. (See app. I for further
                                       discussion of this issue.)

                                       Under the Chief Financial Officers Act of 1990, as amended, and the
                                       Federal Financial Management Improvement Act of 1996, DOD and the
                                       services are required to prepare financial statements and have them
                                       audited. Beginning in fiscal year 1998, these statements must (1) identify
                                       and disclose the estimated cost of deferred maintenance for DOD’s facilities
                                       that are being used and (2) include the cost of any planned facility
                                       demolitions. Such information will also be critical if DOD is to effectively
                                       put in place the results-oriented program decision-making structure
                                       envisioned by the Government Performance and Results Act. Our previous
                                       work has shown that the quality of existing DOD data on the costs
                                       associated with its existing infrastructure has eroded its usefulness to
                                       decisionmakers. In addition, DOD has acknowledged its departmentwide
                                       problem in capturing accurate and complete cost information for its
                                       operations.




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Deteriorating Facilities Is a         Despite the absence of reliable trend data, many installation officials told
Growing Concern                       us that recent reductions in funding and personnel had caused them to
                                      defer maintenance and repair activities and forego recurring preventive
                                      maintenance.14 This is a growing concern because of its potential to
                                      impact operations as well as increase costs. The National Research
                                      Council reported that it is often difficult to discern the direct
                                      consequences of neglect of maintenance and repair because the physical
                                      evidence may not be immediately visible. However, the council notes that
                                      a decline in appearance, increased operating costs, and premature service
                                      failures eventually occur.

                                      At the installations we visited, facilities were in various states of
                                      maintenance and repair. For example, at Foot Hood, Texas, new barracks
                                      construction and renovation were taking place (see fig. 3), and facilities
                                      overall appeared to be in much better condition than at Fort Eustis,
                                      Virginia, where less new construction has occurred. However, officials at
                                      both installations cited growing backlogs in maintenance and repair in
                                      other base facility areas, such as sewer and water systems.


Figure 3: New Army Barracks at Fort
Hood, Texas




                                      14
                                        Preventive maintenance is defined as the planned, scheduled periodic inspection, adjustment,
                                      cleaning, lubrication, parts replacement, and minor repair of equipment and systems.



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Army headquarters officials told us that many of its installations are in a
“breakdown maintenance mode,” resulting in increases in emergency
repairs and equipment breakdowns. Officials at Fort Eustis told us that
their emergency work orders increased from less than 300 for fiscal year
1992 to over 20,000 for fiscal year 1996. The officials also said that over 45
waterlines broke in fiscal year 1996. Available data on the condition of the
Army’s infrastructure suggests that these conditions exist throughout the
Army.

At Langley Air Force Base, Virginia, many facilities were in good
condition, supporting a view generally held by many service officials that
the Air Force spends more on facilities than the other services. However,
base engineering officials expressed concern about being able to maintain
and repair their facilities as they have in the past. Engineering officials at
Langley’s Air Combat Command—the Air Force’s largest command—said
that base in-house maintenance and repair funding for fiscal years 1997
through 1999 will remain constant but that contracts for maintenance and
repair jobs too large for in-house personnel would decline from
$211 million in fiscal year 1996 to about $6 million by fiscal year 1997.
Officials expect the $6 million to decline to almost zero by fiscal year 1999.

Navy headquarters officials told us funding levels allow only preventive
maintenance on mission-critical systems, such as electrical and water
pump distribution systems. The preventive maintenance is limited to
inexpensive repairs that take as little as 15 minutes. An official from the
U.S. Atlantic Fleet in Norfolk, Virginia, said most of its bases were reacting
to emergencies and were not able to be proactive in trying to prevent
them. Norfolk Naval Station engineering officials said they only do some
preventive maintenance. At the Naval Station in Norfolk (see fig. 4), about
half the piers are 50 years old and too narrow to accommodate today’s
larger ships. Many piers were in poor condition and, according to Navy
officials, limited the Navy’s ability to berth ships in transit and support its
deck side requirements, such as loading supplies.




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Figure 4: Portion of Aging Pier
Structure at Norfolk Naval Station,
Virginia




                                      The Marine Corps’ Cherry Point and Camp Lejeune, North Carolina,
                                      installations appeared in good condition. However, Marine Corps
                                      headquarters officials said bases on the West Coast, such as Camp
                                      Pendleton and Camp Barstow, California, were in worse condition. The
                                      officials attribute the poor condition of these bases to a large inventory of
                                      World War II-era wood facilities, strict State of California environmental
                                      oversight, and high contract and labor costs.


                                      Faced with reductions in personnel and funding available to maintain their
Demolition Could                      facilities, many service officials recognize that they continue to have more
Reduce Maintenance                    facilities than they can afford to maintain. One means of reducing facility
and Repair Costs                      maintenance costs is to demolish older structures that may be relatively
                                      more expensive to maintain when they become excess to the services’




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needs.15 In fiscal year 1997, the services plan to set aside about $50 million
of O&M funds for demolition.16

Army officials state that they have spent as little as $2.50 per square foot to
demolish old World War II-era barrack-type structures that were
unoccupied, but the officials consider $10 per square foot a more
reasonable amount for future demolition projects. This amount is more
than the Marine Corps’ estimate of $8 but less than the Air Force’s $11 and
Navy’s estimate of $12 per square foot. Costs vary depending on size and
type of construction and presence of environmental contaminants.
Demolition costs, once recouped, can provide the basis for recurring
savings to maintenance and repair and utility costs, which service officials
consider to be substantial. For example, with demolition costs of $10 per
square foot and operating costs totaling $3.50 per square foot
(maintenance and repair costs of $2.50 per square foot and utility costs of
$1 per square foot), the cost of demolition could be recouped in about
3 years.17 The $3.50 per square foot used in this example is a rough
estimate of actual expenditures across the entire building inventory.
Actual expenditures could be considerably less, depending on building
occupancy. Data were not available to predict with accuracy potential
savings or pay back period for an accelerated demolition program. In any
case, once up-front costs have been recouped, annual savings in
maintenance and repair, as well as utility costs, would begin.

On the basis of the preceding example and the services’ estimates of
square footage to be demolished, we believe the potential exists for
avoiding recurring costs of hundreds of millions of dollars once initial
investment costs are recouped.18 However, various officials indicated that
demolition costs are likely to rise in the future with the elimination of
simpler structures, such as the World War II-era wooden barracks-type

15
  Before a building is demolished, DOD must comply with legislation that governs the preservation of
historic buildings. The National Historic Preservation Act (16 U.S.C. § 470h-2) can prevent the services
from demolishing a historic building, even though the building is costly to maintain. DOD must also
comply with legislation concerning the use of unutilized and underutilized facilities to assist the
homeless. The McKinney Act (42 U.S.C. § 11411) requires DOD to work with the Department of
Housing and Urban Development to determine if such facilities are suitable for use by the homeless
before the buildings can be demolished.
16
  These funds are in addition to normal demolition associated with new construction, which is
typically funded as part of a military construction or family housing military construction
authorization.
17
 Utility costs used in this example are a rough approximation based on Army data, which divides total
expenditures on electricity by square footage of facility space.
18
  Although recurring costs may be avoided in the future, we were unable to calculate precisely the
total amount that could be avoided because, except for the Army, the services do not know the exact
amount of excess space they have.


