oversight

Military Bases: Cost to Maintain Inactive Ammunition Plants and Closed Bases Could Be Reduced

Published by the Government Accountability Office on 1997-02-20.

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

                  United States General Accounting Office

GAO               Report to Congressional Requesters




February 1997
                  MILITARY BASES
                  Cost to Maintain
                  Inactive Ammunition
                  Plants and Closed
                  Bases Could be
                  Reduced




GAO/NSIAD-97-56
             United States
GAO          General Accounting Office
             Washington, D.C. 20548

             National Security and
             International Affairs Division

             B-272660

             February 20, 1997

             The Honorable Ronald V. Dellums
             Ranking Minority Member
             Committee on National Security
             House of Representatives

             The Honorable Gene Taylor
             House of Representatives

             As requested, we reviewed two issues related to the Department of
             Defense’s (DOD) management of real property. First, we assessed the
             opportunities to reduce the cost of maintaining inactive Army ammunition
             plants. Second, we assessed the same issue as it relates to military bases
             among all the services that were closed during the 1988 and 1991 base
             realignment and closure (BRAC) process.


             In accordance with the Defense Planning Guidance, the Army bases its
Background   ammunition requirements on projected training, testing, and war reserve
             requirements for two major regional contingencies. However, this
             requirement is subject to review as (1) DOD rethinks its requirements to
             respond to the two major concurrent regional conflicts, (2) war-fighting
             strategies and weapons technology reduce current ammunition
             requirements, and (3) DOD seeks to fund weapon modernization costs
             through infrastructure cost reductions.

             In 1993, the Army’s Industrial Operations Command (IOC), the Army’s
             single manager for conventional ammunition, restructured its ammunition
             industrial base to include 9 active and 10 inactive plants. (See fig. 1.) Of
             the 10 inactive plants, 6 would be used to replenish ammunition
             inventories after two major regional conflicts and 4 have unique
             capabilities that, according to the Army, make them potentially important
             for future production needs. The Kansas, Louisiana, Mississippi,
             Riverbank, Scranton, and Sunflower ammunition plants are the six plants
             that would be used to replenish ammunition. The Mississippi plant is to
             produce the replenishment requirement for 16 percent of the shell metal
             parts and 78 percent of the grenade metal parts and provide 40 percent of
             the load, assemble, and pack capability. The Badger, Indiana, Longhorn,
             and Volunteer ammunition plants are the four plants that have unique
             capabilities.




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Figure 1: Active and Inactive Army Ammunition Plants




                                                                                     Iowa, AAP
                                                                                     Badger, AAP
                                                                                     Indiana, AAP
                                                                                     Crane, AAA




                                                                                                             Scranton, AAP

       Riverbank
       AAP

                                                                                                      Radford, AAP
                                                                                                      Holston, AAP
                                                                                                      Volunteer, AAP




                                 Lake City, AAP
                                 Sunflower, AAP
                                 Kansas, AAP
                                                                          Milan, AAP
                                                                          Mississippi, AAP
                                                                          Pine Bluff, ARS
                                                                          Louisiana, AAP
                                                                          Longhorn, AAP
                                                                          Lone Star, AAP
                                                                          McAlester, AAP
                                                  Active
                                                  Inactive




                                             After bases are closed, a disposal process is initiated. The property is first
                                             offered to other federal agencies, then to state and local agencies, and then
                                             to the public. Some property has remained in DOD’s possession for many
                                             years while the communities have sought ways to use it. Meanwhile, DOD is
                                             responsible for the expense of protecting and maintaining these bases.
                                             Maintenance is conducted under a contract with a private entity or a
                                             cooperative agreement between base and community authorities. Our
                                             review of bases closed as a result of the BRAC process was restricted to the
                                             1988 and 1991 rounds because sufficient time has not passed for the others
                                             in subsequent rounds to take effect.




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                   The annual cost of maintaining the Army’s inactive ammunition plants,
Results in Brief   which totaled about $118 million since 1990, has decreased over the years.
                   This decrease is the result of various initiatives, including downsizing
                   projects, reduced maintenance requirements, more rigorous contract
                   negotiations with operating contractors, and the Armament Retooling and
                   Manufacturing Support (ARMS) Act of 1992. The ARMS program provides
                   financial incentives to ammunition plant contractors to reuse idle
                   capacities by attracting commercial tenants to the facility. The contractors
                   act as landlords with authority to lease buildings and equipment to
                   commercial producers, and the revenue generated is used to offset the
                   ammunition plants’ maintenance costs. It should be noted that, while the
                   ARMS initiative has offset some of the Army’s maintenance costs,
                   maintaining ammunition plants in inactive status still represents a
                   significant cost to the federal government.

                   While some initial investments will likely be necessary, the Army could
                   further decrease its infrastructure costs by disposing of unneeded
                   property. The Kansas, Louisiana, and Sunflower plants—three of the six
                   inactive plants retained for replenishment purposes—contain 37,000 acres
                   of unneeded land, facilities, and infrastructure that could be declared
                   excess. None of the four inactive plants retained for their unique
                   capabilities—Badger, Indiana, Longhorn, and Volunteer—are needed
                   because alternative sources exist, such as other active ammunition plants
                   or the private sector, to provide the capabilities these plants provide.

