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. Page 1 GAO/NSIAD-97-56 Military Bases B-272660 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. Page 2 GAO/NSIAD-97-56 Military Bases B-272660 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 Page 3 GAO/NSIAD-97-56 Military Bases B-272660 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 Page 4 GAO/NSIAD-97-56 Military Bases B-272660 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, Page 5 GAO/NSIAD-97-56 Military Bases B-272660 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 Page 6 GAO/NSIAD-97-56 Military Bases B-272660 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. Page 7 GAO/NSIAD-97-56 Military Bases B-272660 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 Page 8 GAO/NSIAD-97-56 Military Bases B-272660 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. Page 9 GAO/NSIAD-97-56 Military Bases B-272660 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 Page 10 GAO/NSIAD-97-56 Military Bases B-272660 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. Page 11 GAO/NSIAD-97-56 Military Bases B-272660 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 Page 12 GAO/NSIAD-97-56 Military Bases B-272660 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 Page 13 GAO/NSIAD-97-56 Military Bases B-272660 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. Page 14 GAO/NSIAD-97-56 Military Bases B-272660 Figure 4: Housing, Loring Air Force Base Figure 5: Housing, Fort Sheridan Page 15 GAO/NSIAD-97-56 Military Bases B-272660 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 Ordering Information The first copy of each GAO report and testimony is free. Additional copies are $2 each. Orders should be sent to the following address, accompanied by a check or money order made out to the Superintendent of Documents, when necessary. 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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)