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                           structures, particularly those that were no longer occupied. Increases are
                           expected in the future as more demolition projects require relocation of
                           occupants out of buildings slated for demolition.19 These additional costs,
                           along with the potential for demolition costs to increase due to
                           environmental considerations, will make it important to continue to
                           examine the cost-effectiveness of demolition projects on an individual
                           basis.


Service Views on Funding   The services can derive benefits from formally earmarking, or “fencing,”
                           funds for demolition. Fencing funds ensures that the funds will be used to
                           accomplish a specific objective. For example, Navy funds are fenced for
                           family housing maintenance and repair. Family housing officials at the U.S.
                           Atlantic Fleet said they were able to better meet needed maintenance and
                           repair needs due to the fenced funds. Family housing maintenance and
                           repair funds are also fenced for the other services.

                           Various service officials expressed the view that earmarking and centrally
                           controlling funds for demolition at the service headquarters level may help
                           ensure that funds are used for demolition. However, officials told us they
                           were against fencing funds for demolition, citing the lack of flexibility to
                           use funds for higher priorities.

                           In deliberations on the Fiscal Year 1997 Department of Defense
                           Authorization Bill, specific authorization for demolition was considered
                           but ultimately not approved (H.R. 3230, 104th Cong., 2d sess.). The bill had
                           proposed adding $30 million for demolition ($10 million for each service).
                           The authorization would have limited O&M demolition projects to no more
                           than $300,000 and required demolition projects more than this amount to
                           be funded by the military construction appropriation. Under the same
                           provision, demolition projects over $500,000 had to be reported to the
                           Congress.

                           In response to the bill, DOD said it preferred to use O&M funds for
                           demolition. DOD further said the bill would prevent O&M funds from being
                           used for projects costing over $300,000 and require significant
                           administrative burdens and delays without clear benefits. In addition, base
                           commanders’ authority and flexibility would be severely limited in
                           responding to demolition and funding opportunities as they arise.




                           19
                             Relocations costs can also include the minor alterations of facilities at receiving sites.



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By setting aside funds at the headquarters level, many service officials
think they have taken appropriate steps to ensure that funds would be
used for demolition purposes but still maintain flexibility to use funds to
meet other requirements. Generally, the services were opposed to more
restrictive funding. Navy and Marine Corps officials said they would not be
opposed to fencing funds for demolition if the funds were in addition to
their O&M funds. Officials preferred using O&M funds for demolition, even
though the funds could be used for higher priorities if necessary.

Service officials agreed that they wanted commanders to use available O&M
funds for demolition. As a result, the services, except for the Air Force,
centrally control the approval and funding for demolition. According to Air
Force officials, they will allow base commanders to identify, fund, and
demolish excess facilities on their own initiative.

Officials from the Army, the Navy, and the Marine Corps told us they used
most of the O&M funds they earmarked for demolition. The services, except
for the Navy, do not have a separate demolition account in their O&M
accounts, so we were not able to compare the amount they earmarked to
the amount they obligated for demolition. Service officials provided us
with a summary of what they obligated for demolition for a specific time
period by summing up obligations from individual demolition projects. For
example, in fiscal year 1996, the Navy obligated all of the $6.4 million it
earmarked, and the Marine Corps obligated over 80 percent of the
$4 million it earmarked. The Army did not earmark funds but had a target
goal to reduce square footage by about 5 million, which it met by
obligating about $15 million. Air Force headquarters does not currently
allocate demolition dollars every year; however, major commands
accomplish demolition using their own funds when available.

Army, Navy, and Marine Corps officials told us that demolition of facilities,
which appears to happen mostly in the last quarter of the fiscal year, is not
done at that time for lack of planning for demolition or use of end-of-year
funds. Navy and Marine Corps officials said that it can take until the last
quarter of the fiscal year for bases to complete their project designs and go
through contracting procedures.




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                                       B-276460




                                       The services vary in the scope of their efforts and the way in which they
Formal Demolition                      administer their programs (centralized or decentralized). Table 4
Programs Vary by                       compares each of the service’s programs.
Service
Table 4: Service Demolition Programs
                                       Square feet and dollars in millions
                                                                          Square footage to         Square footage to                Funding
                                                                          be demolished in          be demolished in           designated for
                                       Service                              fiscal year 1997                the future            demolition
                                       Army                                                  3.3                      60.0a               $620a
                                                                                                                           b
                                       Navy                                                  1.5                                           147a
                                       Marine Corps                                          0.5                       1.4c                     16c
                                                   d                                                                       a                      b
                                       Air Force                                             4.2                      15.1
                                       a
                                        These figures are through fiscal year 2003.
                                       b
                                           These figures are unknown.
                                       c
                                        These figures are through fiscal year 2000.
                                       d
                                        The Air Force does not have an approved servicewide plan for facilities demolition. While the Air
                                       Force had established a percentage goal to reduce space, it had not identified, until recently,
                                       specific square footage to be demolished. Recently, Air Force headquarters surveyed its major
                                       commands to identify square footage they planned to demolished.

                                       Source: Our analysis of service data.




Army                                   The Army has the largest and most centrally directed demolition program,
                                       and it is targeting the largest amount of funds for demolition among the
                                       services—$620 million through fiscal year 2003. The Army facilities
                                       demolition program began in 1992 and was included in the service’s
                                       October 1993 Long-Range Facilities Plan.20 Since then, Army officials
                                       report they have spent approximately $95 million demolishing about
                                       39 million square feet.

                                       The Army determines excess space by using a model that compares an
                                       installation’s inventory of space to standard Army requirements, which are
                                       based on the installation’s mission. On the basis of this model, the Army
                                       determined in 1996 that it had an excess of about 134 million square feet.
                                       In fiscal year 1997, the Army plans to spend $20 million and demolish
                                       3.3 million square feet. Starting in fiscal year 1998, the service plans to

                                       20
                                         This plan provides a statement of broad principles and objectives for installation planning, such as
                                       citing the need to establish and fund a capital investment plan to ensure installation revitalization,
                                       replacement, and maintenance of facilities infrastructure. It is not much more specific on how this
                                       broad objective will be accomplished over any specific time frame or at what cost.



                                       Page 16                                                 GAO/NSIAD-97-125 Defense Infrastructure
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spend $100 million in O&M funds per year through fiscal year 2003 to
eliminate excess space at an estimated cost of $10 per square foot.
Therefore, we calculated that it would take the Army about 13 years to
eliminate the excess space at a cost of about $1.3 billion.