                   The overall cost to maintain bases closed in the 1988 and 1991 rounds was
                   approximately $290 million through fiscal year 1996. No trends in costs are
                   discernable because most bases have been closed only a few years and
                   because costs at individual bases vary widely, given their different sizes,
                   varying infrastructure, and diverse locations. Maintenance costs are higher
                   than they need to be because DOD does not tie maintenance levels to the
                   amount of time it takes to transfer bases to the community. The services
                   seldom reduce the maintenance levels, even when progress toward reuse
                   is slow. Continuing maintenance at initial levels keeps maintenance costs
                   high and reduces the savings from base closure.

                   Contractors at inactive ammunition plants and closed bases we visited
                   were satisfying the terms outlined in their maintenance contract. The
                   Federal Property Management Regulation allows for some deterioration of
                   buildings and equipment that are not considered critical to reactivation.
                   During our visits, we observed peeling paint and disassembled production




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                                         lines at several ammunition plants; however, these conditions were within
                                         contract maintenance requirements.

                                         We are recommending that DOD dispose of all unneeded property at
                                         inactive Army ammunition plants. We are also recommending that DOD
                                         establish incentives for communities to speed up the transfer of closed
                                         bases and, after the initial maintenance period has elapsed, DOD should
                                         establish criteria for a phased drawdown of maintenance until minimum
                                         levels are reached.


                                         As shown in table 1, costs to the Army to maintain the 10 inactive
Maintenance Costs at                     ammunition plants have decreased from $21.8 million in fiscal year 1995 to
Inactive Ammunition                      $15 million in 1996. These costs do not include the cost of ARMS or other
Plants Have                              costs. As of May 31, 1996, $57.5 million had been obligated for ARMS
                                         projects.
Decreased
Table 1: Maintenance Costs of Inactive
Ammunition Plants                        Dollars in millions
                                         Ammunition plant                         FY1994    FY1995               FY1996
                                         Badger                                     $5.3       $5.6                 $3.9
                                         Indiana                                     2.0         0.5                   0
                                         Kansas                                      0.1         0.2                   0
                                         Longhorn                                      0         0.4                  0.7
                                         Louisiana                                   0.5         1.6                  0.7
                                         Mississippi                                 4.3         3.4                  3.0
                                         Riverbank                                   3.1         3.3                  1.5
                                                                                       a
                                         Scranton                                                 0                   0.2
                                                                                       a
                                         Sunflower                                               3.1                  2.2
                                         Volunteer                                   3.7         3.7                  2.8
                                         Total                                     $19.0      $21.8                $15.0
                                         a
                                         Plants were still in an active status.




Reasons for Cost Decrease                In 1993, IOC began identifying and implementing downsizing projects that
                                         reduced ammunition plant maintenance requirements and costs.
                                         Downsizing projects included decontaminating and selling excess
                                         equipment, removing sensitive items, documenting excess real property,
                                         deactivating utilities, removing asbestos, consolidating activities, and
                                         closing buildings. These measures reduce the cost to maintain these




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plants. For example, removing sensitive items reduces security costs,
while deactivation reduces operation and maintenance costs. Further,
excessing personal property reduces fire protection requirements and
property management costs.

IOC officials also state that they have reduced inactive plants’ maintenance
costs by streamlining maintenance requirements and more rigorously
negotiating contracts. IOC has started concentrating its maintenance
requirements on facilities that are critical to production requirements,
while reducing requirements at facilities that are less critical. For example,
IOC used to maintain all of the Indiana plant. IOC had estimated that the
maintenance cost for Indiana from 1993 to 1997 would be $53.5 million. In
1993, IOC determined that only the black powder capability was required to
be maintained for its unique capability and subsequently put 8,976 of the
9,790 total acres in modified caretaker status. This action contributed to
reducing maintenance costs by an estimated $47.5 million from 1993 to
1997. In another case, IOC did not renew a contract when the contractor’s
proposal for the scope of work was four times higher than IOC’s estimates.

IOC has increased the number of technical staff who evaluate and annually
renegotiate the maintenance contracts. As a result, IOC has been able to
reduce costs by negotiating reductions in the number of contractor
personnel. On the basis of their technical expertise, IOC staff determine the
maintenance required to keep each plant in a state of readiness and the
minimum number of personnel needed. For example, at the Indiana plant,
32 positions were eliminated in 1994.

The ARMS initiative has contributed to a reduction in maintenance costs at
inactive plants. Under that initiative, the Army authorizes the ammunition
plant contractor under a facility use contract to lease buildings and
equipment to commercial tenants. The terms and payments of these
third-party leases remain between the facility use contractor and the
tenant, simplifying the Army’s involvement. In return for this authority, the
facility use contractor reduces or offsets its charges to the Army for
maintenance at that plant.

