Military Base Closures: Detailed Budget Requests Could Improve Visibility

Published by the Government Accountability Office on 1997-07-14.

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

                   United States General Accounting Office

GAO                Report to Congressional Committees

July 1997
                   MILITARY BASE
                   Detailed Budget
                   Requests Could
                   Improve Visibility

             United States
GAO          General Accounting Office
             Washington, D.C. 20548

             National Security and
             International Affairs Division


             July 14, 1997

             The Honorable Conrad Burns
             The Honorable Patty Murray
             Ranking Minority Member
             Subcommittee on Military Construction
             Committee on Appropriations
             United States Senate

             Senate Report 104-287, dated June 20, 1996, on the 1997 Military
             Construction Appropriations Bill required us to continue our annual
             review of the base realignment and closure (BRAC) accounts and make
             recommendations on the validity of the Department of Defense’s (DOD)
             proposed budget request for base closure activities. This report responds
             to that request.

             In the late 1980s, DOD decided it needed to close numerous military bases
Background   because changing national security needs resulted in a base structure that
             was larger than required. Consequently, the Congress enacted legislation
             that instituted BRAC rounds in 1988, 1991, 1993, and 1995. BRAC legislation
             required that bases be closed within a 6-year period. Bases selected for
             closure in the 1988 round were required to be closed by September 30,
             1995, and bases in the 1991 round must be closed by September 30, 1997.
             Bases in the 1993 and 1995 rounds are to be closed by September 30, 1999,
             and September 30, 2001, respectively.

             The Congress established two BRAC accounts to fund closure rounds. The
             first account funded BRAC activity for the 1988 round, and the second
             account funded BRAC activity in the 1991, 1993, and 1995 rounds. The
             Congress appropriates funds to these accounts by part, and parts I through
             IV correspond to the individual rounds. After September 30, 1995, funds
             needed for 1988 round closures are funded from the second BRAC account.
             Because DOD is committed to the environmental restoration of closing
             bases, additional funds may be needed for environmental restoration,
             along with continuing transition costs such as property management and
             disposal beyond the 6-year closure period.

             DOD is requesting $2.1 billion for BRAC in fiscal year 1998. This request
             includes $40.7 million for the 1988 round, $215.1 million for the 1991
             round, $629.7 million for the 1993 round, and $1,175.4 million for the 1995

             Page 1                                   GAO/NSIAD-97-170 Military Base Closures

                   round. The request is about $400 million less than the fiscal year 1997
                   appropriation and about $1.8 billion less than the fiscal year 1996

                   Our past reviews of BRAC funding have disclosed high unobligated balances
                   and inaccurate budget cost estimates. In July 1996, we reported that the
                   fiscal year 1997 budget could be reduced by $148 million because prior
                   year appropriations were available to fund 1997 requirements.1 We also
                   reported that BRAC budget information was not as effective as it could be
                   for monitoring BRAC expenditures because the budgets historically
                   overstated operations and maintenance and military construction costs
                   and understated environmental costs. In September 1995, we reported
                   high unobligated balances of funds for the 1988 closure round in the
                   months before the expiration of the round.2 (A list of our recent related
                   reports on BRAC financing is provided at the end of this report.)

                   Because the first BRAC account for 1988 base closures is no longer funded
Results in Brief   and part II (1991 closure round) of the second BRAC account will no longer
                   be funded after September 30, 1997, DOD included continuous funding
                   requirements for 1988 and 1991 base closure activities in part III of its
                   fiscal year 1998 appropriation request. Our review of the supporting
                   documentation in DOD’s fiscal year 1998 budget justification books showed
                   that data required to support continued funding for the 1988 and 1991
                   closure rounds was identified in the aggregate without detailed
                   information by individual bases; however, the information provided for the
                   1993 and 1995 closure rounds contains these details. The lack of detailed
                   information for the 1988 and 1991 closure rounds limits visibility of
                   planned expenditures and adjustments to estimated savings for these
                   bases. Further, if the current trend of prolonged environmental restoration
                   costs continues and detailed justification data continues to decrease for
                   older BRAC rounds, less visibility of planned expenditures and changes to
                   estimated savings will result.

                   The high unobligated balances in the BRAC account that we reported last
                   year are being reduced. If DOD continues to obligate BRAC funds at the
                   current rate, unobligated balances will decline from $986.5 million at the
                   beginning of fiscal year 1997 to $200 million at the end of the fiscal year. In

                    Military Bases: Potential Reductions to the Fiscal Year 1997 Base Closure Budget (GAO/NSIAD-96-158,
                   July 15, 1996).
                    Military Bases (GAO/NSIAD-95-215R, Sept. 8, 1995).

                   Page 2                                                GAO/NSIAD-97-170 Military Base Closures

                      addition, DOD and the Air Force reduced their 1998 BRAC appropriation
                      requests by a total of $124 million to control future unobligated balances.