The Army’s demolition program is being given strong top-down emphasis
with project funding approved at the service headquarters level.
Installations propose demolition projects to the Army’s Installation
Management Office at headquarters, where they are reviewed and
approved. Projects are approved based on the amount of square feet to be
demolished and demolition costs. The Army funds the projects out of O&M
funds set aside and retained at the headquarters level for demolition.

Headquarters officials said that in fiscal year 1998 they will use an
accounting code to track and ensure that the funds are used for approved
demolition projects. If installation commanders do not use the funds as
designated, the installation will not be provided with more funds,
according to headquarters officials. Before this central control,
headquarters officials provided the installations with a target amount of
square feet to be demolished, but funds were not always used for
demolition.

According to headquarters officials, the Army plans to approve those
projects that will demolish the most square footage at the least cost. They
believe this process will help achieve the goal of eliminating
approximately 60 million square feet of World War II-era wood buildings
included in the 134 million total excess square footage that will be
demolished first.

The Army’s demolition program is also being done along with restrictions
on the amount of square feet that can be added to installations through
new construction. The program requires the Army to dispose of one
square foot of facilities to offset each square foot of new construction
added to the inventory. According to headquarters officials, the Army has
had this requirement since the early 1980s and kept the restriction as part
of its more recent facilities reduction program that started in fiscal year
1992. This requirement will help to control the growth of excess square
footage of space. (The other services do not use this restriction in
managing their infrastructure.)

According to Army officials, environmental costs and relocation expenses
associated with the Army’s demolition have not thus far been significant



Page 17                                  GAO/NSIAD-97-125 Defense Infrastructure
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               and have been funded out of O&M funds. Funds to cover these expenses in
               the future are included in the $100 million the Army has earmarked for
               demolition.

               In demolishing facilities, the Army has used contractors as well as
               in-house civilian engineering personnel. For example, at Fort Hood, a
               55,000-square foot World War II-era building was being used as a troop
               laundry facility for cleaning sheets, bedding, and towels. According to an
               engineering official, the roof continued to leak, even though it had been
               fixed several times; the laundry equipment was outdated; and the building
               could not accommodate new equipment. In-house engineering staff
               bulldozed the building late in fiscal year 1996 at a total cost of about
               $134,000. A new laundry facility was not built, since the installation
               contracted with a private laundry company. The space is currently being
               used as a parking lot and marshalling area for troops.


Marine Corps   The Marine Corps’ emphasis on demolition began in fiscal year 1994 but
               was given additional emphasis with the Commandant’s fiscal year 1996
               budget guidance, which directed headquarters to sponsor a program to
               prioritize the demolition of unneeded structures.21 Since 1994, the Corps
               has demolished about 1.5 million square feet of space at a cost of about
               $8.3 million. The Corps plans to demolish an additional 1.8 million square
               feet and spend about $4 million each year from fiscal years 1997 to 2000.
               The Corps developed its demolition goal by asking its bases to determine
               what they would like to demolish. According to Corps officials, the
               amount of excess space may be based on requirements, since the base
               commanders know their mission and the infrastructure needed to
               support it.

               The Marine Corps’ facility database indicates that the Corps has an excess
               of 1 million square feet, which is less than the amount of space that the
               Corps plans to demolish by fiscal year 2000. Corps officials told us that
               facilities marked as excess in its asset database may not be necessarily
               marked for demolition. It is not clear how many facilities designated as
               excess by the Corps’ database will actually be demolished. However,
               Corps officials told us they are in the process of reconciling the amount of


               21
                 Demolition plans are included in the Marine Corps’ infrastructure plan, known as the Installations
               and Logistics Campaign Plan, which was finalized and signed by the Commandant in 1996. The plan
               outlines a goal of improving operations, processes, and systems in support of the Corps and ensuring
               the best products and services at the least cost. The five key areas of emphasis in the plan include
               combat service support, material support management, logistics information resources, supporting
               establishment (infrastructure), and contracting.



               Page 18                                                GAO/NSIAD-97-125 Defense Infrastructure
       B-276460




       square footage in demolition plans with the amount of square footage that
       bases reported as excess.

       Marine Corps headquarters centrally funds and manages the demolition
       program. The program is supported by O&M funds, which allows the Marine
       Corps flexibility to use the funds for unforeseen mission requirements.
       Demolition projects originate at the base level and are reviewed and
       selected by headquarters. Marine Corps officials said that they have
       funded, at a minimum, all design costs for demolition projects. They have
       also funded related environmental cleanup as needed in demolition
       projects. However, according to a headquarters official, no projects have
       required the relocation of personnel or minor alterations. The officials said
       the costs of these requirements will be made on a case-by-case basis to
       determine whether they are to be funded at the base or headquarters
       levels.


Navy   The Navy describes its demolition program as a centralized initiative
       funded from O&M funds and managed by its military construction division
       at headquarters. The Navy’s formal emphasis on demolition began in fiscal
       year 1996. However, according to service officials, some buildings were
       demolished in prior years when funding was available, but program data
       was not developed on a centralized basis. In fiscal year 1996, the Navy
       demolished about 400,000 square feet at a cost of about $4.8 million and
       spent $1.6 million to demolish other facilities not measured in square feet,
       such as fuel tanks, for a total of $6.4 million.

       The Navy’s current program is not based on a projected goal of reducing a
       set amount of square footage; rather, it hinges on the expected availability
       of O&M funding to demolish facilities that are (1) in excess of current
       requirements, (2) costly to maintain and operate, (3) unsafe or potentially
       harmful to the environment, and (4) unsightly and not in keeping with the
       concept of “installations of excellence.”22 Because the program is only
       1 year old, a Navy headquarters official said the Navy expected the
       program to become more formalized as it progresses. Navy officials told us
       they planned to spend about $25 million for demolition in fiscal year 1997.
       After that time, they tentatively plan to spend $13 million each year
       through 2000 for demolition. From fiscal year 2001 to 2003, the Navy plans
       to spend a total of $83 million on demolition, but this goal may be

       22
         The Navy has drafted its Shore Support Infrastructure Vision and Strategic Plan, which outlines a
       broad strategy for reducing infrastructure costs and applying business practices to meet the Navy’s
       fleet support mission. The plan cites demolition as the primary tool to reduce costs. The plan does not
       identify cost and time frames for completion of the strategy.



       Page 19                                                 GAO/NSIAD-97-125 Defense Infrastructure
            B-276460




            adversely affected by declining O&M funds. Navy officials stated that they
            had established funding levels from O&M funds for the demolition program
            but suggested that the amount spent could be less if O&M funds are needed
            to meet unforeseen requirements in other areas.