There are facility use contracts in effect at nine of the inactive plants. At
all of these plants, the ARMS initiative has produced revenue used to offset
all or part of the maintenance costs. Revenue generated through leasing
activities at both Indiana and Kansas has helped to offset the cost of
maintenance; contractors at both of these plants provide the required
maintenance at no cost to the Army. Maintenance costs at the Mississippi,



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                                      Riverbank, Sunflower, and Volunteer plants have been substantially
                                      reduced, and IOC projects that within the next few years, these plants will
                                      also be free of maintenance costs. For example, at Mississippi, leasing
                                      activities have helped reduce maintenance costs from $4.3 million in fiscal
                                      year 1994 to the current $3 million in fiscal year 1996. According to IOC
                                      officials and the facility use contractor, the cost to IOC to protect and
                                      maintain Mississippi should be zero by 1999. As leasing activity continues,
                                      IOC will likely realize further cost reductions at the other inactive
                                      ammunition plants. An IOC official explained that because of the funding
                                      delays, the full impact of the ARMS initiative was not realized until 1996.


Cost of ARMS Initiative               In 1992, under the ARMS initiative, the Congress appropriated $200 million
                                      to encourage commercial use of ammunition plants, for the purpose of
                                      reducing costs, creating private sector jobs, and retaining critical skills. IOC
                                      has obligated $57.5 million in ARMS initiative funding at the inactive plants.
                                      To date, $21.6 million has been spent on various projects, including
                                      development of strategic plans, marketing, plant and tenant modifications,
                                      and a variety of feasibility studies for reuse of existing production
                                      equipment. For example, $15 million has been obligated and $3.4 million
                                      spent to help generate interest in commercial leasing activity at the
                                      Mississippi plant. Table 2 shows the total amount of ARMS funds obligated
                                      at the inactive plants and the amount of funds actually spent on ARMS
                                      projects.

Table 2: Amount Obligated and Total
Disbursements of ARMS Funds as of     Ammunition plant                    Obligated amount        Total disbursements
May 31, 1996                          Badger                                       $364,000                   $364,000
                                      Indiana                                    21,011,000                 12,725,000
                                      Kansas                                        722,000                    544,000
                                      Longhorn                                      916,000                    916,000
                                      Louisiana                                     401,000                     32,000
                                      Mississippi                                15,818,000                  3,428,000
                                      Riverbank                                   6,963,000                  1,374,000
                                      Scranton                                      559,000                    559,000
                                      Sunflower                                     513,000                    511,000
                                      Volunteer                                  10,254,000                  1,135,000
                                      Total                                     $57,521,000                $21,588,000

                                      IOC received $10 million in initial ARMS funding in the third-quarter of 1993
                                      but did not receive any additional funds until the first-quarter of fiscal




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                             year 1995. At that time, the Army released an additional $40 million,
                             followed by $50 million in the fourth-quarter of the same year. In the
                             fourth-quarter of fiscal year 1995, the Army reprogrammed $100 million of
                             the $200 million ARMS appropriation to fund other Army programs.

                             In addition to the ARMS initiative, there are costs of downsizing and
                             modernization that are part of retaining inactive plants. For example,
                             downsizing projects at the inactive plants have cost the Army a total of
                             $56.2 million since 1990. In the last decade, over $52 million has been
                             appropriated for modernization projects at the Badger plant. The plant has
                             not been reactivated and the upgraded or new facilities have never been
                             used.


                             Retention costs of inactive plants could be eliminated if the Army
Opportunities to             determines that these plants are unneeded and declares them excess.
Reduce Infrastructure        Currently, the Army retains plants or large portions of plants that are in
Costs Even Further           excess of its mission requirements. The Federal Property Management
                             Regulation requires agencies to conduct annual reviews of real property to
                             ensure prompt identification and release of unneeded or underutilized
                             property. Additionally, each agency is to maintain the minimum inventory
                             necessary to conduct its mission.


Excess Replenishment         In 1996, IOC prepared an economic analysis of the 10 inactive plants. This
Property That Could Be       analysis shows that six of these plants might be needed to meet inventory
Eliminated at Three Plants   replenishment requirements following two concurrent major regional
                             conflicts. However, this requirement is subject to review as (1) DOD
                             rethinks its requirements to respond to the two major concurrent regional
                             conflicts, (2) war-fighting strategies and weapons technology reduce
                             current ammunition requirements, and (3) DOD seeks to fund weapon
                             modernization costs through infrastructure cost reductions.

                             Even if the Army retains all six replenishment plants, only a portion of the
                             property and infrastructure at the Kansas, Louisiana, and Sunflower plants
                             is needed to meet replenishment requirements. Table 3 shows that there
                             are over 37,000 acres of property in excess of what is needed for
                             replenishment requirements at these plants.




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Table 3: Acreage in Excess of IOC’s
Replenishment Requirement                                                             Acres retained for
                                         Ammunition plant             Total acres        replenishment                   Excess
                                         Kansas                            13,727                   121                  13,606
                                         Louisiana                         14,974                    90                  14,884
                                         Mississippi                        4,377                 4,377                       0
                                         Riverbank                            168                   168                       0
                                         Scranton                            15.3                  15.3                       0
                                         Sunflower                          9,500                   400                   9,100

                                         IOC officials state that they are unable to excess most of this property,
                                         given the environmental contamination and the prohibitive cost of
                                         remediation. Nevertheless, in July 1996, the Army Materiel Command, IOC’s
                                         parent command, tasked IOC to review its requirements for real property
                                         and to document any excess property. The Army Materiel Command
                                         recommended that preliminary reports of excess property be submitted
                                         without the extensive environmental documentation that normally
                                         accompanies the report. According to IOC officials, they are in the process
                                         of reviewing all of their property holdings. Further, an internal memo
                                         states that the Army should no longer retain title to plants unless it has a
                                         bona fide production requirement. Recent amendments to the
                                         Comprehensive Environmental Response, Compensation, and Liability Act
                                         could ease the transfer of contaminated property.


