oversight

Military Infrastructure: Real Property Management Needs Improvement

Published by the Government Accountability Office on 1999-09-07.

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

                   United States General Accounting Office

GAO                Report to the Chairman and Ranking
                   Minority Member, Subcommittee on
                   Readiness and Management Support,
                   Committee on Armed Services, U.S.
                   Senate
September 1999
                   MILITARY
                   INFRASTRUCTURE

                   Real Property
                   Management Needs
                   Improvement




GAO/NSIAD-99-100
United States General Accounting Office                                                                  National Security and
Washington, D.C. 20548                                                                            International Affairs Division



                                    B-280230                                                                                         Letter

                                    September 7, 1999

                                    The Honorable James M. Inhofe
                                    Chairman
                                    The Honorable Charles S. Robb
                                    Ranking Minority Member
                                    Subcommittee on Readiness and
                                    Management Support
                                    Committee on Armed Services
                                    United States Senate

                                    The Department of Defense’s (DOD) management of the maintenance of its
                                    properties has concerned the Congress because of the long-standing
                                    absence of accurate data for making funding decisions and increasing
                                    backlogs in infrastructure repairs. As requested, our review of real
                                    property maintenance (RPM) management focused on the properties that
                                    the services maintain and repair using RPM funds from DOD’s operation
                                    and maintenance (O&M) account.1 Specifically, we (1) analyzed how the
                                    services determine and prioritize maintenance and repair requirements and
                                    how they allocate resources to meet their needs, (2) identified promising
                                    practices2 in facility management that the services could consider, and
                                    (3) identified barriers to implementing promising practices and ways to
                                    address them.

                                    To address our objectives, we sent questionnaires to 571 military bases and
                                    major commands3 worldwide; interviewed RPM personnel at 35 bases and
                                    commands nationwide;4 reviewed literature of RPM experts; and


                                    1
                                     These funds cover expenses for a wide variety of property controlled by the military services, for
                                    example, barracks, administrative and training facilities, utility systems, runways, schools, and grounds
                                    maintenance. O&M RPM funds are not to be used for significant portions of property, such as family
                                    housing and medical facilities, which are paid for separately. RPM for many industrial-related activities
                                    is covered separately in contracts. O&M also covers civilian pay, fuel, supplies, repair parts, and
                                    military operations.
                                    2
                                     Promising practices are not necessarily fully proven, but rather are those that appear to be designed
                                    logically to work well and that seem worthy of wider trial involving sound evaluation.
                                    3
                                     We received responses from 529, or 93 percent. Major commands are the administrative entities for
                                    bases with similar missions, such as the fighter bases that are part of the Air Force’s Air Combat
                                    Command.
                                    4
                                     A complete list of sites visited may be found in app. IX, Objectives, Scope, and Methodology.




                   Leter            Page 1                                             GAO/NSIAD-99-100 Real Property Management
                      B-280230




                      interviewed more than two dozen RPM experts and officials at U.S.
                      corporate, university, religious and governmental entities. Appendix IX
                      further describes our scope and methodology.



Results in Brief      DOD does not have a comprehensive strategy for maintaining the services’
                      infrastructure. Rather, each service sets its own standards for maintaining
                      infrastructure. As a result, the services differ in the way they rate property
                      conditions, prioritize repairs, and allocate resources. For example, a
                      barracks rated “satisfactory” by one service may be rated as
                      “unsatisfactory” by another. Also, within each service, answers to our
                      survey indicated that bases and major commands apply condition and/or
                      criteria for rating repairs differently. As a result, the service headquarters
                      cannot be certain that the most critical properties in need of maintenance
                      and repair are targeted. Given incomplete and inconsistent data, and
                      different RPM rating systems among the services, the Congress cannot be
                      assured that it is funding maintenance and repairs that will provide the best
                      return on its investment.

                      There is little relationship between identified RPM needs and the funds the
                      services allocate for RPM. None of the services’ RPM spending plans
                      provide sufficient funding to keep their total backlog of repairs at current
                      levels; under new Navy plans, the total critical-rated backlog will crest in
                      fiscal year 2003, and very slowly diminish thereafter.5 Although DOD
                      instructed the services in July 1997 to fund RPM to enable them to meet
                      75 percent of their RPM requirements by 2003, DOD removed that goal
                      from an updated guidance in April 1999.6 Because the services’
                      headquarters consistently underfund requirements, base and command
                      officials request funding to cover only a portion of RPM needs. For fiscal
                      year 1997, major commands we surveyed reported they requested funding
                      to cover an average of about one-fifth of the RPM needs of their bases and
                      bases reported receiving funding equal to only about one-sixth of their
                      needs. (In response to the draft version of this report, the Navy staff at its
                      headquarters Facilities and Engineering Division stated that a message had
                      been sent to major claimants and bases that all critical RPM needs should




                      5
                       The Navy divides its backlog into “critical” and “deferrable”; only the critical backlog is officially
                      reported to the Congress, although both types are tracked by the Navy.
                      6
                       DOD, Defense Planning Guidances for Fiscal Years 1999–2003 and 2001–2005.




              Leter   Page 2                                              GAO/NSIAD-99-100 Real Property Management
B-280230




be reported. However, this did not apply to non-critical RPM. Non-critical
repairs can deteriorate into critical over time.)

Many promising practices exist in the RPM area, including

• establishing a single system for counting and categorizing inventory;
• having a single, valid engineering-based system for assessing facility
  conditions, with adequately trained personnel and multiple levels of
  review;
• prioritizing budget allocations based on physical condition, relevance of
  facilities to the mission, and life-cycle costing and budgeting;
• setting up a single property maintenance budget that is controlled by a
  central office with the power to shift resources to facilities in the
  greatest need;
• creating incentives to demolish or vacate excess space;
• restricting the use of RPM funds for other maintenance purposes; and
• charging an annual maintenance fee, based on square feet used, to
  ensure adequate funding for facilities and to create an incentive for
  space conservation.

Two nonmilitary organizations—the Capital Needs Analysis Center of the
Church of Latter-day Saints at Brigham Young University and Lawrence
Livermore National Laboratory7—have facility management systems that
collectively use all of these practices. Both report these practices enable
them to maintain needed facilities at common levels, stabilize repair
backlogs, accurately predict future RPM needs, satisfy customers that RPM
funds are allocated fairly and based on actual need, and prepare credible
budget requests. Similarly, a military organization—the U.S. Army Health
Facility Planning Agency—is implementing a life-cycle investment strategy
that it expects to reduce major repair costs by 50 percent and cut
programming time from years to months.

None of the military services has implemented all the promising practices
for RPM, and their adoption of these practices is hampered by several
barriers, including




7
 The Laboratory, part of the University of California, is a management and operating contractor for the
U.S. Department of Energy. It derives most of its budget from the Department and has a 5-year
contract.




Page 3                                            GAO/NSIAD-99-100 Real Property Management
             B-280230




             • the use of RPM funds for other operations and maintenance purposes,
               complicating budget and contract stability;
             • the lack of common standards for allotting space to certain types of
               facilities;
             • the use of multiple budget accounts to pay for RPM, making it difficult
               to determine the cost of maintaining facilities;
             • incomplete and noncomparable RPM data;
             • legal and administrative restrictions that, while having distinct
               purposes, may hamper the services’ ability to cost-effectively address
               RPM issues; and
             • insufficient training of personnel involved in assessing facility
               conditions.

             DOD and the services have multiple options for addressing these barriers,
             including changing their facility rating and cost accounting systems. We
             are making recommendations to DOD to improve its management of
             infrastructure.



Background   According to the Office of the Secretary of Defense (OSD), the military
             services are collectively responsible for maintaining more real property
             than any other entity in the world—more than 320,000 buildings (with
             about 2.1 billion square feet), tens of thousands of miles of roads, and
             1.1 million square yards of pavement (like runways). DOD estimates the
             plant replacement value8 (PRV) of this property at more than $500 billion.
             RPM—which includes daily maintenance, small repairs, and minor
             construction (projects under $500,000 or environmental and health
             projects under $1 million)—is funded through the O&M account. Facilities
             maintained by the O&M RPM funds include the services’ barracks,
             administrative space, classrooms, ports, hangars and runways, roads and
             railroads, day care centers, schools and churches, and utility structures and
             systems (but not the cost of utilities’ consumption). RPM for family
             housing, many industrial-related and military medical facilities is funded by
             separate accounts.



             8
              No standard definition of PRV could be identified; however, the Federal Facilities Council cites two
             methods used by federal agencies in report no. 131, Budgeting for Facilities Maintenance and Repair
             Activities (Washington, D.C., 1996), pp. 10-11. In 1997, we defined PRV as “the cost to replace current
             facilities using today’s construction costs and standards.” See Defense Infrastructure: Demolition of
             Unneeded Buildings Can Help Avoid Operating Costs (GAO/NSIAD-97-125, May 1997), p. 7. See
             app. VIII for a discussion of PRV-related issues.




             Page 4                                            GAO/NSIAD-99-100 Real Property Management
B-280230




Each service headquarters sets the annual budget for maintenance and
repairs based on funding constraints and other priorities. The budget is
discussed among the headquarters, central facilities management offices,
and bases and commands. Adjustments may be made if a base or
command can prove that the funds to be allocated are insufficient to meet
RPM needs.

Congressional concerns have been repeatedly expressed about DOD’s
management of RPM. Despite net congressional increases of about
$817 million for RPM over fiscal years 1992-98, the services’ reported repair
backlog increased 164 percent during the same period in nominal terms.9
Covering more than 20 years, reviews by DOD, GAO,10 the Congressional
Budget Office, and outside consulting organizations have found numerous
problems with DOD’s management of its properties. (A list of related
reports is at the end of this report.) These problems include the lack of an
overall strategy for managing RPM; unreliable and inadequate data on
facilities’ condition and inventory; lack of centralized data management
and lack of access to basic data; insufficient funding to maintain facilities,
in part resulting from moving RPM funds to other O&M accounts; 11 and
problematic service criteria for rating the condition of facilities or to
allocate resources to facilities.

As a result of a 1989 review of its RPM activities, DOD stated that it would
(1) collect RPM costs by facility investment category, (2) standardize
reports on the backlog of maintenance and repairs, (3) institute 5-year
maintenance planning, (4) standardize PRV computations, and (5) establish
a meaningful goal for RPM investments.12 However, most of these actions


9
 Data provided by OSD. We did not validate service backlog estimates. Total reported backlog
increased from $8.9 to $14.6 billion for fiscal years 1992-98. RPM increases by the Congress above
requested amounts totaled $1.615 billion during this period, but decreases totaled $798 million, for a net
plus up total of $817 million. For fiscal year 1999, according to OSD, the Congress provided a net
increase of $455 million above the request for RPM, an amount equal to almost 57 percent of the total
net increases of the previous 7 years. However, since these funds are only now being spent, the effect
on backlog has not yet been determined.
10
 See High-Risk Series: Defense Infrastructure (GAO/HR-97-7, Feb. 1997), p. 10; Defense Infrastructure:
Demolition of Unneeded Buildings Can Help Avoid Operating Costs (GAO/NSIAD-97-125, May 1997),
pp. 3 and 21; and Deferred Maintenance Reporting: Challenges to Implementation (GAO/AIMD-98-42,
Jan. 1998), pp. 32-34. Numerous other GAO reports on RPM problems date back to 1976.
11
  To prevent this practice, the Congress had included a statutory floor in each military service’s O&M
section of DOD’s appropriation acts until the late 1980s (e.g. stating that “not less than” a certain
amount “shall be available only for the maintenance of real property facilities”).
12
    DOD, Renewing the Built Environment, March 1989, Executive Summary.




Page 5                                             GAO/NSIAD-99-100 Real Property Management
                          B-280230




                          were not implemented at the time because DOD was concentrating on
                          reducing its overall infrastructure through base realignments and closures.
                          As noted in the Senate Appropriations Committee report on DOD’s
                          fiscalyear 1992 appropriations,13 most of the management problems
                          remained. To address the issues comprehensively, the Congress
                          appropriated $50 million in fiscal year 1992 for an extensive pilot test of a
                          system to evaluate the condition of all service facilities and to prioritize
                          spending using a single set of criteria. Outside contractors developed an
                          exhaustive condition assessment system with detailed standards and
                          instructions that was tested at 10 military installations between July 1994
                          and April 1995. The services rejected the system (adoption was not
                          mandatory), citing the estimated cost. However, no analysis was done to
                          compare this cost to costs the services incurred for individual annual
                          assessments.



Without an Overall        In the absence of an overall, comprehensive management strategy for
                          maintaining the services’ infrastructure,14 each service has established its
Management Strategy,      own criteria for assessing the condition of its properties and the urgency of
the Services’ RPM Is in   repairs, prioritizing RPM needs, and deciding how much to allocate for
                          RPM. As a result of the differences among the services’ systems, however,
Disarray                  a facility’s condition may be rated as “satisfactory” by one service and
                          “unsatisfactory” by another or might not be rated at all if the service rates a
                          repair project’s urgency rather than a facility’s deficiencies. Furthermore,
                          respondents to our survey reported weaknesses in their services’
                          assessment systems and a lack of trained inspectors and RPM personnel
                          overall.

                          Even though service bases do annually assess facility conditions and
                          estimate the costs of required maintenance, service headquarters fund
                          maintenance and repairs at far less than the bases’ estimates of what is
                          needed. Moreover, the major commands do not request the amount
                          actually needed to accomplish required maintenance and repairs because




                          13
                           S. Rept 102-154, pp. 79-80 (1991).
                          14
                            DOD was to issue a strategic plan for infrastructure in early 1999; however, the plan has been delayed
                          indefinitely, as funding intended for it was used for other purposes. We previously cited the absence of,
                          but need for such a plan as well as measurable goals, milestones, and actions to specific DOD
                          infrastructure problems in High-Risk Series (GAO/HR-97-7, Feb. 1997), p. 10, and in Defense
                          Infrastructure (GAO/NSIAD-97-125, May 1997), pp. 3 and 21.




                          Page 6                                             GAO/NSIAD-99-100 Real Property Management
                                B-280230




                                they believe that their headquarters will not fund RPM at that level.15 This
                                situation may lead to a bow wave of backlogged repairs, as facilities
                                continue to deteriorate when they are not maintained properly.
                                Consistently funding maintenance at levels below what is needed to
                                maintain infrastructure vitiates the intent if not the letter of OSD guidance,
                                which is meant to prevent further deterioration of infrastructure. In
                                technical comments on the draft of this report, DOD stated that the April
                                1999 update of the Defense Planning Guidance for fiscal years 2001-2005
                                requires the services to fund RPM “to at least match” each year’s planned
                                RPM spending that had been set forth in the fiscal year 2000 President’s
                                budget Future Years Defense Program. However, since none of the
                                services’ RPM funding plans for fiscal year 2000 will measurably reduce
                                existing total backlog, the spending levels do not appear sufficient to keep
                                the overall backlog steady.

                                Without data on the consistency of ratings of facilities across the services
                                and a common standard by which to compare the services’ RPM facilities’
                                conditions, OSD and the Congress cannot reliably compare or prioritize the
                                services’ budget requests for RPM. And if the services continue to delay
                                maintenance on their facilities, costs for future repairs will increase.


Services’ Rating Criteria Are   The services’ rating systems differ in how they assess facility condition,
Different                       rate the urgency of repairs, prioritize RPM needs, and allocate resources.16

                                • The Army rates facilities at three levels, from worst (red), to fair
                                  (amber), to best (green), using worksheets with both written criteria
                                  and illustrations. The Army’s Installation Status Report (ISR) provides
                                  color-coded summaries of conditions at bases and commands and for
                                  the Army as a whole, and its software generates the estimated costs of
                                  improving facilities. ISR summary data for every command and its
                                  component bases are maintained in an automated database and are
                                  accessible to facility management personnel at headquarters and to
                                  other authorized users.



                                15
                                 Although perhaps obvious, we mean the level of funding required to fully meet repair needs, rather
                                than to partially address needs. In technical comments, the Navy had stated that its major claimants
                                had based funding requests on the amounts needed to bring facilities to levels ranging from C1 (best) to
                                C3. A C3 condition is not one in which all needed repairs have been made, since it is not C1.
                                16
                                 The service’s systems are discussed in detail in apps. I, II, III, and IV.




                                Page 7                                               GAO/NSIAD-99-100 Real Property Management
B-280230




• The Air Force rates facilities’ deficiencies with regard to their estimated
  impact on four mission areas, at three levels (critical, degraded, and
  minimal) in its Facility Investment Metric (FIM) system.
• The Navy uses an engineering-based assessment to determine facilities’
  deficiencies, which it reports in the Annual Inspection Summary (AIS).
  Data from the summary is then used to rate the deficiencies’ impact on
  28 mission areas at four levels, from has fully met demands (C1) to has
  not met vital demands (C4). These ratings are shown in the Navy’s
  Shore Base Readiness Report.
• The Marine Corps, a part of the Navy, uses its Commanding Officer’s
  Readiness Reporting System and, in addition, a version of the AIS. The
  system is modeled on the Navy’s Shore Base Readiness Report, rating
  readiness in 26 mission areas at four levels, from fully mission capable
  to not mission capable.

According to our survey, bases within the same service and between the
services showed varying degrees of consensus with regard to how they
ranked the reasons that facilities and/or mission areas received a “worst”
rating. We grouped the responses from bases for eight criteria used to
assign a “worst” rating into three categories—most important, moderately
important, or least important reason for a “worst” rating for a facility or
mission area. (Results for the Marines are not included because of the very
few number of Marine bases that ranked these factors.) Figure 1 shows
how the responding bases ranked eight criteria or factors in this regard.




Page 8                               GAO/NSIAD-99-100 Real Property Management
B-280230




Figure 1: Bases’ Ratings of Importance of Criteria in Worst-Level Ratings
                                         Air Force                  Army              Navy

                Age exceeded             10   20      70       30     38   32    6      41   53
                   guidelines

              Severe physical            34   58      8        59     35   6            46   0
                                                                                 54
                   deficiency

      Significant safety/health          68   29      3        41    49    10           38   0
                                                                                 62
       /environmental defects

          Configuration did not
                   meet a goal            6   78      16       19    68    13     5     90   5
   (e.g., restroom vs. latrines)

   Configuration did not meet            14   82      4        12    82    6      10    67   24
         purpose of structure

                  Appearance              2   39      59        8    48    44     5     33   62
             severely deficient

         Inadequate space per            13   85      2        26    60    14     5     81   14
                   guidelines

           Conditions severely           73    27     0        29    62    10     72    28   0
              impede mission




    Percent of respondents rating factor as most important

     Percent of respondents rating factor as moderately important

    Percent of respondents rating factor as least important

Source: Responses to question 6, GAO survey. Totals may not add exactly to 100 percent due to
rounding.


As shown in figure 1, in terms of cross-service diversity, three times as
many Army bases as Air Force bases (30 percent vs. 10 percent) rated “age
exceeded guidelines” as a most important factor in assigning a “worst”
rating. On the other hand, more than twice as many Air Force and Navy
bases as Army bases (73 and 72 percent vs. 29 percent) cited mission
impact as a most important factor in assigning a “worst” rating. Also,
within the Army and the Air Force, bases lacked consistency on the



Page 9                                              GAO/NSIAD-99-100 Real Property Management
                                                  B-280230




                                                  importance of several factors leading to ratings of “worst.” For example,
                                                  29 percent of the Army bases reported “conditions severely impede
                                                  mission” as a most important reason for a “worst” rating, while 62 percent
                                                  ranked it as of moderate importance. Similarly, 39 percent of Air Force
                                                  bases rated “severe physical deficiency” as a most important factor, while
                                                  59 percent rated it as of “moderate importance.”

                                                  Bases within each service also showed mixed consistency about the
                                                  importance of nine criteria for allocating funds for repair projects for
                                                  facilities rated “worst” at their base. (See app.VI, table VI.1.) For example,
                                                  35 percent of Army bases cited physical condition as the most important
                                                  criterion for determining RPM allocations, but 59 percent rated it as
                                                  moderately important. Similarly, almost twice as many Air Force bases
                                                  rated physical condition as moderately important as those citing it as the
                                                  most important factor (63 percent vs. 36 percent). In the Navy, 19 percent
                                                  of bases ranked a commander’s priority as a most important criterion,
                                                  while more than two-thirds rated it as moderately important. In the Air
                                                  Force, almost twice as many bases rated commander’s priority as
                                                  moderately important as those that rated it most important (63 percent vs.
                                                  34 percent).

RPM Assessment System Has                         In our questionnaire, we asked bases to indicate which weaknesses, if any,
Several Weaknesses                                they associated with their facility condition assessment systems. Table 1
                                                  shows the percent of bases in each service that chose a given weakness.



Table 1: Weaknesses in Services’ Condition Assessment Systems

                                                                     Percent of responding bases that checked weakness as relevant
                                                                                            to RPM process
Type of weakness                                                               Army          Air Force        Navy          Marines
Little or no linkage between condition assessments/
determination of requirements and RPM budget estimation                           46                29           30               50
Little or no linkage between assessments/requirements and
RPM allocation                                                                    61                39           41               56
Cost estimates generally not accurate                                             36                25           34               37
Ratings too subjective                                                            30                34           40               56
Using one rating for multiple facilities oversimplifies conditions                51                37           38               37
Ratings not informative                                                           53                32           27               25
Ratings too broad                                                                 32                30           28               44
Ratings not timely                                                                15                14           22               44
                                                                                                                          (continued)



                                                  Page 10                                 GAO/NSIAD-99-100 Real Property Management
                                           B-280230




                                                               Percent of responding bases that checked weakness as relevant
                                                                                      to RPM process
Type of weakness                                                            Army             Air Force           Navy             Marines
Assessments lack robust engineering base                                       40                    25             18                     19
Overemphasis on appearance                                                     38                     9               7                    12
Others                                                                         21                    25             18                     25
                                           Source: Responses to question 12, GAO survey. Vertical totals exceed 100 percent because more
                                           than one choice was possible.


                                           Bases identified several weaknesses in their assessment systems. First, in
                                           all the services, respondents reported budget-related problems—that there
                                           is little or no linkage between condition assessments and/or the
                                           determination of RPM requirements with either RPM budget estimates or
                                           the final allocation of resources. Base officials told us that they were
                                           concerned that their major commands and headquarters do not adequately
                                           consider the bases’ identified needs in preparing RPM budgets or allocating
                                           resources. Also, 25-37 percent of respondents reported that cost estimates
                                           generated by condition assessments/requirements determination are
                                           generally not accurate.

                                           Second, as also shown in table 1, many of the services’ bases identified four
                                           problems with their assessment systems. First, the criteria for condition
                                           assessment are too subjective, involving individual judgment. Second, the
                                           process of summing up ratings for a broad category (such as all community
                                           support buildings) with multiple facilities oversimplifies conditions. Third,
                                           the ratings (e.g., critical or degraded) do not make clear what is wrong with
                                           a specific facility (making it necessary to go back to the original
                                           paperwork). Finally, overall condition ratings are too broad (e.g., red,
                                           amber, and green). Substantial percentages among Army respondents also
                                           felt that the assessments lacked a robust engineering basis and
                                           overemphasized facility appearance.

                                           In addition, when asked in a different question about ways to improve the
                                           RPM process, in each service except the Navy, nearly two-thirds of the
                                           respondents endorsed the idea of a system that places more emphasis on
                                           long-term, strategic maintenance planning and de-emphasizes annual
                                           assessments of facilities. Fifty percent of the Navy respondents endorsed
                                           this idea. Similarly, there was substantial agreement among bases that
                                           RPM funding should be based on facilities’ physical deficiencies (Air Force,
                                           56 percent; Army, 53 percent; Navy, 48 percent; and Marines, 50 percent).
                                           There was even greater consensus that RPM funding should not be based




                                           Page 11                                       GAO/NSIAD-99-100 Real Property Management
                                                 B-280230




                                                 on a fixed increase above or below the previous year’s level (Air Force, 51
                                                 percent; Army, 59 percent; Navy, 61 percent; and Marines, 87 percent).

                                                 Survey responses from bases also indicated that bases lack procedures to
                                                 ensure that assessments of facility conditions are valid and reliable, that is,
                                                 that they actually reflect the facilities’ physical conditions. The responses
                                                 are summarized in table 2.



Table 2: Percent of Bases Using Listed Methods to Ensure Condition Assessments Are Consistent

                                                                                                                                         Service-wide
Type of validation procedure                                                     Army        Air Force          Navy        Marines           average
No formal procedure used to ensure consistency of assessments,
other than expertise/training of assessor                                           56               51             60             38               55
Some number of facilities are reinspected by different assessors to
determine consistency with initial review                                             4                3             4               6                4
Random sample of facilities are reinspected by different assessors                  23                 7             7             19               12
Outside contractors used to validate initial ratings                                  2                1             6             13                 3
                                                 Source: Responses to question 10, GAO survey.


                                                 As table 2 shows, 55 percent of all survey respondents indicated that they
                                                 had no formal standardized procedures to determine the reliability of
                                                 inspectors’ ratings. Four percent reported that they used different
                                                 inspectors for follow-up visits to verify reported problems.

Lack of Trained Inspectors                       According to our survey and discussions during visits to 35 bases and
Affects the Quality of RPM                       commands, training and resource shortages are an unresolved RPM
Assessments                                      problem for large majorities of service installations, and these problems
                                                 constrain the quality of the assessment process. About 25 percent of
                                                 survey respondents in the Army and the Air Force, 31 percent in the
                                                 Marines, and about 51 percent in the Navy, reported that they do not
                                                 provide or require some form of standardized training for personnel that
                                                 assess the condition of facilities. Bases reported that 83 percent of the
                                                 facility inspectors are building users who are not trained professionals
                                                 such as engineers or craftsmen.17 Given this situation, we question how



                                                 17
                                                  The Air Force bases reported that 86 percent of inspectors were building users; the Army, 82 percent;
                                                 the Navy, 71 percent; and the Marines, 64 percent. Bases were asked to identify the qualifications of
                                                 “persons who determine requirements or conduct assessments/inspections of facility conditions.”




                                                 Page 12                                          GAO/NSIAD-99-100 Real Property Management
                                                  B-280230




                                                  these inspectors can be expected to produce reasonably accurate and
                                                  consistent ratings of facilities.

                                                  In our survey, many bases also reported shortages of personnel in the RPM
                                                  area, sufficiently trained personnel, and personnel to carry out RPM
                                                  administrative work. The responses are summarized in table 3.



Table 3: Percent of Bases Identifying Training and Resource Constraints

                                                                                                                               Service-wide
Type of constraint                                                         Army       Air Force          Navy      Marines          average
Shortage of personnel for RPM                                                 61              45           35            44              47
Shortage of trained personnel (i.e., with skilled craft or
engineering expertise)                                                        48              42           28            63              41
Shortage of resources—time, budget—to carry out
assessments                                                                   72              61           71            75              67
                                                  Source: Responses to question 11, GAO survey.




Insufficient RPM Funding                          The services’ plans for funding RPM could result in the further
                                                  deterioration of infrastructure and an increase in backlogs of repairs. The
                                                  Defense Planning Guidances since 1997 were intended, in part, to get the
                                                  services to increase spending in areas considered as underfunded. The
                                                  April 1999 guidance update for fiscal years 2001–2005 requires that RPM
                                                  funding at least match the annual levels in the fiscal year 2000 President’s
                                                  budget Future Years Defense Program while eliminating a previously
                                                  established goal to meet 75 percent of RPM requirements. However, even if
                                                  the service headquarters comply with the update, they do not plan to fund
                                                  RPM at levels that will meet identified RPM requirements (both critical and
                                                  noncritical). Furthermore, many bases and commands do not request
                                                  funding to meet all their RPM needs and some receive uneven allocations
                                                  of funds for RPM, relative to their identified needs.

Services’ Plans May Lead to                       None of the services’ plans provide sufficient RPM funds to keep the
Deterioration of Facilities and                   backlog of repairs at current levels, as measured by their own rating
Increases in Backlogged Repairs                   systems. As a result, overall service infrastructure conditions may
                                                  deteriorate over the next 4 to 5 years, although improvements in some
                                                  specific type of facilities, such as barracks, may result from targeted
                                                  spending. Delaying repairs is not cost-effective, as noted at a March 1999
                                                  congressional hearing, where an OSD official remarked that the lack of




                                                  Page 13                                         GAO/NSIAD-99-100 Real Property Management
B-280230




timely maintenance leads to expensive repairs in the future.18 Despite this
situation, the services plan to fund RPM at varying levels as follows:

• The Air Force plans no funding for repair projects until fiscal year 2003;
  preventive maintenance is funded at 1 percent of PRV. The Air Force
  estimates that through fiscal year 2005, it will provide funding for only
  40 percent of the repairs identified as critical or degraded.
• The Navy plans to fund RPM at 1.84 percent of PRV in fiscal year 2001,
  increasing that gradually to 2.59 percent by fiscal year 2005; under this
  plan, critical backlog will increase about 10 percent, from about $2.5
  billion to about $2.75 billion in fiscal year 2003, and then begin to
  decline. While critical backlog in barracks will be virtually eliminated,
  according to the Navy, other facilities will continue to be at C2 and C3
  levels,19 and noncritical backlog is not addressed.
• The Marine Corps estimates that by fiscal year 2005, backlogged repairs
  will increase 60 percent in dollar value.
• The Army plans to increase RPM spending from 64 percent of its
  requirements to about 84 percent over fiscal years 2000–2005, but
  because of the RPM requirements baseline the Army uses, it is unclear
  that this increase will stabilize backlog.20

Further backlog increases may produce a bow wave of more costly repairs
in the future. It was estimated that the services’ reported backlog would
increase by $2 billion (13.6 percent) in 1 year, to more than $16.6 billion in




18
 Prepared statement of Randall A. Yim, Acting Deputy Under Secretary of Defense (Installations), to
Senate Armed Services Subcommittee on Readiness, March 10, 1999, p. 6.
19
  The Navy defines the C3 level as the one at which the condition of facilities permits meeting the
demands of assigned mission “only marginally,” “but with major difficulty.” According to the Navy, the
RPM funding levels for fiscal year 2001 are intended to bring aviation, waterfront operations, training
facilities, and utilities to the C2 level (“has substantially met all demands”), “with all other facility
categories at the C3 level.”
20
  The Army defines its RPM requirement as the “estimated cost for the minimum annual sustainment of
facilities . . . at existing levels plus the cost of renovations that are not new construction.” The Army
plans to fund this requirement on an upward slope; it estimates it will reach 84 percent of this
requirement by 2005. According to the Army, however, it would today take about $14.8 billion to bring
O&M RPM-funded facilities up to the highest level of its condition assessment system, the ISR. The
Army requested extra annual funding of $1.4 billion to address these deficiencies, but it is slated to
receive only $178 million annually, if it becomes available, or about 1.3 percent of total ISR-estimated
needs. Therefore, it is unclear how backlog will be constrained. See app. I.