            Proposed Navy demolition projects originate at the activity level and are
            forwarded to the claimant level, such as the Commander in Chief, U.S.
            Atlantic Fleet. At the claimant level, projects are reviewed and prioritized
            and then forwarded to Navy headquarters for further review, when factors
            such as potential cost avoidance and O&M savings are considered. Although
            Navy demolition projects are approved and funded at the headquarters
            level, the Navy does not currently include funding for any environmental
            cleanup or relocation of functions to other facilities. The Navy is in the
            process of developing a system to track and monitor the execution of
            demolition projects. A Navy official said that headquarters staff currently
            make site visits to ensure completion of projects.


Air Force   The Air Force has had the least centralized demolition program among the
            services. Air Force officials state that they have demolished structures
            using available O&M funding. However, funding was not tracked until fiscal
            year 1996 when, according to officials, the Air Force spent $52 million to
            demolish about 5 million square feet.

            The Air Force has drafted a tentative goal to reduce its facilities square
            footage by a net of 3 percent each year between fiscal years 1997 and 2005
            through consolidation and demolition.23 However, it has not developed
            detailed plans to accomplish this goal. According to officials, if a plan to
            reduce its square footage is implemented, base commanders would use
            O&M, military construction, or military family housing funds for demolition.
            Program initiatives are the responsibility of individual commanders who
            identify, fund, and execute individual demolition projects. In October 1996,
            the Air Force began an initiative to develop a way to identify and track
            excess square footage. As of February 1997, the Air Force was still
            planning how it would implement this initiative. Tentative plans are to task
            major commands with collecting the information.


            23
              This goal is included in a draft strategic plan developed by the Air Force in 1996. The Air Force
            expected to publish the plan in April 1997. The draft plan addresses four civil engineering core
            functions: combat and contingency engineering; base operations, maintenance, and development;
            environmental leadership; and housing excellence. The plan sets forth goals in each core function,
            such as building a smart facility investment strategy and increasing the effectiveness and reducing the
            cost of doing business. Each goal has objectives to achieve, but the plan does not address the amount
            of funding needed to implement the goals and objectives or set year-to-year goals.



            Page 20                                                 GAO/NSIAD-97-125 Defense Infrastructure
                        B-276460




                        OSD’s and the services’ strategic planning for facilities maintenance and
Emphasis on Strategic   repair, including the revitalization of facilities infrastructure, was limited.
Planning Has Been       Those plans that did exist were not focused on long-term comprehensive
Limited                 strategies for facilities revitalization, replacement, and maintenance, and
                        they were not tied to measurable goals to be accomplished over specific
                        time frames or linked to funding.

                        Over the past 7 years, we have called attention to critical government
                        operations that are highly vulnerable to waste, fraud, abuse, and
                        mismanagement by designating them as high-risk areas. One area of focus
                        has been accountability and cost-effective management of defense
                        programs. Our February 1997 high-risk series of reports included defense
                        infrastructure as a new high-risk area.24 The defense infrastructure report
                        noted that DOD is spending funds to operate and maintain an aging,
                        underutilized, and excess facilities infrastructure. It noted that setting
                        forth a clear framework for a reduced defense infrastructure is key to
                        avoiding waste and inefficiency. It further noted that the Secretaries of
                        Defense, the Army, the Navy, and the Air Force need to give greater
                        structure to their efforts to attain infrastructure reductions by developing
                        an overall strategic plan. Such a plan could be expected to encompass
                        needed demolition as well as facilities revitalization.

                        The need for strategic planning for facilities infrastructure is also
                        underscored by the requirements of the Government Performance and
                        Results Act. The act requires federal agencies, including DOD, to develop
                        agencywide strategic plans by September 30, 1997, annual performance
                        plans for fiscal year 1999 and beyond, and annual program performance
                        reports beginning March 31, 2000. The strategic plans must cover at least a
                        5-year period and include an agency’s mission statement and goals. They
                        must also describe how an agency plans to achieve its goals through its
                        activities and its human, capital, information, and other resources, such as
                        facilities.

                        Performance plans must include measurable performance goals, where
                        feasible, and the indicators for measuring performance. Performance
                        reports must compare actual performance with performance goals and
                        explain what needs to be done when goals are not met. Such performance
                        reporting for DOD’s infrastructure should include, as part of DOD’s
                        assessment of the program’s efficiency in meeting performance goals, the
                        measurement of actual against expected facility infrastructure
                        maintenance costs. Such periodic reporting should also identify and

                        24
                          High-Risk Series: Defense Infrastructure (GAO/HR-97-7, Feb. 1997).



                        Page 21                                                GAO/NSIAD-97-125 Defense Infrastructure
              B-276460




              facilitate monitoring estimates of the costs associated with deferred
              facility maintenance.

              Strategic planning can help agency components and programs to develop
              outcome-oriented goals and performance measures that are linked to and
              support agencywide goals.25 Our report on DOD’s implementation of the
              Government Performance and Results Act notes that the Senate and
              House reports on the legislation anticipate that strategic planning will be
              institutionalized and practiced at all organizational levels throughout the
              federal government. Our report on DOD’s Logistics Strategic Plan notes the
              need to link organizational components’ plans to agencywide strategic
              plans.

              Our executive guide to implementing the act notes that several
              organizations, in implementing management reforms similar to those
              required by the act, found a key to successful implementation was to
              create clear, hierarchically linked goals and performance measures that
              cascaded from the top to the bottom levels of the organization. Such
              hierarchies of goals and measures provide a straightforward road map
              showing how the work of managers and staff throughout an organization
              contributes to attaining organizationwide strategic goals. The guide
              stresses that performance measurement is one of the most important
              features of the act. According to the guide, performance measures at each
              organizational level should be outcome oriented to allow demonstrating
              results, limited to those that are responsive to multiple priorities, and
              linked to responsible programs. Key to assessing performance is the need
              to collect sufficiently complete, accurate, and consistent data.


              Disproportionate reductions have occurred in funding devoted to
Conclusions   maintenance and repair compared with reductions in space being
              managed by the services over the last 10 years. This finding is consistent
              with concerns of various service officials that they continue to retain more
              facilities than they can afford to maintain. Demolition is one means of
              addressing this problem on installations that are being retained by the
              services, and it can also help avoid unnecessary maintenance and repair
              and utility costs in a period of declining resources. Each of the services
              has some plans to emphasize the demolition of excess facilities, but the
              Army appears to be providing the strongest program emphasis. Even

              25
               See DOD’s GPRA Implementation (GAO/NSIAD/GGD-97-65R, Jan. 31, 1997), Logistics Planning:
              Opportunities for Enhancing DOD’s Logistics Strategic Plan (GAO/NSIAD-97-28, Dec. 18, 1996), and
              Executive Guide: Effectively Implementing the Government Performance and Results Act
              (GAO/GGD-96-118, June 1996).



              Page 22                                              GAO/NSIAD-97-125 Defense Infrastructure
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                      though stronger emphasis in the other services might be desirable, it
                      appears that declining O&M funding levels could have the potential to
                      constrain the existing plans of each of the services.