Four Plants That Could Be                IOC officials state that the Badger, Indiana, Longhorn, and Volunteer plants
Eliminated                               are retained for their unique production capabilities that could be vital for
                                         future needs. However, according to Department of Army guidance, these
                                         plants must be economical to retain. IOC contends that the alternative
                                         sources it has identified for the items produced at these plants have
                                         experienced production delays and that the risks of not being able to
                                         obtain these items justify the cost of maintaining these plants. Table 4 lists
                                         the four plants’ unique capabilities and the alternative sources available.

Table 4: Alternative Production
Sources for Items Produced at Inactive                                                            Alternate sources
Plants Retained for Unique               Plant                      Item                          currently identified
Capabilities                             Badger                     Propellent                    Radford Ammunition Plant
                                                                    Ball propellent               Olin-St. Marks
                                         Indiana                    Black powder                  Goex, Inc.
                                         Longhorn                   HMX (MUSALL)                  Holston Ammunition Plant
                                         Volunteer                  Trinitrotoluene (TNT)         Radford Ammunition Plant




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The Badger and Volunteer plants are retained to back up Radford, an
active plant. IOC retains these plants because Radford has experienced
production delays due to explosions. However, after the last explosion in
1985 impaired Radford’s ability to manufacture an item that could be
produced at Badger, IOC did not reactivate Badger; instead, it used a
commercial supplier. According to an IOC official, reactivating Badger
would have been administratively difficult and too expensive. In addition,
IOC justifies retaining the Indiana plant on the basis of its being the only
government source of black powder. However, IOC purchases black
powder from a commercial supplier to meet its requirements.

In June 1996, IOC declared Longhorn excess to its mission, when the
operating contractor’s proposal to maintain the facility was higher than
IOC’s estimates. According to an IOC official, on the basis of the economic
analysis, excessing the Longhorn plant was the most cost-effective option.
Nevertheless, the Army has yet to formally excess Longhorn or initiate the
disposal process.

Even if the Army believes that the unique capabilities justify the cost of
retaining these plants, only a small portion of the facilities at the Indiana
and Badger plants is needed to meet those requirements. The map in
figure 2 shows the small portion of the Indiana plant that is retained for
the black powder capability. A similar situation exists at the Badger plant.




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Figure 2: Indiana Army Ammunition Plant




                                                     Ohio River

                                                                                                                  River Ridge
                                                                                                                   Housing




                   Black Powder Manufacturing                                                                                   Igloo Area
                             Plant
                                                                                          Powder Preparation
                                                                                                Area




                                                                                                                                                          Propellent
                                                Propellent & Explosives Area                                   Igniter                                     Charge
                                                                                                                Lines           Propellent Charge Lines     Lines




                                                           Source: U.S. Army.



                                                           Maintenance costs at each base vary depending on its size, infrastructure,
Maintenance Costs                                          location, and the extent and conditions of leases. Maintenance costs at the
Differ at Bases Closed                                     35 bases in our review ranged from $13,000 to $9 million in
Under the BRAC                                             fiscal year 1996. (App. II shows maintenance costs at these bases.) For
                                                           example, maintaining Moffet Field Naval Air Station (which was originally
Process                                                    1,577 acres, of which 1,440 acres were transferred to the National
                                                           Aeronautics and Space Administration) cost $13,000. At the other extreme,
                                                           DOD spent $9 million at Loring Air Force Base. The high cost of
                                                           maintenance at Loring Air Force Base relates to its size (8,700 acres),
                                                           infrastructure (over 3 million square feet of facilities), and location (the
                                                           most northernly portion of Maine, where the winter is harsh).

                                                           There is no set formula for establishing maintenance levels at each base.
                                                           For example, not all housing has heat and air-conditioning provided—only
                                                           those units identified with reuse potential are maintained. The services are
                                                           supposed to collaborate with the community to determine what
                                                           maintenance levels will be performed. In cases where communities are not
                                                           actively involved in reuse, the services will establish maintenance levels
                                                           on their own. The level of activities is related to the community’s intended



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                              reuse, the amount and type of infrastructures, the base’s size, and climatic
                              conditions.

                              The cost of maintaining bases is also affected by leasing. Leasing is
                              encouraged by the services, because it reduces the level of funding they
                              must provide to closed installations but still preserves federal assets.
                              Leasing is also valued by communities, as it can both provide a source of
                              revenue and stimulate redevelopment on the base. Leases may be for rent
                              or maintenance services. In general, leasing decreases the services’
                              maintenance costs, because either tenants’ rental payments offset the
                              services’ costs or tenants provide these services in lieu of rent.