Page 14                                            GAO/NSIAD-99-100 Real Property Management
                             B-280230




                             fiscal year 1999.21 A contributing cause may be, as we reported in 1997, that
                             total RPM spending decreased 38 percent during fiscal years 1987-96, while
                             the services reduced the square footage they maintained only about
                             10 percent during the same period. 22

RPM Budgets Not Consistent   The services’ future plans are a reflection of the services’ long-standing
With Requirements            practice of failing to fund RPM at levels sufficient to meet identified total
                             requirements. Responses to our survey showed little relationship between
                             the known, identified RPM needs and the funds requested to address those
                             needs. For example, major commands’ overall requested an average of
                             20.4 percent of their bases’ total identified needs in fiscal year 1997.23
                             Similarly, bases reported receiving 16.2 percent of known RPM needs from
                             their commands in fiscal year 1997. Of their needs, Army bases reported
                             that they received funding equal to 15.4 percent; Air Force bases received
                             18.3 percent; Navy bases, 14.2 percent; and Marine Corps, 28 percent.

                             According to headquarters facility management officials of each service,
                             funding RPM is not their service’s first priority. An Army official described
                             it as the last of four priorities. The major commands and bases understand
                             that this is the culture for RPM and have acted accordingly—as reflected in
                             the data reported to us by the commands and the bases. For example, base
                             officials said that in their view service headquarters do not adequately
                             consider RPM needs identified during the assessment process in making
                             decisions about budget and allocation of resources. In light of the lack of
                             apparent connection between the assessments, requests, and actual
                             subsequent RPM funding allocations, some base officials questioned the
                             wisdom of expending resources on annual assessments.




                             21
                               House Report 105-591, p. 48 (1998). We did not validate service backlog estimates. The calculation of
                             changes in reported backlogs has become increasingly problematic since the Army’s method is different
                             from that of the other services. The Army estimates backlog as the amount required to bring designated
                             facilities to a higher level of condition according to its condition assessment system. The Army
                             previously defined backlog as the unfunded cost of all identified repairs, regardless of their criticality or
                             relevance to mission. The Navy reports only critical-rated project costs as backlog; it excludes
                             noncritical “deferrable” repairs. The Air Force categorizes backlogs at three levels and reports only the
                             most urgent top two as its backlog.
                             22
                              Defense Infrastructure: Demolition of Unneeded Buildings Can Help Avoid Operating Costs
                             (GAO/NSIAD-97-125, May 1997), p. 4.
                             23
                              Request by Army, 9.3 percent; Air Force, 31 percent; Navy, 28 percent; and Marines, 30 percent. The
                             overall average percentage was reduced because the Army’s identified needs were more than double
                             the next highest of any service, and Army commands requested 9.3 percent of this total.




                             Page 15                                             GAO/NSIAD-99-100 Real Property Management
                      B-280230




                      In addition to the disconnect among RPM needs, requests, and allocations,
                      responses to our survey suggest that the division of RPM funds among
                      bases has been inequitable. Some bases reported allocations as much as 27
                      times the amount that other bases received relative to their needs. For
                      example, for fiscal year 1997, bases in one Air Force command reported
                      receipt of 7 percent to 191 percent of their needs; bases in one Army
                      command reported receipt of 9 percent to 118 percent of their needs; and
                      bases in a Navy command reported receipt of 3.5 percent to 39 percent of
                      their needs. The scope of these differences suggests that funding is based
                      on criteria other than need.



Promising Practices   On the basis of experts’ recommendations and other criteria, we had
                      discussions with almost 2 dozen nonmilitary entities about their facility
Could Help DOD        assessment, planning, and budgeting systems.24 The other criteria included
Improve RPM           citations in the expert literature of entities with good reputations for RPM
                      practices, size of the organization, and comparability of entities to the
Management            military services in terms of goals of maintaining infrastructure for long
                      periods. Of these, we found two that have a set of particularly promising
                      practices that bear consideration by the military services. These are (1)
                      Brigham Young University’s Capital Needs Analysis (CNA) Center, Provo,
                      Utah, and (2) the University of California’s Lawrence Livermore National
                      Laboratory (LLNL), Livermore, California.25


Two Organizations’    The practices used by CNA and LLNL are designed to ensure reliable and
Promising Practices   valid property assessments, rational prioritization of needs, equitable
                      allocation of resources, and cost-effectiveness in terms of making repairs
                      at the appropriate time to avoid the deterioration of facilities and thus more
                      expensive repairs.

                      CNA and LLNL have incorporated the following six practices into facilities
                      management, which they say have made maintenance management more
                      efficient and cost-effective:

                      • established a single system for counting and categorizing inventory;

                      24
                       App. IX contains a complete list of these experts and the organizations we queried.
                      25
                       The CNA Center manages the worldwide facilities of the Church of Latter-day Saints at more than
                      7,000 locations, including 4 universities. The LLNL system encompasses 600 diverse buildings
                      (6.2 million square feet) with a PRV of almost $3 billion.




                      Page 16                                          GAO/NSIAD-99-100 Real Property Management
                               B-280230




                               • have a single, valid engineering-based system for assessing facility
                                 conditions, using adequately trained personnel at multiple levels of
                                 review;
                               • prioritized budget allocations based on physical condition, relevance of
                                 facilities to the mission, and life-cycle costing and budgeting;
                               • set up a single property maintenance budget that is controlled by a
                                 central office with the power to shift resources to facilities in the
                                 greatest need;
                               • created incentives to demolish or vacate excess space; and
                               • restricted the use of RPM funds for other maintenance purposes.

                               As discussed below, one of these practices—life-cycle planning—requires
                               further explanation; and LLNL uses a seventh practice—an annual
                               maintenance charge.

Life-Cycle Planning a Key      Life-cycle planning is a core element of LLNL’s and CNA’s management of
Element to Managing Facility   facility maintenance. Under the life-cycle concept, a building’s useful life is
Maintenance                    limited by the durability of facility components such as electrical systems.26
                               The two organizations have created databases on facilities and their
                               components (such as heating, ventilation, and air conditioning units) based
                               on their inspections. With this data, the two organizations can estimate
                               facility components’ remaining life cycles (taking into account previous
                               results as well) and replace components only when necessary. For
                               example, a component such as an air-conditioning system would be
                               replaced only when its repair cost exceeded a given percentage of its
                               replacement cost or it broke down so often that it was ineffective to repair
                               it both in terms of cost and maintenance time.

                               With life-cycle data, both organizations can project peaks and valleys of
                               future maintenance spending and estimate the RPM funding level required
                               to sustain facilities through their life cycles. CNA budgets RPM based on a
                               40-year life cycle 27 and a 4-year budget that it adjusts annually based on
                               condition assessments and the resulting estimated future costs. The center
                               states that the transparency of the life-cycle system and its objectivity in


                               26
                                Sean C. Rush, Managing the Facilities Portfolio: A Practical Approach to Institutional Facility Renewal
                               and Deferred Maintenance (Washington, D.C.: National Association of College and University Business
                               Officers, 1991), p. 48.
                               27
                                For more details, see app. VIII and Robert E. Hutson and Frederick M. Biedenweg, “Before the Roof
                               Caves In: A Predictive Model for Physical Plant Renewal,” in APPA, Capital Renewal and Deferred
                               Maintenance in Critical Issues in Facilities Management, vol. 4 (1989), pp. 12-29, and Managing the
                               Facilities Portfolio, pp. 52-62.




                               Page 17                                           GAO/NSIAD-99-100 Real Property Management
B-280230




assessing RPM needs have helped reshape the culture of its component
institutions; the change has permitted the center to base maintenance on
real needs rather than on the internal influence of different entities within
CNA. With this process, CNA as ensured overall systemwide minimum
adequate conditions for all facilities; entities that choose higher standards
must use external funding. Further, according to CNA, the use of life-cycle
analysis has made its budget requests more credible, helping it to obtain
adequate funding for true RPM needs.

Even though LLNL operates on a 1-year budget, as do most federal agencies
and the military, it uses life-cycle data to prioritize RPM spending: that is,
the components most likely to fail receive funding first. LLNL management
has used the life-cycle process to demonstrate the need to adequately fund
preventive maintenance and thus preclude costly component failures.
Both LLNL and CNA also require departments and programs to use their
own funds to pay for improvements that do not address a repair or
maintenance need, such as replacing carpeting that is not worn out.

One government entity, the Army’s Health Facility Planning Agency
(HFPA),28 uses life-cycle principles for facility management. HFPA has
developed a costing and budgeting process based on life cycles that it is
extending across 1,600 hospitals, clinics, and other health-related facilities
worldwide. The agency prioritizes RPM spending based on a combined
assessment of predicted needs over a life cycle, known physical
deficiencies, and mission impact, and it targets funds for those facilities
that serve the largest number of people. It assumes a 50-year facility
replacement cycle and uses life-cycle estimates to optimize investments in
operations, maintenance, repairs, and minor construction. 29 HFPA reports
that in the 5 years it has used life-cycle costing and budgeting, it has
reduced its anticipated major repair costs by 50 percent.30




28
 HFPA is in charge of RPM for Army hospitals and clinics worldwide; its funding comes from the
Defense Health Program, not from the Army’s O&M RPM account. HFPA also develops long-term
strategic RPM plans and the methods used to assess the condition of facilities and allocation priorities.
29
 Army HFPA mission booklet, p. 4.
30
 Army HFPA mission booklet, second to last page. We did not validate the claimed savings but find that
RPM experts emphasize that adequate preventive maintenance can reduce overall RPM costs by
avoiding costly, catastrophic repairs resulting from neglect. Timely and adequate preventive
maintenance is widely regarded as essential to making RPM cost-effective.




Page 18                                           GAO/NSIAD-99-100 Real Property Management
                              B-280230




Lawrence Livermore’s          LLNL has another practice that stands out as potentially promising and
Annual Maintenance Charge     cost-effective in managing facilities. It charges an annual fee of $6 per
                              square foot for maintenance and repair, cleaning, grounds care, and waste
                              disposal costs. According to Laboratory officials, the charge compares
                              favorably to those incurred by other organizations for the same range of
                              services. Also, external reviewers have twice examined the LLNL charge
                              and found it to have been based on incurred costs. According to
                              Laboratory officials, the charge has focused facility users’ attention on
                              their maintenance costs and has, as intended, led to reductions in the
                              amount of space claimed to be necessary. Through the fee, the Laboratory
                              has generated sufficient revenue to pay for repairs, thereby preventing
                              increases in its maintenance backlog. It has not reduced the existing
                              backlog (at current rates) but does not consider this significant because the
                              backlog includes deficiencies in buildings that are excess to its needs and
                              that are being maintained at a minimum level.

                              Charging for maintenance by the square foot makes clear how much space
                              costs, and such a charge could be a required component of any military
                              base’s budget to create a minimum annual funding level to ensure adequate
                              maintenance. Military entities that use working capital funds have a similar
                              system in that RPM and other overhead costs are included in the rates that
                              are charged to military customers for services rendered.



Barriers Hinder the           None of the services use all of the promising maintenance practices we
                              found at CNA and LLNL, and they would have to overcome several barriers
Services’ Use of              to successfully adopt these practices. These barriers include the services’
Promising Practices           differing cultures related to RPM standards for maintaining facilities,
                              budget limitations and the low priority given to fund RPM, the lack of
                              comparable and adequate data, the lack of common space allocation
                              standards, and legal and administrative rules. These barriers would be a
                              significant challenge to overcome; however, other organizations have faced
                              similar challenges and met them.


Services’ Cultural Barriers   DOD’s 1999 Annual Defense Report recognizes that base facility conditions
                              affect quality of life and retention. 31 At the same time, each service has
                              different standards to which facilities are maintained. As a result, the


                              31
                               DOD, 1999 Annual Defense Report, ch. 9, p. 10.




                              Page 19                                           GAO/NSIAD-99-100 Real Property Management
                             B-280230




                             services have created widely varying living and working conditions. For
                             example, the Air Force emphasizes high-quality conditions in part because
                             Air Force bases are collocated with their platforms (their aircraft).
                             However, Air Force RPM spending plans, as well as those of the other
                             services, permit increases in backlog, including critical-rated repairs, over
                             the next several years.



RPM Budgeting Barriers

Migration of O&M RPM Funds   The services have long used RPM funds for other O&M purposes (such as
                             unfunded emergency military operations), moving funds from the RPM
                             account for other purposes considered more pressing. Although the RPM
                             funds are generally returned toward the end of the fiscal year, urgent
                             repairs may be delayed if contracts are canceled. Thus, the flexibility
                             afforded by fungibility makes cost-effective planning and management of
                             RPM problematic. Migration or even the outright reduction of planned
                             funding also greatly hinders the use of life-cycle costing and budgeting.
                             Although the Army’s HFPA uses life-cycle principles to assess its facilities
                             and to plan its RPM budgets, its ability to implement its plans was
                             compromised in fiscal year 1999 by the arbitrary movement of its RPM
                             funds to other accounts. As noted, both LLNL and CNA prohibit RPM fund
                             migration because it creates budgeting and contracting instability.

Budget Process               There is little, if any, clear connection between the detailed assessments of
                             actual repair needs made at the base level and subsequent RPM budget
                             requests or allocations. While RPM needs are reported by bases and major
                             commands to headquarters, the service headquarters have funded only
                             about one-sixth of the total known RPM needs, according to the budget
                             data reported on the surveys. Moreover, we were told that commanders do
                             not request the full amounts needed, knowing that funding will never be
                             provided at those levels.

Federal Budget Cycle         The single-year O&M budget constrains each service; all are barred from
                             accumulating reserves to address future, predictable surges in repair
                             needs. However, some organizations that are similarly constrained, such as
                             LLNL and the Army’s HFPA, use life-cycle analyses for planning purposes
                             to set RPM budgets at levels sufficient to address predicted RPM needs.

Multiple Accounts            Military RPM is paid for from multiple accounts, some of which are quite
                             large in dollar terms (e.g., military family housing, industrial activities



                             Page 20                              GAO/NSIAD-99-100 Real Property Management
                              B-280230




                              under working capital funds, hospitals and health clinics) and not included
                              in O&M. For example, the Army pays for RPM from 27 different accounts;
                              O&M RPM accounted for just 55 percent of the Army’s expenses related to
                              real property maintenance in fiscal year 1997. In addition, the Center for
                              Naval Analyses found that the Navy had 110 different accounts for RPM use
                              in 1995. Navy O&M RPM applied to just 45 percent of the estimated total of
                              Navy plant value in 1995.32 As a result of these multiple accounts, funding
                              for RPM is fragmented, creating problems in tracking how much is actually
                              being spent.

Barriers Created by           The services have different coding schemes to record their inventory of
Incomparable, Inaccessible,   facilities; as a result, this information across the services is not
and/or Incomplete Data        comparable. In addition, inventory data are often inaccessible and/or
                              incomplete. Only the Army published an annual report—called the Annual
                              Summary of Operations (now discontinued)—that specified spending per
                              square foot at every base worldwide, by type of facility and by different
                              type of maintenance.33 The Army’s database contained separate costs in
                              standard metrics (e.g., per square foot, per railroad mile, per square yard of
                              pavement) for 113 different facility types and RPM-related activities. The
                              Air Force and the Navy (and, the Marines, whose inventory is recorded in
                              the Navy’s database) already have large property inventory databases, but
                              they are neither on-line nor nearly as detailed as the Army’s in terms of
                              RPM-related spending categories.34 In addition, OSD has not required the
                              Navy to fully fill out budget exhibit data sheets, making it impossible to
                              compare Navy RPM spending to the other services’ spending on a
                              per square foot basis.




                              32
                               Ackerman, Glenn, et.al., The Backlog of Maintenance and Repair: Preventing Its Growth and
                              Measuring Its Impact, Center for Naval Analyses (Alexandria, Va.: Apr. 1995), p. 7.
                              33
                               Department of the Army, Directorates of Public Works, Annual Summary of Operations, for any fiscal
                              year through 1997. We found no comparable report by other services. The Army’s Installation Support
                              Center reports that the requirement for publishing the annual summary has been withdrawn, as of fiscal
                              year 1998, and that no comparable report will be forthcoming. The report was also available on-line.
                              34
                                Although the Army’s database is more comprehensive, it requires greater clarity regarding who is
                              paying for what, and over what time period, since RPM expenditures by DOD entities for which the
                              Army has technical responsibility are listed as Army spending, when in fact the spending is by
                              non-Army entities and is actually reimbursed. For example, at one base, we found that an intelligence
                              entity made extensive renovations through RPM at an annual cost of $8 per square foot (four times
                              more than the Army average for comparable space), and the cost was recorded as Army RPM spending.
                              Although reimbursed, the spending was averaged into Army accounts, and the $8 cost noticeably
                              increased the average cost per square foot for both that base and for the command in which its
                              spending was averaged.




                              Page 21                                          GAO/NSIAD-99-100 Real Property Management
                                B-280230




                                Without valid, reliable data, OSD and the services cannot adequately
                                evaluate the cost-effectiveness of real property management or even know
                                how much is being spent on RPM. A March 1998 Logistics Management
                                Institute analysis found that during the Quadrennial Defense Review
                                (QDR), DOD analysts and managers often worked with databases 20 years
                                behind modern systems and practices used in private industry. The
                                Institute noted that the databases “lacked the capability, flexibility, and
                                responsiveness to meet analysts’ needs.” 35

                                In April 1999, OSD issued a cost factors handbook for facilities that
                                reduced about 3,000 service facility category codes to about 400 and that
                                reports average RPM costs per square foot for each of these codes, as well
                                as new construction costs per square foot. These were based on
                                commercial cost-estimating guidelines compiled by multiple expert
                                sources, including the Building Owners Management Association, the
                                International Facilities Management Association, R.S. Means, Whitestone,
                                and the Army Cost and Economic Analysis Center. 36 OSD intends to use
                                these cost factors, once validated, to show the services the level of
                                spending required to sustain facilities. However, the services have not yet
                                decided whether to accept the revised facility category codes.

Barrier Due to Lack of Common   The services set their own space standards for facilities and workers (e.g.,
Space Allocation Standards      the Army allocates 162 square feet per administrative worker; the Navy and
                                the Marines allocate 110 to150 square feet). Without common standards, it
                                is difficult to constrain the use of space, including identifying “excessive”
                                use. (The Army uses space standards to determine RPM funding and
                                penalizes bases that have excess space.) Although some facilities will
                                always be service-unique (e.g., nuclear submarine repair facilities;
                                intercontinental ballistic missile silos), many (such as barracks, standard
                                classrooms, administrative space, and family housing) are common across
                                the services.

Legal and Administrative        Certain laws and administrative restrictions can hamper the services’
Barriers                        ability to cost-effectively address RPM issues, even though they have other




                                35
                                 Gerald W. Westerbeck and Jordan W. Cassell, Infrastructure Planning and Real Property Management:
                                New Facility Category Coding (Logistics Management Institute, McLean, Va.: Mar. 1998).
                                36
                                 DOD Facilities Cost Factors Handbook, DOD (Apr. 1999), p. 2.




                                Page 22                                        GAO/NSIAD-99-100 Real Property Management
                  B-280230




                  important purposes. For example, the National Historic Preservation Act37
                  places restrictions on the demolition of some buildings and imposes
                  potentially costly standards of repair on some historic structures. At one
                  base, for example, decorative fireplace tiles in officers’ homes were
                  deemed historic, and replacements had to be ordered from England
                  because no source for them could be found in the United States. At
                  another base, windowsills for “historic” buildings required repair by
                  craftsmen with special certification. However, the base could not afford
                  the specialist craftsmens’ rates and chose to let the sills continue to fall
                  apart. Under the McKinney Act,38 the services must rate properties slated
                  for demolition in the contiguous 48 states, Alaska, and Hawaii, to
                  determine their potential utility to house the homeless; in fiscal year 1998,
                  the Army rated nearly 9,900 buildings for this purpose, including facilities
                  at remote locations.



Conclusions and   In the absence of a sound DOD strategy for managing the upkeep of its
                  infrastructure, the services use different methods and criteria for assessing
Recommendations   the condition of properties, prioritizing maintenance and repair needs, and
                  allocating resources. Without standard assessment criteria, DOD cannot
                  compare maintenance costs or facility conditions across the services. This
                  hampers the development of a sound strategy for managing the upkeep of
                  the military’s infrastructure. Moreover, the services cannot ensure that
                  their ratings of facilities’ conditions or urgent repairs are valid or reliable
                  either at individual bases or within each of the services because facility
                  assessors do not apply their service’s criteria consistently. As a result, DOD
                  does not have accurate and comparable databases on facility conditions,
                  mission impact, and repair costs, and the Congress cannot be assured that
                  it is funding maintenance and repairs that will provide the best return on its
                  investment.

                  Bases report little connection between their efforts and actual budget
                  allocations from their headquarters. Furthermore, RPM funds are
                  reallocated for non-RPM purposes. Given the uncertainty and instability in
                  RPM funding, contracting and rational planning for maintenance are made


                  37
                   The National Historic Preservation Act (16 U.S.C. §470h-2) governs the preservation of historic
                  buildings and can prevent the services from demolishing a historic building.
                  38
                   The McKinney Act (16 U.S.C. §11411) requires DOD to work with the Department of Housing and
                  Urban Development to determine whether unused or underused facilities scheduled to be demolished
                  are suitable for use by the homeless.




                  Page 23                                          GAO/NSIAD-99-100 Real Property Management
B-280230




more difficult. When maintenance is deferred, facilities further deteriorate
and become more expensive to repair.

DOD has the opportunity to improve its infrastructure management
through the adoption of promising practices already in place in the private
sector. We recognize that barriers to implementing these practices exist
and that DOD will face challenges in overcoming some of these barriers.
However, in the long term, the adoption of sound standards, measures, and
processes will help DOD maximize its RPM investment and ensure that
needed facilities are adequately maintained, and those that are unneeded
are removed from inventory. Development and issuance of a meaningful,
comprehensive cross-service strategic plan is essential to eliminating the
disarray in the management of the services’ infrastructure. Such a strategic
plan should provide for effective and equitable methods to connect actual
repair needs to budget allocations to repair and maintain those facilities
that are essential to the multiple missions of most bases, from operations
to community welfare.

To improve DOD’s RPM management and address barriers to change, we
recommend that the Secretary of Defense

1. fund the development of DOD’s strategic facilities plan and

2. develop a cross-service integrated strategy, in close coordination and
consultation with the heads of facilities infrastructure of each service, to
comprehensively address RPM issues; the strategy should provide, at a
minimum, for

• uniform standards that set the minimum condition in which military
  facilities are to be maintained and standardized condition assessment
  criteria;
• standard criteria by which the services are to allocate space for different
  types of facilities (e.g., barracks, classrooms, administrative buildings)
  and against which RPM funding allocations will be measured;
• standard criteria for inventorying DOD and service property (except for
  relatively few service-unique facilities);
• computerized, on-line inventory and cost databases that permit
  meaningful comparisons, across and within the services, of RPM
  spending by type, size, and location of facility and RPM activity,
  including direct data access by OSD;
• standard cost accounting methods by which the services will record and
  track their RPM expenditures so that they and DOD know how much is



Page 24                               GAO/NSIAD-99-100 Real Property Management
                      B-280230




                        being spent, where it is being spent, and on what type of facility or
                        RPM-activity it is being spent, by common metric, using the Army’s
                        Directorate of Public Works’ Annual Summary of Operations report
                        (published through 1997) as a potential model;
                      • the identification of priorities for the services to use to explicitly link
                        needs assessments with resource allocations and tracking systems that
                        show whether or not identified high priority needs are allocated the
                        funds intended for them by the Congress;
                      • mandated training standards (curriculum and hours) for all those
                        involved in condition assessment and ratings of repair urgency; and
                      • the services’ adoption of a comprehensive, valid, engineering-based
                        assessment system that incorporates life-cycle planning into facilities
                        maintenance based on the well-developed methods already used by
                        nonmilitary entities.

                      In addition, the Department’s RPM strategy needs to deal with the issue of
                      funding instability, particularly the migration of RPM funds to non-RPM
                      uses and the lack of RPM reserve funds. In this regard, the Department
                      should consider the feasibility of adopting the promising practices
                      identified in this report. To the extent that adoption of any of these
                      practices would require changes to existing law, we recommend that the
                      Department develop a legislative proposal for submission to the Congress.



Agency Comments and   DOD stated that, overall, our report provides a good review of the
                      Department’s real property maintenance program. In addition, it stated
Our Evaluation        that our survey results provided the Department feedback on efforts to
                      improve existing policy and methodologies.

                      DOD concurred or partially concurred with 9 of 12 components of two
                      overall recommendations, nonconcurred with 3 of the 12, and provided a
                      number of comments that it characterized as technical. Where appropriate,
                      we made minor changes and clarifications in responses to these technical
                      comments. However, we believe that some of the agency’s comments
                      warrant further discussion.

                      DOD believes that our report does not give credit to the services for their
                      accomplishments in better defining their RPM requirements and
                      determining RPM funding allocation. DOD also stated that it has
                      previously examined some of our recommendations but did not implement
                      them because—in the case of condition assessment surveys—of their high
                      cost or because of “policy decisions regarding devolution of DOD-wide



                      Page 25                               GAO/NSIAD-99-100 Real Property Management
B-280230




standards or establishment of working capital funding.” DOD also
expressed the view that “anomalies of the survey results may be
attributable to misunderstandings of the survey instrument by installation
level personnel rather than an indicator of a lack of clear policy for field
activity personnel.”

With regard to crediting the services’ efforts to better define RPM
requirements, we recognized the services’ efforts in our report. We analyze
the systems used by each service in detail, with a separate appendix on
each system, citing the strengths we found, such as the Army’s annually
published RPM inventory database. We also noted advanced techniques for
RPM used by the Army’s Health Facility Planning Agency, which could be
used as a model by other service branches and other Army components.

With regard to the cost of implementing a DOD-wide standardized
Condition Assessment Survey (CAS), we found that no cost comparison
had been made by DOD of a CAS to the systems used by the services when
a CAS was field tested in the early 1990s. Moreover, we note that without a
standard CAS, conditions, mission impact, and inventory data cannot be
compared from one service to another and, therefore, DOD cannot
prioritize the RPM needs of the services.

We do not agree that answers to our questionnaire were due to
“misunderstandings of the survey instrument.” DOD does not cite any
particular issue on which they believe personnel were confused by the
survey. In order to eliminate potential misunderstanding in the survey
instrument, we pretested it at 15 Army, Navy, and Air Force bases and
commands, and provided for its review by each services’ headquarters
facility management staffs. Revisions were made based on feedback from
the field pretests and from the headquarters’ RPM experts. Moreover, at
some bases, facility management personnel told us orally that they found
the regulations and policies confusing and contradictory.

DOD nonconcurred with our recommendations that

1. DOD’s strategy for RPM should, at a minimum, provide for standard cost
accounting methods by which the services will record and track their RPM
expenditures, stating that “the level of recommended detail is too great to
provide a meaningful evaluation;”




Page 26                              GAO/NSIAD-99-100 Real Property Management
B-280230




2. DOD should consult with the Congress on the most feasible method by
which to restrict the use of RPM funds for non-RPM purposes, stating that
commanders need the maximum flexibility possible; and

3. DOD should mandate training standards (curriculum and hours) for all
those involved in RPM assessments, stating that it is not certain such
training is needed and is unwilling, without further study, to commit
resources to it.

We continue to believe that requiring standard cost accounting methods to
track how much each service is spending on RPM and by what type of
facility will help DOD provide oversight responsibility. Also, we believe
that meaningful evaluation of the comparative costs of maintaining the
same types of facilities across services (e.g., barracks, classrooms, and
administrative space) requires the kind of detail provided in the Army’s
Directorate of Public Works annual reports. The same data are required for
major commands to be able to compare expenditures of their bases. With
current databases and budget data, it is not possible to readily compare
RPM spending per square foot for like facilities across the services. OSD’s
new facility category code system, which includes industry cost standards,
will have no clear purpose unless these costs—which are per square foot—
can be compared to what military installations spend. The Army’s
databases permit such comparisons and are on-line; these should be used
as the model for the other services.

We note that many officials told us migration of funds out of RPM for other
purposes routinely disrupts rational planning and contracting. Therefore,
while we appreciate the need for flexibility, we continue to believe that
fund migration is an issue for DOD to address. As the National Research
Council notes, “Spending below targets set for normal maintenance . . . may
substantially increase costs of repair, replacement, and loss of use, costs
that might have been avoided.”39 It would appear, therefore, that better
management of fund migration could prove cost-effective in both the short
and long term. We have modified our recommendation to suggest that
DOD consider the feasibility of adopting the promising practices identified
in this report and seek legislative changes, if needed.

Concerning the need for DOD to mandate standard training for personnel
conducting RPM assessments, we note that common training will help


39
 Quoted in DOD Facilities Cost Factors Handbook, Version 1.0, April 1999, p. 3.




Page 27                                          GAO/NSIAD-99-100 Real Property Management
B-280230




ensure consistency in the assessment of facility conditions and RPM needs.
The Navy noted in its technical comments that its guidance on RPM
inspector qualifications “addresses such things as technical trade
background, formal education in theory, experience in maintenance and
repair operations, and skills in inspection techniques, planning and
estimating, maintenance standards, and building codes.” This guidance
could well serve as the model for a DOD-wide standard for all facility
inspectors.

DOD’s comments and our evaluation can be found in appendix XI.

We conducted our review from May 1997 to March 1999 in accordance with
generally accepted government auditing standards.


We are sending copies of this report to the Honorable William S. Cohen,
Secretary of Defense; the Honorable William J. Lynn III, Under Secretary of
Defense (Comptroller); the Honorable F. Whitten Peters, Secretary of the
Air Force; the Honorable Louis Caldera, Secretary of the Army; the
Honorable Richard Danzig, Secretary of the Navy; General James L. Jones,
Commandant of the Marine Corps; the Honorable Jacob J. Lew, Director,
Office of Management and Budget; and interested congressional
committees and members. We will also make copies available to others
upon request.