                      Changes in square footage of space being maintained by the services can
                      provide an important basis for assessing progress of demolition and other
                      facility reduction measures. Such data can also provide a basis for
                      assessing changes in funding for repair and maintenance. Trend analyses
                      of this data could help DOD measure performance and meet reporting
                      requirements under the Chief Financial Officers Act. These analyses could
                      also be important to making more informed operational decisions
                      concerning facilities infrastructure programs, as contemplated by the
                      Government Performance and Results Act. It is critical that DOD make
                      marked strides to improve its ability to develop and disclose a complete
                      picture of the actual costs incurred to maintain its infrastructure, as well
                      as estimates of the costs it may incur to carry out facility maintenance that
                      was previously deferred.


                      We recommend that the Secretary of Defense
Recommendations
                  •   direct the services to use consistent and common criteria, to the extent
                      feasible, for developing (1) accurate and reliable trend data on
                      infrastructure condition, including square footage, plant replacement
                      value, and other relevant measurements, and (2) costs associated with
                      their current infrastructure and possible reduction options, including
                      information on deferring facility maintenance and demolishing excess
                      facilities;
                  •   use the trend data as a starting point in formulating an overall strategic
                      plan for facilities infrastructure that links to the departmentwide strategic
                      planning requirements set forth in the Government Performance and
                      Results Act; and
                  •   require the Air Force, the Navy, and the Marine Corps to demolish excess
                      infrastructure to the maximum extent feasible when facilities are being
                      replaced by new construction.


                      The Congress may wish to consider requiring DOD and the services to
Matter for            provide 7 to 10 years of comparable trend data on square footage of space
Congressional         being maintained and other measurements, such as plant replacement
Consideration         value and other facility unit measures, along with their O&M budget
                      submissions and justifications each year.



                      Page 23                                   GAO/NSIAD-97-125 Defense Infrastructure
                     B-276460




                     DOD concurred with our recommendations. However, DOD took exception
Agency Comments      to our observation that it did not currently have complete, reliable
and Our Evaluation   information. DOD stated that, as is the case with any similar, large, complex
                     organization, all existing information is not and should not be immediately
                     available at the headquarters level. It also took the position that the
                     standard of “complete” information was too extreme and that each
                     proposal to collect data at the headquarters level must be carefully
                     evaluated for its cost-effectiveness.

                     Our statement regarding complete, reliable information was made in the
                     context of the need for information and cost associated with either
                     maintaining DOD’s current facilities infrastructure or reducing it. We also
                     note important limitations in DOD and service trend data. Therefore, we
                     continue to believe that it is beneficial for DOD and the services to develop
                     more complete data on a consistent and continual basis to provide
                     information for meaningful trend analyses. Although complete information
                     is desirable, our recommendation did not use that term. Rather, we
                     stipulated that the services needed to use consistent and common criteria,
                     to the extent feasible, for developing accurate and reliable trend data on
                     infrastructure condition and costs.

                     DOD also expressed the view that using 1987 as the beginning point for our
                     analysis of changes in square footage of space being managed understated
                     DOD’s accomplishments, since the recent BRAC efforts did not get underway
                     until 1991, and would continue until 2001. It further noted that fiscal years
                     1987-1990 represented 4 years of physical plant growth before beginning to
                     count the square footage drawdown.

                     For purposes of analysis, we chose a 10-year period, as suggested by the
                     requester, because of his interest in having data commencing before the
                     onset of the most recent BRAC rounds. Even extending out to 2001, the
                     reductions in square footage are much less than typically might be
                     expected given the approximately 21 percent reduction in domestic
                     infrastructure often cited by DOD in reporting the results of its BRAC
                     actions. That is one of the reasons we recommended DOD require the
                     demolition of excess infrastructure to the maximum extent feasible when
                     facilities are being replaced by new construction. The complete text of
                     DOD’s response is included as appendix III. The scope and methodology of
                     our review appears in appendix II.

                     We conducted our review between July 1996 and February 1997 in
                     accordance with generally accepted government auditing standards.



                     Page 24                                  GAO/NSIAD-97-125 Defense Infrastructure
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Unless you publicly announce the contents of this report earlier, we plan
no further distribution of it until 15 days from its issue date. At that time,
we will send copies to the Chairmen and Ranking Minority Members of the
Senate and House Committees on Appropriations and on the Budget, the
Senate Committee on Armed Services, and the House Committee on
National Security; the Secretaries of Defense, the Army, the Navy, and the
Air Force; the Commandant of the Marine Corps; and the Director, Office
of Management and Budget.

Please contact me on (202) 512-5140 if you have any questions concerning
this report. Major contributors to this report are listed in appendix IV.

Sincerely yours,




Mark E. Gebicke
Director, Military Operations
  and Capabilities Issues




Page 25                                   GAO/NSIAD-97-125 Defense Infrastructure
Contents



Letter                                                                                             1


Appendix I                                                                                        28
                        DOD                                                                       28
Systems for Assessing   Army                                                                      28
Infrastructure          Air Force                                                                 29
                        Navy                                                                      30
Condition               Marine Corps                                                              32

Appendix II                                                                                       33

Scope and
Methodology
Appendix III                                                                                      39

Comments From the
Department of
Defense
Appendix IV                                                                                       41

Major Contributors to
This Report
Tables                  Table 1: Percent Change in O&M Obligations for Maintenance and             4
                          Repair Between Fiscal Years 1987 and 1996
                        Table 2: O&M-Funded Maintenance and Repair as a Percent of                 8
                          Plant Replacement Value in Fiscal Year 1996
                        Table 3: Percent Change in Maintenance and Repair Obligations              9
                          per Square Footage of Facility Space Between Fiscal Years 1987
                          and 1996
                        Table 4: Service Demolition Programs                                      16

Figures                 Figure 1: Percent Change in Facilities Square Footage Between              5
                          Fiscal Years 1987 and 1996
                        Figure 2: Percent Change in Square Footage for CONUS Facilities            6
                          Between Fiscal Years 1987 and 1996
                        Figure 3: New Army Barracks at Fort Hood, Texas                           10




                        Page 26                               GAO/NSIAD-97-125 Defense Infrastructure
Contents




Figure 4: Portion of Aging Pier Structure at Norfolk Naval                  12
  Station, Virginia




Abbreviations

BRAC       Base Realignment and Closure
CONUS      continental United States
DOD        Department of Defense
O&M        operation and maintenance
OSD        Office of the Secretary of Defense


Page 27                                 GAO/NSIAD-97-125 Defense Infrastructure
Appendix I

Systems for Assessing Infrastructure
Condition

               The Department of Defense (DOD) has recognized the need for a standard
               data system that would provide comprehensive trend data on
               infrastructure condition by service. However, it has not been successful in
               implementing such a system. A recent study sponsored by the Office of the
               Secretary of Defense (OSD) to develop such a system never progressed
               beyond the pilot phase. Consequently, DOD and the services use their own
               unique systems, all of which have significant limitations in providing trend
               data and relating infrastructure condition to readiness.