                      DOD’s current approach for providing support in the budget justification
Supporting Budget     books reduces visibility over planned expenditures for individual bases.
Request Information   Funds for BRAC closure rounds have generally been requested by part
Varies by Closure     under BRAC accounts except where the 6-year closure period for individual
                      rounds has lapsed. After September 30, 1995, the Congress provided
Round                 continued funding needed for environmental restoration and transition for
                      bases closed in the 1988 closure round—but included it in the second BRAC
                      account established to fund the 1991, 1993, and 1995 closure rounds.

                      For fiscal year 1998, DOD has continued its practice of not requesting funds
                      by specific BRAC rounds once the 6-year closure period has passed. Thus,
                      with the impending closure of the 1991 closure round (part II) on
                      September 30, 1997, DOD included funding requests for both the 1988 and
                      1991 closure rounds as part of its funding requirements for part III (1993
                      round). The 1998 part III request includes $40.7 million for the 1988 round
                      and $98.3 million for the 1991 round.3 The supporting documentation for
                      these requests is limited to aggregate amounts for environmental
                      restoration, property management, and disposal. Unlike the submissions
                      for the 1993 and 1995 rounds, the requests did not detail the funds required
                      at the base level. Therefore, the Congress has less visibility over how the
                      funds are to be expended.

                      DOD officials believe the information provided to the Congress in the
                      budget request is adequate. Further, they believe that the level of
                      information provided reduces DOD’s budget justification paperwork and
                      review processes.4 In the future, DOD plans to continue grouping funds
                      needed for closed bases still in transition with funds being requested for
                      bases of subsequent rounds not yet closed.

                      In addition to reducing congressional visibility, requesting funding for
                      closed bases still in transition as part of bases not yet officially closed can
                      cause savings estimates to be misstated for each category of bases. To
                      support its budget request, DOD provides the Congress each year with

                       The DOD fiscal year 1998 request for the 1991 round is $215.1 million. Of this amount, the Navy
                      requested $116.8 million in a separate 1991 round budget justification book. The remaining
                      $98.3 million is in part III (1993 round).
                       DOD normally submits a justification book for each closure round by service. By requesting
                      post-closure funding as part of active round requests, DOD can avoid preparing separate justification
                      books for closure costs that exist beyond the initial 6-year period.

                      Page 3                                                  GAO/NSIAD-97-170 Military Base Closures

                                      savings estimates by round. These estimates are affected if costs from
                                      completed rounds are included in the appropriation parts that fund active
                                      rounds. For example, by requesting $139 million for 1988 and 1991 round
                                      environmental restoration, property management, and property disposal
                                      costs in part III (1993 round) of the appropriation, the 1993 net savings
                                      estimate is understated by 12.3 percent for fiscal year 1998 and 3.6 percent
                                      for the 6-year closure period.

                                      The Senate Committee on Appropriations has expressed concern
Unobligated Balances                  regarding the slow pace of BRAC obligations and the resulting high
Have Declined                         unobligated balances. Congressional rescissions and DOD actions reduced
                                      unobligated balances by the end of fiscal year 1995, but these balances
                                      increased in fiscal year 1996.

                                      In July 1996, we reported that unobligated balances in the BRAC account
                                      could be much higher at the end of fiscal year 1996 if obligation rates were
                                      not increased. DOD’s data indicated that unobligated balances increased
                                      from $374.8 million at the end of fiscal year 1995 to $986.5 million at the
                                      end of fiscal year 1996. As shown in table 1, this increase was relative to
                                      both the prior year appropriation and the overall amount appropriated for
                                      BRAC since it began.

Table 1: Unobligated BRAC Balances
at the End of Fiscal Years 1995 and   Dollars in millions
1996                                                                               Percent of all     Percent of prior
                                                                 Unobligated              BRAC      fiscal year BRAC
                                      Fiscal year                   balance       appropriations        appropriation
                                      1995                            $374.8                  3.9                13.5
                                      1996                            $986.5                  7.4                25.3

                                      DOD originally estimated that unobligated balances would remain high
                                      through fiscal year 1997 and the start of fiscal year 1998. According to
                                      DOD’s fiscal year 1998 BRAC budget request, unobligated balances would be
                                      about $1.1 billion at the beginning of that fiscal year. DOD now indicates
                                      that these balances are going to be much lower. Service officials cited two
                                      examples of reasons for the decrease: the Army’s plans to obligate
                                      $176 million for construction at Fort Leonard Wood and the Navy’s
                                      increased priority on obligating and liquidating BRAC funds.

                                      Our analysis of DOD’s fiscal year 1997 BRAC obligation data indicates that
                                      unobligated balances could be much lower at the start of fiscal year 1998

                                      Page 4                                   GAO/NSIAD-97-170 Military Base Closures

                     than the $1.1 billion estimated in DOD’s budget. As of March 31, 1997,
                     unobligated balances in the BRAC accounts totaled $1.8 billion. During the
                     first half of fiscal year 1997, DOD obligated $1.6 billion. If DOD continues to
                     obligate BRAC funds at this rate, unobligated balances would decline to
                     $200 million at the start of fiscal year 1998. DOD has also taken actions to
                     control future unobligated balances. For example, the Air Force reduced
                     its 1998 BRAC budget request by $54 million. In addition, DOD reduced the
                     overall fiscal year 1998 BRAC appropriation request by another $70 million.
                     Both DOD and the Air Force cited the need to reduce unobligated balances
                     as the reason for decreasing the amount of their requests.