Please contact me at (202) 512-3092 if you or your staff have any questions
concerning this report. GAO contacts and staff acknowledgments are
listed in appendix XII.




Kwai-Cheung Chan
Director, Special Studies
 and Evaluations




Page 28                             GAO/NSIAD-99-100 Real Property Management
Page 29   GAO/NSIAD-99-100 Real Property Management
Contents



Letter                                                                                          1


Appendix I                                                                                     36
Army Strategy,          Background                                                             36
                        Army RPM Funding Strategy                                              37
Methods, and Criteria   Army Systems to Determine RPM Needs                                    38
for Determining Real    ISR System                                                             39
                        Facility Inspections                                                   42
Property Maintenance    ISR Ratings                                                            42
Requirements            Review and Validation Process                                          46
                        Resource Allocation                                                    51
                        Bases Visited                                                          54


Appendix II                                                                                    56
Air Force Strategy,     Background                                                             56
                        Air Force RPM Funding Strategy                                         58
Methods and Criteria    FIM Assessment System                                                  59
for Determining Real    Allocation of RPM Resources                                            70
                        Bases Visited                                                          72
Property Maintenance
Requirements

Appendix III                                                                                   74
Navy Strategy,          Background                                                             74
                        Navy RPM Funding Strategy                                              75
Methods, and Criteria   Methods and Criteria to Determine Maintenance Needs                    76
for Determining Real    Validation of Inspection Results                                       81
                        Allocation of RPM Resources                                            83
Property Maintenance    Bases Visited                                                          86
Requirements




                        Page 30                          GAO/NSIAD-99-100 Real Property Management
                          Contents




Appendix IV                                                                                       88
Marine Corps’ Strategy,   Background                                                              88
                          RPM Funding Strategy                                                    88
Methods, and Criteria     RPM Assessment System                                                   89
for Determining Real      CORRS: A New System                                                     89
                          Survey                                                                  93
Property Maintenance      RPM Needs Exceed Requests Fivefold                                      93
Requirements              Bases Visited                                                           93


Appendix V                                                                                        95
Summary Comparison
of Service Methods and
Criteria

Appendix VI                                                                                       96
Criteria for Allocation
of Funds

Appendix VII                                                                                      99
Percent of Value
Measures for
Estimating RPM
Requirements

Appendix VIII                                                                                    106
Promising Practices in    Sources of Expertise on Promising Practices                            106
                          Criteria Used to Select Entities for Interviews                        107
Facilities Management     Experts and Expert Organizations Consulted                             107
                          Entities Contacted for Information on Management Practices             108
                          Fragmented Knowledge Base of Promising Practices                       109
                          Federal Facilities Council’s Promising Practices                       110
                          Life-Cycle Principles of Facility Management                           111
                          Preventive Maintenance and Life-Cycle Management                       113
                          Summary: Identified Promising Practices                                118




                          Page 31                           GAO/NSIAD-99-100 Real Property Management
                         Contents




Appendix IX                                                                                      119
Objectives, Scope, and   Scope of the Study                                                      119
                         Methodology                                                             119
Methodology

Appendix X                                                                                       127
Our Survey on Real
Property Maintenance
for Installations

Appendix XI                                                                                      136
Comments From the
Department of Defense

Appendix XII                                                                                     149
GAO Contacts and
Staff
Acknowledgments

Bibliography                                                                                     150


Related GAO Products                                                                             160


Tables                   Table 1: Weaknesses in Services’ Condition Assessment Systems            10
                         Table 2: Percent of Bases Using Listed Methods to Ensure Condition
                           Assessments Are Consistent                                             12
                         Table 3: Percent of Bases Identifying Training and Resource
                           Constraints                                                            13
                         Table I.1: Steps to Ensure Assessments Are Valid                         47
                         Table I.2: Steps to Ensure Assessments Are Consistent                    47
                         Table I.3: Army Installation Views on Constraints                        49
                         Table I.4: How Army Bases Would Change Methods                           50
                         Table I.5: Fiscal Year 1997 Requirements Versus Funding Requested        52
                         Table I.6: Army Bases’ Views on ISR Weaknesses                           53



                         Page 32                            GAO/NSIAD-99-100 Real Property Management
          Contents




          Table I.7: How Army Bases Would Change the Funding Allocation
            Process                                                              54
          Table II.1: Air Force FIM Spending Plans Versus Needs Fiscal Years
            1998-2005                                                            58
          Table II.2: Fiscal Year 1998 Air Force FIM Project Ratings and Cost    60
          Table II.3: Steps to Ensure FIM Project Ratings Are Valid              66
          Table II.4: Steps to Ensure Consistency                                67
          Table II.5: Factors That Constrain Assessment Quality                  67
          Table II.6: How Bases Would Change Determining RPM Requirements 68
          Table II.7: Additional Assessment Tools That Supplement FIM            68
          Table II.8: Top Five Frequently Cited Weaknesses                       71
          Table II.9: How Bases Would Change Funding Allocations                 72
          Table III.1: Type and Frequency of Inspection                          80
          Table III.2: Steps to Ensure Inspections Are Valid                     82
          Table III.3: Steps to Ensure Consistency                               82
          Table III.4: Factors That Constrain the Quality of Assessments         83
          Table III.5: Top Weaknesses in RPM System                              85
          Table III.6: Bases’ Choices to Proposed Changes in Allocation Process 86
          Table IV.1: Dimensions and Ratings in CORRS                            91
          Table IV.2: How Installations Would Change Methods to Determine
            Requirements                                                         93
          Table V.1: Basic Characteristics of Services’ Condition Assessment
            Systems                                                              95
          Table VI.1: Ranking of Factors Affecting Allocation of Funds,
            by Service                                                           96
          Table IX.1: Responses to GAO Questionnaires                           121



Figures   Figure 1: Bases’ Ratings of Importance of Criteria in Worst-Level
            Ratings                                                                  9
          Figure VIII.1: Life-Cycle Model for a Single Building                    112
          Figure VIII.2: Effect of Adequate and Timely Maintenance and
            Repairs on the Service Life of a Building                              114




          Page 33                             GAO/NSIAD-99-100 Real Property Management
Contents




Abbreviations

AIS        Annual Inspection Summary
ANG        Air National Guard
ASIP       Army Stationing and Installation Plan
BASEREP    Shore Base Readiness Report
BCE        base civil engineer
CAS        Condition Assessment Survey
CEAC       Cost and Economic Analysis Center
CFA        Commander’s Facility Assessment
CNA        Capital Needs Assessment
CNET       Chief, Naval Education and Training
CPV        current plan value
DOD        Department of Defense
FCG        facility category group
FDM        facilities degradation module
FII        facility investment index
FIM        facility investment metric
FOMA       facility operation and maintenance activities
HFPA       Health Facility Planning Agency
ISR        Installation Status Report
LLNL       Lawrence Livermore National Labortory
LMI        Logistics Management Institute
MARM       Mission Area Rating Matrix
NASA       National Aeronautics and Space Administration
NAVFAC     Naval Facilities Engineering Command
NRC        National Research Council
O&M        operation and maintenance
OSD        Office of the Secretary of Defense
PCMS       Projects by Contract Management System
PM         preventive maintenance
PML        preventive maintenance level
PRV        plant replacement value
PWC        Public Works Center
QDR        Quadrennial Defense Review
RDT&E      research, development, test, and evaluation
RPLANS     Real Property Planning and Analysis System
RPM        real property maintenance
USAF       U.S. Air Force
USMC       U.S. Marine Corps



Page 34                           GAO/NSIAD-99-100 Real Property Management
Page 35   GAO/NSIAD-99-100 Real Property Management
Appendix I

Army Strategy, Methods, and Criteria for
Determining Real Property Maintenance
Requirements                                                                                                               Appenx
                                                                                                                                Idi




               In this appendix we discuss the Army’s strategy, methods and criteria for
               determining its real property maintenance (RPM) requirements and for
               allocating resources to those needs. We also include the responses to our
               questionnaire on RPM-related issues that we sent to Army bases.1 In
               particular, we examine a key part of the Army’s system for evaluating
               infrastructure conditions and estimating costs for facility sustainment and
               improvement, the Installation Status Report (ISR), Part I--Infrastructure.
               (A Part II--Environment--addresses compliance with environmental rules
               and regulations and was outside the scope of this report. Part III, under
               development, addresses performance standards.) For brevity, we refer
               henceforth to part I as the “ISR.”



Background     The Army owns and manages a very large amount of real property at about
               1,900 installations and sites worldwide (including active, Reserve, and
               National Guard-related sites), on 14.1 million acres of land. This property
               is managed by over 200 parent installations in 15 major commands.2 As of
               September 30, 1997, the real property at these locations consisted of
               178,256 buildings (including 53,999 family housing buildings), with
               1.039 billion square feet and an average age of 40 years. The Army’s
               infrastructure also includes 3,016 miles of railroads, 965 vehicular bridges,
               623 central heating plants, and 77,114 miles of surfaced areas (such as
               roads). The Army estimates its plant replacement value (PRV) at about
               $212 billion.3 (We did not verify the accuracy of the Army’s inventory
               report, or its PRV estimate. However, in 1998, we reported that, with
               regard to all of DOD’s property, plant and equipment, DOD’s Inspector
               General stated that control procedures over assets were inadequate and
               cause inaccurate reporting of real property, capital leases, construction in
               progress, inventory, and preparation of footnotes.)4

               Army RPM is funded by several sources. The Army’s operation and
               maintenance (O&M) account is the largest funding source, representing
               about 55 percent of the total real property maintenance activity costs in

               1
               The survey, which asked about bases’ facility inventory, RPM processes and funding, was sent to 180
               Army bases; 149 returned the questionnaires, or 83 percent. See app. X for a copy of the survey.
               2
                Parent installations have responsibility for managing and supporting several subinstallations.
               3
               Army Directorate of Public Works, Annual Summary of Operations, Fiscal Year 1997, vol. I, p. 2-13. The
               Army defines PRV as the cost of replacing current facilities with state-of-the-art facilities. Ibid., p. 1-3.
               4
                 See Deferred Maintenance Reporting: Challenges to Implementation (GAO/AIMD-98-42, Jan. 30, 1998,
               p. 32).




               Page 36                                              GAO/NSIAD-99-100 Real Property Management
                   Appendix I
                   Army Strategy, Methods, and Criteria for
                   Determining Real Property Maintenance
                   Requirements




                   fiscal year 1997. The remainder is funded through other sources, such as
                   the Army’s Defense Health Program, Military Family Housing, and Army
                   Working Capital Fund. The Army's fiscal year 1999 O&M RPM
                   appropriation was $1.446 billion (active, Reserves and National Guard).
                   Currently, the Army estimates that it would cost $14.8 billion to improve all
                   O&M RPM-funded facilities from their current levels to the “C-1” (i.e., best
                   level) in the Army’s condition assessment report, the ISR. 5



Army RPM Funding   The Army defines its RPM requirement as the amount needed “for the
                   minimum annual sustainment of facilities” to maintain them “at existing
Strategy           levels plus the cost of renovations that are not new construction.”
                   Estimates are adjusted annually for inflation.

                   For fiscal year 1999, the Army’s RPM appropriation was $1.446 billion, or
                   64 percent of the $2.26 billion estimated as its requirement to sustain
                   facilities, according to the Office of the Assistant Chief of Staff for
                   Installations Management (ACSIM), the office responsible for the Army’s
                   infrastructure.6 However, the Army currently plans to increase O&M RPM
                   funding over the next 6 years to about 84 percent of its RPM sustainment
                   requirement, which is expected to increase to about $2.7 billion. As a
                   result, annual O&M RPM funding would increase 53 percent (in nominal
                   terms) from $1.446 billion in fiscal year 1999 to $2.21 billion in fiscal year
                   2005, if the Department of the Army provides the funds. However, these
                   plans appear uncertain, as the Army reduced the goal from 91 percent in
                   March 1999 to 84 percent in August 1999.

                   The Army’s RPM sustainment requirement is only a fraction of the amount
                   required to fix all identified repair needs, as of fiscal year 1997, that Army
                   bases reported in responses to our survey. Army bases reported to us that
                   they had $12.4 billion in outstanding repair needs, compared with the
                   estimated Army-wide sustainment requirement of about $2.26 billion, or
                   less than one-fifth that amount.7 The responses were from 83 percent of


                   5
                    This amount is different than backlog of maintenance and repair, which is the estimated cost to fix all
                   identified repairs, regardless of urgency or mission relevance. The Army no longer reports this as
                   backlog, rather, it cites the ISR-generated estimate.
                   6
                    Figures cited are for all Army components—active, Reserve, and National Guard.
                   7
                    The $2.26 billion was calculated by taking the Army’s statement that $1.446 billion in fiscal year 1999
                   RPM funding represented meeting 64 percent of its RPM requirement. One hundred percent would be
                   $2.26 billion.




                   Page 37                                            GAO/NSIAD-99-100 Real Property Management
                      Appendix I
                      Army Strategy, Methods, and Criteria for
                      Determining Real Property Maintenance
                      Requirements




                      the Army bases to which we sent questionnaires, suggesting that additional
                      needs were not reported, given 17 percent nonrespondents. Therefore,
                      while the Army plans to significantly increase its RPM funding, the
                      53-percent increase by 2005 does not appear to come near to fully funding
                      currently identified repair needs. The Army states that because it has other
                      priorities, it chooses to accept a risk of deterioration in some facilities in
                      order to fund these other priorities.

                      In addition, the Army’s ACSIM stated that it would cost $14.8 billion to
                      bring all O&M RPM-funded facilities from the current ISR levels, ranging
                      from C-4 to C-2, up to the highest (C-1). (The ISR software estimates costs
                      for going from one C-level to a higher C-level.) The ISR estimate is not the
                      same as backlog; these are different ways to estimate RPM needs. The
                      Army used the $14.8 billion as the basis for competing for “unfinanced
                      requirements” in fiscal year 1999, requesting one-tenth that amount
                      ($1.48 billion) from the Office of the Secretary of Defense, if extra monies
                      became available. However, the Army stated that OSD reduced the
                      requested amount by first cutting it to the estimated cost of bringing
                      facilities up to the C-2 level (versus C-1), which was $7.12 billion, and
                      spreading that over 40 years. As a result, the Army’s “request” for unfunded
                      requirements was reduced from $1.48 billion to $178 million.



Army Systems to        The Army uses a number of computerized databases to determine its RPM
                      needs and allocate resources to them. These have been referred to as the
Determine RPM Needs   Infrastructure Decision Architecture (IDA). This architecture assists “in
                      management and funding decisions and enables leadership to implement
                      non-incremental, comprehensive decisions on Army infrastructure
                      management issues.”8 The IDA databases and related decision support
                      systems include:

                      • An on-line computerized database of the total inventory of real property,
                        called the Integrated Facilities System.
                      • The Real Property Planning and Analysis System (RPLANS), a decision
                        support system that provides a 7-year estimate of needed space at
                        installations, based on predetermined space allowances for each type of
                        Army facility. RPLANs calculate how much excess (or deficit) space an


                      8
                       Army contractor paper for FDM, p. 1. According to the Army, the term IDA is not currently widely
                      used, but that no other term has replaced it to describe the “broad conceptual framework” of databases
                      and decision support systems that make up the IDA.




                      Page 38                                          GAO/NSIAD-99-100 Real Property Management
             Appendix I
             Army Strategy, Methods, and Criteria for
             Determining Real Property Maintenance
             Requirements




                 installation has or will have by comparing existing and projected space
                 to the permitted amount.
             •   The Army Stationing and Installation Plan (ASIP), which defines and
                 projects installation population, also over a 7-year period, based upon
                 Army force structure databases.
             •   The facilities degradation module (FDM), a computerized database that
                 predicts the life-cycle condition of facilities over specified time periods,
                 given different funding levels for maintenance, based in part on data
                 from 80,000 Army facilities.
             •   The ISR, a facilities rating database that includes software that
                 generates condition ratings and estimated cost of repairs of facility
                 categories.
             •   The Headquarters Executive Information System (HQEIS), an on-line
                 decision support tool that allows users to access a variety of
                 institutional data sources and to view it at multiple levels (Army
                 headquarters, major commands, bases, etc.). Data that are on-line
                 include the Headquarters ISR (summary data), Integrated Facilities
                 System, and the Army Stationing and Installation Plan.9

             The Army emphasizes that it manages property, including maintenance and
             repair, by using all of these systems. The ISR was the central focus of our
             analysis because the Army uses it to assess the condition of its facilities
             and its data can be used to predict the consequences of funding at levels
             below (or above) those required to maintain facilities in their current state.



ISR System   Implementation of part I of the ISR began in 1995. It assesses the physical
             condition of certain facilities or facility category groups (FCG) using the
             same standards.

             The objectives of the ISR are to:

             1. assess and report the current condition of Army facilities and
             nonbuilding infrastructure (such as roads), measured in terms of quality
             and quantity;

             2. provide Army-wide indicators on such things as conditions, trends,
             facility shortfalls, and deviations from standards;


             9
              We did not verify the reliability of the data in the various Army databases. Access to the HQEIS data
             requires a password.




             Page 39                                           GAO/NSIAD-99-100 Real Property Management
                           Appendix I
                           Army Strategy, Methods, and Criteria for
                           Determining Real Property Maintenance
                           Requirements




                           3. assist in allocating resources and prioritizing infrastructure programs;

                           4. provide information for determining changes in Army policy or needs for
                           new policies; and

                           5. provide information for use in stationing and force structure decisions.

                           The majority of Army installations are required to complete the ISR. (In
                           general, only installations scheduled for closure under the Base
                           Realignment and Closure program or coded as “Lay Away” are exempt.)
                           However, government-owned, contractor-operated installations have not
                           conducted ISR assessments, contrary to ISR instructions.



Management of ISR System   The ACSIM is responsible for overall ISR policies, standards, and
                           procedures. Army headquarters develops facility standards and issues
                           guidance to meet Army-wide infrastructure goals and objectives. Army
                           major commands are responsible for program management and
                           administration. Each command is to ensure that the ISR is implemented at
                           the installations it controls and that the bases comply with ISR
                           requirements. Each installation commander is responsible for completing
                           the ISR as required, certifying the results, and forwarding it to the major
                           commands. Parent installations are responsible for ISR assessments at
                           their subinstallations.


ISR Structure              To achieve the objectives of the ISR, Army installations annually evaluate
                           the quality (physical condition) and quantity of real property and enter the
                           results into a database. These data, along with data from the other Army
                           databases, are used to generate overall ratings for each base, including the
                           extent to which facilities meet unit needs, Army standards, and mission
                           requirements. The ISR system includes software that estimates the costs to
                           improve facilities from the level they are rated at in the ISR up to any
                           higher level—such as from C-4 to C-3, or C-4 to C-1.

                           ISR results are generated for four infrastructure levels:

                           • 5 broad top-level areas (mission, mobility, housing, community, and
                             installation support);
                           • 28 categories;
                           • 60 subcategories; and
                           • 219 facility category groups.



                           Page 40                                    GAO/NSIAD-99-100 Real Property Management
                          Appendix I
                          Army Strategy, Methods, and Criteria for
                          Determining Real Property Maintenance
                          Requirements




                          In some categories, there is no FCG lower than the subcategory; this is the
                          case for unaccompanied personnel housing (i.e., barracks.) The
                          installations evaluate facilities by FCG and these ratings form the basis for
                          all ratings/calculations rolled-up in the ISR software to subcategory,
                          category, and area levels.


ISR Assessment Criteria   The ISR established common Army-wide standards for assessing facility
                          quality. Criteria for quality evaluations are contained in separate standards
                          booklets for most of the 60 ISR subcategories (e.g. operations buildings,
                          small arms ranges, maintenance facilities, and barracks). Facility groups
                          are rated in terms of green, amber, or red:

                          • red indicates dysfunctional or substandard, “overall poor condition”;
                          • amber indicates that the facility “does not fully meet standards,” but is in
                            “overall fair condition”; and
                          • green indicates that it “complies with standards” and is in “overall good
                            condition.”

                          These color levels are further defined in considerable detail in ISR
                          standards booklets with narrative statements that characterize the area
                          being assessed and, in most cases, pictures that illustrate the general
                          condition for each rating level. For example, four criteria are spelled out
                          for each of the 3 color levels for the lobby of an administrative facility;
                          there are eight criteria for a green rating for building exteriors. Criteria are
                          written in layman’s terms, such as “building walls, windows and doors in
                          sound condition”; “entry in good repair”; “inadequate exterior signage.”
                          According to the Army, the ISR “articulates facility conditions and RPM
                          requirements through an affordable and understandable process.” “It
                          provides data showing possible problem areas and trends, which at HQDA
                          [Headquarters, Department of the Army] level, influence development of
                          facility investment programs.”10

                          Only permanent and semi-permanent assets identified in the ISR database
                          are to be assessed. Temporary structures are generally not rated because
                          they are not considered long-term solutions to facility requirements.
                          Certain other facilities at installations using he ISR also are not required to
                          be rated. For example, World War II wooden structures, even if in use, do



                          10
                           Army technical comments on the draft of this report.




               Lte
                 rt       Page 41                                         GAO/NSIAD-99-100 Real Property Management
                       Appendix I
                       Army Strategy, Methods, and Criteria for
                       Determining Real Property Maintenance
                       Requirements




                       not have to be rated under ISR because they are expected to be
                       demolished.



Facility Inspections   Under the ISR system, inspections can be done by anyone designated to do
                       the ratings, including engineers, contractors, and building users
                       (occupants). The installation’s ISR coordinator identifies which offices are
                       responsible for base facilities within the ISR categories and each unit
                       designates who will inspect what facilities. According to ISR instructions,
                       the inspectors should be the primary users of the facility and
                       knowledgeable of the facilities’ condition and uses. For example, the base
                       facilities maintenance staff (engineers or other skilled craftsmen from
                       public works or the engineering offices) should rate all base utilities and
                       other facilities managed by this office.

                       Having building users do the inspections is intentional, according to
                       headquarters staff, as this is more likely in the Army’s view to ensure that
                       those most familiar with a facility’s condition over time are doing the
                       rating. Among the 149 Army installations that responded to our
                       questionnaire, 82 percent of inspectors were described as building users.


Inspector Training     Each inspector should receive a short training session on the facility
                       inspection process. Headquarters level training is provided for the
                       installation ISR team/coordinator. These staff can then train unit
                       inspectors at the base. This training generally includes a briefing (about
                       2 hours), a video, and a self-teaching computer-based training package.
                       According to some facilities management personnel, it is challenging to get
                       all inspectors to attend training and the preponderance of building-user
                       inspectors change annually.



ISR Ratings            The ISR requires inspectors to rate the physical condition of facilities
                       against Army-wide standards/criteria for that type facility. For example,
                       the ISR Standards Booklet 5 contains rating criteria for maintenance
                       facilities that apply to 14 FCGs, including aircraft maintenance facilities,
                       vehicle maintenance shops, and depot ammunition maintenance shops.
                       Inspectors are to use the appropriate standards booklet to evaluate
                       facilities and record the results on an inspection worksheet. In some
                       instances, if a required “critical” component, such as a restroom, is not in
                       the facility, the item is rated red automatically. Similarly, a barracks cannot



                       Page 42                                    GAO/NSIAD-99-100 Real Property Management
Appendix I
Army Strategy, Methods, and Criteria for
Determining Real Property Maintenance
Requirements




be rated above red if it has a common latrine. The overall facility rating
cannot exceed that of the worst critical component.

A separate inspection and rating is to be prepared for each purpose/FCG in
the same building; these are not averaged to produce one rating for the
facility. Therefore, if a building/facility were multipurpose, there would not
be a building-specific rating. Separate color ratings for each FCG are to be
entered into the ISR database. However, at one of the Army sites we
visited, one unit did not complete separate ratings for each FCG within a
building. The unit inspector said that if the building housed more than one
FCG, the user who occupied the largest part of the facility also included the
other area in his rating (in other words, there was a “building” inspection).

When there are a number of similar facilities for the same FCG, a
representative sample may be taken if the number is large enough and the
facilities are of the same design. The color ratings of the sample are to be
proportionately entered into the ISR database to generate an overall
C-rating for the FCG. For example, in fiscal year 1996, one base we visited
inspected about 5 percent of family housing units (139 out of 2,924)
because these were all from the same FCG.

As we observed during our site visits, most base ISR files contained the
Summary Mission facilities worksheets, and, in some cases, supporting
documentation (the pertinent standards booklets with checkmarks of each
related element indicating the reason(s) for the inspection rating results).
At one base, many files also contained a copy of the engineering report on
the building’s structural condition (e.g., walls, window, mechanical,
electrical, and fire alarm).

Once the inspection worksheets are completed, they are returned to the
installation ISR coordinator. Based on discussions during our site visits,
the ISR coordinating office generally reviews selected worksheets to
ensure they accurately reflect the conditions of the facilities. The
reviewers focus on any significant changes or apply their expertise or
personal knowledge of the facilities. Some subsequent checks are made.
However, because of limited resources, facilities’ staff told us that it is not
possible to check them all. The ISR coordinating office and the public
works directorate then check if there are any disconnects with the
inspection results and work orders.




Page 43                                    GAO/NSIAD-99-100 Real Property Management
                             Appendix I
                             Army Strategy, Methods, and Criteria for
                             Determining Real Property Maintenance
                             Requirements




Software Generated Quality   The ISR software calculates separate quality and quantity ratings (C-1, the
and Quantity Ratings         highest, to C-4, the lowest), and then an overall C-rating (the lower of the
                             two ratings) using installation ratings and information from existing Army
                             databases. A C-1 rating indicates that an infrastructure group requires little
                             immediate attention; a C-4 rating highlights a significant problem area for
                             the installation. C-ratings are calculated for all four infrastructure levels,
                             beginning with the FCG. The C-ratings for the three higher levels are an
                             aggregation of all the lower level ratings. For example, the “area” C-ratings
                             result from the aggregation of FCG, subcategory, and category ratings that
                             comprise the area. However, the base commander can adjust the overall
                             area C-ratings (raise or lower) with a written justification. No C-rating
                             overwrites are allowed below the area level.

                             The method of calculating quality C-ratings and area and category level
                             C-ratings changed for the 1998 ISR cycle. Rather than using the percentage
                             of inventory rated green, amber, or red, it is now based on a numerical
                             (weighted) value assigned to each color rating. Area and category level
                             C-ratings are now a weighted average of the lower level ratings rather than
                             a nonweighted average. This change is intended to correct having a small,
                             less important FCG counting the same as a large important group. The
                             C-ratings from previous years will be normalized to reflect the changes.

                             The quality C-ratings are generated by comparing the facility condition
                             ratings for each FCG to space allowances specified in the Headquarters
                             Real Property Planning and Analysis System. The color ratings are first
                             linked to system data on the number of facilities in a given FCG and the ISR
                             software calculates the amount that is green, amber, and red. Next, quality
                             points are awarded based on the amount of inventory rated green, amber,
                             and red. For example, facilities rated green are given three quality points;
                             amber and red get two and one quality point(s), respectively. The total
                             points are summed and the C-rating is awarded. The cut-off values for
                             ratings are

                             •   C-1 equals 90 percent or greater,
                             •   C-2 equals 75 percent or greater,
                             •   C-3 equals 60 percent or greater, and
                             •   C-4 less than 60 percent.

                             The quantity C-ratings are calculated by the ISR software, which compares
                             reported space to installation mission requirements. The inventory data




                             Page 44                                    GAO/NSIAD-99-100 Real Property Management
                          Appendix I
                          Army Strategy, Methods, and Criteria for
                          Determining Real Property Maintenance
                          Requirements




                          are obtained from the Integrated Facilities System.11 The quantity
                          C-ratings—based on a percentage requirement satisfied by either
                          permanent or semi-permanent—are defined as follows:

                          • C-1—95 percent or more of required facilities are available and meet the
                            unit’s needs and Army standards. There are very minor, if any,
                            functional deficiencies. Infrastructure fully supports mission
                            performance.
                          • C-2—80 percent or more of required facilities are available and meet the
                            unit’s needs and Army standards, but there are some minor functional
                            deficiencies. Infrastructure supports the majority of assigned missions.
                          • C-3—60 percent or more of required facilities are available and meet the
                            majority of the unit’s needs and Army standards. However, there are
                            some functional deficiencies and mission performance is impaired.
                          • C-4—less than 60 percent of required facilities on hand do not meet
                            needs or Army standards and significantly impair mission performance.
                          • C-5—an installation is undergoing major reorganization, inactivated, or
                            closure.



Software-Generated Cost   The C-ratings are then linked to ISR cost factors to calculate the cost of
Estimates                 new construction requirements, renovation, and annual sustainment
                          (maintaining permanent/semi-permanent facilities as well as temporary
                          facilities at current condition). All cost factors are at the FCG level of
                          detail. Cost factors for new construction are expressed as dollars per unit
                          of measure for each FCG (e.g., for FCG F7218P—enlisted barracks, trainee,
                          there is a designated dollar cost per sleeping space). Local cost factors are
                          built into the software to reflect geographic differences. The Army Cost
                          and Economic Analysis Center (CEAC) develops the cost factors to
                          estimate the costs for installation infrastructure sustainment and
                          improvement.


ISR Reporting             The ISR is a computerized system. Its rating results and inventory are
                          transferred by disk from individual bases to their major commands and
                          then to a central computer maintained by the Department of the Army and
                          available to ACSIM staff and other authorized users.

                          11
                           The ISR does not include the condition rating for each Army building/facility listed in the Integrated
                          Facilities System database. The system uses a five-level rating scale (A= serviceable/excellent,
                          B=serviceable/fair, C=serviceable/poor, I=functionally inadequate, and N= physically not serviceable)
                          for each item.




                          Page 45                                           GAO/NSIAD-99-100 Real Property Management
                        Appendix I
                        Army Strategy, Methods, and Criteria for
                        Determining Real Property Maintenance
                        Requirements




                        The installation commander submits the ISR report to the major command
                        with a cover memorandum containing the commander’s narrative
                        statement prioritizing five broad infrastructure areas (1) mission facilities,
                        (2) mobility facilities, (3) housing, (4) community facilities, and
                        (5) installation support—and highlighting mission impacts due to
                        infrastructure deficiencies. Each major command aggregates data from its
                        installations, prepares a written assessment of the status of its installations,
                        and submits the reports to Army headquarters.