                              Although the first round of base closure decisions occurred in 1988, it is
                              too early to determine trends in maintenance costs. Because these bases
                              did not close immediately after they were identified for closure, not
                              enough data are available for identifying cost trends. For example, George
                              Air Force Base closed in December 1992, 4 years after it was identified in
                              the BRAC 1988 round. Further complicating the analysis, closures often
                              occurred midyear and the associated maintenance costs reflect only that
                              period. Those costs cannot be compared with a full year of maintenance
                              cost to determine if costs are increasing or decreasing. Additionally,
                              one-time costs associated with the closure, such as purchasing
                              maintenance uniforms and computers or the movement of personnel, may
                              or may not be included in the first year’s costs and thus make comparisons
                              with the second year’s cost data difficult.


Maintenance Levels Are        As a benefit to the community, the services usually continue maintaining
Not Tied to Amount of         closed bases at initial levels until the property is conveyed. In most cases,
Time It Takes to Transfer a   it takes several years—sometimes 6 or more—before final agreements are
                              reached with the community to convey the property. The length of time
Base to Community             that the services are required to maintain these properties at initial levels
                              varies depending on the closure round. Levels of initial maintenance for
                              bases closed in the 1988 round could be reduced by late 1995; maintenance
                              levels at bases closed in the 1991 round could be reduced as of mid-1996.1
                              Once the period for the initial levels of maintenance elapses, the services
                              are to reduce the levels of maintenance consistent with federal
                              government standards for surplus property. However, if requested by the
                              communities, these initial levels can be extended by the service
                              secretaries.

                              1
                               Subsequently, in the 1993 and 1995 rounds, the time frame for reducing the initial maintenance levels
                              was shortened to 1 year after operational closure or 180 days after the record of disposal was
                              approved by the service secretary.



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Service officials told us that, in general, maintenance levels have not been
reduced from their initial levels, even where progress toward reuse has
been slow. They noted that the communities strongly advocate
maintaining existing levels of maintenance and that the Congress and the
President have supported efforts to assist communities experiencing base
closures. Further, the services’ maintenance manuals recognize that the
public and the Congress expect facilities to be maintained to support
reuse.

While we understand that there is a need to provide maintenance, there
are indications the cost of doing this may be higher than necessary. For
example, service and Office of the Secretary of Defense officials note that,
while they are committed to supporting communities’ reuse of the
property, maintenance costs are not declining and may extend beyond the
6-year BRAC time frame for closures. To contain these costs the services
are considering ways to tie maintenance funding to each community’s
redevelopment progress. For example, the services are developing criteria
to assess community redevelopment efforts. Recently, when the Air Force
was negotiating provisions for the extension of the cooperative agreement
for maintenance at Loring, the Office of the Secretary of Defense
suggested that the Air Force negotiate some performance criteria (e.g.,
leases signed, jobs created, areas occupied, or increases in state or local
expenditures on the reuse implementation effort) to assess the
community’s efforts to develop the property.

Navy officials stated that they have an obligation to maintain BRAC
property at initial levels for some period of time. However, to address the
ongoing costs of providing maintenance, the Navy plans to implement a
policy to control maintenance costs at BRAC bases by tying levels of
maintenance to the communities’ redevelopment plans and establishing
clear limits on the level and amount of funding that will be provided to
those bases that are not in active reuse. The Navy policy would decrease
the amount of funding available over the 6-year period in which closures
must take place. By the 6th year, if the property was not in active reuse,
the Navy would turn off utilities, abandon unoccupied facilities, and
provide only minimal security to prevent trespassing.

This policy would give the Navy some leverage at sites where the
community has expressed interest in the property, but progress toward
reuse appears minimal. For example, the Navy has been negotiating the
disposal of Hunters Point Annex with the city of San Francisco, but
agreeing on the terms of transfer has been difficult. The Navy has entered



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                    into many small-business leases at the base, but the leases generate only
                    about $1 million in revenue, compared with the $3 million the Navy now
                    spends on providing caretaker services at the site. An established Navy
                    policy of reduction in services could provide some incentive to settle the
                    terms of transfer.



Contractor
Maintenance Is
Adequate

Ammunition Plants   Inactive plants are maintained by the contractors who formerly operated
                    them; IOC retains the operating contractors for their technical expertise
                    and to ensure that critical skills are preserved. IOC determines what
                    maintenance tasks are required at each facility to ensure that the plant can
                    meet its production commitment in the required time frames. These tasks
                    are contained in the scope of work or maintenance plan.

                    At the plants we visited, contractors were satisfactorily performing the
                    maintenance tasks called for in the scope of work established by IOC.
                    Civilian Army personnel were ensuring that the tasks were completed
                    properly. During site visits, we compared activities in the scope of work
                    with the physical conditions at the plant. We verified by comparing
                    requirements with maintenance records that contractors were meeting
                    their contract commitments. According to IOC officials, they monitor the
                    contractors to ensure they fulfill their contractual obligations and, if
                    problems are identified, processes exist to ensure they are corrected.