               In the conference report accompanying the fiscal year 1992 Defense
DOD            Appropriations Act, the Congress provided for the implementation of a
               pilot test program to conduct comprehensive maintenance surveys at
               selected bases. The surveys, referred to collectively as the Condition
               Assessment Survey, were a comprehensive effort led by OSD to develop a
               consistent assessment of the condition of DOD facilities. The Senate report
               stated that $50 million should be used for the pilot test, noting that a lack
               of accurate and meaningful budget information on repair and maintenance
               had precluded obtaining a reasonable assessment of DOD’s needs. The
               conference report directed DOD to use funds from the real property
               maintenance account to cover the cost of each survey. The survey was
               then tested at 12 installations servicewide.

               The pilot test of the survey was completed in 1995 and, according to an
               OSD report, achieved all its goals set by the Congress and DOD to improve
               the accuracy, consistency, and credibility of maintenance and repair data.
               A feature of the survey was the ability of its information system to
               calculate costs for repair and replacement and a condition index scale of 0
               (poor) to 100 (excellent). In addition, the system automatically determined
               when a repair should be done in a given time period based on data for the
               facility’s return on investment. Despite these accomplishments, service
               officials told us that the system’s information management system was
               labor intensive and expensive to implement and maintain. DOD projected
               the cost to implement the survey servicewide would be about $715 million,
               but the services would be responsible for funding about $270 million of
               this cost. According to an OSD official, the survey was not implemented
               beyond the initial pilot phase primarily because of the costs.


               To assess the condition of its infrastructure, the Army started using the
Army           Installation Status Report in 1995. The report is a three-part information
               system that is intended to provide decisionmakers with an objective



               Page 28                                  GAO/NSIAD-97-125 Defense Infrastructure
            Appendix I
            Systems for Assessing Infrastructure
            Condition




            assessment of the infrastructure, environment, and services at Army
            installations. The report provides installation status in the form of
            C-ratings, which are also used in the Army’s familiar Unit Status Report.

            Part I of the report on infrastructure provides 2 years of data for fiscal
            years 1995 and 1996. It shows the status of installations grouped into five
            broad areas: mission facilities, strategic mobility facilities, housing
            facilities, community facilities, and installation support. Part I also
            provides separate C-ratings that indicate whether the Army has enough
            facilities and the facilities meet Army standards.

            The report does not provide trend data because the system has not been
            fully implemented. According to Army officials, reliable trend data from
            the report will not be available until fiscal year 2000. Until then, the Army
            will be validating data and refining its data collection techniques.
            Examples of these refinements include revising inspection standards for
            utilities and including semipermanent buildings in inspections.
            Additionally, the report does not relate infrastructure condition to
            readiness. Army officials said they have not determined a measurement for
            this relationship.


            In September 1992, the Air Force began looking for a statistical tool to
Air Force   support requirements for maintenance and repair. The Air Force’s Civil
            Engineering and Studies and Analysis groups jointly developed an
            assessment process called the Commanders’ Facility Assessment. The
            assessment system was designed to link facility condition to mission
            requirements to ensure that resources for maintenance, repair, and minor
            construction are allocated to the most critical mission needs of field
            commanders. Commanders are to use the assessments to stratify their real
            property maintenance and repair and military construction requirements.

            The assessment requires field commanders to identify recurring and
            nonrecurring requirements. Recurring requirements include those that are
            necessary to accomplish day-to-day maintenance to preclude further
            deterioration of the real property facilities and infrastructure.
            Nonrecurring requirements are broken down into three levels of facility
            requirements. Level I (unsatisfactory) reflects deficiencies that cause
            frequent mission interruptions, accelerate facility deterioration, resulting
            in high life-cycle maintenance costs, curtail or eliminate some operations,
            and degrade livability and workplace conditions. These deficiencies
            require a major upgrade within 2 years. Level II (degraded) reflects



            Page 29                                  GAO/NSIAD-97-125 Defense Infrastructure
       Appendix I
       Systems for Assessing Infrastructure
       Condition




       deficiencies that impair mission support, reduce effectiveness of the work
       force, and speed deterioration of the facility. These deficiencies require a
       major upgrade within 2 to 6 years. Level III (adequate) reflects facilities
       that do not impair mission accomplishment, although minor deficiencies
       may exist. These requirements improve operational productivity and
       reduce operation costs, such as facility consolidations, demolitions, and
       energy conservation measures.

       The assessment includes six major areas: real property maintenance (host
       and tenant); current mission military construction (host and tenant); all
       medical facility requirements; nonappropriated fund activities; Defense
       Business Operations Fund—Transportation (unique to the Air Mobility
       Command); and Defense Maintenance Industrial Fund—Research,
       Development, Test, and Evaluation (unique to the Air Force Material
       Command). However, the assessment excludes other areas, such as new
       mission military construction, military family housing, and environmental
       compliance.

       The assessment only provides condition data for Air Force facilities for
       fiscal years 1993 and 1995. Air Force officials cited several areas that need
       improvement, such as clarifying guidance to the field and improving the
       assessment’s software. They also said that assessment training was poor
       and that the assessment was too complex and labor intensive. The Air
       Force recently completed the validation of 1995 data. It plans to
       implement the assessment again in fiscal year 1997 and complete an
       upgrade of the software in fiscal year 1998. Air Force officials were
       reluctant to state that the assessment would provide an indication of how
       infrastructure related to readiness. They stated that the assessment was
       more oriented toward linking facilities to mission requirements rather than
       readiness.


       The Navy assesses the condition of its facilities through the Annual
Navy   Inspection System, which is prepared by each activity (i.e., a base).
       According to Navy officials, the system started in the 1960s. The objective
       of the system is to provide an annual condition assessment report of
       unfunded repair and maintenance deficiencies. The system report
       classifies its facilities maintenance requirements into two categories:
       critical and deferrable. Critical requirements need to be completed in
       12 months, whereas deferrable requirements are not as pressing, and thus
       corrective actions are not critical. Each activity reports its backlog of
       critical deficiencies to the Navy, which uses this information to prepare its



       Page 30                                  GAO/NSIAD-97-125 Defense Infrastructure
Appendix I
Systems for Assessing Infrastructure
Condition




departmentwide system report. Navy officials said they consider the
system to be an assessment of the condition of their facilities, even though
the system only tracks backlogs.

The system is a compilation of inspections performed throughout the
assessment year, but not all facilities are inspected each year. Inspections
performed through the year are control inspections on the physical
condition of structural, mechanical, and electrical facilities; preventive
maintenance inspections on critical dynamic equipment, such as electrical
and water pump distribution systems; and inspections of
operator-assigned major equipment. Navy guidance requires all facilities to
be inspected completely within a 3-year cycle. Navy activities prepare
annual maintenance action plans that are their management tools for
performing repair and maintenance activities. The plans provide data that
is incorporated into the system and updated annually.