                        Other reports include the category/subcategory report, the
                        assets/requirement report, the renovation/new construction cost report,
                        and the sustainment cost report. The facility quality condition report, used
                        at the installation level, lists the ratings from inspection worksheets for
                        each permanent/semi-permanent asset at the installation. It includes the
                        facility number, FCG, size of asset, color rating, and unit identification
                        code. Other reports can be generated from the ISR software such as
                        appropriations reports.

                        Once the ratings have been reviewed and approved at the headquarters
                        level, the results for every rated installation are available on-line to
                        authorized users.12 This makes it possible to compare installations
                        worldwide across various outcome and cost measures, both by command
                        and by base, and by type of mission. ISR data can be viewed in many ways.
                        For example, it can provide information on how many sleeping spaces in
                        barracks are rated at what level, either at an individual installation, across
                        all bases within a command, or across the entire Army.



Review and Validation   At the installations we visited, we were told that the ISR coordinating office
                        generally reviews selected worksheets to ensure they accurately reflect the
Process                 conditions of the facilities, based on their personal knowledge of the
                        facilities, including work that may have been done during the year. Some
                        subsequent checks are made. However, facilities staff at bases we visited
                        stated that because of limited resources, it is not possible for them to check
                        all the facilities.

                        Responses from Army installations to our survey reflected what we were
                        told in field visits, with most bases stating that the primary validation


                        12
                         According to the Army Installation Support Center, any Army employee in facilities management is
                        assigned a password for access to the ISR results that are kept on-line upon request.




                        Page 46                                         GAO/NSIAD-99-100 Real Property Management
                          Appendix I
                          Army Strategy, Methods, and Criteria for
                          Determining Real Property Maintenance
                          Requirements




                          method was review of selected worksheets by facility management staff,
                          based on the staff knowledge of facilities. Table I.1 summarizes the bases’
                          responses.



                          Table I.1: Steps to Ensure Assessments Are Valid

                          Step taken to ensure validity                                          Percent citing step
                          Selected worksheets are reviewed by facility management                                65
                          office staff
                          Rely on expertise of assessor; no formal procedures used                               24
                          Facility staff makes follow-up visits to verify reported problems                      20
                          on a sample of selected rating worksheets
                          Other validation methods.                                                              18
                          Outside contractors are used to validate facility ratings.                              5
                          Source: Responses to question 9, GAO survey.




Ensuring Consistency of   We also asked installations how they ensured that the consistency of
Assessments               facility condition assessments given by one rater would be, on average, the
                          same reported by other raters. Most respondents said they had no formal
                          procedures or mechanisms other than the expertise and/or training of their
                          staff who do the ratings. Table I.2 shows the responses.



                          Table I.2: Steps to Ensure Assessments Are Consistent

                          Steps taken to ensure consistency                                      Percent citing step
                          No formal procedures other than expertise and/or training of                           56
                          the assessors
                          Other method to ensure consistency                                                     26
                          A random sample of facilities is reinspected by different                              23
                          assessors from our base to determine whether the second set
                          of ratings is similar to the first
                          A set number of percentage of facilities are reinspected by                             4
                          different assessors from our base to determine if second set of
                          ratings were similar to the first
                          Outside contractors are used to validate facility ratings                               2
                          Source: Responses to question 10, GAO survey.




                          Page 47                                         GAO/NSIAD-99-100 Real Property Management
Appendix I
Army Strategy, Methods, and Criteria for
Determining Real Property Maintenance
Requirements




As the table shows, the Army respondents rely primarily on the
expertise/training of its raters to ensure assessments are consistent.
Outside contractors are used relatively infrequently.

However, despite the detailed instructions and worksheets, during our site
visits we found a lack of consistency in assessments. Some inspectors
were very conscientious about using the standards booklets whereas
others did not use them at all. Consistency and accuracy in ratings were a
prominently cited concern in an Army analysis of the 1994 field testing of
the ISR, as was a related concern about adequate personnel understanding
of ISR “standards and processes” in a September 1998 After Action
Report.13

At the installations we visited, the inspectors used several different
approaches to complete their ISR ratings. Based on a comparison of
several ratings to the appropriate standards booklets and our observations
of actual facility conditions, we found there were some cases where
individual building areas could have been rated differently or worksheets
were incorrectly summarized and the overall quality rating should have
been different (in some cases higher, in some, lower). We also found that
some Army units believe that they do not have the resources to adhere to
all ISR instructions (such as having enough facility inspectors). In one
case, according to base officials, staff from the base assigned amber ratings
to all the facilities at various subinstallations. They said that this was done
without inspecting the buildings and with no input from building users,
because there were not enough resources (staff, time, or money) to comply
with ISR instructions. Based on our inspection of building conditions at
one of these sub-installations, the amber ratings did not reflect the actual,
more deteriorated condition of some buildings.

At another installation, we were told that some ratings were questioned
because the facility was rated green; yet, there were several high-cost
repair projects scheduled for the building. Based on our observations, the
exterior of this facility was in extreme disrepair, having crumbling concrete
walls, cracks, and leaking windows.




13
 Army, “ISR Test After Action Review,” June 8, 1994, pp. 5 and 7, and September 2, 1998, p. 1.




Page 48                                           GAO/NSIAD-99-100 Real Property Management
                         Appendix I
                         Army Strategy, Methods, and Criteria for
                         Determining Real Property Maintenance
                         Requirements




Army Installations       We asked installations to cite any or all of four factors that might constrain
Comments on the ISR      the quality of facility condition assessments at their bases. Regarding the
                         overall quality of the ISR process, 72 percent of the Army respondents
                         reported the primary factor affecting overall quality was the shortage of
                         resources—insufficient time and/or budget to carry out assessments.
                         (See table I.3.)



                         Table I.3: Army Installation Views on Constraints

                                                                                             Percent that checked
                         Constraining factor                                                 factor as a constraint
                         Shortage of personnel                                                                  61
                         Shortage of trained personnel with engineering or craft                                48
                         backgrounds
                         Shortage of resources (i.e., insufficient time and/or budget to                        72
                         carry out assessments)
                         Other                                                                                  11
                         Does not apply—no factors create a significant constraint on                           13
                         the quality of reviews of facility conditions
                         Source: Responses to question 11, GAO survey.


                         It is readily apparent that a large majority of Army installations reported a
                         shortage of resources and personnel as a constraining factor on the quality
                         of condition assessments.


How to Improve           We also asked facilities management personnel at bases to choose what
Assessment Methods and   they would change about the methods or criteria used to determine real
                         property maintenance requirements.
Criteria




                         Page 49                                         GAO/NSIAD-99-100 Real Property Management
                        Appendix I
                        Army Strategy, Methods, and Criteria for
                        Determining Real Property Maintenance
                        Requirements




                        Table I.4: How Army Bases Would Change Methods

                                                                                                Percent choosing
                        Change in method                                                        proposed change
                        Rate building/facilities primarily according to engineering,                          64
                        life-safety, and health criteria, while decreasing the role of
                        aesthetics
                        Place much more emphasis on long-range maintenance,                                   64
                        while de-emphasizing annual assessments of facilities
                        Other                                                                                 20
                        Source: Responses to question 13, GAO survey.


                        These responses show that 64 percent of Army respondents agree that the
                        role of appearance should be reduced in facility assessments and the same
                        percentage agree that “much more emphasis” should be placed on
                        long-range maintenance.

                        At one base we visited, the facilities staff said that because the deficiencies
                        causing poor ratings are not identified, the urgency of the repair work
                        cannot be assessed. They suggested that each red rating be accompanied
                        by a work order to fix the condition. They also suggested including a
                        standardized deficiency database as part of the ISR process to better
                        manage problems identified. In their view, such a system would allow
                        sorting by type of deficiency and priority, provide trend data, and post
                        correction of deficiencies.


Other Systems Used to   In addition to the ISR, the Army National Guard maintains a Project
Determine Repair and    Inventory Evaluation Report for all guard units for use in preparing budget
                        submissions. Each state prepares a comprehensive list of repair projects
Maintenance Needs       that includes data such as individual project description, costs, installation
                        name and location, and status. The report is updated periodically and sent
                        to the National Guard Bureau annually.

                        Yet another system is used to fund RPM for Army government-owned,
                        contractor-operated installations, such as industrial plants that produce
                        ammunition. In general, these sites have contracts that govern what the
                        contractor is required to do, with maintenance included as part of the
                        operator’s responsibility. Some survey government-owned,
                        contractor-operated respondents stated that they use some type of
                        assessment/inspection of facility conditions.




                        Page 50                                         GAO/NSIAD-99-100 Real Property Management
                       Appendix I
                       Army Strategy, Methods, and Criteria for
                       Determining Real Property Maintenance
                       Requirements




Resource Allocation    According to ACSIM personnel, there is no direct link between the ISR
                       assessments and the allocation of resources. The emphasis of the ISR, they
                       said, is to take a "snapshot" of the condition of the inventory; its software
                       then estimates what it would cost to improve facilities to C-1 or to
                       intermediate levels, from the rated level. In budget terms, the installations
                       do not actually request RPM funds. Instead, Army officials told us, the
                       Department of the Army decides how much “risk” to infrastructure they are
                       willing to tolerate, given other competing funding needs, and this leads to
                       an overall Army RPM spending total. This total is then divided
                       downwards, with each major command receiving a “target” figure; in turn,
                       each major command informs its component bases how much each will
                       receive in RPM funding.



How Bases Prioritize   Certain bases we visited had formal systems to review projects and
Spending               priorities or make funding decisions. At one base, resources are allocated
                       after projects are prioritized by a project priority list determined by their
                       installation planning board. The panel includes members from the major
                       staff directorates and tenants (such as the school house dean) and is
                       chaired by the base commander. There are about 20 voting members and
                       20 nonvoting members. The board is supported by working panels.

                       Customer work requests are evaluated using a local “project priority
                       matrix.” Projects are categorized (medical, operations/training, housing,
                       utilities, maintenance, administrative, supply, and community support) and
                       classified by type of work--health/safety, force protection,
                       mission/readiness, infrastructure). The matrix “points” are then weighted
                       according to the seriousness of the problem to be corrected (complete
                       failure, component failure, failure is imminent, system functional, or little
                       deterioration).

                       Work orders for repairs are not linked to the ISR and can be prepared at
                       any time. However, a customer can reference the ISR results as a basis for
                       the work (which could help when prioritizing all base projects). Other
                       bases implied that there simply is too little money to focus on prioritizing
                       spending. Substantial funds are used to pay for “must pay” items such as
                       utilities. Finally, the major command and base level commanders have the
                       authority and can use RPM funds for other needs.




                       Page 51                                    GAO/NSIAD-99-100 Real Property Management
                           Appendix I
                           Army Strategy, Methods, and Criteria for
                           Determining Real Property Maintenance
                           Requirements




Maintenance Needs Versus   We asked installations to report the funding they requested for RPM and
Requested Funding          the amount they would need to meet all identified repairs. This
                           unconstrained RPM requirement is how much it would cost to fix all
                           deficiencies previously identified but not funded and is commonly referred
                           to as backlog. These data are no longer officially collected or reported by
                           the Army to OSD or to the Congress. Instead, the ISR software generates
                           the estimated cost to bring ISR-rated facilities to the C-1 condition level (or
                           any lower level above the rated one).

                           At the Army bases we visited, we found a general sense among facilities
                           staff that although they made a significant effort to identify deficiencies,
                           the subsequent funding was so low that it appeared their efforts were
                           meaningless. The large difference between total backlog requirements and
                           the funding actually requested by bases for RPM, as reported on the
                           surveys, is shown in table I.5.



                           Table I.5: Fiscal Year 1997 Requirements Versus Funding Requested


                           Army bases’ unconstrained RPM requirements (total cost of fixing all          $12.4 billion
                           identified deficiencies)
                           RPM funding requested by bases from major commands, fiscal year 1997          $1.96 billion
                           Funding requested as a percent of unconstrained requirement                         15.8%
                           Source: Responses to question 15, GAO survey.


                           As the table shows, Army bases reported that they requested funding equal
                           to only about one-sixth (15.8 percent) of their identified RPM needs. We
                           were told by facilities staff that these differences were due to the fact that
                           everyone knows the funding environment is low and that total needs are
                           not expected to be funded given the gap between available funding and
                           identified requirements. It is also the case, however, that total repair and
                           maintenance needs are not a statement of priority, but rather what it would
                           cost to fix all known things that need fixing, regardless of importance to
                           mission or severity of defect.

                           We asked installations to indicate which of several factors they saw as
                           weaknesses in their facility condition assessment system. The results with
                           regard to the top rated items, in descending order of percent, are shown in
                           table I.6.




                           Page 52                                         GAO/NSIAD-99-100 Real Property Management
                        Appendix I
                        Army Strategy, Methods, and Criteria for
                        Determining Real Property Maintenance
                        Requirements




                        Table I.6: Army Bases’ Views on ISR Weaknesses

                                                                                             Percent that checked
                        Weakness                                                                            option
                        Little or no linkage between condition assessment and                                  61
                        allocation of resources
                        Ratings do not tell what is wrong within facility or mission                           53
                        category; reasons not readily available
                        Rollup oversimplifies conditions                                                       51
                        Little or no linkage between condition assessment and budget                           46
                        estimation
                        Assessment process lacks robust engineering base                                       40
                        Focuses too much on facility appearance                                                38
                        Cost estimates are generally not accurate                                              36
                        Overall condition ratings are too broad                                                32
                        Source: Responses to question 12, GAO survey.


                        The major ISR weakness, according to Army base respondents, is that there
                        is little or no linkage between condition ratings and subsequent resource
                        allocations. A majority of respondents also reported that the system does
                        not reflect the reason(s) for the ratings and that “rollup” ratings for a
                        category with multiple facilities oversimplify conditions.


Installation Views on   We also asked installations about their views with regard to how they
Proposed Changes to     would change the RPM funding allocation process. Table I.7 shows the
                        percentage of installations that cited any of four alternatives.
Allocation Processes




                        Page 53                                         GAO/NSIAD-99-100 Real Property Management
                             Appendix I
                             Army Strategy, Methods, and Criteria for
                             Determining Real Property Maintenance
                             Requirements




                             Table I.7: How Army Bases Would Change the Funding Allocation Process

                             Suggested change                                                   Percent checking option
                             Funding should not be based on a fixed increase above or                                   59
                             below the previous year’s level
                             Funding should be based primarily on the physical                                          53
                             deficiencies, with “needier” bases receiving more funds than
                             those in better condition
                             Funding should be based on average age, total square                                       45
                             footage and number of facilities
                             RPM funding/allocation should not be centrally managed by                                  39
                             major command.
                             Source: Responses to question 22, GAO survey. Total exceeds 100 percent because more than one
                             choice could be made.


                             The top choice among Army respondents was that RPM funding should not
                             be based on a fixed increase above or below the previous year’s level. A
                             majority of respondents also favored basing funding on physical
                             deficiencies, with more for “needier” bases.


Consequences at Base Level   Personnel responsible for real property maintenance at bases we visited
                             were virtually unanimous in pointing out that they could not adequately
                             maintain their facilities at the funding levels allocated to them in recent
                             years. For example, at one base, we were told that there is simply not
                             enough money to maintain all the required facilities. The major command
                             allocates a recurring base amount by activity; officials said that resources
                             were not adequate to provide the amount needed to take care of
                             requirements. At another base, the real property maintenance budget level
                             is “incremental”; i.e., it receives a fixed increase above or below the
                             previous year’s allocation.



Bases Visited                The following sites were visited to ask facilities management officials at
                             each about how RPM requirements are determined, how funds are
                             allocated, and their views on the RPM process in their service. The
                             questionnaire was pretested at some, and subsequently validated at others,
                             as indicated. In addition, we visited Fort Bragg (Forces Command),
                             Fayetteville, North Carolina, and Fort Belvoir (Military District of
                             Washington), Alexandria, Virginia, to gain a better understanding of the ISR
                             and the Army’s RPM processes from personnel involved in RPM, as well as
                             to see a diverse selection of Army property and facilities.



                             Page 54                                      GAO/NSIAD-99-100 Real Property Management
Appendix I
Army Strategy, Methods, and Criteria for
Determining Real Property Maintenance
Requirements




Sites visited to pretest questionnaires

Fort McPherson, (Forces Command), Atlanta, Georgia;
Fort Hood, (Forces Command), Killeen, Texas;
Fort Sam Houston, (Medical Command), San Antonio, Texas;
U.S. Army Forces Command, Atlanta, Georgia; and
U.S. Army Medical Command, San Antonio, Texas.

Sites visited to validate survey responses

Fort Sill (Training and Doctrine Command), Lawton, Oklahoma;
Texas Army National Guard, Austin, Texas; and
Rock Island Arsenal (Army Materiel Command), Rock Island, Illinois.




Page 55                                    GAO/NSIAD-99-100 Real Property Management
Appendix II

Air Force Strategy, Methods and Criteria for
Determining Real Property Maintenance
Requirements                                                                                                               Appe
                                                                                                                              nIx
                                                                                                                                Idi




               In this appendix, we discuss the Air Force’s strategy, methods and criteria
               for real property maintenance (RPM), including the responses to the
               questionnaire on RPM-related issues that we sent to Air Force bases and
               major commands.1 In particular, we focus on the Air Force’s Facility
               Investment Metric (FIM) system that is used to rate the urgency of repair
               projects funded from the operation and maintenance (O&M) RPM account.



Background     As of fiscal year 1998, worldwide Air Force installations had over 105,000
               buildings totaling just over 650 million square feet. Approximately 51,500
               of the buildings were family housing units and were paid for from the
               military family housing account, meaning O&M RPM funds paid for the
               repair and maintenance of the other 54,000 buildings with 480 million
               square feet.2 The O&M RPM-funded facilities had an estimated plant
               replacement value (PRV)3 of $146.4 billion. The Air Force’s Real Property
               Maintenance Account Program/Programs and Analysis Branch administers
               O&M RPM-funded facilities and serves as the advocate for RPM funding
               within the Air Force. According to the Air Force, RPM appropriations for
               fiscal year 1999 were $1.52 billion. Of this total, $1.359 billion was for the
               active Air Force, $66 million for the Air Force Reserve and $95 million for
               the Air National Guard.

               In the Air Force, O&M RPM funding consists of spending for (1) preventive
               maintenance level repairs (PML) and (2) repair and minor construction
               projects.4 To better determine repair and minor construction needs, the
               service implemented the Commander’s Facility Assessment (CFA) in fiscal



               1
                The survey, which asked about base facility inventory, RPM processes and funding, was sent to 202 Air
               Force bases (including Air Force reserve and Air National Guard); 200 returned the questionnaires, or
               99 percent. See app. X for a copy of the survey.
               2
                Air Force data provided to GAO.
               3
                PRV is defined by the Office of the Secretary of Defense (OSD) as “the cost to replace the current
               physical plant (facilities and supporting infrastructures) using today’s construction cost (labor and
               materials) and standards (methodologies and codes).”
               4
                Preventive maintenance is defined as the planned, periodic inspection, adjustment, and minor repair of
               equipment and systems. It is “the minimum level of maintenance required to sustain the day-to-day
               operation of the Air Force facilities and infrastructure between periodic repairs and replacement.” (Air
               Force: FIM Executive Overview, p. 5.) Air staff said that repair and minor construction projects are
               those that the Air Force bases contract out for a number of reasons, such as the size or dollar amount of
               the project. The service also allocates funds to support the civil engineering workforce at each base.
               This amount is based on historical amounts allocated for this purpose and base size factors, such as
               square feet and average age of the facility.




               Page 56                                            GAO/NSIAD-99-100 Real Property Management
Appendix II
Air Force Strategy, Methods and Criteria for
Determining Real Property Maintenance
Requirements




year 1993, which was then replaced in 1998 with FIM, which the Air Force
views as a more objective method to assess and present its RPM needs.

CFA, used from fiscal year 1993 to 1997, required bases to gather condition
assessment data on buildings and rank the impact of building conditions on
their missions. However, CFA had two major limitations, according to the
Air Force. The rating criteria were considered too subjective and the
method used to summarize data was problematic. The Air Force felt that
CFA criteria allowed commanders overly wide interpretation of CFA
ratings. CFA also grouped multiple requirements into one level, which
placed lower-impact requirements in the same category as more critical
requirements. Air Force RPM officials stated that these limitations reduced
the credibility of the system with the Air Force senior leadership.

According to the Air Force, the FIM’s purpose is “to put a mission face on
existing facility and infrastructure requirements in order to advocate for
funds at the Air Force Corporate Structure.”5 The FIM is used to rate only
RPM O&M funded repair projects that are not PML work. In contrast to the
CFA, the Air Force states that the FIM measures specific requirements
(rather than rating an entire facility or infrastructure system); has more
objective ratings; and provides feedback to leaders.6 According to the FIM
operational guide, it is intended to link RPM spending to the Air Force’s
“investment philosophy: to address the most urgent facility needs of the Air
Force.”

The FIM guide appears to endorse the need for a comprehensive strategy,
stating that the Air Force will use the data gathered under FIM “to develop
a corporate investment strategy, measure adherence to this strategy, and
ascertain the adequacy of long-term levels of investment to meet facility
requirements.”7 Given that FIM had only been used for 1 year at the time of
our review, it was not possible to determine the extent to which it had met
these goals.




5
 “Air Force Facility Investment Metric: Implementation and Operations Guide,” August 1997, p. 1. In
this regard, it is very similar to the Army’s Installation Status Report, which was also implemented as
part of a strategy to advocate for RPM funding. The Air Force corporate structure is, according to the
Air Force, “the Secretariat and HQ USAF leadership structure, to include the Air Force council, Board,
Panels, and integrated product teams.”
6
 Air Force: FIM Executive Overview, August 1997, p. 4.
7
 Air Force: FIM Executive Overview, August 1997, p. 1.




Page 57                                           GAO/NSIAD-99-100 Real Property Management
                                          Appendix II
                                          Air Force Strategy, Methods and Criteria for
                                          Determining Real Property Maintenance
                                          Requirements




Air Force RPM                             Using the FIM infrastructure rating system, Air Force bases identified
                                          $355 million in critical-rated projects for fiscal year 1998. However, the Air
Funding Strategy                          Force funding plan provides no funding for FIM-rated repair projects from
                                          fiscal year 1998 to fiscal year 2003, while funding the PML portion of RPM
                                          at 1 percent of the PRV of each installation. According to the Air Force
                                          Installations and Logistics office, repair projects are zeroed out until fiscal
                                          year 2003 because “we must look at overall needs, and the need is
                                          [weapons] modernization.”

                                          The Air Force’s December 1997 Annual Planning and Programming
                                          Guidance states that bases should use the FIM “to identify and
                                          accommodate RPM projects that satisfy the most urgent needs of the Air
                                          Force.” The Air Force estimates that the planned FIM-based spending of
                                          $1.694 billion for fiscal years 2003-2005 is 40 percent of the $4.22 billion
                                          total of FIM-estimated needs for projects rated “critical” or “degraded.”
                                          Table II.1 shows the Air Force spending plan through fiscal year 2005
                                          versus the estimated cost of projects rated critical or degraded using FIM
                                          criteria.



Table II.1: Air Force FIM Spending Plans Versus Needs Fiscal Years 1998-2005

Dollars in millions
Fiscal year                           1998       1999          2000        2001         2002         2003        2004         2005          Total
FIM funding planned by Air Force         0            0            0           0            0         246          666          782         1,694
                                          a           a
Need above funding level (for                                  1,700        800          800          800          120            0         4,220
critical/degraded projects)
                                          a
                                           No estimate provided for these 2 years. However, critical and degraded FIM projects for fiscal
                                          year 1998 alone totaled just over $4 billion (see table II.2).
                                          Source: Air Force.


                                          Table II.1 shows that the estimated cost of FIM critical and degraded level
                                          projects will increase until fiscal year 2004, when resumed funding for FIM
                                          begins to reduce the total. However, due to the zeroing-out until fiscal
                                          year 2003, the total of backlogged repairs will be about $4.22 billion by
                                          fiscal year 2005. Moreover, this funding is only for FIM projects rated
                                          critical or degraded—excluding those rated “minimal,” which were
                                          estimated to cost $3.4 billion in fiscal year 1998 (see table II.2). Using this
                                          funding strategy, therefore, the amount of critical and “degraded’ repairs
                                          increases, while “minimal” ones remain unfunded.




                                          Page 58                                          GAO/NSIAD-99-100 Real Property Management
                 Appendix II
                 Air Force Strategy, Methods and Criteria for
                 Determining Real Property Maintenance
                 Requirements




                 An OSD official expressed skepticism about the wisdom and realism of the
                 Air Force RPM funding strategy, noting that since the Air Force had only
                 funded PML repairs, emergency repairs remain unfunded. Therefore, in the
                 view of the OSD official, when emergencies occur, PML funds would be
                 used for them—providing even less for PML. This, in turn, could increase
                 the cost of repairs due to insufficient funds for PML.



FIM Assessment   The Air Force’s FIM requires active and reserve bases to identify and
                 prioritize repair and minor construction projects based on the impact that
System           deficiencies are having on the capability of units to carry out missions of
                 different types, in four broad categories.

                 Under FIM, repair projects (rather than individual buildings or facilities)
                 are rated as “critical,” “degraded,” or “minimal,” referring to the existing
                 impact of conditions on mission, defined as follows:

                 • A critical rating indicates a significant loss of installation mission
                   capability and frequent mission interruptions; continuous work-arounds
                   are needed.
                 • A degraded rating indicates a limited loss of installation mission
                   capability; work-arounds to prevent mission disruption and degradation
                   are often required.
                 • A minimal rating indicates marginal or no adverse impact to installation
                   mission capability; work-arounds are seldom needed.

                 Impact ratings are not further quantified, and, to some degree, reflect the
                 judgment of those doing the ratings. In contrast, the Marines use similar
                 categories for impact on mission, but define most with specific quantified
                 measures (e.g., critical impact is interfering with a mission specified
                 percent of the time, in a year). (See app. IV.) FIM projects are funded from
                 O&M and are for repair and minor construction. They do not include
                 military construction, PML (day-to-day repair and maintenance), or funds
                 from other accounts, such as family housing.

                 To determine FIM impact ratings, engineers may consult with the facility
                 users and/or other engineering staff to determine how the project impacts
                 the installation’s mission. For example, at Scott Air Force Base, several
                 civil engineering staff met and collectively determined the ratings. The
                 base civil engineer then approved them and forwarded them to the base’s
                 major command.




                 Page 59                                        GAO/NSIAD-99-100 Real Property Management
                     Appendix II
                     Air Force Strategy, Methods and Criteria for
                     Determining Real Property Maintenance
                     Requirements




Mission Categories   The impact ratings are used to rate the condition of four major mission
                     categories—primary mission, mission support, base support, and
                     community support—as follows:

                     • Primary mission—facilities and infrastructure that directly accomplish
                       or indirectly support the installation’s primary mission. Examples
                       include airfield pavements, navigational aids, and missile alert facilities.
                     • Mission support—facilities that support the installation’s primary
                       mission, some infrastructure, and primary emergency response facilities
                       that provide immediate life support and rescue service. Examples
                       include aircraft maintenance facilities, fire stations, and the base
                       communication center.
                     • Base support—facilities and some infrastructure that are not directly
                       tied to the primary mission, but are necessary to keep the installation
                       functioning properly (e.g., administrative facilities and chapels).
                     • Community support—facilities that support the installation, such as
                       lodging facilities and theaters.

                     As noted, the FIM ranks projects in terms of the impact that the
                     deficiencies they are intended to address are having on current mission
                     readiness, as well as their estimated cost. This is then rolled up into a
                     “Mission Area Rating Matrix” (MARM), which also includes the PRV of
                     RPM-funded facilities, and a facility investment index (FII) for each
                     mission area, critical projects, and critical and degraded projects. (The FII
                     is the estimated cost of FIM projects divided by the PRV of the facilities in
                     which they will be done.) The FIM data for the estimated cost of projects
                     from the MARM for the entire Air Force for fiscal year 1998 is shown in
                     table II.2.



                     Table II.2: Fiscal Year 1998 Air Force FIM Project Ratings and Cost

                     Dollars in millions
                                                                                FIM Rating
                     Mission category                   Critical     Degraded         Minimal   Estimated total cost
                      Primary mission                      $178          $1,025         $544                 $1,747
                      Mission support                       134            1,459        1,120                 2,713
                      Base support                            33           1,102        1,444                 2,580
                      Community support                       10               94        290                    394
                     Total                                 $355          $3,681        $3,398                $7,434
                     Source: Headquarters, Air Staff, Office of the Civil Engineer.




                     Page 60                                            GAO/NSIAD-99-100 Real Property Management
                      Appendix II
                      Air Force Strategy, Methods and Criteria for
                      Determining Real Property Maintenance
                      Requirements




                      According to the FIM operational guide, “the Air Staff must use the MARM
                      to develop” its facility investment strategy—that is, to prioritize repair
                      projects based on the criticality of the impact on mission. 8


FIM Data On-line      The data from FIM are available on-line in summary form to the Air Force
                      Office of the Civil Engineer, Programs Divisions, permitting rapid
                      comparisons of the needs of different installations rated under FIM. Unlike
                      the Army’s ISR (see app. I), the FIM on-line data do not provide an overall
                      condition rating for the base. Instead, the FIM on-line data show the
                      ratings for individual repair projects (i.e., critical, degraded, or minimal)
                      and the estimated cost of these repairs. The system also shows the cost of
                      all FIM projects in a given mission area at an installation. Moreover, the
                      data can be easily “sliced and diced,” permitting comparison and analysis
                      of the repair projects at any number of chosen installations or major
                      commands. This makes it comparable to the way ISR data can be analyzed.

                      Further, the data gathered by FIM show a 7-year estimate of all the projects
                      at an installation identified with regard to their level of urgency, their
                      estimated cost, and the year in which the money will be spent on them.
                      Since the year assigned for doing a repair project is based in large part on
                      the base’s estimate of its urgency—including when a component or facility
                      may fail—these timeline projections are a form of life-cycle analysis.
                      Repair urgency is also based on what mission it affects and how important
                      that mission is relative to other missions.

                      After a FIM rating of a given installation is reviewed and approved by the
                      Facility Board or equivalent, the data that go into the FIM are inputted from
                      the installation to the FIM computerized system. The data are
                      administered by Gunter Air Station, Alabama, which maintains both the
                      FIM and the Air Force’s RPM inventory data. The data are also
                      simultaneously “released” to the installation”s major command for review.
                      However, the data are not funneled through the major command. Once
                      sent to the on-line system, the data are also available to the Programs and
                      Analysis Branch.