                    The Army contracts only for a level of maintenance necessary to allow a
                    plant to reactivate and meet production levels within a required time
                    frame. This does not require keeping plants in a higher operating
                    condition. For example, we inspected the Mississippi plant, randomly
                    selecting buildings and equipment, and saw some deterioration. We
                    observed peeling paint and disassembled production lines. Figure 3 shows
                    disassembled equipment at the Mississippi plant. Contractor and Army
                    personnel explained that (1) the paint was peeling off of galvanized steel
                    and would not impair production capabilities and (2) production
                    equipment is disassembled and left at its original location to facilitate
                    reassembly, prevent the potential loss of components, and eliminate the
                    cost of storage. The conditions we saw at Mississippi were not unique; we



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                                      found similar conditions at other plants. Army and contractor personnel
                                      explained that these were common occurrences and were appropriately
                                      addressed given the scope of work requirements.


Figure 3: Disassembled Equipment at
Mississippi Plant




Closed Bases                          The bases we selected for site inspection were maintained according to
                                      contracts or agreements with DOD. We visited six BRAC bases and compared
                                      the maintenance levels with the physical conditions at all six bases. We
                                      randomly selected buildings and toured the premises, finding that the
                                      majority of the buildings and grounds were being maintained according to
                                      the levels set forth in the cooperative agreement or maintenance contract.
                                      Additionally, civilian military and service personnel were in most cases
                                      ensuring that the tasks were completed. Most community officials were
                                      likewise satisfied with the bases’ conditions. Figures 4 and 5 show the
                                      condition of the bases we visited.




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Figure 4: Housing, Loring Air Force
Base




Figure 5: Housing, Fort Sheridan




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                                     At each selected base, we inspected the premises for evidence of
                                     deterioration. In the majority of cases, the buildings were weather tight
                                     and secure. However, in one instance, we found substantial deterioration.
                                     At Brooklyn Naval Station, buildings were vandalized and looted. (See
                                     fig. 6.) External and internal plumbing, stoves and refrigerators, and
                                     essentially anything that was removable were taken. Naval personnel
                                     explained that the vandalism occurred between 1991 and 1994, when the
                                     Navy essentially provided no maintenance other than heat and electricity.
                                     According to the Commanding Officer, the Navy abandoned Brooklyn to
                                     minimize its expenses. However, a full-time security force now patrols the
                                     base 7 days a week, 24 hours a day.


Figure 6: Naval Hospital, Brooklyn
Naval Station




                                     We recommend that the Secretary of the Army begin the disposal
Recommendations                      determination process for (1) all excess real property not needed for
                                     replenishment requirements at the Kansas, Louisiana, and Sunflower Army
                                     ammunition plants and (2) all inactive plants retained only for their unique
                                     capabilities when those capabilities can be adequately provided by other
                                     sources. An integral part of this process will be identifying the costs
                                     involved in accomplishing the disposal of unneeded properties.




                                     Page 16                                          GAO/NSIAD-97-56 Military Bases
              B-272660




              We also recommend that the service secretaries establish incentives for
              communities to speed up the transfer of closed bases. Specifically, after
              the initial maintenance period has elapsed, which varies by BRAC rounds,
              the services should establish criteria for a phased drawdown of
              maintenance until minimum maintenance levels are reached.


              Our review included the 10 inactive army ammunition plants and the 35
Scope and     bases closed in the 1988 and 1991 BRAC rounds that had maintenance
Methodology   contracts or cooperative agreements in place.2 We selected the 1988 and
              1991 rounds because cost information was available. Cost information for
              the 1993 or 1995 rounds is generally not available, since operational
              closure in the majority of cases has not yet occurred. We performed work
              at the Pentagon, Army Material Command, Industrial Operations
              Command, Air Force Base Conversion Agency, and the Naval Facilities
              Engineering Command. We interviewed DOD officials, operating
              contractors, local reuse authorities, and tenants. We obtained and
              reviewed information provided by the services and visited the following
              selected sample of installations: Badger Army Ammunition Plant,
              Wisconsin; Indiana Army Ammunition Plant, Indiana; Mississippi Army
              Ammunition Plant, Mississippi; and Volunteer Army Ammunition Plant,
              Tennessee; Brooklyn Naval Shipyard, New York; Fort Sheridan, Illinois;
              Hunters Point Annex, California; Jefferson Proving Ground, Indiana;
              Loring Air Force Base, Maine; and Williams Air Force Base, Arizona. We
              chose these bases because they were located across the continental
              United States and in both urban and rural areas and were generally among
              the most costly.

              To calculate the cost to maintain all 35 military installations in our sample,
              we collected and analyzed historical cost information. In the sample
              selected for site visits, we also reviewed contracts or cooperative
              agreements for maintenance and contractor cost data. The scope of our
              work did not include an in-depth review of the cost of the ARMS program.

              We did not review or test the reliability of DOD’s reported cost information
              discussed in this report as part of this assignment. However, DOD has
              acknowledged, and our financial statement audit work has consistently
              confirmed, significant problems with the comprehensiveness and accuracy
              of DOD’s reported cost information. We present this cost information
              because it was the only relevant data readily available and because it was

              2
               Forty-two major bases in total were closed during the 1988 and 1991 closure rounds. However, only 35
              bases had either cooperative agreements or maintenance contracts in place.