Although historical data from the system is available, Navy officials told us
that they are concerned about the quality of this data. One official told us
that the data suffers from the lack of consistent and standardized
guidelines for the inspections. That official also indicated that the quality
of the inspections could vary with the experience and expertise of the
inspectors. A 1995 report of the Navy Internal Audit Office’s review of the
U.S. Atlantic Fleet’s annual inspection process cited the lack of a centrally
managed quality assurance program. In response, the Commander,
Atlantic Fleet, contracted with the Navy’s Public Works Center to conduct
all fleet annual inspection reports to ensure greater consistency and
accuracy in reporting its backlog of repair and maintenance. Fleet officials
told us that they are now more confident with their system data but that
only 1 year of data is currently available. The quality of previous data is
problematic in terms of establishing trends.

The Navy also started a Shore Base Readiness Reporting System in 1982.
The system was created to link financial data to shore-based readiness
missions. The system measures personnel, facilities, and equipment by
their ability to support mission operations. Assets are rated from C1 to C4,
and C3 and C4 ratings indicate that the assets are only marginally or not
meeting mission requirements. The data is not tied to funding
requirements. The system is prepared by commanding officers and staff at
the activity level who review data from the annual inspection system and
determine a rating by mission categories. The Navy was able to provide
trend data by activity on the number of facilities that were rated C1 to C4.




Page 31                                  GAO/NSIAD-97-125 Defense Infrastructure
               Appendix I
               Systems for Assessing Infrastructure
               Condition




               The Marine Corps determines its infrastructure condition by inspections,
Marine Corps   which have been done since the 1960s. Each organization has a
               maintenance or inspection office to perform these inspections. The
               inspectors are trained for performing various types of reviews, such as
               electrical and utilities. Before the inspections, the inspectors examine data
               on backlogs in the particular area they are about to review. The inspectors
               use engineering performance standards and estimate the cost of repair,
               labor, and material, using industry information and catalogs. The activity
               control office generally manages the standard documentation from the
               inspections.

               The Marine Corps’ annual control inspection is required to identify the
               base’s total maintenance and repair requirements, assess physical
               condition, update real property records, and determine the effectiveness
               of maintenance programs. The inspection integrates data from various
               base inspections, such as preventive, cyclic, and operator inspections.
               Results from the inspections help build the Marine Corps bases’ long-range
               maintenance and annual work plans. Data from the annual control
               inspection appears in the Marine Corps’ Backlog of Maintenance and
               Repair report. This report contains only valid items of maintenance and
               repair work that remain as firm requirements in annual work plans but
               could not be funded in the fiscal year. The Marine Corps includes all
               maintenance deficiencies in its report.

               The Marine Corps is in the process of developing a Commanders’
               Readiness Reporting System to link facility condition and mission
               readiness. A Marine Corps official told us that the first readiness report
               was expected to be prepared by April 1997. The Marine Corps has a system
               to report trend data on its backlog of maintenance and repair.




               Page 32                                  GAO/NSIAD-97-125 Defense Infrastructure
Appendix II

Scope and Methodology


              To determine the extent that the services’ obligations for maintenance and
              repair correlate to changes in building square footage, we obtained
              worldwide operation and maintenance (O&M) funding information for
              maintenance and repair and minor construction obligations.1 We limited
              the scope of our review to active Army, Air Force, Navy, and Marine Corps
              forces only. We selected data for fiscal years 1987 through 1996 because
              those years comprise the most recent 10-year period and represent a point
              in time before the onset of the recent period of Base Realignment and
              Closure (BRAC) actions.

              We focused on maintenance and repair and minor construction obligations
              because obligations from these accounts directly affect the condition of
              facilities and represent the day-to-day care and upkeep of the services’
              facilities. We focused on budget obligations rather than budget requests or
              appropriations because obligations provide a more complete accounting
              of funds used for maintenance and repair activities than budgets or budget
              requests.2 Obligations represent commitment of funds, such as contracts
              awarded. The liquidation of such obligations may not occur for some time
              after they are recorded.

              We also obtained a breakdown of O&M funding in the continental United
              States and overseas from the Army and the Marine Corps; however, the Air
              Force and the Navy were unable to provide such a breakdown because
              these services do not track obligation data this way. As a result, we were
              not able to make DOD-wide comparisons between overseas and continental
              U.S. obligations. In analyzing obligation data, we converted the obligation
              amounts for different years into constant fiscal year 1997 dollars so that
              the dollar amounts of the different years could be compared without the
              impact of inflation. We excluded military family housing from our review
              because we were unable to obtain complete obligation and square footage
              data comparable to the data we obtained for other types of facilities and
              because military family housing is not funded by the regular O&M funded
              budget.

              We also obtained and evaluated data showing changes in square footage of
              facilities owned and managed by the services for fiscal years 1987 through
              1996 as well as the changes projected to occur in future years. We selected
              square footage as an indicator of infrastructure size because square

              1
               Although maintenance and repair activities are funded from different sources, we focused on O&M
              because it provides between 73 and 98 percent of each service’s maintenance and repair funds.
              2
               See Operation and Maintenance Funding: Trends in Army and Air Force Use of Funds for Combat
              Forces and Infrastructure (GAO/NSIAD-96-141, June 4, 1996).



              Page 33                                              GAO/NSIAD-97-125 Defense Infrastructure
Appendix II
Scope and Methodology




footage is a consistent measure across services. Although the services’
total infrastructure is measured by factors other than square footage and
includes other measures, such as linear feet of runways, service officials
told us that square footage represents the best measure for the majority of
their facilities. Also, the majority of O&M funded maintenance and repair
obligations are used to maintain and repair facilities measured in square
feet.

Due to time constraints, we did not assess the services’ internal controls
associated with infrastructure data management, including the validity of
the square footage data provided for our review. However, we determined
the extent to which the services had validated their data to provide an
indication of the data’s relative level of accuracy and completeness. We
relied on the services to provide us the best representative data regarding
square footage, and the rigor of the data depended partly on whether the
service used square footage to manage its infrastructure.

The Army used square footage to manage its infrastructure, and Army
officials stated that recent data is about 85 to 90 percent accurate because
of initiatives undertaken in the early 1990s to improve the integrity of the
data. These initiatives included the use of a contractor to ensure and then
update the accuracy of the Army’s data, reliance on Army Audit Agency
audits, and BRAC certifications. The square footage data for fiscal years
1987 through 1990 for the Army may not be as reliable as data after 1990
because the Army initiated its efforts to ensure square footage accuracy
after that date. However, Army officials said that the data for 1987 through
1990 provided to us was the best available data for that time. We found
that the data for these 4 years was generally in line with the Army’s overall
square footage data.