                      Major commands review the ratings and can change them. Air Staff use the
                      data to create an Air Force-wide MARM that they present to Air Force
                      leaders to advocate for FIM funds. For fiscal year 1998, the FIM raters


                      8
                       FIM guide, August 1997, p. 5.




               Lte
                 rt   Page 61                                        GAO/NSIAD-99-100 Real Property Management
                          Appendix II
                          Air Force Strategy, Methods and Criteria for
                          Determining Real Property Maintenance
                          Requirements




                          estimated that FIM projects would cost $7.4 billion, of which only 540
                          (2 percent of 27,000) were rated as critical, estimated to cost $355 million,
                          or about 5 percent of total FIM-estimated repairs. Forty percent of the
                          projects were rated as “degraded,” and 58 percent as minimal. According
                          to headquarters staff, the MARM can and should be used to prioritize RPM
                          spending, so that funds are expended on critical and degraded categories.
                          This, the staff told us, would also help reduce future repair costs for
                          catastrophic failure.


Criterion to Determine    In addition to the rating and prioritizing of repair projects, the Air Force
Preventive Maintenance    allocates funding for PML—a component of RPM—at 1 percent of the
                          estimated PRV of infrastructure at a base. According to Air Force Civil
Needs                     Engineering staff, this level is adequate to satisfy PML requirements, given
                          the recommendation of the 1989 DOD infrastructure study that
                          recommended that the services annually budget a minimum of 1.75 percent
                          of PRV for maintenance and repair, excluding any additional funds required
                          to reduce existing backlog.9

                          While this 1-percent method for allocation provides a guaranteed
                          minimum, it is based on a set percent of PRV rather than on a
                          determination of physical deficiencies. It is a shorthand way of assuring a
                          given funding minimum, which may equal, exceed or fall below actual
                          needs. (See app. VII for more discussion.)


Preventive Maintenance    Although the Air staff uses the same 1 percent of PRV to allocate to its
May Not be Fully Funded   major commands, according to the Air Staff, the Air Force does not require
                          major commands or bases to spend that allocated 1 percent of PRV for
                          PML; commanders can use the funds in other areas. An Air Mobility
                          Command official told us that they try to allocate one percent of PRV to
                          PML, but that other needs may have a higher priority.

                          At Scott Air Force Base, a civil engineer estimated they actually receive
                          only about a half percent of PRV for PML. Further, of the PML money, most
                          is not used for this purpose, but rather to replace and repair items that are
                          broken due to prior insufficient PML. For example, a 10-inch water main,
                          now a $1-million critical FIM project, is being replaced because of
                          inadequate PML.

                          9
                           DOD, Renewing the Built Environment, March 1989, p. 28.




                          Page 62                                        GAO/NSIAD-99-100 Real Property Management
                            Appendix II
                            Air Force Strategy, Methods and Criteria for
                            Determining Real Property Maintenance
                            Requirements




                            A base civil engineer from the Alabama National Guard said that they had
                            replaced overhead doors that would not have been needed if adequate PML
                            had been done to preserve the existing doors. When PML is not done, the
                            work will (eventually) show up as a FIM project and typically cost more
                            than the amount of PML needed, according to the Alabama official.

                            Another factor in Air Force RPM decision-making is the criterion for repair
                            versus replacement. The Air Force has a guideline that requires
                            reconsideration of a project when the estimated cost of the project exceeds
                            70 percent of the PRV of a building. 10 As in the other services, this is a
                            guideline.


Installation Views on FIM   Some facilities management engineers at bases we visited expressed the
                            view that the FIM ratings may be too restrictive, citing the fact that only
                            2 percent of the 27,000 Air Force-wide FIM projects were rated critical for
                            fiscal year 1998; these represented about 5 percent of the total estimated
                            cost of repairs ($355 million of $7.4 billion). However, headquarters Air
                            Staff told us that the Air Force intentionally made the ratings more
                            restrictive than under CFA and that FIM was to intended to reflect only the
                            Air Force’s most urgent needs. In their view, CFA ratings were too
                            subjective, resulting in many facilities rated as critical.

                            Some base engineers told us that because FIM ratings were too restrictive,
                            few projects would get a critical rating and a chance of being funded. For
                            example, at one base that we visited, of the total 103 projects, none were
                            rated critical as of November 1997. Civil engineering staff at another Air
                            Force Base said that they were concerned that few critical ratings might
                            appear to make the Air Force look in better shape than it was. At yet
                            another base we visited, 6 of 88 projects were rated critical and engineering
                            officials expressed concern that FIM would make their base look in better
                            shape that it was. They said that the FIM did not show that 132 roofs were
                            leaking and were concerned that the system would not convey an accurate
                            overall picture of conditions at the base.

                            Using the FIM rating system, although total estimated Air Force repair
                            backlog increased about 278 percent from fiscal year 1997 to fiscal



                            10
                             Air Force Instruction 32-1032, 11 May 1994, “Planning and Programming Real Property Maintenance
                            Using Appropriated Funds,” p. 6.




                            Page 63                                        GAO/NSIAD-99-100 Real Property Management
                            Appendix II
                            Air Force Strategy, Methods and Criteria for
                            Determining Real Property Maintenance
                            Requirements




                            year 1998 ($2.667 billion to $7.434 billion), only 5 percent in dollar value
                            ($355 million) under FIM was rated critical.

                            Engineering officials at three bases we visited said they were concerned
                            the Air Force would only fund those projects with critical ratings in the
                            primary mission category. They expressed concern that other mission
                            areas, especially community support, would not receive funds. (As noted,
                            for fiscal years 1998-2002, the Air Force has “zeroed out” all funding for
                            repair projects.) An official at headquarters stated that bases can spend
                            more on repair projects if they choose, noting that the amount of funding
                            received by bases through their major commands is not the maximum
                            spending allowed. He added that bases can move funds from other O&M
                            accounts, if available.

                            At one of the bases we visited, facilities officials said that in their view,
                            many base support and community support projects could not get a critical
                            rating because funding was being reserved only for critical projects, and
                            base commanders wanted to reserve it for facilities connected to
                            operations. Further, because ratings were too restrictive, in their opinion,
                            funding all critical projects in all mission areas still would not provide them
                            with sufficient funds for repairs that they felt needed to be made.


Air National Guard Bureau   Facilities held by the Air National Guard (ANG) represents about 5 percent
Uses Additional Criteria    of the Air Force’s total PRV. However, the ANG accounts for about half of
                            Air Forces bases (103 of 202 identified to us for the purpose of our
                            questionnaire). In the ANG, FIM projects and large PML projects are
                            normally contracted out and are 100 percent federally funded. Other
                            activities, such as smaller PML—changing filters, adjusting equipment,
                            etc.—are covered by the state/federal agreement for Facility Operation and
                            Maintenance Activities (FOMA). Under this agreement, the state and
                            federal government share costs for a variety of items such as utilities,
                            rental of equipment, state employees’ salaries, and supplies and materials.
                            The cost-share ratio depends on the mission of the unit, but according to
                            the ANG Bureau (i.e., headquarters), the typical share is 75 percent federal
                            and 25 percent state. 11




                            11
                             The federal share of FOMA is based on manpower standards, actual salary rates for the state, and
                            historical/predicted costs for utilities, services, supplies, and materials.




                            Page 64                                          GAO/NSIAD-99-100 Real Property Management
                   Appendix II
                   Air Force Strategy, Methods and Criteria for
                   Determining Real Property Maintenance
                   Requirements




                   For maintenance and repair that is 100-percent federally funded, such as
                   FIM projects, the ANG Bureau uses a mix of factors as criteria to determine
                   the annual amount each base receives—square footage and condition,
                   pavement area and condition, area cost factors, and overall real property
                   funds availability.


Daily Repair and   In the Air Force, base civil engineers (BCE) and building users identify
Maintenance        repair and minor construction projects. Building users report problems to
                   civil engineering, and civil engineering staff, through their day-to-day work,
                   report problems. Among the 200 Air Force installations that responded to
                   our survey, approximately 12.4 percent of inspectors were reported to be
                   engineers or skilled craftsmen, with the remainder being building users,
                   and about a half percent being contractors.

                   Typically, work orders for repairs are entered daily into a base’s work order
                   system, upon receipt of a request for repair. When building users identify
                   repairs, civil engineering staff determine whether the requested repair or
                   minor construction is valid through personal knowledge of the facility or
                   inspection. For example, at a small base, the civil engineer would have
                   personal knowledge of the age of systems, such as an air conditioning
                   system in the command building. If the system historically had not cooled
                   the building adequately, the base engineer would know that a work order to
                   repair the system to properly cool the building is a valid request. At larger
                   bases, civil engineers may have to visit the site to validate the request.

                   Through a work order board that meets as needed, BCEs prioritize projects
                   according to whether in-house engineering can handle or whether the
                   projects need to be contracted out. BCEs enter the estimated cost of the
                   contract projects into the Air Force’s Projects by Contract Management
                   System (PCMS).12 (These data are also centralized at a Gunter Air Station
                   facility that maintains the FIM database.)

                   Civil engineers use PCMS and real property records to create the FIM
                   database.13 BCEs update PCMS projects to reflect FIM mission impact
                   ratings, and real property records provide the specific mission category


                   12
                    PCMS was implemented around 1989 and is the Air Force civil engineering system that tracks contract
                   work from design to completion. All FIM projects are in PCMS.
                   13
                     One FIM objective was to use existing databases and reduce the workload of gathering the
                   information. We did not verify data in PCMS or in real property records.




                   Page 65                                         GAO/NSIAD-99-100 Real Property Management
                           Appendix II
                           Air Force Strategy, Methods and Criteria for
                           Determining Real Property Maintenance
                           Requirements




                           codes for each base. In fiscal year 1998, base engineers assigned initial FIM
                           mission impact ratings to all projects in PCMS.


Methods to Ensure Rating   FIM ratings are validated through a review and approval process. After
Validity                   base engineers assign an initial rating to all PCMS projects, the base
                           commander reviews/approves the ratings. Typically, each base in the Air
                           Force has a facility board that consists of all the base’s unit commanders.
                           This board assists the base commander in making facility infrastructure
                           decisions, including approval of FIM project ratings. BCEs present the FIM
                           ratings at a board meeting and resolve any differences in opinions. The
                           base engineer also obtains the commander’s priorities for the projects and
                           includes this ranking in the FIM database.

                           Our survey results reflected the use of a FIM review and approval process.
                           Installations reported a number of ways in which initial ratings are
                           reviewed, with use of outside contractors ranking the lowest, at about
                           3 percent. Table II.3 summarizes base responses.



                           Table II.3: Steps to Ensure FIM Project Ratings Are Valid

                                                                                               Percent of respondents
                           Step to ensure validity                                                      citing method
                           Rely on expertise of assessor; no formal procedures used                               21
                           Selected worksheets are reviewed by facility management                                46
                           office staff
                           Facility staff makes follow-up visits to verify reported problems                      25
                           on a sample of selected rating worksheets
                           Outside contractors used                                                                3
                           Other validation methods                                                               34
                           Source: Responses to question 9, GAO survey.




Methods to Ensure          When asked about the steps taken to ensure ratings given by one rater
Consistency in Ratings     would be, on average, the same reported by another rater, 51 percent of
                           respondents said they had no formal procedures or mechanisms other than
                           the expertise and/or training of their staff who do the ratings. Forty-eight
                           percent wrote in about other methods used to ensure consistency. Table
                           II.4 shows the responses.




                           Page 66                                        GAO/NSIAD-99-100 Real Property Management
                        Appendix II
                        Air Force Strategy, Methods and Criteria for
                        Determining Real Property Maintenance
                        Requirements




                        Table II.4: Steps to Ensure Consistency

                                                                                           Percent of respondents
                        Step to ensure consistency                                                      citing step
                        No formal procedures used other than expertise of the raters                            51
                        Set number or percent of facilities are reinspected by different                         3
                        assessors
                        Random sample of facilities are reinspected by different                                 7
                        assessors
                        Outside contractors used                                                                 1
                        Other method to ensure consistency                                                      48
                        Source: Responses to question 10, GAO survey.




Installation Views on   Regarding the overall quality of the FIM process, 61 percent reported the
Constraints             primary factor affecting overall quality was the shortage of resources—
                        insufficient time and/or budget to carry out assessments. Table II.5 shows
                        the responses.



                        Table II.5: Factors That Constrain Assessment Quality

                                                                                             Percent that checked
                        Constraining factor                                                                 factor
                        Shortage of personnel                                                                   45
                        Shortage of trained personnel, that is, engineering or skilled                          42
                        craft background
                        Shortage of resources (that is, insufficient time and/or budget                         61
                        to carry out assessments)
                        Other                                                                                    9
                        Does not apply--no factors create a significant constraint on                           22
                        the quality of reviews of facility conditions
                        Source: Responses to question 11, GAO survey.


                        When asked how methods could be changed, 64 percent of the responding
                        bases reported that the Air Force should place much more emphasis on
                        long-range planning, while de-emphasizing annual assessments of facilities.
                        Thirty-nine percent responded that buildings and facilities should be rated
                        primarily according to engineering, life-safety and other factors, as shown
                        in table II.6.




                        Page 67                                         GAO/NSIAD-99-100 Real Property Management
                                          Appendix II
                                          Air Force Strategy, Methods and Criteria for
                                          Determining Real Property Maintenance
                                          Requirements




                                          Table II.6: How Bases Would Change Determining RPM Requirements

                                          Proposed change                                                                Percent agreeing
                                          Rate building/facilities primarily according to engineering and                               39
                                          life-safety criteria, while decreasing the role of aesthetics
                                          Place much more emphasis on long-range maintenance                                            64
                                          planning while de-emphasizing annual assessments
                                          Other                                                                                         28
                                          Source: Responses to question 13, GAO survey.




Some Major Commands                       We found the Air Force allows major commands to use assessment tools in
Supplement FIM With Other                 addition to FIM to rate the condition of their facilities and prioritize RPM
                                          spending. Three major commands—the Air Force Materiel Command, the
Assessment Tools                          Air Combat Command, and the Air Force Academy—use non-FIM
                                          assessments. Command officials told us these systems provide more
                                          detailed information about projects than FIM does and helps them make
                                          more informed decisions regarding project funding. The Air Force
                                          Academy uses a system that includes life-cycle principles of property
                                          management.

                                          The systems used by Air Force Materiel Command and the Academy are
                                          based on engineering assessments as to whether facilities are working
                                          adequately. In contrast, FIM prioritizes projects based on how deficiencies
                                          are impacting missions. Air Staff stated that commands are allowed to use
                                          other tools if it helps them to better manage their facilities. Table II.7
                                          outlines the three systems’ major features.



Table II.7: Additional Assessment Tools That Supplement FIM

Major command                   Name of system                                    Principle characteristic
Air Force Materiel Command      Infrastructure Condition System (ICS)             Provides engineering assessment/ratings on the
                                                                                  physical condition of the system on a scale of 0 to 10.
Air Combat Command              Civil Engineering Risk Matrix (CERM)              Rates projects impact on mission more extensively
                                                                                  than FIM and provides a measure indicating
                                                                                  probability of funding from low to high.
Air Force Academy               Facility Investment Strategy                      Rates buildings not projects, updated each year by a
                                                                                  contractor; buildings managed to extend maximum life
                                                                                  of facility.
                                          Source: Air Force civil engineering officials at each of the cited commands.




                                          Page 68                                           GAO/NSIAD-99-100 Real Property Management
                                Appendix II
                                Air Force Strategy, Methods and Criteria for
                                Determining Real Property Maintenance
                                Requirements




Inspection Condition System     The Air Force Materiel Command Inspection Condition System is a series
                                of checklists that establish detailed rating criteria for evaluating the
                                physical condition of the components and subcomponents of five
                                designated infrastructure systems—building systems, utility systems,
                                pavement and grounds, airfield systems, and water and wastewater system.
                                Inspectors read physical condition descriptions and assign a rating scaled
                                from 0 to 10 (0 is complete failure; 10 is new condition) that best describes
                                the subcomponents physical condition. Each subcomponent is then
                                assigned a weighting factor that best represents the importance of the
                                subcomponent to the overall component system. Component ratings are
                                then used to determine project ratings. The Air Force Materiel Command
                                will continue to use its system along with FIM because, officials told us, it
                                gives the command an engineering-based technical assessment of projects.
                                An Air Force Materiel Command official said that FIM provides the impact
                                on the mission and Inspection Condition System tells them technically how
                                well the system, such as a heating and air conditioning system, is
                                performing.

Civil Engineering Risk Matrix   The Air Combat Command planned to require its bases to use its Civil
System                          Engineering Risk Matrix System in addition to the FIM through fiscal
                                year 1998, after which it would transition to FIM only. The matrix system
                                was similar to FIM in that it rates projects according to mission impact. It
                                has five mission areas and impact ratings, each with a numerical value.
                                When combined, the values produce a funding probability from low to
                                maximum. The five impact ratings are catastrophic, critical, essential,
                                required, and desired. Catastrophic is valued at seven, whereas desired is
                                valued at one. The Air Combat Command developed the matrix to provide
                                it with a risk-based methodology to advocate for project funding.

Facility Investment Strategy    In 1995, the Air Force Academy developed a Facility Investment Strategy
                                that gave it an engineering analysis of facility and infrastructure conditions
                                and that utilizes some elements of life-cycle planning. In this system,
                                buildings have an estimated lifespan, and maintenance is geared to
                                maximizing the lifespan. The system determines all work that needs to be
                                done for buildings, regardless of the urgency. In contrast, FIM determines
                                projects that need to be done and prioritizes them by mission impact.

                                With the information the system provides, the academy developed
                                condition indices that monitor the effects of various levels of investment.
                                The indices are also used to predict the anticipated condition of the asset




                                Page 69                                        GAO/NSIAD-99-100 Real Property Management
                           Appendix II
                           Air Force Strategy, Methods and Criteria for
                           Determining Real Property Maintenance
                           Requirements




                           based on the amount of investment made to renew the asset.14 According
                           to the academy, they plan to continue to use their system along with FIM.
                           They told us that their system gives them more detailed building
                           information than does FIM and that they continue to add to the detail each
                           year as they do annual updates. Each year the academy pays a contractor
                           about $25,000 to $30,000 to update and analyze the program data.



Allocation of RPM          The Air Force plans to allocate RPM resources based on two factors—the
                           1 percent of estimated installation PRV and the prioritization scheme
Resources                  created under FIM. However, through fiscal year 2002, no funding will be
                           provided to FIM-rated repair projects; the only RPM funding will be for
                           preventive maintenance level repairs. According to FIM guidance, the Air
                           Force will use the FIM Mission Area Matrix to establish investment targets
                           for each mission area tied to an Air Force investment strategy.
                           Headquarters will then allocate funding to the major commands based on
                           their share of the targeted requirement. According to headquarters, targets
                           have not yet been established since FIM is still new.


Almost Half of Air Force   Since the Air Force allocates a very substantial portion of total RPM
PRV Estimate Needs         spending on the basis of PRV (100 percent through fiscal year 2002), it is
                           critical that installations calculate accurately. However, this may not be the
“Correction”               case, as noted in a contractor analysis of the Air Force’s PRV model, which
                           found that only 55 percent of the Air Force’s estimated $204 billion (fiscal
                           year 1996) PRV “has been determined . . . to be acceptable”; “the Air Staff
                           has determined that the remaining 45 percent of the PRV data is in need of
                           review and validation.”15 “The most recent calculation of PRV . . . contains
                           anomalies that required validation or correction.”16 The Air force indicated
                           that it is addressing this issue.

                           In addition, the contractor’s report notes that some PRV estimates are
                           unreliable because the real property records “do not contain the level of


                           14
                            This system and the use of condition indices influenced the development of FIM. After being briefed
                           on the academy’s system, the Air Force Vice Chief of Staff directed the Air Force Office of the Civil
                           Engineer to develop an index, similar to the one developed by the academy, for use by commanders to
                           analyze future facility construction and repair requirements.
                           15
                            USAF: “Short Term Analysis Report: Air Force PRV Model,” October 1997, p. 2.
                           16
                            Delta Research Division of BTG, Inc.: “Short Term Analysis Report: Air Force PRV Model,” October
                           1997, p. 1.




                           Page 70                                          GAO/NSIAD-99-100 Real Property Management
                   Appendix II
                   Air Force Strategy, Methods and Criteria for
                   Determining Real Property Maintenance
                   Requirements




                   detail required to accurately match an appropriate unit cost to the real
                   property record quantity.”17 As an example, the report cites the fact that
                   water lines are only identified as a “generic type,” but not the size or type of
                   water line, which it notes can range in cost from $7 per linear foot to about
                   $60 per linear foot for 24-inch cast iron pipe. The report provides no
                   estimate of the potential range of inaccuracy in the PRV estimates for Air
                   Force facilities. In sum, the PRV measure’s estimate appears open to
                   misinterpretation and, hence, miscalculation.


RPM Needs Exceed   Air Force bases’ responses to our survey reported that in fiscal year 1997,
Requests           they had $5.9 billion in repair needs, and had received 18.3 percent of that
                   total ($1.08 billion) in RPM funding. In responses to the survey, as shown
                   in table II.8, the lack of linkage between requirements and allocation of
                   resources was one of the top five most frequently cited weaknesses in the
                   Air Force’s RPM management.



                   Table II.8: Top Five Frequently Cited Weaknesses

                   Weakness                                                              Percent citing weakness
                   Little or unclear linkage between RPM needs assessment and                                 39
                   resource allocation
                   Rollup oversimplifies conditions                                                           37
                   Condition assessments/requirements determination are too                                   34
                   subjective
                   Ratings do not tell what is wrong within facility or mission                               32
                   category
                   Little/unclear linkage between condition determination and                                 29
                   budget estimation
                   Source: Response to question 12, GAO survey. Total exceeds 100 percent because more than one
                   choice was possible.


                   Air Staff uses FIM to advocate for resources. When we asked bases what
                   they would change about the method used to allocate RPM resources,
                   about 50 percent wrote that they would not change the system. Of the
                   other 50 percent, about half (48 percent) recommended a variety of
                   changes ranging from the receipt of a lump-sum amount at the beginning of
                   the year to simply increasing the dollar amount they received.


                   17
                    Delta Research Division of BTG, Inc., op. cit., p. 4.




                   Page 71                                             GAO/NSIAD-99-100 Real Property Management
                Appendix II
                Air Force Strategy, Methods and Criteria for
                Determining Real Property Maintenance
                Requirements




                When asked to suggest methods on how funding is allocated by their major
                commands, there appeared to be no clear consensus with regard to four
                proposed alternatives, other than a 60- to 40-percent opposition to
                decentralizing control of RPM funds downwards from the major
                commands. Table II.9 shows the percent of bases’ that agreed with four
                specified alternatives.



                Table II.9: How Bases Would Change Funding Allocations

                                                                                  Percent of respondents
                Suggested change                                                            citing change
                Funding for RPM should be based primarily on the physical                             56
                deficiencies present in facilities
                Funding should not be based on a fixed increase above or                              51
                below the previous year’s level
                Funding be based on average age, total square footage and                             45
                number of facilities
                RPM funding/allocation should not be centrally managed by                             40
                major command
                Source: Responses to question 22, GAO survey.




Bases Visited   We visited Eglin Air Force Base, Fort Walton Beach, Florida; Pope Air
                Force Base, Fayetteville, North Carolina; and Air Combat Command,
                Langley Air Force Base, Langley, Virginia, to ask facilities management
                officials how RPM requirements are determined, how funds are allocated,
                and their views on the RPM process. We asked similar questions at the
                following sites, where we also pretested our survey at some, and
                subsequently validated it at others, as indicated.

                Sites visited to pre-test the questionnaire

                Maxwell Air Force Base (Air Education and Training Command),
                 Montgomery, Alabama;
                Seymour-Johnson Air Force Base (Air Combat Command), Goldsboro,
                 North Carolina;
                Wright-Patterson Air Force Base (Air Materiel Command), Dayton, Ohio;
                 and
                Air Force Materiel Command, Wright-Patterson Air Force Base, Dayton,
                 Ohio.




                Page 72                                         GAO/NSIAD-99-100 Real Property Management
Appendix II
Air Force Strategy, Methods and Criteria for
Determining Real Property Maintenance
Requirements




Sites visited to validate questionnaire

Alabama Air National Guard, Birmingham, Alabama;
Scott Air Force Base (Air Mobility Command), Belleville, Illinois;
Tinker Air Force Base (Air Force Materiel Command), Oklahoma City,
Oklahoma; and
Air Mobility Command, Scott Air Force Base, Belleville, Illinois.




Page 73                                        GAO/NSIAD-99-100 Real Property Management
Appendix III

Navy Strategy, Methods, and Criteria for
Determining Real Property Maintenance
Requirements                                                                                                               AppeInx
                                                                                                                                 Idi




               In this appendix we discuss the Navy’s strategy, methods and criteria for
               determining RPM requirements and allocating resources, including the
               responses to a questionnaire on RPM-related issues that we sent to Navy
               installations and major claimants. 1 In particular, we examine the key
               components of the Navy's system for evaluating base infrastructure
               conditions and estimating RPM costs, its Annual Inspection Summary (AIS)
               and Shore Base Readiness Report (BASEREP).



Background     At the end of fiscal year 1998, the Navy managed 31,040 buildings totaling
               almost 343 million square feet. According to the Navy Budget Office, the
               Navy’s operations and maintenance (O&M) fiscal year 1999 appropriation
               for Navy and Navy Reserve RPM is $973.3 million. The Navy estimates that
               its backlog of critical-rated repairs will be just over $2.5 billion at the end of
               fiscal year 1999.2 The Deputy Chief of Naval Operations (Logistics)
               Facilities and Engineering Division has oversight responsibility for RPM.
               According to the Navy, the plant replacement value (PRV)3 of Navy
               facilities, as of fiscal year 1998, was estimated at about $103 billion.4

               Navy RPM needs can be funded through six appropriations: O&M, Navy;
               O&M, Naval Reserve; Research, Development, Test and Evaluation, Navy;
               the Navy Working Capital Fund; Military Construction, Navy; and Naval
               Reserve. Not all installations receive funds from all six appropriations.
               The working capital fund and Navy O&M also fund property inspections to
               identify and report backlogs. While military construction funds are not
               intended for RPM, they may reduce RPM needs when used to replace or
               extensively renovate an existing facility.




               1
                We sent the survey, which asked about installation facility inventory, RPM processes, and funding, to
               132 Navy installations; 126, or 95 percent, returned the questionnaires. See app. X for a copy of the
               survey. Major claimant is the Navy’s equivalent term for major command in the Air Force and Army.
               These are the headquarters for a larger number of installations with similar functions.
               2
                The Navy rates backlog as either critical or deferrable; only the critical backlog is officially reported to
               the Congress.
               3
                PRV is defined by OSD as “the cost to replace the current physical plant (facilities and supporting
               infrastructures) using today’s construction cost (labor and materials) and standards (methodologies
               and codes).”
               4
                This includes family housing ($10 billion in PRV), but excludes facilities funded by working capital
               funds, which have an estimated PRV of $35 billion.




               Page 74                                             GAO/NSIAD-99-100 Real Property Management
                   Appendix III
                   Navy Strategy, Methods, and Criteria for
                   Determining Real Property Maintenance
                   Requirements




Navy RPM Funding   The Navy estimates that it would take annual funding equivalent to about
                   2.1 percent of PRV to keep the conditions of its facilities stable, but was
Strategy           funding RPM at about 1.5 percent of PRV in 1998 for O&M-funded
                   properties. However, according to the Navy, it will increase RPM spending
                   to 1.84 percent of PRV in fiscal year 2001, with the total gradually rising to
                   2.59 percent of PRV by fiscal year 2005. The Navy estimates that this will
                   result in holding increases in critical-rated backlog to no more than about
                   10 percent over end of fiscal year 1998 levels by fiscal year 2005.5 The
                   spending planned for fiscal years 2001-2005 would cap the growth in
                   critical backlog at about $2.75 billion. The Navy has targeted some of the
                   planned RPM spending to barracks, with the goal that critical-rated repairs
                   for barracks will be “virtually eliminated” by fiscal year 2004, if the funding
                   is provided as planned.

                   While the Navy RPM funding strategy appears to be reasonably consistent
                   with a stated Navy goal to prevent an increase in repairs rated “critical,” it
                   is not clear that noncritical rated backlog growth will be adequately
                   addressed. The Navy stated that even with the increased funding for
                   critical-rated repairs, most facilities’ RPM would be funded at a level
                   resulting in either a C2 or C3 readiness level. C3 means that the facilities in
                   the category (e.g., aviation, waterfront operations, training) have only
                   marginally met the demands of the mission, but with major difficulty. For
                   fiscal year 2001, RPM funding will keep 4 of 11 facility categories at the
                   C2 level, with the remainder at C3.6 The Navy told us that eventually some
                   noncritical repair needs could become critical, as conditions worsen. The
                   Navy funding strategy for RPM is the result of balancing RPM needs against
                   the other competing priorities of the Navy.




                   5
                    Estimate is from a Navy November 1998 briefing and technical comments on draft of this report. A
                   June 1999 Navy graph shows total critical backlog increasing from just under $2.5 billion at the start of
                   fiscal year 1999 to about $2.75 billion for fiscal years 2002-2003 and declining slightly thereafter.
                   6
                    According to the Navy, for the purpose of calculating these ratings, it reduced its facilities from 28 to 11
                   mission categories. These include barracks, aviation (runways and associated facilities) training, and
                   utilities.




                   Page 75                                              GAO/NSIAD-99-100 Real Property Management
                       Appendix III
                       Navy Strategy, Methods, and Criteria for
                       Determining Real Property Maintenance
                       Requirements




Methods and Criteria
to Determine
Maintenance Needs

Overview of Navy RPM   The Naval Facilities Engineering Command (NAVFAC) is responsible for
                       the technical direction of the Navy’s real property inventory. The
                       Command maintains a database of all Navy real property, including
                       property of the Marine Corps. The database contains various data
                       elements, including the unit identification code of the plant property
                       accounting unit, date acquired, government cost, current plant value (CPV),
                       investment category, use, and size (square feet, statute miles).