                     Some funding will continue to be needed for closure costs beyond the
Matter for           6-year period allowed for bases to officially close, and the number of
Congressional        closed bases will continue to increase. Consequently, the Congress may
Consideration        wish to consider requiring DOD to provide more complete information in its
                     budget requests for closed rounds that is comparable to the information
                     supplied for active ones. Although this requirement would result in some
                     additional justification paperwork for DOD, it would afford the Congress
                     better visibility over the use of funds for all affected bases.

                     DOD  provided oral comments on a draft of this report. DOD officials agreed
Agency Comments      with our assessment that high unobligated balances in the BRAC account
and Our Evaluation   are being reduced significantly. However, they did not concur with our
                     concern that DOD’s current practice of providing limited data for the earlier
                     rounds under part III reduces congressional visibility over BRAC spending
                     and savings. The officials stated that the data submitted in the budget
                     justification books, along with other financial data, provide the Congress
                     with sufficient visibility and that any additional data needed can be easily
                     obtained from the military services. Further, the officials said that this
                     approach reduces paperwork and any associated review processes.

                     After considering DOD’s comments, we revised the focus of our Matter for
                     Congressional Consideration in our draft report. Instead of focusing on
                     possible changes in the current approach to appropriating BRAC funds, we
                     refocused that section on the adequacy of supporting information
                     provided in DOD’s BRAC budget requests. We believe that 1988 and 1991
                     round data provided in part III (1993 round) is not in sufficient detail to
                     provide the Congress with adequate visibility for budget deliberations.
                     Although 1988 and 1991 round planned expenditures and estimated
                     savings are presented in the budget submission within the subaccounts

                     Page 5                                     GAO/NSIAD-97-170 Military Base Closures

              (e.g., environmental and operations and maintenance), they are not
              presented at the base level. Because DOD currently excludes base-level
              information in its budget submissions, the Congress does not have a
              complete picture of planned expenditures and changes to estimated
              savings by base. We believe that this data will become more important to
              the Congress as the amount of funding for closed rounds is likely to
              increase and detailed information over a larger share of the budget request
              is reduced. Although DOD may have to do some additional paperwork, we
              believe that submitting fully detailed justifications for each round will
              provide the Congress with more complete information to exercise its
              oversight role.

              DOD officials also provided technical clarifications to the report. We
              considered these comments and made changes where appropriate.

              Our review of the fiscal year 1998 BRAC budget focused on current budget
Scope and     execution. We reviewed DOD reports to identify the overall availability of
Methodology   prior year funds. To determine if the prior year funds were being used in a
              timely manner, we reviewed (1) budget execution data for BRAC
              environmental and operations and maintenance funds and (2) Inspector
              General audits of construction projects. We also compared DOD backup
              budget material with the budget request submitted to the Congress to
              validate the amount of the appropriations request.

              In performing this review, we used the same accounting systems, reports,
              and statistics the services use to monitor their programs. We did not
              independently determine the reliability of this information.

              We conducted our work from October 1996 to May 1997 in accordance
              with generally accepted government auditing standards.

              We are sending copies of this report to the Chairmen and Ranking
              Minority Members of relevant congressional committees and
              subcommittees; the Secretaries of Defense, the Army, the Navy, and the
              Air Force; the Director of the Office of Management and Budget; and other
              interested parties. We will also make copies available to others on request.

              Page 6                                    GAO/NSIAD-97-170 Military Base Closures

Please contact me at (202) 512-8412 if you or your staff have any questions
about this report. Major contributors to this report were John Klotz, Tom
Monahan, Robert Poetta, and Randy Jones.

David R. Warren, Director
Defense Management Issues

Page 7                                   GAO/NSIAD-97-170 Military Base Closures
Recent GAO Reports Related to Base
Realignment and Closure Costs, Savings,
and Financing
               Military Bases: Cost to Maintain Inactive Ammunition Plants and Closed
               Bases Could Be Reduced (GAO/NSIAD-97-56, Feb. 20, 1997).

               Military Base Closures: Reducing High Costs of Environmental Cleanup
               Requires Difficult Choices (GAO/NSIAD-96-172, Sept. 5, 1996).

               Military Bases: Update on the Status of Bases Closed in 1988, 1991, and
               1993 (GAO/NSIAD-96-149, Aug. 6, 1996).

               Military Bases: Potential Reductions to the Fiscal Year 1997 Base Closure
               Budget (GAO/NSIAD-96-158, July 15, 1996).

               Military Bases: Closure and Realignment Savings Are Significant but Not
               Easily Quantified (GAO/NSIAD-96-67, Apr. 8, 1996).

               Military Bases: Case Studies on Selected Bases Closed in 1988 and 1991
               (GAO/NSIAD-95-139, Aug. 15, 1995).

(709214)       Page 8                                  GAO/NSIAD-97-170 Military Base Closures
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