              Page 17                                                          GAO/NSIAD-97-56 Military Bases
                  B-272660




                  not practical within the constraints of this review for us to identify and
                  accumulate more reliable cost information from other sources.
                  Consequently, the DOD-reported cost information presented in this report
                  should be considered as an order of magnitude estimate of actual costs. As
                  such, actual costs may be significantly greater or less than DOD’s reported
                  costs.

                  To determine if inactive facilities are still needed, we reviewed the
                  Defense Planning Guidance, which is used to established requirements for
                  facilities. We reviewed documents to identify facilities or portions of
                  facilities needed to satisfy the requirements. We interviewed agency
                  officials to confirm the requirements. We reviewed the Federal Property
                  and Administrative Services Act of 1949, as amended, and the Federal
                  Property Management Regulation to determine what should be done with
                  facilities that are no longer needed.

                  To determine the adequacy of contractor maintenance, we reviewed
                  maintenance contracts or agreements and compared maintenance
                  procedures with requirements. For the ammunition plants, we reviewed
                  the procedures followed by IOC and contractor personnel for assessing the
                  maintenance required to ensure the plants could be remobilized and meet
                  production in the required time frames. We did not test to determine
                  whether the levels of maintenance contained in the scope of work would
                  allow a plant to meet remobilization time frames. We did randomly inspect
                  facilities to ensure that maintenance procedures were followed and
                  completed as stipulated in the contract or cooperative agreement. In
                  addition, we interviewed Administrative Contracting Officers, Contracting
                  Officer Representatives, and site managers to assess services’
                  performance in ensuring that contract requirements are met. We
                  performed our review in accordance with generally accepted government
                  auditing standards between April and November 1996.


                  In commenting on a draft of this report, DOD partially concurred with the
Agency Comments   report, partially concurred with the first recommendation, and concurred
                  with the second recommendation. DOD said that the Army is currently
                  assessing the ammunition industrial base and the assessment is to be
                  completed and submitted to the Congress by June 1997. Therefore, at this
                  time, DOD only agreed with the disposal of Longhorn Army Ammunition
                  Plant and said that it would address the other plants in its June report to
                  the Congress. DOD’s comments are provided in appendix I.




                  Page 18                                          GAO/NSIAD-97-56 Military Bases
B-272660




We are sending copies of this report to the Secretaries of Defense, the
Army, the Navy, and the Air Force; the Director, Office of Management and
Budget; and other interested parties. We will also make copies available to
others upon request.

Please contact me at (202) 512-8412 if you or your staff have any questions
concerning this report. Major contributors to this report are listed in
appendix III.




David R. Warren, Director
Defense Management Issues




Page 19                                         GAO/NSIAD-97-56 Military Bases
Contents



Letter                                                                                            1


Appendix I                                                                                       22

Comments From the
Department of
Defense
Appendix II                                                                                      25

Protection and
Maintenance Costs at
Closed Bases
Appendix III                                                                                     27

Major Contributors to
This Report
Appendix IV                                                                                      28

Related GAO Products
Tables                  Table 1: Maintenance Costs of Inactive Ammunition Plants                  4
                        Table 2: Amount Obligated and Total Disbursements of ARMS                 6
                          Funds as of May 31, 1996
                        Table 3: Acreage in Excess of IOC’s Replenishment Requirement             8
                        Table 4: Alternative Production Sources for Items Produced at             8
                          Inactive Plants Retained for Unique Capabilities

Figures                 Figure 1: Active and Inactive Army Ammunition Plants                      2
                        Figure 2: Indiana Army Ammunition Plant                                  10
                        Figure 3: Disassembled Equipment at Mississippi Plant                    14
                        Figure 4: Housing, Loring Air Force Base                                 15
                        Figure 5: Housing, Fort Sheridan                                         15
                        Figure 6: Naval Hospital, Brooklyn Naval Station                         16




                        Page 20                                       GAO/NSIAD-97-56 Military Bases
Contents




Abbreviations

ARMS       Armament Retooling and Manufacturing Support
BRAC       base realignment and closure
DOD        Department of Defense
IOC        Industrial Operations Command


Page 21                                     GAO/NSIAD-97-56 Military Bases
Appendix I

Comments From the Department of Defense




             Page 22           GAO/NSIAD-97-56 Military Bases
                Appendix I
                Comments From the Department of Defense




Now p. 16.




Now on p. 17.




                Page 23                                   GAO/NSIAD-97-56 Military Bases
Appendix I
Comments From the Department of Defense




Page 24                                   GAO/NSIAD-97-56 Military Bases
Appendix II