                       NAVFAC’s objective is to make optimum use of available resources for
                       RPM. Its goals include ensuring the most efficient use of resources,
                       performing scheduled maintenance to avoid breakdowns, and performing
                       routine maintenance to avoid having to perform major repairs. These tasks
                       involve inspecting facilities, setting work priorities, planning and
                       estimating work, and reporting facility condition.

                       The Navy has maintained two facility condition reporting systems since
                       1982: the Annual Inspection Summary (AIS) and the Shore Base Readiness
                       Report (BASEREP). These systems serve different purposes, but overlap
                       in that they both involve installations’ reports on aspects of facilities’
                       condition. Both are based on engineering inspections of facilities. AIS, the
                       Navy told us, is based on a fence-to-fence inspection of facilities to rate
                       deficiencies, rather than individual buildings. Deficiencies are rated as
                       either critical or deferrable; critical are those that must be funded within
                       12 months. The purpose of the AIS is to develop realistic, long-term
                       maintenance plans that will reduce the Navy's RPM backlog. AIS is the
                       summary of work and costs to correct deficiencies for each facility. The
                       BASEREP’s purpose is to link installation resources with readiness and
                       workload. BASEREP reports on facility quantity and condition, major
                       equipment quantity and condition, and personnel. BASEREP is the
                       installation commander's assessment of the installation's ability to execute
                       assigned missions; it includes explanations of remedial actions needed to




                       Page 76                                    GAO/NSIAD-99-100 Real Property Management
                       Appendix III
                       Navy Strategy, Methods, and Criteria for
                       Determining Real Property Maintenance
                       Requirements




                       correct deficiencies. Ratings are by mission areas and include the status of
                       all the facilities supporting the assigned missions. 7

                       The Navy’s AIS does not include Marine Corps activities, industrial and
                       research plants owned and operated by private contractors, military
                       assistance advisory groups and defense attache offices, petroleum
                       reserves, Reserve Officer Training Corps units, family housing, fleet
                       moorings, and property funded through the Naval Telecommunications
                       Command and Naval Security Group Command activities.

                       NAVFAC publishes guidance and handbooks on managing real property,
                       including procedures and guidance for conducting and documenting
                       facilities inspections. Navy instructions require installation commanding
                       officers to accomplish missions assigned by their major claimant, including
                       the management of related budgeting and obligation of funds. They are
                       responsible for efficiently and effectively managing installation facilities to
                       ensure they are adequate to accomplish the missions.


Navy RPM Definitions   The Navy has defined maintenance, repair, and construction as follows:

                       • Maintenance: the recurring, day-to-day, periodic, or scheduled work
                         required to preserve or return a real property facility to such a condition
                         that it may be used for its designated purpose.
                       • Repair: the return of a real property facility to such condition that it
                         may be effectively utilized for its designated purpose, by overhaul,
                         reconstruction, or replacement of constituent parts or materials that are
                         damaged or deteriorated to the point where they cannot be
                         economically maintained.
                       • Construction: the erection, installation, or assembly of a new real
                         property facility; or the addition, expansion, extension, alteration,
                         conversion, or replacement of an existing real property facility; or the
                         relocation of a real property facility.

                       The Navy has established criteria, including funding limits, for facilities
                       projects to comply with laws and regulations. Major claimants set the
                       limits of funds obligation for each base. A deficiency under the limits and
                       within the Navy definitions for maintenance and repair may be funded by



                       7
                        Navy briefing, June 1998 and Navy email communication to GAO, September 1997.




                       Page 77                                        GAO/NSIAD-99-100 Real Property Management
          Appendix III
          Navy Strategy, Methods, and Criteria for
          Determining Real Property Maintenance
          Requirements




          the installation. Projects over the limits must be approved and funded by
          the major claimant as a special project.


BASEREP   The BASEREP is an annual report of each installation's ability to perform
          its missions and shows the level of mission readiness, listed by three
          categories, including the quantity and condition of facilities, personnel, and
          quantity and the condition of major equipment. Its purpose is to link
          financial and personnel resources with readiness and workload. BASEREP
          criteria define 28 mission areas and major claimants assign mission areas
          to their installations. Installation commanding officers rate their
          installations’ abilities to perform the assigned missions according to
          C-ratings. The four C-ratings are

          •   C1—has fully met all demands throughout the reporting period.
          •   C2—has substantially met all demands, with only minor difficulty.
          •   C3—has only marginally met the demands, but with major difficulty.
          •   C4—has not met vital demands.

          The C-ratings apply to the installation's asset categories—(1) personnel,
          both military and civilian; (2) facilities’ quantity and condition; and
          (3) major equipment quantity and condition. In applying the ratings to
          facilities, quantity addresses the number and size regarding mission and
          condition addresses deficiencies that should be corrected to achieve
          mission requirements. The commanding officers provide additional
          narrative assessments describing the problems and the proposed solutions
          for all missions rated C3 or C4.

          Because these ratings are not quantified and involve individual judgments
          by commanders, a Navy RPM official at one installation described the
          BASEREP as “a very subjective assessment.”

          Three Navy sites we visited had some C4 mission ratings. The Norfolk
          Naval Shipyard reported C4 in its port operations mission area; NAS
          Oceana reported C4 in its bachelor housing mission area; and Public Works
          Center San Diego reported C4 in its research, development, test, and
          evaluation (RDT&E) and administrative services missions.

          According to BASEREP criteria, AIS data should not drive the BASEREP
          assessment, but BASEREP deficiencies should be addressed in the AIS.
          Major claimants provide supplemental guidance to their installations on
          reporting criteria. According to base officials, the Chief, Naval Education



          Page 78                                    GAO/NSIAD-99-100 Real Property Management
                          Appendix III
                          Navy Strategy, Methods, and Criteria for
                          Determining Real Property Maintenance
                          Requirements




                          and Training (CNET) directed that only facilities’ condition and quantity
                          ratings be provided on its installations’ September 30, 1997, BASEREPs; the
                          major claimant did not want the personnel or equipment ratings.


AIS                       AIS is the Navy's means of identifying and reporting its cumulative backlog
                          of real property maintenance and repair. It is also the tool through which
                          installation commanders identify and report RPM deficiencies and plan,
                          budget, and fund their RPM. AIS contains the critical and the total
                          maintenance and repair backlog as of the fiscal year’s end. AIS also
                          includes the names of the organizations that performed facility inspections,
                          the percentage of inspections completed, and explanations of large
                          increases in the backlog.

                          The AIS divides all deficiencies into two types: critical and deferrable. A
                          deficiency is rated critical if it “must be corrected within 12 months” and
                          “will impact mission, affects quality of life or has safety or environmental
                          hazard potential” according to the Naval Facilities Engineering Command’s
                          Inspection of Shore Facilities manual.8 The estimated cost of fixing the
                          deficiencies that qualify as critical is reported to OSD as the backlog of
                          maintenance and repair. If a critical deficiency has not been addressed for
                          4 years, it is to be classified as deferrable.



Inspections to Identify   The three volumes of the Inspection of Shore Facilities manual describe the
Deficiencies              criteria and procedures for performing the three types of facilities
                          inspections—operator, preventive maintenance, and control. The latter is
                          the primary source for AIS and budget data.

                          Navy inspection criteria require a thorough examination of each facility,
                          evaluation of the operator, and preventive maintenance inspections, and
                          identify related resource requirements as a basis for funding requirements.
                          Inspections are expected to be planned, scheduled, and performed by
                          qualified inspectors and are required for structural, mechanical, electrical,
                          and roof repairs.

                          According to Navy criteria, inspectors should (1) have a technical trade
                          background; (2) be experienced in maintenance and repair operations,
                          including maintenance standards, safety, health, and building codes; and

                          8
                           NAVFAC M0-322, vol. I, March 1993, p. 3-5.




                 Lte
                   rt     Page 79                                       GAO/NSIAD-99-100 Real Property Management
Appendix III
Navy Strategy, Methods, and Criteria for
Determining Real Property Maintenance
Requirements




(3) have the ability to write clear reports of facility conditions. The criteria
include requirements for a facility condition report and describe its three
components: a facility condition detailed deficiency list, facility inspection
checklists, and facility condition summary sheet. These documents are to
be used to identify packages of work for planning, estimating, and
programming maintenance and repairs into the installation's work control
system as well as identifying budget-oriented resource requirements. They
form the basis for AIS and BASEREP.

Navy inspection criteria also cover the requirements for compliance with
regulatory standards and safety codes; that is, national building codes for
corrosion, electrical elevator, plumbing, track safety standards,
Occupational Safety and Health Administration requirements, and
environmental regulations. NAVFAC publishes other manuals containing
inspection and maintenance guides for many facilities, including
maintenance of railroads, building maintenance, structures, paints and
protective coatings.

The criteria for frequency of facility inspections are shown in table III.1.
These are suggested frequencies and installations may deviate when
resources are not available.



Table III.1: Type and Frequency of Inspection

                                       Type and frequency of inspection (in years)
Facility’s mission relationship            Structural   Electrical Mechanical    Roof
Direct mission support                             2           2           2         1
Indirect mission support                           3           3            3        1
Nonmission support                                 4           4            4        2
Inactive or excess                                 5           5            5        3
Source: Navy.


Navy criteria call for inspectors to prepare for inspections by reviewing
facility records, including floor plans, the status of major alterations and
maintenance projects, lists of related contracts and warranties, and lists of
tenants and maintenance persons. The six installations and the Public
Works Center we visited used in-house staff or contractors to conduct their
control inspections. Our review indicated that in-house inspectors
scheduled their inspections, reviewed property records, and other files
they maintained for each facility. After conducting the inspections, they




Page 80                                     GAO/NSIAD-99-100 Real Property Management
                              Appendix III
                              Navy Strategy, Methods, and Criteria for
                              Determining Real Property Maintenance
                              Requirements




                              typically prepared the worksheets, preliminary cost estimates of the work
                              they identified, and entered the data into the installation's work order
                              system. The Public Works Center submitted its inspection reports and
                              prepared work orders for the deficiencies.


Estimating Costs to Correct   Navy criteria call for inspectors to prepare preliminary cost estimates of
Deficiencies                  the work identified and suggest four sources for estimating labor and
                              material costs, including NAVFAC P-716, Unit Price Standards, R.S. Means
                              Company, Inc., or Richardson Dodge (the latter two are private companies
                              that research and publish cost estimates). Officials told us their
                              inspector/estimators use the manuals to estimate costs of needed work.
                              They determine the scope of the maintenance and repair work they
                              identified and use the manuals to price the costs of the various types of
                              crafts and materials. Projects that cost more than the installation
                              commanding officer's approval limits are special projects and generally
                              must be approved and funded by the installation's major claimant.

                              Installation commanders submit their lists of needed special projects to
                              their major claimant for review and funding. Major claimants review the
                              special projects, assign priorities, and fund those to the extent they have
                              remaining funds. Review boards evaluate the projects and recommend
                              priorities.


Relationship Between          Officials at one of the installations we visited said that BASEREP
BASEREP and AIS               objectives should support and be consistent with the AIS submission.
                              However, because there are 28 mission areas in BASEREP but only 18 in
                              AIS, with the latter encompassing the BASEREP’s areas, it is clear the 2 do
                              not match exactly. AIS and BASEREP use the same data from inspections
                              but rate different RPM-related elements. According to the Navy, both AIS
                              and BASEREP ratings are used “at all levels of the chain of command to
                              allocate resources among competing projects.” 9



Validation of                 Navy criteria call for inspectors to have training and experience in the craft
                              trades. The staff inspectors at the locations we visited were engineering
Inspection Results            technicians who were experienced in the trades and in facilities inspection,


                              9
                               Navy email communication to GAO, September 1997.




                              Page 81                                      GAO/NSIAD-99-100 Real Property Management
Appendix III
Navy Strategy, Methods, and Criteria for
Determining Real Property Maintenance
Requirements




according to Navy officials. At one installation that contracted for its
inspections, officials told us the inspectors had equivalent experience.

Responses to our questionnaire showed that the installations used different
control inspection review and approval procedures. About 53 percent
reported that facility management staff reviewed selected worksheets and
judged ratings based on personal knowledge. About 20 percent said they
used other methods such as facility boards and higher commands to
validate inspection results. Eleven percent said they used outside
contractors. Table III.2 shows the responses.



Table III.2: Steps to Ensure Inspections Are Valid

Step to ensure validity                                                Percent citing step
Rely on the expertise of assessor; no formal procedures used                           23
Facility management staff review selected worksheets                                   53
Facility staff make follow-up visits to verify reported problems                       19
on a sample of selected rating worksheets
Outside contractors are used                                                           11
Other validation methods. Specify.                                                     20
Source: Responses to question 9, GAO survey.


When asked about the steps taken to ensure ratings given by one staff
would be, on average, the same reported by another staff, 60 percent said
they had no formal procedures or mechanisms other than the expertise
and/or training of the staff who did the ratings. About 38 percent wrote
about other methods used to ensure consistency. Most described an
inspection review process in which ratings are reviewed up the chain of
command. Table III.3 summarizes these answers.



Table III.3: Steps to Ensure Consistency

Step to ensure consistency                                             Percent citing step
No formal procedures used other than expertise of the assessor                         60
Different assessors reinspect facilities                                                4
Different assessors reinspect a random sample of facilities                             7
Outside contractors are used                                                            6
Other method used to ensure consistency                                                38
Source: Responses to question 10, GAO survey.




Page 82                                         GAO/NSIAD-99-100 Real Property Management
                    Appendix III
                    Navy Strategy, Methods, and Criteria for
                    Determining Real Property Maintenance
                    Requirements




                    Regarding the overall quality of the control inspection process, 71 percent
                    of the respondents reported the primary factor affecting overall quality was
                    the shortage of resources. Table III.4 illustrates these responses.



                    Table III.4: Factors That Constrain the Quality of Assessments

                                                                                        Percent that checked
                    Constraining factor                                                 factor as a constraint
                    Shortage of personnel                                                                  35
                    Shortage of trained personnel, that is, those with engineering                         28
                    or skilled craft backgrounds
                    Shortage of resources (i.e., insufficient time and/or budget to                        71
                    carry out assessments)
                    Other                                                                                   7
                    Does not apply. No factors creating a significant constraint on                        21
                    the quality of reviews of facility conditions
                    Source: Responses to question 11, GAO survey.


                    When asked how methods could be improved, 76 percent of the
                    respondents reported that they agreed with combining AIS and BASEREP,
                    while 50 percent said long-range planning should get more emphasis.10



Allocation of RPM   The Navy Comptroller allocates obligation authority to various major
                    claimants, which in turn allocate it to their installation commanders. The
Resources           Navy Facilities and Engineering Division told us that most commands
                    withhold 4 to 4.5 percent of total annual RPM spending for mid-year
                    release. After mid-year review of competing needs, they release the reserve
                    funds; these may be used for either general RPM, or for special projects, or
                    emergency repairs. Special projects are construction, repair, maintenance,
                    or equipment installation projects that exceed the funding authority of the
                    installation commander but fall below the threshold for military
                    construction. Navy guidelines restrict special project funding to no more
                    than 10 percent of total RPM annual spending.

                    Six of the installations we visited received Navy O&M obligation authority
                    from their major claimants. They also received funds from tenants that
                    paid for some services on a reimbursable basis. RPM funds were managed


                    10
                     Responses to question 13, GAO survey.




                    Page 83                                         GAO/NSIAD-99-100 Real Property Management
Appendix III
Navy Strategy, Methods, and Criteria for
Determining Real Property Maintenance
Requirements




by the installation's engineering officer (public works officer), base civil
engineer, or staff civil engineer, who directed the application of resources.
Officials at all the installations we visited told us their RPM funding has
been insufficient to keep the RPM backlog from increasing over the last
few years. For example, officials at the Norfolk Naval Shipyard told us they
implemented an aggressive demolition program to reduce future RPM
needs, but even with that they could not keep up with RPM needs.

Three of the seven sites we visited were funded through Navy Working
Capital Fund (1) Norfolk Naval Shipyard, (2) Public Works Center San
Diego, and (3) Naval Air Station Patuxent River. These three were funded
through revenue they generated by providing services to customers. The
Public Works Center prepared annual budgets based on rates and
quantities of products and services they expected to sell to their customers,
including facility control inspections. The Center funding for its RPM was
included in its utilities and overhead rates.

The Norfolk Naval shipyard, like the Public Works Centers, funds most of
its RPM through its overhead rates. The shipyard also received some O&M
funding for RPM on some other facilities, including bachelor housing
(barracks). It expected to receive military construction funding for some
other maintenance projects.

Naval Air Station Patuxent River was funded by four sources: Navy
Working Capital Fund; Research, Development, Test and Evaluation, Navy;
O&M; and Military Construction, Navy. The capital fund was the largest
source of RPM funds, collected through its overhead rates, according to
public works personnel. Research, Development, Test and Evaluation was
provided to fund all the related base operations support functions,
including RPM. Its O&M funded RPM for other base operations support,
including aviation operations, bachelor housing, training, administration,
and community services.

The other four bases performed the largest portion of their RPM with O&M
funds. At two, Dam Neck and Northwest, officials told us their funding
allocations were stable, that is, they almost always got the funding they
expected to receive before the fiscal year began, and they were able to
execute RPM efficiently and economically. Officials at those installations
also said that their RPM backlog was increasing but they believed they
were better off than fleet-funded installations because their funding was
more stable. Operational commitments at fleet-funded bases, they said,
compete for the same O&M funds as RPM.



Page 84                                    GAO/NSIAD-99-100 Real Property Management
                           Appendix III
                           Navy Strategy, Methods, and Criteria for
                           Determining Real Property Maintenance
                           Requirements




                           We asked bases to choose from a list of weaknesses that characterize their
                           RPM system (or to write in their views). The responses are shown in table
                           III.5.



                           Table III.5: Top Weaknesses in RPM System

                                                                                               Percent that checked
                           Weakness                                                                       weakness
                           Little or unclear linkage between RPM needs assessment and                            41
                           allocation of resources
                           Rollup oversimplifies conditions                                                      38
                           Condition assessments/requirements determination are too                              25
                           subjective
                           Ratings do not tell what is wrong within facility or mission                          27
                           category
                           Little or unclear linkage between condition assessment and                            30
                           budget estimation
                           Source: Responses to question 12, GAO survey.




Needs Exceed Allocations   With regard to the allocation of RPM funds, Navy installations reported
                           receiving RPM funding equal to 14.2 percent of their identified RPM needs
                           in fiscal year 1997.11 The Navy Facilities and Engineering Division
                           emphasized that “the amount requested and received by the base
                           commander is only a part of the total equation,” noting that “the major
                           claimants hold a portion of the RPM budget for special” projects.12
                           Similarly, major claimants have a portion of their RPM budgets withheld by
                           higher levels for the centralized demolition program.

                           We asked Navy installations to indicate whether or not they agreed with
                           four potential alternative changes to their RPM funding system. The
                           responses are shown in table III.6.




                           11
                            Responses to question 15, GAO survey.
                           12
                            Navy email communication to GAO, September 1997.




                           Page 85                                         GAO/NSIAD-99-100 Real Property Management
                Appendix III
                Navy Strategy, Methods, and Criteria for
                Determining Real Property Maintenance
                Requirements




                Table III.6: Bases’ Choices to Proposed Changes in Allocation Process

                Suggested change                                                    Percent citing change
                RPM funding should be based on physical deficiencies, with                               48
                “needier” bases receiving more funds
                Funding should not be based on a fixed increase above or                                 61
                below the previous year’s level
                Funding should be based on the average age, total square                                 32
                footage, and number of facilities
                RPM funding/allocation should not be centrally managed by                                30
                major command
                Source: Responses to question 22, GAO survey. Responses exceed 100 percent because more than
                option could be chosen.




Bases Visited   We pretested and post-tested the survey at selected locations as part of our
                work to ensure the reliability of the survey. We pretested the survey at six
                Navy sites:

                U. S. Atlantic Fleet, Norfolk, Virginia;
                Naval Air Station Pensacola (Chief, Naval Education and Training),
                 Pensacola, Florida;
                Naval Air Station Oceana (U.S. Atlantic Fleet), Virginia Beach, Virginia;
                Naval Air Station North Island (U.S. Pacific Fleet), San Diego, California;
                Public Works Center San Diego (Naval Facilities and Engineering
                 Command), San Diego, California; and
                Norfolk Naval Shipyard (Naval Sea Systems Command), Portsmouth,
                 Virginia.

                We performed survey post-tests to validate survey responses at four
                locations:

                Naval Air Systems Command, Naval Air Station Patuxent River, Lexington
                 Park, Maryland;
                Fleet Combat Training Center, Atlantic, Dam Neck, Virginia Beach Virginia;
                Naval Security Group Activity Northwest (Naval Security Group
                 Command), Chesapeake, Virginia; and
                Naval Air Station Patuxent River (Naval Air Systems Command), Lexington
                 Park, Maryland.

                During our pre- and post-tests, we visited facilities causing, or contributing
                to, a C3 or C4 mission area in the BASEREP, at seven sites:



                Page 86                                     GAO/NSIAD-99-100 Real Property Management
Appendix III
Navy Strategy, Methods, and Criteria for
Determining Real Property Maintenance
Requirements




Naval Air Station Oceana, Virginia Beach, Virginia;
Naval Air Station North Island, San Diego, California;
Public Works Center San Diego, San Diego, California;
Norfolk Naval Shipyard, Portsmouth, Virginia;
Fleet Combat Training Center, Atlantic, Dam Neck, Virginia Beach, Virginia;
Naval Security Group Activity Northwest, Chesapeake, Virginia; and
Naval Air Station Patuxent River, Patuxent River, Maryland.

During these visits we also reviewed related property records, documented
backlog information and the recorded deficiencies, and visited the facilities
to observe the condition and deficiencies. We interviewed installation
engineering staff as they showed us the deficiencies and documented
additional information when necessary. We observed and confirmed the
deficiencies recorded at 17 of the 18 facilities we visited through direct
observation.

We also visited three other sites where we interviewed relevant officials,
observed facility conditions, and were briefed on RPM processes and
issues. The three were Naval Station Norfolk, Norfolk, Virginia; Naval
Amphibious Base Little Creek, Norfolk, Virginia; and Public Works Center
Norfolk, Norfolk, Virginia.




Page 87                                    GAO/NSIAD-99-100 Real Property Management
Appendix IV

Marine Corps’ Strategy, Methods, and Criteria
for Determining Real Property Maintenance
Requirements                                                                                                                   Appenx
                                                                                                                                    IV
                                                                                                                                     di




                       In this appendix, we discuss the Marine Corps’ strategy, methods, and
                       criteria for determining RPM requirements and allocating resources to
                       those needs. We examine the Marine Commanding Officer’s Readiness
                       Reporting System (CORRS), a key component of the Marines’ system for
                       evaluating base infrastructure conditions, including the responses to our
                       questionnaire on RPM-related issues that we sent to Marine Corps bases
                       and the Corps’ single major claimant.1



Background             As of 1998, Marine Corps installations worldwide managed about 11,000
                       buildings totaling about 104 million square feet, with an estimated plant
                       replacement value (PRV)2 of $28 billion (or about 5.6 percent of the
                       services’ total PRV). Although the Corps has its own bases and (one) major
                       claimant, it is a part of the Navy and is therefore closely linked to the Navy
                       in almost every regard, including the fact that the Naval Facilities
                       Engineering Command (NAVFAC) maintains the real property inventory for
                       the Corps. The Corps headquarters Facilities Branch has overall
                       responsibility for Marine Corps RPM programs. According to the Navy
                       Budget Office (which maintains the Marines’ fiscal data), the Marine Corps
                       fiscal year 1999 RPM appropriation was $351.2 million, of which
                       $6.9 million was for the Marine Reserve and $344.3 million was for its active
                       forces.



RPM Funding Strategy   The Marine Corps’ funding strategy through fiscal year 2005 is to underfund
                       RPM compared to what it estimates is required to keep the amount of
                       backlog repairs at current levels. According to the Corps, estimated
                       unfunded repair backlogs rise 60 percent during 1998-2005, from
                       $711 million to $1.1 billion. According to the Corps headquarters Facilities
                       Branch, about 80 percent of this amount is critical-rated repair; the
                       remainder is deferrable repair.




                       1
                         We sent the survey, which asked about base facility’s inventory, RPM processes, and funding, to 16
                       Marine Corps bases; all returned the questionnaire. See appendix X for a copy of the survey. A claimant
                       is the equivalent to a major command in the Army or Air Force.
                       2
                        PRV is defined by the Office of the Secretary of Defense (OSD) as “the cost to replace the current
                       physical plant (facilities and supporting infrastructures) using today’s construction cost (labor and
                       materials) and standards (methodologies and codes).”




                       Page 88                                            GAO/NSIAD-99-100 Real Property Management
                      Appendix IV
                      Marine Corps’ Strategy, Methods, and
                      Criteria for Determining Real Property
                      Maintenance Requirements




                      The Marine Corps compares its RPM spending level to the private sector to
                      demonstrate that it requires more funds for RPM.3 The Corps noted that in
                      fiscal year 1998, it planned to spend the equivalent of 1.2 percent of PRV on
                      RPM, comparing it to the 1.75 percent level recommended in a 1989 DOD
                      report,4 and a private industry level of 3.5 percent cited in the same report.5
                      It subsequently allocated about 1.4 percent of PRV to RPM, and plans to
                      gradually increase this to about 1.8 percent by fiscal year 2005. However,
                      this is not a sufficient funding level to constrain the growth of backlog. The
                      Corps states that “all bases are underfunded” with regard to RPM and that
                      with “insufficient funds, backlog grows.”



RPM Assessment        The Marine Corps uses two systems to assess its RPM needs—a version of
                      the Navy's Annual Inspection Summary (AIS) (see app. III), and CORRS.
System                CORRS is modeled on the Navy's Shore Base Readiness Report
                      (BASEREP). It rates the ability of an installation, on a scale of one to four,
                      to carry out its mission. According to the Corps headquarters Facilities
                      Branch staff, the Marine version of AIS is less detailed than the Navy’s but
                      is otherwise similar. It uses inspections to generate an estimate cost for
                      repairs. Critical-rated repairs that are not funded become the reported
                      backlog. Unlike AIS, the data are not inserted into a servicewide database.
                      Rather, each base reports its estimated backlog to Corps headquarters at a
                      given point during the year.



CORRS: A New System   The Marine Corps’ CORRS facilities assessment system was tested at
                      various installations in 1996, and bases initially submitted data to the
                      system in April 1997. According to the Corps, CORRS was created to

                      • link facility conditions directly to mission requirements;
                      • rate Corps facilities at all installations against a uniform set of
                        requirements;
                      • make Marine Corps-wide investment decisions factoring in facilities’
                        effect on readiness; and




                      3
                       June 1997 briefing to GAO.
                      4
                       DOD, Renewing the Built Environment, 1989, p. 31
                      5
                       DOD, Renewing the Built Environment, 1989, p. 16.




                      Page 89                                         GAO/NSIAD-99-100 Real Property Management
Appendix IV
Marine Corps’ Strategy, Methods, and
Criteria for Determining Real Property
Maintenance Requirements




• enable the Marines to compete with the Navy, the Army, and the Air
  Force for very limited resources.6

According to a memorandum issued by the Commandant of the Marine
Corps, the advantages of CORRS are that it provides (1) comparability of
requirements with other services and a detailed defense for budget
submissions and (2) helps base commanders “identify problem areas and
facility deficiencies that impact mission areas.” The memorandum also
states that CORRS will provide headquarters facilities planning staff with
the data needed to provide “an opportunity to make informed resource
allocation decisions and identify deficiencies to higher headquarters.”
Further, it states that “the Planning, Programming, and Budget System
(PPBS) fails if the consequences of inadequate funding cannot be clearly,
logically and uniformly presented by an installation. With the
implementation of CORRS, all Marine Corps installations will have
identical classification formats.”

In CORRS, facilities are rated on their condition and quantity, and
commanders assess the ability of their plant facilities to achieve mission
requirements. According to CORRS instructions, quantity ratings use a
scale of one (best) to four (worst), and “should reflect the size and number
of facilities required by the mission . . . compared to what actually exists.”
CORRS has a four-point scale to rate the impact of facility condition on
readiness, with results placed in a mission area assessment matrix, which
appears similar to the matrix used by the Air Force for its deficiency rating
system, the facility investment metric (FIM). The four levels are defined as
follows:

• Level 1: Full mission capability; no major facility deficiencies.
• Level 2: Full mission capability; any existing facility deficiencies are
  minor and within the activities’ capability to correct with available
  resources.
• Level 3: Reduced mission capability with major facility deficiencies; the
  activity does not possess the resources to correct those failures.
• Level 4: Not mission capable; there are major facility deficiencies that
  require external resource support to eliminate.




6
 The purpose of CORRS was virtually identical to the Army’s rationale for its Installation Status Report,
and the Air Force’s rationale for its facility investment metric system, both implemented recently (1995
and 1998, respectively).




Page 90                                            GAO/NSIAD-99-100 Real Property Management
Appendix IV
Marine Corps’ Strategy, Methods, and
Criteria for Determining Real Property
Maintenance Requirements




CORRS rating worksheets show ratings on a 1 to 4 scale for individual
facilities within a 24 mission areas (versus 28 in the Navy's BASEREP).
Individual facility ratings are then combined, following a formula, to
produce an overall condition rating of 1 to 4 for mission areas at
installations, and quantity ratings. Although the mission-capable levels are
stated in broad terms, the facility condition worksheets for each of the
26 mission areas quantify with considerable precision how the rater is to
decide which of the four levels is correct in many cases and with somewhat
less precision in those that involve a less readily quantifiable situation. For
example, for aircraft operations, CORRS shows how to calculate the rating
level for each of seven specific operational dimensions. The instructions
for the first and seventh dimensions are shown in table IV.I.



Table IV.1: Dimensions and Ratings in CORRS

Indicator (measure)                                     Rating             CORRS level
Percentage of days when required air operations         Less than 5%                 1
are restricted or curtailed due to condition of
runways, taxiways, arresting gear, or aprons
                                                        5–10%                        2
                                                        10-20%                       3
                                                        Greater than 20%             4
Risk that mission will be curtailed over next year due Almost none                   1
to document structural, safety, or environmental
hazards
                                                        Some risk                    2
                                                        Serious risk                 3
                                                        Almost certain               4
Source: CORRS Facility Condition Readiness Worksheet.


According to the CORRS instructions, the overall rating for the mission is
calculated as “enter worst rating [of the seven dimensions in the mission] if
that rating occurs more than once.” “Otherwise, enter worst rating minus
one.” Similar methods of calculation apply to the other mission areas.