Navy and Marine Corps officials expressed confidence in the accuracy of
their data. A February 1995 audit by the Naval Audit Service, performed
along with the 1995 BRAC process, indicated a 90-percent accuracy rate for
data sampled.

We had some initial concerns about the completeness and accuracy of the
Air Force data. We encountered discrepancies in some initial data sets
provided by Air Force officials and therefore requested the Air Force to
provide us with revised data sets. The Air Force provided us with data on
the square footage of space it owned and managed for 3 fiscal
years—1987, 1995, and 1996—but it could not readily provide such data for




Page 34                                  GAO/NSIAD-97-125 Defense Infrastructure
Appendix II
Scope and Methodology




fiscal years 1988 through 1994. Air Force officials said that the square
footage data they provided us was the best available.

In analyzing our data to determine the correlation between obligations and
square footage, we compared the percent change in obligations to the
percent change in square footage between fiscal years 1987 and 1996. We
made these calculations by service and then calculated a servicewide
figure. We tried to determine if the decline in obligations had impacted the
condition of the services’ facilities over the 10-year period. We asked the
services for trend data on the condition of their facilities and the level of
emergency work orders and other work orders done at the installation and
base levels. The Army was the only service that had a system that
conveyed the actual physical condition of its facilities; however, the Army
implemented the system in 1995, and service officials indicated that
additional work was still needed to refine and accumulate data before
meaningful trends could be developed. Trend data on emergency work
orders and other types of work orders at the installation and base levels
was not available for the 10-year period, and this information was not
summarized beyond the installation and base levels.

To determine the extent that the services examined the potential for
long-term savings in demolishing excess infrastructure, we sought
cost-benefit analyses in this area. Each of the services provided estimates
for the potential savings per square foot. However, we found these
estimates were often rule-of-thumb estimates or were based on simple
averages associated with prior demolition activities rather than formal
cost-benefit analyses.

All of the services, except the Air Force, provided the amount of excess
facilities for 1996. Air Force officials told us their major commands had
been required to submit annual reports on the extent that their excess
facilities could be demolished, but the Air Force discontinued this
requirement several years ago because the report was considered
unnecessary. The Army had the most rigorous method to determine excess
space. The Army developed a model that compared required square
footage based on mission needs with actual square footage. This data
could be summarized at the installation, major command, or headquarters
level. The Navy obtained one estimate of excess from its asset database.
However, in terms of identifying square footage of space for demolition
purposes, the Navy relies on its bases to estimate the amount of square
footage to be reduced from demolition. For the Marine Corps,




Page 35                                  GAO/NSIAD-97-125 Defense Infrastructure
                             Appendix II
                             Scope and Methodology




                             headquarters officials periodically ask the bases to report the amount of
                             square footage they consider excess and want to demolish.

                             To determine the extent that the services developed a formal demolition
                             program as a means of reducing excess space as part of an overall
                             infrastructure management plan, we reviewed the services’ demolition
                             programs and plans and evaluated the extent to which they were included
                             as part of overall service infrastructure management plans. We
                             interviewed service officials responsible for infrastructure planning to
                             determine the services’ current efforts to include demolition, condition
                             assessment survey data, and funding needs in their overall infrastructure
                             plans. We visited the following locations:


Office of the Secretary of   Office of the Deputy Under Secretary of Defense, Industrial Affairs and
Defense                      Installations, Washington, D.C.

                             Directorate of Installation Management, Arlington, Virginia

                             Readiness, Programs, and Assessment Directorate, Washington, D.C.

                             Comptroller, Military Construction, Washington, D.C.


Department of the Army       Assistant Secretary of the Army, Financial Management (Business
                             Resources), Washington, D.C.

                             Office of the Assistant Chief of Staff, Installation Management,
                             Washington, D.C.

                             Resource Integration Office, Installation Management, Washington, D.C.

                             Facilities and Housing Directorate, Washington, D.C.

                             Army Forces Command, Fort McPherson, Georgia

                             Army Training and Doctrine Command, Fort Monroe, Virginia

                             Army Base, Fort Eustis, Virginia

                             Army Base, Fort Hood, Texas




                             Page 36                                  GAO/NSIAD-97-125 Defense Infrastructure
                         Appendix II
                         Scope and Methodology




                         Center for Public Works, Army Corp of Engineers, Fort Belvoir, Virginia

                         Army Military District of Washington, Fort McNair, Washington, D.C.

                         Army Materiel Command, Alexandria, Virginia


Department of the        Air Force Deputy Chief of Staff for Installations and Logistics, Office of the
Air Force                Civil Engineer, Washington, D.C.

                         Office of the Assistant Secretary of the Air Force, Financial Management,
                         Budget Operations Division, Washington, D.C.

                         Air Force Real Estate Agency, Bolling Air Force Base, Washington, D.C.

                         Air Combat Command, Langley Air Force Base, Virginia

                         1st Fighter Wing, Langley Air Force Base, Virginia


Department of the Navy   Office of the Assistant Secretary of the Navy, Financial Management
                         Comptroller, Washington, D.C.

                         Naval Facilities Engineering Command Headquarters, Alexandria, Virginia

                         Naval Facilities Engineering Command—Atlantic Division (Engineering
                         Field Division), Norfolk, Virginia

                         Chief of Naval Operations, Shore Installation Management Office,
                         Crystal City, Virginia

                         Commander in Chief, U.S. Atlantic Fleet, Norfolk, Virginia

                         Norfolk Naval Station, Norfolk, Virginia

                         Navy Public Works Center, Norfolk, Virginia


Commandant of the        Marine Corps Headquarters, Installation and Logistics
Marine Corps             Department—Facilities Branch, Housing Management Section, and
                         Land Use and Military Construction Branch, Arlington, Virginia




                         Page 37                                    GAO/NSIAD-97-125 Defense Infrastructure
        Appendix II
        Scope and Methodology




        Marine Corps Air Station, Cherry Point, North Carolina

        Marine Corps Base, Camp Lejeune, North Carolina


Other   The Association of Higher Education Facilities Officers, Alexandria,
        Virginia

        Federal Facilities Council, Washington, D.C.




        Page 38                                 GAO/NSIAD-97-125 Defense Infrastructure
Appendix III

Comments From the Department of Defense




               Page 39      GAO/NSIAD-97-125 Defense Infrastructure
Appendix III
Comments From the Department of Defense




Page 40                                   GAO/NSIAD-97-125 Defense Infrastructure
Appendix IV

Major Contributors to This Report


                        Sharon A. Cekala
National Security and   Karen S. Blum
International Affairs   Barry W. Holman
Division. Washington,   Janice V. Morrison
                        Charles W. Perdue
D.C.                    Donna M. Rogers


                        Lorelei H. Hill
Atlanta Field Office    Harry F. Jobes
                        Karen B. Thompson


                        Richard Seldin
Office of the General
Counsel




(703166)                Page 41              GAO/NSIAD-97-125 Defense Infrastructure
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