Protection and Maintenance Costs at Closed
Bases


Dollars in millions
                                                         Closure date   FY 1994   FY 1995     FY 1996          Total
Army Installation
                                                                              a         a
Army Material Technology Laboratory, Mass.               9/95                                   $1.702        $1.702
Fort Sheridan, Ill.                                      5/93            $2.965    $3.912        3.045         9.922
Fort Wingate, N.Mex.                                     1/93             0.639     0.222        0.334         1.195
                                                                              b
Hamilton Army Airfield, Calif.                           10/93                      0.929        0.414         1.343
Jefferson Proving Ground, Ind.                           9/95             0.054     0.910        0.333         1.297
                                                                              a
Woodbridge Research Facility, Va.                        9/94                       0.400        0.232         0.632
Total Army                                                               $3.658    $6.373       $6.060       $16.091
Navy Installation
                                                                              b
Brooklyn Naval Station, N.Y.                             7/93                      $1.717       $1.429        $3.146
                                                                              b
Davisville Naval Construction Battalion Center, R.I.     4/94                       0.757        0.712         1.469
Hunters Point Annex, Calif.                              4/94            $0.809     4.059        3.456         8.324
                                                                              b
Long Beach Naval Hospital, Calif.                        3/94                       0.332        0.229         0.561
                                                                              b
Long Beach Naval Station, Calif.                         10/94                      0.485        1.116         1.601
                                                                              b
Moffett Field Naval Air Station, Calif.                  7/94                       0.026        0.013         0.039
                                                                              b
Philadelphia Naval Hospital, Pa.                         9/93                       1.598        0.373         1.971
                                                                              b
Philadelphia Naval Station, Pa.                          1/96                       0.436        5.381         5.817
                                                                              b
Puget Sound Naval Station (Sand Point), Wash.            9/95                       1.229        1.892         3.121
                                                                              b         a
Warminster Naval Air Warfare Center, Pa.                 3/97                                    0.098         0.098
Total Navy                                                               $0.809   $10.639      $14.701       $26.149
Air Force Installation
Carswell Air Force Base, Tex.                            9/93            $7.540    $4.117       $4.354       $16.011
Castle Air Force Base, Calif.                            9/95             0.300     4.060        4.468         8.828
Chanute Air Force Base, Ill.                             9/93             8.162     5.845        2.399        16.406
Eaker Air Force Base, Alaska                             12/92            3.521     4.205        2.267         9.993
England Air Force Base, La.                              12/92            4.156     8.009        0.854        13.019
George Air Force Base, Calif.                            12/92            4.919     4.716        1.813        11.448
Grissom Air Force Base, Ind.                             9/94             5.285     3.268        1.640        10.193
Loring Air Force Base, Maine                             9/94             9.054     7.091        9.063        25.208
Lowry Air Force Base, Colo.                              9/94             7.686     6.128        2.665        16.479
Mather Air Force Base, Calif.                            9/93            11.559     6.888        4.864        23.311
Myrtle Beach Air Force Base, S.C.                        3/93             2.725     3.139        2.715         8.579
Norton Air Force Base, Calif.                            3/94             8.530     5.486        3.810        17.826
Pease Air Force Base, N.H.                               3/91             8.350     7.581        1.246        17.177
Richards-Gebaur Air Reserve Station, Mich.               9/94             2.113     2.085        0.858         5.056
                                                                                                          (continued)




                                               Page 25                                 GAO/NSIAD-97-56 Military Bases
                                    Appendix II
                                    Protection and Maintenance Costs at Closed
                                    Bases




Dollars in millions
                                                         Closure date             FY 1994    FY 1995         FY 1996           Total
Air Force Installation
Rickenbacker Air Guard Base, Ohio                        9/94                      $1.732      $3.539          $4.082         $9.353
Williams Air Force Base, Ariz.                           9/93                       5.102       4.615             3.354       13.071
Wurtsmith Air Force Base, Mich.                          6/93                      11.440       9.619             5.237       26.296
Total Air Force                                                               $102.174        $90.391        $55.689        $248.254
Total DOD                                                                     $106.641       $107.403        $76.450        $290.494

                                    Notes:

                                    1. The table excludes environmental remediation costs.

                                    2. Figures at Army installations exclude onetime costs funded by the base closure and
                                    realignment process.

                                    3. The table excludes Chase Naval Station and Salton Sea Test Base because the Navy did not
                                    provide figures due to minimal costs at these bases.
                                    a
                                    Not applicable because the services indicated that costs were not incurred.
                                    b
                                        Data were not provided by the services.

                                    Source: Army, Navy, Air Force




                                    Page 26                                                         GAO/NSIAD-97-56 Military Bases
Appendix III

Major Contributors to This Report


                        James F. Wiggins
National Security and   John J. Klotz
International Affairs
Division, Washington,
D.C.
                        Patricia J. Nichol
Dallas Field Office
                        Gary W. Ulrich
San Francisco Field     Leo G. Acosta
Office                  Julie M Hirshen
                        Jonathan Silverman




                        Page 27              GAO/NSIAD-97-56 Military Bases
Appendix IV

Related GAO Products


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

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

              Closing Maintenance Depots: Savings, Workload, and Redistribution
              Issues (GAO/NSIAD 96-29, Mar. 4, 1996).

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

              Military Bases: Challenges in Identifying and Implementing Closure
              Recommendations (GAO/T-NSIAD-95-107, Feb. 23, 1995).

              Military Bases: Environmental Impact at Closing Installations
              (GAO/NSIAD-95-70, Feb. 23, 1995).

              Military Bases: Reuse Plans for Selected Bases Closed in 1988 and 1991
              (GAO/NSIAD-95-3, Nov. 4, 1994).




(709191)      Page 28                                         GAO/NSIAD-97-56 Military Bases
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