As shown, written rather than percentage estimates are used for some
dimensions of mission areas; in some cases, the entire mission area uses
written rather than percentage definitions. For example, ratings of the
three indicators for morale, welfare, and recreation are all written
definitions: seldom; occasional; frequent; and continuous problem. It is
evident, therefore, that some rating levels can be calculated with greater



Page 91                                      GAO/NSIAD-99-100 Real Property Management
                      Appendix IV
                      Marine Corps’ Strategy, Methods, and
                      Criteria for Determining Real Property
                      Maintenance Requirements




                      accuracy—assuming the operational records are available—than others,
                      which require a judgment about the dividing lines for the levels among the
                      definitions of risk or unacceptability of conditions. In addition, some of the
                      indicators themselves require interpretation, such as “morale and welfare
                      levels unacceptably low due to BOQ/BEQ [bachelor officers’ quarters/
                      bachelor enlisted quarters] conditions.” In this latter case, the term
                      unacceptably is open to subjective judgment.


Base Views on CORRS   On the surveys returned to us, officials at one Marine installation
                      commented that, CORRS “is not flexible enough to reflect base-specific
                      requirements.” Further, the “drop- down menu restricts detailed
                      reporting.” Another base made these comments with regard to both detail
                      and current utility:

                      to date [early 1998] CORRS has not been used in the process of determining our
                      maintenance real property requirements due to the general nature of the information was
                      inputted. Currently, CORRS does not identify specific deficiencies and necessary repairs.
                      CORRS has been a useful tool for validating planned repair and construction projects.

                      At a Marine base we visited, the facilities staff expressed some reservations
                      about the vagueness of the CORRS worksheets, noting that they were not
                      rating physical condition but the impact of conditions on mission
                      readiness. They noted that under this rating system, a building could
                      actually be in fine physical condition but rated as low or unacceptable
                      under CORRS because it was housing an activity for which it was not well
                      designed. For example, a warehouse would be inappropriate as a library or
                      as a day care center but could be fine as a warehouse. They said that
                      CORRS did not make clear whether they were to rate the facility in terms of
                      the facility's original mission—for which it was designed—or in terms of
                      the mission of the people now in it.

                      Facilities officials further stated that they found CORRS ambiguous in
                      some regards. If they had 100 administrative buildings at the installation,
                      they had the time to interview only a sample of the occupants to determine
                      how well the buildings were meeting their needs. They said that they had
                      to figure out who the "top" administrative people were and that it was
                      unclear how to rate an entire mission area if only 2 of 77 buildings did not
                      meet the mission. They said it was hard to justify a rating of 3 or 4
                      (indicating poor conditions) when 75 of 77 buildings were acceptable.
                      (Because CORRS is a new system, the headquarters Facilities Branch
                      stated that changes are being made to it as they get feedback from the field
                      on what works and what does not.)



                      Page 92                                     GAO/NSIAD-99-100 Real Property Management
                       Appendix IV
                       Marine Corps’ Strategy, Methods, and
                       Criteria for Determining Real Property
                       Maintenance Requirements




                       Another installation expressed concern about whether base commanders
                       would report accurately on the impact of facilities on readiness, stating
                       that “No CO [commanding officer] will confess to being ‘not mission
                       capable’.”



Survey                 A total of 16 Marine installations received questionnaires and all returned
                       them. Despite the high response rate, the relatively small total number of
                       respondents introduces a cautionary note about generalizing from the
                       results. When asked how methods could be improved, there appeared to
                       be no strong consensus among Marine respondents. Eight of the 16
                       favored rating facilities primarily according to engineering-based criteria,
                       but the other 8 did not. Ten Marine installations favored more emphasis on
                       long-term planning, but 6 did not. Table IV.2 shows the Marine responses.



                       Table IV.2: How Installations Would Change Methods to Determine Requirements

                                                                                                   Percent approving
                       Proposed change in method                                                    proposed change
                       Rate building/facilities primarily according to engineering, life-safety,                 50
                       and health criteria, while decreasing the role of aesthetics
                       Place much more emphasis on long-range maintenance planning,                              63
                       while deemphasizing annual assessments of facilities
                       Other                                                                                     13
                       Source: Responses to question 13, GAO survey.




RPM Needs Exceed       Marine bases reported a large gap between the RPM dollars they asked for
                       from their major claimant and their unconstrained requirements. The
Requests Fivefold      respondents reported that in fiscal year 1997, they received $174 million for
                       RPM from headquarters (the sole major claimant), but that their
                       unconstrained RPM requirement was $622 million. Thus, they received
                       about 28 percent of their identified needs; this was about double the ratios
                       received by Army bases or Navy installations, and about 1.5 times more
                       than was received, as a ratio, by Air Force bases.



Bases Visited          We reviewed relevant policies and other service guidance and records, and
                       interviewed responsible RPM-related staff at the Marine Corps




                Lte
                  rt   Page 93                                         GAO/NSIAD-99-100 Real Property Management
Appendix IV
Marine Corps’ Strategy, Methods, and
Criteria for Determining Real Property
Maintenance Requirements




headquarters, and the Marine Corps base Quantico, Virginia, where we also
compared the data reported to us in the questionnaire with base records.




Page 94                                  GAO/NSIAD-99-100 Real Property Management
Appendix V

Summary Comparison of Service Methods and
Criteria                                                                                                                                         Appe
                                                                                                                                                    nx
                                                                                                                                                     Vdi




                                                Each service uses different methods and criteria by which to rate the
                                                condition of its facilities, prioritize repairs, and allocate funds to those
                                                repairs. The core systems for assessing and rating the condition of
                                                facilities and/or the urgency of repairs are: the Army’s Installation Status
                                                Report (ISR), the Air Force’s Facility Investment Metric (FIM), the Navy’s
                                                Annual Inspection Summary (AIS) and Shore Base Readiness Report
                                                (BASEREP), and the Marine Corps’ Commanding Officer’s Readiness
                                                Reporting System (CORRS). These generally combine assessments of the
                                                physical condition of facilities and those conditions’ impact on mission.
                                                However, the Air Force’s system rates repair deficiencies only in terms of
                                                estimated impact on mission rather than rating the condition of each
                                                facility. Table V.1 compares some of these systems’ basic characteristics.



Table V.1: Basic Characteristics of Services’ Condition Assessment Systems

                                                                                  Service
Characteristic of rating
system                     Army                           Air Force                    Navy                         Marines
Name(s) & date             ISR, 1995                      FIM, 1998                    AIS; BASEREP,                CORRS, 1997
implemented                                                                            1982
What is rated by the       Facilities and mission         Deficiency impact in four    Repair projects and          Facilities, equipment, and
assessment system          areas                          mission areas                mission areas                personnel in terms of
                                                          (based in part on work       (based on facility           capability to meet
                                                          orders generated by          inspections)                 designated mission
                                                          facility users)
Who inspects               Building users and             Users and                    Users and                    Users and
facilities                 engineers/skilled              engineers/skilled            engineers/skilled            engineers/skilled
                           craftsmen                      craftsmen                    craftsmen                    craftsmen
Number of levels in rating Three-point scale for          Three-point scale for      Four-point scale for           Four-point scale for each
system                     facility condition; four       urgency of repairs/ impact mission areas; Two-point       rated category
                           points for mission areas       on mission                 scale for repair backlog
                                                                                     urgency
                                                Source: Service reports, manuals, and briefings.


                                                As table V.1 shows, with the exception of the Navy, assessment systems
                                                currently used by the services have been recently implemented. In general,
                                                these rating scales rank the severity of the condition of a facility or the
                                                urgency of a repair project. However, because they use different criteria to
                                                arrive at the ratings, and because the scaling systems vary, the ratings they
                                                generate are not comparable from service to service.




                                                Page 95                                            GAO/NSIAD-99-100 Real Property Management
Appendix VI

Criteria for Allocation of Funds                                                                                              Appenx
                                                                                                                                   V
                                                                                                                                   diI




                                             In response to our survey on real property maintenance (RPM) issues that
                                             we sent to 530 service bases worldwide, bases ranked nine criteria to
                                             determine how RPM funds were allocated. (The text of the survey can be
                                             found in app. X.) The rankings of one through nine were collapsed into
                                             three broad levels representing the respondents’ assessment of the
                                             importance of each factor in allocating RPM funds—most important,
                                             moderately important, and least important. Table VI.1 shows the percent of
                                             respondents, by service, that assigned these three levels to each of nine
                                             criteria.



Table VI.1: Ranking of Factors Affecting Allocation of Funds, by Service

                                                              Percent of bases ranking factors’ importance in
                                                                            allocation of funds
                                                   Percent ranking factor   Percent ranking factor as    Percent ranking factor
Factor                           Service               as most important       moderately important          as least important
Mission priority and/or          Air Force                            86                           14                        0
readiness
                                 Army                                 59                           40                        1
                                 Navy                                 89                           11                        0
                                 Marines                              93                            7                        0
Facility appearance              Air Force                             4                           62                       34
                                 Army                                  4                           60                       36
                                 Navy                                  2                           53                       45
                                 Marines                               0                           87                       13
Low repair cost                  Air Force                             1                           48                       50
                                 Army                                  5                           63                       32
                                 Navy                                  4                           61                       35
                                 Marines                               0                           64                       36
Physical condition of facility   Air Force                            36                           63                        2
                                 Army                                 35                           59                        6
                                 Navy                                 36                           63                        1
                                 Marines                              40                           60                        0
Type of facility                 Air Force                             9                           84                        7
                                 Army                                 10                           82                        8
                                 Navy                                 12                           81                        7
                                 Marines                               7                           87                        7
                                                                                                                    (continued)




                                             Page 96                                GAO/NSIAD-99-100 Real Property Management
                                          Appendix VI
                                          Criteria for Allocation of Funds




                                                              Percent of bases ranking factors’ importance in
                                                                            allocation of funds
                                                 Percent ranking factor         Percent ranking factor as         Percent ranking factor
Factor                        Service                as most important             moderately important               as least important
Type of deficiency            Air Force                                 22                                75                                 3
                              Army                                      31                                65                                 4
                              Navy                                      29                                70                                 1
                              Marines                                   20                                73                                 7
Base commander’s priorities   Air Force                                 34                                63                                 3
                              Army                                      35                                60                                 5
                              Navy                                      19                                74                                 6
                              Marines                                   40                                53                                 7
Service guidance              Air Force                                  4                                61                             35
                              Army                                      10                                44                             45
                              Navy                                       6                                47                             47
                              Marines                                    0                                46                             54
DOD guidance                  Air Force                                  7                                38                             55
                              Army                                      11                                34                             55
                              Navy                                       7                                46                             47
                              Marines                                    0                                31                             69
                                          Source: Responses to question 19, GAO survey. Totals may not add exactly to 100 due to rounding.


                                          These data suggest that importance of mission was the most important
                                          factor in allocating RPM funds for the Air Force, Marine Corps, and Navy
                                          respondents, with 86 to 93 percent ranking this as “most important.” No
                                          other factor came close to receiving this high a percentage of ranking as the
                                          most important in affecting funding allocation. However, only 59 percent
                                          of Army bases, or about one-third less than the other services, assigned a
                                          comparably high ranking to mission impact.

                                          Compared to the 59 to 93 percent assigned to mission impact across the
                                          services as a most important factor, there was a narrower spread for the
                                          importance assigned to the Department of Defense (DOD) guidance, with
                                          31 to 46 percent of bases ranking this factor as one of moderate-level
                                          importance and 0 to 11 percent ranking it as the most important. There
                                          was slightly more variation in the importance of service guidance, with
                                          44 to 61 percent of bases ranking it as of moderate importance, and 0 to
                                          10 percent ranking it as most important. There was considerable similarity
                                          across the services in terms of the ranking assigned to physical condition
                                          as an allocation factor, with 35 to 40 percent of the bases rating it as the
                                          most important, and 59 to 63 percent in each ranking it as moderate. There



                                          Page 97                                        GAO/NSIAD-99-100 Real Property Management
Appendix VI
Criteria for Allocation of Funds




was less consensus on the importance of a commander’s priorities, with
twice as many Marine bases citing it as of highest impact compared to Navy
bases (40 vs. 19 percent), and 34 to 35 percent of Army and Air Force bases
ranking it as most important.

Within each service, consistency on the rankings of these criteria varied by
the bases. For example, 35 percent of Army bases cited physical conditions
as most important, but 59 percent rated these as moderately important.
Similarly, almost twice as many Air Force bases assigned physical
condition as a moderate rank as those citing it as the most important
(63 vs. 36 percent). In the Navy, 19 percent of the bases ranked a
commander’s priority as the most important allocation criteria, while
74 percent said it was moderate. In the Air Force, almost twice as many
bases ranked commander priority as moderately important as those that
assigned it the highest level rating (63 percent vs. 34 percent).

On DOD guidance as a criterion, 11 percent of Army bases rated it as most
important while 55 percent rated it as least important. Similarly, among Air
Force bases, there was little agreement—7 percent ranked it as most
important, 38 percent as moderately important, and 55 percent at least
important in allocating funds. In the Navy, 46 percent ranked it as of
moderate importance, and 7 percent ranked it as most important.
Differences in the Marine Corps were somewhat less obvious on the
rankings of almost every criterion.




Page 98                              GAO/NSIAD-99-100 Real Property Management
Appendix VII

Percent of Value Measures for Estimating
RPM Requirements                                                                                                          Appex
                                                                                                                              V
                                                                                                                              nIdi




               The percent of plant replacement value (PRV) or similar measures of
               facility value spent on real property maintenance (RPM) are commonly
               cited by the Department of Defense (DOD) and the services with regard to
               the adequacy of RPM funding levels in the services. There is no fixed
               standard for defining PRV, although most definitions are similar. The Office
               of the Secretary of Defense (OSD) defines PRV as “the cost to replace the
               current physical plant (facilities and supporting infrastructure) using
               today’s construction cost (labor and materials) and standards
               (methodologies and codes),” and developed a standard formula to
               calculate it.1

               Perhaps the most widely cited percentage spending guideline for RPM2 was
               recommended by the Building Research Board of the National Research
               Council in its 1990 report, Committing to the Cost of Ownership—
               Maintenance and Repair of Public Buildings.

               An appropriate budget allocation for routine maintenance and repair for a substantial
               inventory of facilities will typically be in the range of two to four percent of the aggregate
               current replacement value of those facilities (excluding land and major associated
               infrastructure). . . . Where neglect of maintenance has caused a backlog of needed repairs to
               accumulate, spending must exceed this minimum level until the backlog has been
               eliminated.3




               1
                The OSD formula is:
                 Scope (size of a facility)
                     x Unit cost factor (cost per unit to construct)
                     x Area cost factor (locality adjustment)
                     x Inflation factor (adjustment to the year in question)
                     x 1.2 (overhead factor) (standard inspection and overhead, design, contingency, supporting
                        facilities)
                 = plant replacement value.
               Source: OSD (Installations) Directorate of Analysis and Investment: “Plant Replacement Value,” July,
               1997.
               2
                Harvey H. Kaiser A Foundation to Uphold (Alexandria, Va.: APPA,) 1996, p. 46. See also, Level of
               Investment Study Facilities and Infrastructure Maintenance and Repair, Civil Engineering Research
               Foundation, August 1996, pp. 6, 3-7, which notes that the Board’s guideline of 2 to 4 percent of current
               plant replacement value is "a widely-used benchmark . . . often cited in the literature pertaining to
               building maintenance for public agencies, colleges, and universities." (pp. 3-6).
               3
                 Committing to the Cost of Ownership: Maintenance and Repair of Public Buildings, Committee on
               Advanced Maintenance Concepts for Buildings, Building Research Board, Commission on Engineering
               and Technical Systems, National Research Council, (Washington, D.C.: National Academy Press, 1990)
               p. xii.




               Page 99                                            GAO/NSIAD-99-100 Real Property Management
Appendix VII
Percent of Value Measures for Estimating
RPM Requirements




Current replacement value is defined by the Building Research Board as
“the amount in current dollars it would cost to duplicate the facilities.”4
This value was described to us by a Federal Facilities Council official as
having the same meaning as PRV.5 The Council reported in 1996 that
federal agencies were using two different methods to calculate current
replacement value.6

The Air Force uses a percentage guideline as a benchmark against which to
determine the adequacy of its preventive maintenance spending, funding it
at 1 percent of PRV. This was based on a 1989 DOD infrastructure report
that compared military RPM spending as a percent of PRV to other
governmental entities, major private corporations, and major universities.7
The Air National Guard budgets RPM with a baseline of 1 percent of PRV;
that is, all installations receive no less than 1 percent of PRV for annual
RPM. The Navy has used a 2-percent current plant value benchmark8 based
in part on an April 1995 Center for Naval Analyses study that concluded
that funding at 2 percent of current plant value was required to arrest the
growth of backlog in Navy facilities, thereby sustaining them at current
conditions.9 The Navy tracks both the current plant value as well as the
plant replacement value of its inventory.10

DOD’s 1997 Quadrennial Defense Review explicitly cited the percentage of
PRV spent by the services (1.16 percent) on RPM compared to that spent by


4
Federal Facilities Council, Budgeting for Facilities Maintenance and Repair Activities (Washington,
D.C.: National Academy Press, 1996), Report Number 131, p. 10.
5
 Similarly, the Civil Engineering Research Foundation stated that current replacement value is
“equivalent to the term PRV” and used the terms interchangeably in its Level of Investment Study:
Facilities and Infrastructure Maintenance and Repair (Washington, D.C.: CERF, Aug. 1996), pp. 3-6.
6
  Budgeting for Facilities Maintenance and Repair Activities (Washington, D.C.: National Academy Press,
1996), Report Number 131, pp. 10-11.
7
 DOD, Renewing the Built Environment, March 1989, pp. 11, 15, 31.
8
 Current plant value is defined by the Navy as the cost of the facility’s “original acquisition, plus major
improvements, inflated to current dollars” (June 1998 briefing, p. 6). Similarly, current plant value is
defined by the Center for Naval Analyses as "the facility's original construction cost plus the cost of its
capital improvements (e.g., a roof replacement)." Glenn H. Ackerman, Jino Choi, and Ty D. Weis, The
Backlog of Maintenance and Repair: Preventing Its Growth and Measuring Its Impact (Alexandria, Va.:
Center for Naval Analyses,) Apr. 1995, p. 9.
9
 The Backlog of Maintenance and Repair: Preventing Its Growth and Measuring Its Impact (Alexandria,
Va.: Center for Naval Analyses,) Apr. 1995, p. 1.
10
 Base Operating Support Shore Maintenance and Repair Trends, Navy, fiscal year 1996, p. 16 of 36,
Inventory.




Page 100                                            GAO/NSIAD-99-100 Real Property Management
                          Appendix VII
                          Percent of Value Measures for Estimating
                          RPM Requirements




                          the private sector as evidence that service RPM spending was inadequate,11
                          noting that this level exceeds the nonmilitary sector in just one category—
                          county jails. Similarly, in a 1989 infrastructure report, DOD recommended
                          that the services spend 1.75 percent of their PRV on maintenance and
                          repair; this did not include additional spending that would have been
                          required to eliminate repair backlogs. 12

                          RPM experts, the National Aeronautics and Space Administration (NASA),
                          and OSD have identified multiple problems with the concept of basing the
                          level of RPM funding on a percentage of estimated PRV or other
                          comparable percentage estimates of the value of facilities. (As noted, PRV
                          is also referred to as current replacement value or current plant value, both
                          of which calculate the value of a facility differently but are comparable
                          measures.)


Percentage Measures Are   The decision to base RPM funding on a percentage of replacement value
Not Based on Condition    (whether PRV or current plant value or an equivalent) has certain
                          drawbacks. For example, the NASA facilities maintenance guidebook
                          explicitly cites the Building Research Board guideline, while cautioning
                          that actual condition assessments may lead to a different funding level.

                          NASA headquarters recognizes the annual funding level of 2 to 4 percent of current
                          replacement value recommended by the Federal Facilities Council (formerly the Building
                          Research Board), National Research Council, as a reasonable funding target necessary to
                          maintain facilities in a steady-state condition at an adequate maintenance standard until an
                          independent analysis of facilities condition assessment trends indicates otherwise.13

                          NASA’s caveat is noteworthy, for it is clearly the case that budgeting for
                          maintenance on the basis of a percentage of PRV is not based on the actual
                          condition of the facilities in question; rather, it assumes that (1) some
                          minimum amount—in this case, 2 to 4 percent of PRV—is required to
                          maintain a large inventory of facilities annually and (2) the backlog is
                          already so low that additional spending is not required to eliminate it (a
                          caution noted by the Building Research Board in the original formulation).



                          11
                           DOD, Quadrennial Defense Review, Infrastructure Panel, “Installation Support Task Force Final
                          Report,” February 24, 1997, Attachment 1, Issue Paper, p. 1-1.
                          12
                           DOD, Renewing the Built Environment, March 1989, p. 31.
                          13
                           NASA: Facilities Maintenance and Energy Management Handbook, section 1.2.4, issued Oct. 1, 1994.




                          Page 101                                        GAO/NSIAD-99-100 Real Property Management
Appendix VII
Percent of Value Measures for Estimating
RPM Requirements




A 1996 analysis of the Board’s 2- to 4- percent guideline by the Civil
Engineering Research Foundation noted that the Board’s report recognized
that a percentage guideline cannot take into account factors relevant for
determining the RPM funding level for a facility. These were

•    size and complexity,
•    current age,
•    condition,
•    use,
•    historical or community value,
•    geographic location,
•    climate,
•    mechanical and electrical technologies needed,
•    telecommunications and security systems technologies needed, and
•    criticality of building role or function.14

The problematic nature of using a percentage of PRV (or other similar
methods of estimating facility value) was also noted by Federal Facilities
Council officials in an interview with us. They stated that the Building
Research Board’s 1990 recommendation was based on a guess at best.
They said that the Board had decided that 1 percent was too little and
5 percent was more than any (public) entity would be allocated, so it set
the level at 2 to 4 percent. However, in the case of facilities with estimated
PRV in the hundreds of millions of dollars, 2 to 4 percent is a large range for
annual maintenance spending. Council officials said that as a result they
were reconsidering the Board’s recommendation in an effort to be more
precise.

OSD also identified a major drawback to determining maintenance funding
on the basis of a percentage of PRV in a July 1997 analysis, noting that “as
an allocation tool, PRV has so far demonstrated only marginal utility.”
“Having an accurate PRV sheds little light on the question of an appropriate
budget level for facilities, nor does it provide much assurance about where
specifically to spend facility dollars.”15 Further, even if percent of facility
value was an accurate measure of RPM needs—which it inherently is not—
there is also the difficulty of ensuring that the value of like facilities, both
within and across services, is calculated identically.


14
 Level of Investment Study: Facilities and Infrastructure Maintenance and Repair (Washington, D.C:
Civil Engineering Research Foundation, Aug. 1996), pp. 3-7.
15
 “Plant Replacement Value,” OSD (Installations) Directorate of Analysis and Investment, July 18, 1997.




Page 102                                         GAO/NSIAD-99-100 Real Property Management
Appendix VII
Percent of Value Measures for Estimating
RPM Requirements




Although OSD told us that each service had been told to use the exact same
formula to calculate PRV,16 it is also the case that “in the weeds, they [the
services] don’t have standardized facility codes [to identify similar
facilities], and, as a result, they can have different replacement costs for
similar facilities.” This means that uniformity in such estimates is not
ensured for similar types or classes of facilities (e.g., barracks) across the
services, although the scope of variation is not known.

OSD officials said that the PRV estimating process is analogous to creating
a recipe for a cake, in which minor variations could occur from chef to
chef. However, an Army misunderstanding of OSD’s PRV formula led to a
20-percent underestimate of the Army’s overall PRV in fiscal year 1996; this
was corrected (upwards) in fiscal year 1997. Further, although OSD’s
formula states that the overhead factor component of PRV should be a
multiplier of 1.2, the Air Force instructions to a contractor on developing
PRV calculations, provided to us in October 1997, state that “overhead
markup was established by the Air Force as 25 percent (1.25 multiplier).”
While the difference may not seem large, it is not consistent with the OSD
policy that the services are to calculate PRV using the same formula and
can result in significant differences in PRV estimates when PRV totals
billions of dollars.

We did not attempt to validate the accuracy of the PRV estimates of the
services; this was beyond the scope of this report. However, the Air Force’s
PRV instruction on calculation reported that only 55 percent of the Air
Force’s estimated $204 billion (fiscal year 1996) PRV was acceptable; and
that the Air Staff had determined that the remaining 45 percent of the PRV
data needed to be reviewed and validated.17 The Air Force is actively
addressing the problem.

In addition, the Air Force report notes that some PRV estimates are
unreliable because the real property records “do not contain the level of
detail required to accurately match an appropriate unit cost to the real
property record quantity” (p. 4). As an example, the report cites the fact
that water lines are only identified as a “generic type,” but not the size or
type of water line, which it notes can range in cost from $7 per linear foot
to about $60 per linear foot for 24-inch cast iron pipe. The report provides



16
 “Plant Replacement Value,” OSD (Installations) Directorate of Analysis and Investment, July 18, 1997.
17
 "Short Term Analysis Report: Air Force PRV Model," Air Force, Oct. 1997, p. 2.




Page 103                                         GAO/NSIAD-99-100 Real Property Management
       Appendix VII
       Percent of Value Measures for Estimating
       RPM Requirements




       no estimate of the potential range of inaccuracy in the PRV estimates for
       Air Force facilities.

       Similarly, the Navy noted that while estimates for many of its facilities are
       reasonable in some areas, such as utilities and specialized research and
       development (R&D) facilities, their accuracy is questionable. In addition,
       for overseas installations in countries where the currency has depreciated,
       the Navy said that there could be significant reductions in PRV without any
       real reduction in facilities or the cost of maintaining those facilities.18 For
       example, the PRV of a Navy base in Japan dropped 25 percent from one
       year to the next year because of changes in currency exchange rates. As a
       result, allocating RPM funding on the basis of a percentage of PRV could
       lead to large and unpredictable swings in allocating RPM at some locations.

       Two entities that we identified as having what are termed promising
       practices in facilities management (see app. VIII)—those that appear to
       offer improvements over current ones—do not use PRV or similar metrics
       as an RPM funding guideline. For example, the Lawrence Livermore
       National Laboratory does not use PRV in this way because no one can
       agree on estimating it, even with specific guidelines. The Capital Needs
       Analysis Center does not use it because it is not a measure of need.
       Further, basing RPM needs on PRV can create incentives to overestimate
       the value, since the larger the PRV, the greater the potential RPM funding.

       Further, as OSD explained regarding PRV, the formula contains many
       variables unrelated to size, for example, a shift in standard from barracks
       with common latrines to private rooms would increase PRV because
       replacement cost is computed at the new standard and higher unit cost. In
       this case, facility PRV would increase even though its size did not change.
       OSD also found that in some cases DOD’s real property databases are
       inadequate to precisely filter the PRV estimates for these kinds of analyses.
       Similarly, OSD stated that any DOD PRV is actually a blend of the PRV
       formula and the cost of acquisition plus inflation because one-third of
       DOD’s physical plant is not covered by standard unit costs upon which a
       PRV estimate can be made from DOD’s PRV cost model.19




       18
        Navy email communication to GAO, July 10, 1998.
       19
        “Plant Replacement Value,” OSD, (Installations) Directorate of Analysis and Investment, July 1997,
       p. 2. The facilities not covered are mainly utilities and service-unique facilities.




Lte
  rt   Page 104                                         GAO/NSIAD-99-100 Real Property Management
Appendix VII
Percent of Value Measures for Estimating
RPM Requirements




Because PRV measures structure value and is therefore not a measure of
condition, using a percentage of PRV or variations of it (e.g., current plant
value) to estimate RPM spending would not determine whether the
resulting funding level is under, over, or equal to the spending required to
fix actual deficiencies. As a result, using a percent of PRV or similar
measures as a benchmark against which to evaluate the adequacy of RPM
spending is just one tool in estimating RPM needs.

In sum, in addition to the fact that PRV measures structure value, not
condition, there are other grounds for caution in using a percentage of PRV
to estimate RPM needs. First, there can be problems with the reliability of
the data that go into the PRV estimate. Second, in the military services, the
lack of specificity in the property codes does not permit accurate estimates
of the cost of certain types of infrastructure. Third, there is no clearly
agreed upon standard by which to estimate PRV; the Federal Facilities
Council reported on two methods being used by federal agencies. Despite
OSD’s directive specifying a PRV calculation formula, variations in
calculating PRV could occur among hundreds of bases doing these
calculations. Fourth, as the Building Research Board stated, PRV does not
take into account multiple factors potentially relevant to RPM needs. Fifth,
basing RPM allocations on PRV creates an incentive to overestimate it, as
this would generate a calculated figure showing a need for higher funding.
In sum, PRV percentages should not be the only method used to determine
the funding level required to maintain facilities. As the Navy noted, PRV
and other comparable measures are tools, each having unique limitations,
and as long as this is understood and are not viewed as a cure-all answer,
they can be useful.20




20
 Navy email communication to GAO, July 10, 1998.




Page 105                                       GAO/NSIAD-99-100 Real Property Management
Appendix VIII

Promising Practices in Facilities Management                                                                              Appe
                                                                                                                             ndIx
                                                                                                                                VIiI




                         We identified promising practices in facilities management among
                         nonmilitary entities that might be appropriate for use by the services. In
                         this appendix, we define promising practice; identify the sources of
                         expertise used to find promising practices among nonmilitary
                         organizations and other criteria used to identify potentially useful
                         examples; and discuss two entities with practices that appear to be
                         particularly worthy of consideration by the services for better facilities
                         management.

                         In a 1991 report, we defined promising practice as a practice that does not
                         signify proven effectiveness but rather the appearance of promise. The
                         goal is not to judge outcomes but to locate and describe specific initiatives
                         that are designed logically to work well and seem worthy of wider trial
                         involving sound evaluation. 1

                         In terms of real property maintenance (RPM), a promising practice would
                         be one that makes it possible to manage property more cost-effectively. In
                         addressing the issue of cost-effective RPM, a February 1997 Department of
                         Defense (DOD) paper on installations noted that ideally, DOD would like to
                         determine the minimum cost of operating each installation without putting
                         mission accomplishment at risk or sacrificing quality of life.2



Sources of Expertise     We identified entities that might be using promising practices from

on Promising Practices   • a review of the expert literature on facility management and condition
                           assessment systems;
                         • interviews of experts in facility management regarding what they
                           considered promising practices as well as their knowledge of entities
                           that have good reputations for such management or that were using or
                           systems with demonstrated effectiveness;
                         • contacting a variety of entities recommended by the experts and the
                           literature to determine how they manage their property and/or what
                           they know about practices that might be promising;




                         1
                          Older Americans Act: Promising Practice in Information and Referral Services (GAO/PEMD-91-31 Aug.
                         1991), p. 2.
                         2
                         DOD, “What Does the Future Hold for Defense Installations? A White Paper for DOD Commanders,”
                         February 1997, p. 3.




                         Page 106                                       GAO/NSIAD-99-100 Real Property Management
                          Appendix VIII
                          Promising Practices in Facilities
                          Management




                          • knowledge gained from symposia sponsored by the National Research
                            Council’s Federal Facilities Council 3 —widely regarded as a source of
                            expertise on facilities management; and
                          • criteria intended to meet the objective of finding promising practices
                            that might be used by the military services.



Criteria Used to Select   The criteria used to aid in selecting entities for interviews about potential
                          promising practices included the following:
Entities for Interviews
                          • Size. The entities we contacted were generally large, in terms of the
                            number of buildings, square footage, and/or locations of buildings that
                            they control.
                          • Consistency. We sought to find condition assessment systems used
                            across all the facilities and/or sites of the same entity.
                          • Duration. We looked for systems that have been in place for 2 or more
                            years so that there was a track record of performance that could be
                            assessed.
                          • Documentation. We looked for well-documented systems.
                          • Life/Safety. We did not seek data from entities that had serious
                            life-safety/environmental problems, such as structure collapses over
                            1997-99.



Experts and Expert        Among the experts and expert entities we consulted regarding promising
                          practices and entities using such practices were the following:
Organizations
Consulted                 • Applied Management Engineering, Virginia Beach, Virginia;
                          • Association of Higher Education Facilities Officers, 4 Alexandria,
                            Virginia;
                          • Civil Engineering Research Foundation, Washington, D.C.;
                          • Richard Coullahan, Senior Vice President, Parsons Brinckerhoff Energy
                            Services, Herndon, Virginia;
                          • Edward R. Damphousse, Manager, Consulting Services Group, R.S.
                            Means Company, Inc., Kingston, Massachusetts;


                          3
                           The Council’s purpose is to promote continuing cooperation between federal and private entities of the
                          building community to advance building science and technology. It is a continuing activity of the Board
                          on Infrastructure and the Constructed Environment of the National Research Council.
                          4
                          Formerly named the Association of Physical Plant Administrators of Universities and Colleges. The
                          Association changed its name but not its acronym.




                          Page 107                                          GAO/NSIAD-99-100 Real Property Management
                         Appendix VIII
                         Promising Practices in Facilities
                         Management




                         • Marc M. Fagan, President, and Thomas K. Davies, Executive Vice
                           President, Vanderweil Facility Advisors, Boston, Massachusetts;
                         • Federal Facilities Council of the National Research Council,
                           Washington, D.C.;
                         • Dr. Harvey H. Kaiser, HHK, Syracuse, New York;
                         • Logistics Management Institute, McLean, Virginia;
                         • Peter Lufkin, Principal, Economics, Whitestone Research, Santa
                           Barbara, California;
                         • Private Sector Council, Washington, D.C.;
                         • Leif Steinert, Senior Consultant, WorkPlace: A Bentley Strategic
                           Affiliate, Littleton, Massachusetts; and
                         • Eric Teicholz, President, Graphic Systems, Inc., Cambridge,
                           Massachusetts.



Entities Contacted for   Taking the recommendations of the experts and expert organizations as
                         well as the expert literature, we contacted the following entities to discuss
Information on           their facility management practices.
Management Practices
                         Universities

                         George Washington University, Washington, D.C.
                         Harvard University, Cambridge, Massachusetts
                         Massachusetts Institute of Technology, Cambridge, Massachusetts
                         University of California, Facilities Management and Construction, Oakland,
                          California
                         University of California, Berkeley, California
                         University of California, San Diego, California
                         University of North Carolina, Chapel Hill, North Carolina

                         Corporations

                         Hughes Electronics Corporation
                         Lockheed Martin Corporation
                         Mobil Business Resources Corporation
                         The Boeing Company
                         Trammel Crow Company (Washington, D.C.)




                         Page 108                             GAO/NSIAD-99-100 Real Property Management
                      Appendix VIII
                      Promising Practices in Facilities
                      Management




                      Governmental Agencies and Entities

                      Army Health Facility Planning Agency, Falls Church, Virginia
                      Construction Engineering Research Laboratories, Champaign, Illinois
                       (Army Corps of Engineers)
                      Department of Energy, Washington, D.C.
                      Facilities Management, Ronald Reagan Building and International Trade
                       Center, Washington, D.C.
                      General Services Administration, Washington, D.C.
                      Lawrence Livermore National Laboratory (LLNL),5 Livermore, California
                      NASA, Facilities Engineering Division, Washington, D.C.
                      NASA, Goddard Space Flight Center, Greenbelt, Maryland
                      National Institutes of Health, Division of Engineering Sciences, Rockville,
                       Maryland
                      City of San Jose, California, Department of Public Works

                      Nonprofit Entities

                      Capital Needs Analysis Center, Brigham Young University, Provo, Utah6

                      Of these entities, we visited three—Lawrence Livermore National
                      Laboratory (LLNL); the Capital Needs Analysis Center, which manages the
                      property of the Church of Latter-day Saints; and George Washington
                      University.



Fragmented            The knowledge base of facility management practices was fragmented,
                      with each expert or entity most familiar with the practices of a limited
Knowledge Base of     number of institutions. The entities that experts were most familiar with
Promising Practices   were generally their customers for developing facility management systems
                      or those that had answered questionnaires in various surveys. There was
                      agreement that the field of facilities management is exploring a wide
                      variety of ways in which to manage property.




                      5
                       LLNL is a part of the University of California that operates under a 5-year contract to the Department of
                      Energy. Since it is clearly not a university as generally understood, we list it here with government
                      entities.
                      6
                      The Center manages the property of the Church of Latter-day Saints. It is a part of Brigham Young
                      University but also supervises the University’s property management.




                      Page 109                                           GAO/NSIAD-99-100 Real Property Management
                      Appendix VIII
                      Promising Practices in Facilities
                      Management




                      In our review of the facility management literature we found no fixed
                      standards for the methods, criteria or frequency with which condition
                      assessments should be carried out. Nor, as the Federal Facilities Council
                      noted in an October 1998 study, is there a “single, agreed upon guideline to
                      determine how much money, is, in fact necessary to maintain public
                      buildings.”7 (We also found no standard for nonpublic sector buildings.)



Federal Facilities    We did find reasonably widespread agreement in the literature and among
                      experts regarding the basic types of information that should be gathered—
Council’s Promising   such as interior square footage of buildings and cost—to effectively
Practices             manage property. In a 1998 study, the Council proposed four
                      characteristics that are key components for a condition assessment and
                      capital assets management program. Based on our interviews with experts
                      and the cited entities, we found that these four components were a good
                      summary of promising practices for facility management. They are

                      • a standardized, documented inspection process that provides accurate,
                        consistent, and repeatable results;
                      • a detailed, ongoing inspection of real property assets that is validated at
                        predetermined intervals;
                      • standardized cost data based on an industry-accepted cost estimating
                        system to determine repair and replacement costs; and
                      • a user-friendly information management system or process that
                        prioritizes current and anticipated maintenance and repair requirements
                        to maximize the use of resources and minimize the cost of irreversible
                        loss of service life .8

                      The Council’s list appears promising for the military because, if fully
                      implemented, such practices would address facility management
                      deficiencies cited by DOD in 1997. These deficiencies include

                      • unavailable data,
                      • incomplete data,


                      7
                        National Research Council, Stewardship of Federal Facilities (Washington D.C.: National Academy
                      Press, Oct. 1998), p. 2. The study was supported by a contract between the National Academy of
                      Sciences and the Department of State on behalf of the Federal Facilities Council (p. ii). The National
                      Research Council is shown on the cover as the author, but the Federal Facilities Council is the
                      distributing agency.
                      8
                        National Research Council, Stewardship of Federal Facilities (Washington D.C.: National Academy
                      Press, Oct. 1998), p. 43.




                      Page 110                                          GAO/NSIAD-99-100 Real Property Management
                           Appendix VIII
                           Promising Practices in Facilities
                           Management




                           •    nonstandard data,
                           •    inaccessible information,
                           •    lack of data integrity, and
                           •    lack of performance measures. 9

                           In addition, the literature and experts agree that using the same criteria to
                           assess facility conditions across all the facilities of an entity is required to
                           produce meaningful comparisons from building to building or site to site.



Life-Cycle Principles of   The last element of the Council’s list describes life-cycle facility
                           management, which seeks to minimize the cost of irreversible loss of
Facility Management        service life by estimating the future point in time at which a building
                           component will likely fail and thereby scheduling maintenance or
                           replacement in advance of that point. It is a methodology aimed at
                           maximizing cost-effectiveness: building “service life can be optimized
                           through adequate and timely maintenance and repairs.”10

                           DOD’s early 1990s Condition Assessment Survey effort explicitly
                           incorporated life-cycle principles, as described in an OSD report:

                           The system also automatically determines whether a deficient assembly should be repaired
                           or replaced based on return on investment, and when replacement is recommended, will
                           identify which year the replacement should be accomplished . . . The system automatically
                           extrapolates the estimated repair costs for the facilities not inspected to produce a
                           multi-year maintenance and repair plan, which is an eight-year plan to schedule repairs and
                           replacements.11

                           With a life-cycle-based database, entities are able to project peaks and
                           valleys of future maintenance spending and to budget at a level that will
                           provide for facility renewal over a multidecade period. Figure VIII.1 shows
                           how life-cycle based costing can project a 50-year budget for a building:




                           9
                           “What Does the Future Hold for Defense Installations? A White Paper for DOD Commanders,” DOD,
                           February 1997, p. 11.
                           10
                             National Research Council, Stewardship of Federal Facilities (Washington D.C.: National Academy
                           Press, Oct. 1998), p. 12. See also, Building Research Board, Pay Now or Pay Later: Controlling Cost of
                           Ownership from Design Throughout the Service Life of Public Buildings (Washington, D.C.: National
                           Academy Press, 1991).
                           11
                            OSD (Installations) Directorate of Analysis and Investment, p. 6, undated but clearly written after
                           April 1995.




              Lte
                rt         Page 111                                          GAO/NSIAD-99-100 Real Property Management
                                               Appendix VIII
                                               Promising Practices in Facilities
                                               Management




Figure VIII.1: Life-Cycle Model for a Single Building
$18.00 Cost/SF

$16.00

$14.00

$12.00

$10.00

 $8.00

 $6.00

 $4.00

 $2.00

 $0.00
         1

             3

                  5

                      7

                           9




                                                       19

                                                            21

                                                                  23

                                                                        25




                                                                                                    35

                                                                                                          37

                                                                                                               39




                                                                                                                                 45

                                                                                                                                      47

                                                                                                                                            49
                                11

                                     13

                                          15

                                                 17




                                                                                27

                                                                                     29

                                                                                          31

                                                                                               33




                                                                                                                     41

                                                                                                                           43
                                                                       Ye ars

                                               Note: Vertical axis shows estimated costs per square foot in dollars; horizontal axis shows years, 1 to
                                               50.
                                               Source: Army Health Facility Planning Agency.


                                               Figure VIII.1 shows estimated maintenance costs per year per square foot
                                               for a 50-year period for the Army’s Health Facility Planning Agency. The
                                               costs portrayed are based on the life cycles of the components of the
                                               facility in question (such as heating-ventilation-air conditioning, roofing, or
                                               window frames). A database is constructed using the known costs of how
                                               long a component lasts and how much it costs to replace it (both parts and
                                               labor).

                                               The Army Health Facility Planning Agency does not yet have a systemwide
                                               condition assessment of all facility components, and it does not have
                                               budget protection for its RPM funding. For example, its fiscal year 1999
                                               funding for preventive maintenance and repairs was cut almost two-thirds
                                               and shifted to other programs. Thus, it cannot meet its life-cycle based
                                               funding levels; the forced migration of RPM funds hinders its life-cycle
                                               based system.




                                               Page 112                                         GAO/NSIAD-99-100 Real Property Management
                        Appendix VIII
                        Promising Practices in Facilities
                        Management




                        With regard to assessing facilities, the Army Health Facility Planning
                        Agency is now extending life-cycle component assessments to all locations.
                        It prioritizes repair spending on the basis of a combination of the physical
                        deficiencies that need to be fixed and the mission impact to be addressed.
                        Because its mission is to provide adequate health care facilities to a
                        specific population, it can make decisions about repairs that benefit the
                        greatest number of clients, and its takes into account the health services
                        available in a geographic area from nonmilitary providers.



Preventive              The Capital Needs Analysis Center emphasized the importance of
                        developing a database of component life cycles based on actual
Maintenance and         inspections; it found that almost all components last significantly longer
Life-Cycle Management   than manufacturers’ specifications. Through regular inspection and careful
                        monitoring of buildings and their components, the Center can reasonably
                        estimate when repairs should be made or components should be replaced.
                        These life-cycle estimates can then be used to plan repair and maintenance
                        budgets. This, in effect, constitutes the essence of life-cycle maintenance.12
                        These systems provide “an accurate prediction of total future M&R
                        [maintenance and repair] needs . . . necessary to produce meaningful
                        budgets. Condition prediction allows managers to find out what, where
                        and when facilities, systems and components will need M&R.” 13

                        Regular preventive maintenance is an essential component of life-cycle
                        management. Figure VIII.2 from the National Research Council’s 1998
                        study illustrates how maintenance extends the service life of a building.




                        12
                         For a more technical discussion, see Donald G. Iselin and Andrew C. Lemer, eds., The Fourth
                        Dimension in Building: Strategies for Minimizing Obsolescence, Committee on Facility Design to
                        Minimize Premature Obsolescence, National Research Council (Washington, D.C.: National Academy
                        Press), pp. 14-25, and Eric Teicholz "Facility Condition Assessment Technology," (http://www.
                        graphsys.com/articles), February 1999.
                        13
                          Federal Facilities Council, Budgeting for Facilities Maintenance and Repair Activities, Report No. 131
                        (Washington D.C.: National Academy Press, 1996), p. 25. Similarly, “The remaining life [of a
                        component] identifies when the next funding will be needed. The life cycle suggests how often that
                        item needs to be replaced over a 40-year life cycle. The costs are set at the current replacement cost
                        . . . .the replacement cycle file . . . allows use of a database to evaluate and project replacement needs."
                        Douglas K. Christensen, “Integrating Capital Studies Within Physical Plant Operations,” Capital
                        Renewal and Deferred Maintenance, Critical Issues in Facilities Management, No. 4 (Alexandria, Va.:
                        1989), p. 93.




                        Page 113                                            GAO/NSIAD-99-100 Real Property Management
                  Appendix VIII
                  Promising Practices in Facilities
                  Management




                  Figure VIII.2: Effect of Adequate and Timely Maintenance and Repairs on the Service
                  Life of a Building
                                                                                    Optimum Performance



                                                                                              Likely Aging
                                                                                         (Without Renewal) With
                                                                                          Normal Maintenance
                  Performance




                                                 Likely Aging                                              Minimum
                                                   Without                                                Acceptable
                                              Normal Maintenance                                         Performance




                                                                     Service Life Lost
                                                                   to Poor Maintenance
                                                                        irreversible


                                                                                                     Design
                                                                                                   Service Life

                                                                                     Time
                                                                                 (not to scale)

                  Source: Stewardship of Federal Facilities, p. 13.


                  As figure VIII.2 shows, a building that is not adequately maintained will
                  likely experience what amounts to premature deterioration, generating
                  costly repairs that could have been avoided through timely maintenance.

                  Among the entities that we contacted regarding facility maintenance
                  practices, we identified elements from several that could be of use to the
                  military services.


Useful Examples   Two nonmilitary entities in particular have facility assessment and
                  budgeting processes systems that appear to be particularly promising.
                  These are the Capital Needs Analysis Center, located at Brigham Young
                  University, Utah, which manages the facilities of the Church of Latter-day




                  Page 114                                            GAO/NSIAD-99-100 Real Property Management
                           Appendix VIII
                           Promising Practices in Facilities
                           Management




                           Saints (LDS) worldwide,14 and the University of California’s Lawrence
                           Livermore National Laboratory (LLNL), which uses a system based on one
                           developed by the Department of Energy (DOE). Both had all of the Federal
                           Facilities Council’s listed elements in their systems, and both used them
                           across many of their facilities and locations. In addition, as noted, the
                           Army’s Health Facility Planning Agency bases its facility management
                           system on life-cycle principles. The Center has used life-cycle management
                           since 1981 at its universities and religious centers, and extended the system
                           to 7,000 LDS chapels about 2 years ago.

Online Databases           Both the Center and LLNL have their data online and therefore accessible
                           to managers. These centrally controlled, online databases show the
                           inventory of facilities and components, including physical condition. The
                           data can be “sliced and diced” using multiple criteria—such as building
                           type, component type and age, and remaining life-cycle years. This permits
                           almost instantaneous generation of portraits of facility conditions and
                           comparative costs of life facilities.

Reserve Funds              The Capital Needs Analysis Center is permitted by its management to
                           allocate projected RPM spending over a 4-year period, based on its life-
                           cycle cost projections, with any leftover funds from the current year
                           applicable to the remaining 3 years. This allows for flexibility and
                           application of life-cycle budgeting, since the system is built on the concept
                           that expenses will be higher in some years than in others. Logically,
                           therefore, expenditures can be anticipated, but since they do not
                           necessarily occur in the forecast year, RPM monies that have been banked
                           can then be used when needed. The 4-year period is adjusted annually,
                           based on condition assessments and revisions of forecast component life
                           cycles and estimated future costs. Although this feature is not available to
                           government entities that operate on a single-year budget, both LLNL and
                           the Army HFPA use life-cycle costing and budgeting for planning purposes.

Common Rating System for   Although the Center and LLNL have separate systems, both apply the
Facilities                 principle of using engineering-based facility condition rating systems to
                           their own facilities. This principle provides for a level playing field for the
                           evaluation of RPM needs and to allocation of monies among their facilities
                           and sites. The Center compares facilities of same or similar type and shifts


                           14
                            The Center manages approximately $30 billion in property at more than 7,000 locations of chapels and
                           a half dozen universities and religious centers, at diverse locations (Provo, Utah; London, England;
                           Jerusalem, Israel; and Hawaii). Temples were not included when we interviewed Center officials.




                           Page 115                                         GAO/NSIAD-99-100 Real Property Management
                              Appendix VIII
                              Promising Practices in Facilities
                              Management




                              RPM spending to those locations most in need. Center officials told us that
                              the idea was to maintain a common minimum standard; to do so, monies
                              must be moved from relatively physically adequate facilities to those not as
                              adequate.

                              Center officials said that while there was initial resistance from some
                              entities, the change in the culture of allocation had become widely
                              accepted. We observed a number of facilities at Brigham Young University,
                              including the Missionary Training Center. These facilities appeared to be in
                              sound condition and none were notably better than the others. Some, such
                              as dormitories, were quite spartan in terms of amenities. Most of the
                              observed facilities appeared to be both modest in appearance and
                              functional in nature.

Repair Force and Validation   Another characteristic that both LLNL and the Center have in common is
Reviews                       reliance on craft tradespersons or journeymen to perform daily
                              maintenance and to report on the conditions of buildings in the role of
                              inspectors. Both entities emphasized that using the expertise of their
                              tradespersons had met the goal of getting buy-in for their RPM assessment
                              systems from those that fix the buildings daily as well as utilizing their
                              practical expertise in estimating the remaining life cycle of components.
                              Further, both systems use multiple layers of review and validation of
                              identified repair needs to ensure that conditions are rated consistently
                              across multiple facilities.

Nonfungible RPM Monies        At both LLNL and the Center, RPM funds are treated as nonfungible; that is,
                              they may not be used for non-RPM purposes, and appeared to be fairly
                              strictly limited to repairs as opposed to renovations or upgrades.
                              Enhancements could be funded by individual schools at Brigham Young
                              University, but only from departmental funds; in effect, the RPM allocation
                              in a given year for special projects is set by the Center, and any changes
                              must be paid for out of the subentity’s own budget.

                              Both LLNL and the Center have found that they can reduce subjectivity in
                              maintenance decisions by requiring programs to pay for aesthetic fixes,
                              while confining RPM spending to addressing physical deficiencies. Thus, if
                              a program wants new or higher quality carpeting in its building(s), it must
                              use program, not maintenance funds, unless the existing carpeting is worn
                              out.




                              Page 116                             GAO/NSIAD-99-100 Real Property Management
                          Appendix VIII
                          Promising Practices in Facilities
                          Management




Maintenance Fee at LLNL   Beyond the common elements at LLNL and the Center, one factor at LLNL
                          stood out as a potentially useful tool in managing facilities—an annual
                          charge per square foot charge for maintenance, custodial, grounds care,
                          and garbage disposal costs. This charge was instituted in 1991; it began at
                          $1 per square foot and has since increased to about $6 per square foot. We
                          were told that, of the total, about $2.10 is for maintenance alone. The
                          square footage charges are assessed against program budgets; LLNL
                          officials said that the charged cost compares favorably to other entities’
                          costs determined through a 1995 benchmarking study that compared
                          21 private and public research entities along numerous dimensions of
                          facility management and cost.15 Similarly, LLNL meters utility use by
                          programs and charges that to the programs. According to LLNL facilities
                          management, the charge has had the effect of focusing the attention of
                          users on the maintenance cost of their facilities and has, as intended,
                          constrained the use of space. Through the square foot charge, LLNL can
                          maintain facilities at existing levels; that is, it can prevent further increases
                          in backlogged repairs as a result of unfunded maintenance needs. LLNL
                          stated that while it does not have the money to address all existing
                          deficiencies, some are of low priority or are in buildings used by programs
                          that are being terminated. Therefore, it would not be a good business
                          decision, they said, to fix all the deficiencies in every facility, given higher
                          priority needs, or in buildings that will no longer be used in some cases,
                          once current funding ends for certain programs.

                          The LLNL practice of charging a fixed maintenance/custodial fee per
                          square foot could be considered by the services. This fee has several
                          potentially useful effects:

                          • it makes transparent the true costs of maintaining facilities;
                          • it can be set high enough to address RPM needs, precluding growth of
                            backlogged repairs; and
                          • it creates an incentive to save, as programs are charged for the space
                            used.

                          In contrast, the practice of allocating on a basis of a percent of PRV or
                          current replacement value is not based on actual facility conditions and




                          15
                            “Research Facilities Benchmarking Conference,” sponsored by Eastman Kodak and IBM, October
                          1995. No place of publication listed. Provided to GAO by LLNL. We did not validate the data reported
                          in the study, which provides only a coded system of identification of participating entities.




                          Page 117                                         GAO/NSIAD-99-100 Real Property Management
                      Appendix VIII
                      Promising Practices in Facilities
                      Management




                      rewards entities that claim a high PRV. 16 While some flexibility and
                      ingenuity would be required to administer a fee per square foot at military
                      installations, administering a maintenance fee would have the inherent
                      advantage of assessing costs across the full range of facilities at a base
                      while creating an incentive to use space frugally. Assessment of such a
                      charge, which is a form of overhead, would not be unusual, since the
                      military services’ working capital funds already incorporate such overhead
                      charges as integral to their billing system.



Summary: Identified   From our interviews with the Capital Needs Analysis Center, Lawrence
                      Livermore National Laboratory, the Army’s Health Facility Planning
Promising Practices   Agency, the other entities cited above, the relevant literature, the Federal
                      Facilities Council list, and our discussions with experts, we synthesized
                      several principles and processes that appear to constitute promising
                      practices for a cost-effective program of facility management. These are

                      • a detailed inventory of facilities and their components;
                      • a centrally controlled, online computerized inventory and inspection
                        database;
                      • a common rating system applied to facilities with standardized,
                        objective, repeatable, engineering-based criteria to evaluate physical
                        conditions;
                      • life-cycle principles of costing and budgeting for planning;
                      • trained personnel for inspections, with multiple layers of review to
                        ensure consistency and validation;
                      • nonfungibility of RPM funds;
                      • allocation of repair funds based on an identified need and prioritized
                        according to severity/impact of deficiency, which can take mission
                        impact into account; and
                      • an annual space management fee based on square footage used that
                        covers RPM costs.




                      16
                       The Army Health Facility Planning Agency determined its life-cycle requirements prior to converting
                      them to a percent of PRV over a 50-year facility replacement life cycle.




                      Page 118                                         GAO/NSIAD-99-100 Real Property Management
Appendix IX

Objectives, Scope, and Methodology                                                                   AppX
                                                                                                        ex
                                                                                                         Indi




                     As requested by the Senate Subcommittee on Readiness, Committee on
                     Armed Services, we examined (1) the methodologies and criteria used by
                     the military services to determine the need for real property maintenance
                     (RPM) of facilities and to allocate available resources within each service
                     and (2) the methods and criteria used by other organizations that are
                     promising practices in facilities management and that therefore may be
                     appropriate for use by the services.



Scope of the Study   We focused on the services’ facilities around the world for which RPM is
                     funded from the operation and maintenance (O&M) account. These
                     facilities include barracks, administrative offices, airfields and terminals,
                     classrooms and other training buildings, libraries, child development
                     centers and dependent schools. They do not include facilities funded by
                     non-O&M RPM accounts, such as revolving and management funds, the
                     Defense Health Program (hospitals and medical clinics), or military family
                     housing.



Methodology          To address our first objective, we conducted analyses of DOD and service
                     data. We also

                     • interviewed and were briefed by knowledgeable officials involved in
                       real property management from all the services and
                     • obtained and reviewed key RPM-related documents and RPM-related
                       manuals for each service, guidance, and other relevant reports and
                       documents.

                     We also collected data for this objective through questionnaires based in
                     part on surveys related to RPM performed by other professional
                     organizations and information obtained from independent experts, DOD,
                     and service officials. Two versions were developed—one for bases
                     (installations) and one for major commands in the Army and Air Force and
                     the Navy-Marine Corps equivalent, major claimants. During
                     September-December 1997, we pretested the installation questionnaire at
                     11 bases, 3 bases in the Army and Air Force each, and 5 Navy bases. We
                     also pretested the command questionnaire at four major commands
                     (2 Army, 1 Air Force, and 1 Navy) for clarity, length of time of




                     Page 119                             GAO/NSIAD-99-100 Real Property Management
Appendix IX
Objectives, Scope, and Methodology




administration, and acceptability to the respondents.1 Pretest versions
were also submitted for review and comment to each service point of
contact (POC) (including the Marines), and revisions were made based on
the input from the POCs and from the pretests. We wanted to ensure that
the questions would allow us to address the objectives and would make
sense to those we sent it to.

The survey contained three groups of questions on methods and criteria
used to (1) assess facility conditions, (2) estimate RPM budget and
prioritization of needs, and (3) allocate resources to those needs. The text
of the survey that was sent to installations can be found in appendix X.

Two questionnaires were sent; one to 530 military installations and one to
41 major commands/major claimants worldwide (Air Force, Army, Navy,
and Marines) that are holders of RPM O&M funded facilities and that are
“parent installations” (subinstallations are components of parent
installations, and their property is included as part of the parent
installations). This was the universe of bases in the services that hold and
evaluate O&M RPM-funded property, according to the service RPM
headquarters offices. Bases scheduled to be closed by the end of 1998 and
scheduled for realignment or closure under the Base Realignment and
Closure (BRAC) Act were excluded.

Although we asked that the questionnaire be returned within 10 days of
receipt, it actually required more than 6 months to achieve a return rate of
over 80 percent from each service. Our service POCs helped by repeatedly
contacting bases and commands. The final tally of returned but not
necessarily completely answered questionnaires is shown in table IX.1.




1
 Bases that were visited for pretests are listed at the end of the appendix on each service.




Page 120                                           GAO/NSIAD-99-100 Real Property Management
                                            Appendix IX
                                            Objectives, Scope, and Methodology




Table IX.1: Responses to GAO Questionnaires

                                                        Total number of                    Total returned      Returned as percent
Service                                           questionnaires mailed                           to GAO           of those mailed
Army bases                                                             180                            149                       83
Navy installations                                                     132                            126                       95
Marine Corps installations                                              16                             16                      100
Air Force bases                                                        202                            200                       99
All services                                                           530                            491                       93
Major commands/major claimants of all services                          41                            38                        93
                                            Note: BRAC bases excluded from both mailed and returns.


                                            In addition to the questionnaire, to determine the methods and criteria of
                                            the services and their allocation of resources for RPM needs, we visited
                                            installations and major commands of all the services (with the exception of
                                            the Marine Corps, where we visited one base), across the continental
                                            United States between July 1997 and August 1998. During those visits we

                                            • reviewed related property records, documented backlog information,
                                              and the recorded deficiencies;
                                            • visited facilities to observe their condition and deficiencies to compare
                                              assessments to actual building conditions;
                                            • discussed the evaluation methods/condition assessment process with
                                              the raters/reviewers; and
                                            • interviewed installation engineering staff as they showed us the
                                              deficiencies and documented additional information when necessary.

                                            We also pretested and validated our questionnaires at a number of these
                                            installations and major commands/claimants.

                                            We visited the following offices, bases, major commands, and claimants:


Office of the Secretary of                  Office of the Deputy Under Secretary of Defense (Installations) Directorate
Defense                                      of Analysis Investment, Arlington, Virginia
                                            Office of the Secretary of Defense, Readiness Programming and
                                             Assessment Division, Washington, D.C.



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



                                            Page 121                                      GAO/NSIAD-99-100 Real Property Management
                              Appendix IX
                              Objectives, Scope, and Methodology




                              Department of Public Works, Alexandria, Virginia
                              Installation Support Center, Alexandria, Virginia

Bases                         Fort Belvoir, (Military District of Washington), Alexandria, Virginia
                              Fort Bragg (Forces Command), Fayetteville, North Carolina
                              Fort Hood (Forces Command), Killeen, Texas
                              Fort McPherson (Forces Command), Atlanta, Georgia
                              Fort Sam Houston (Medical Command), San Antonio, Texas
                              Fort Sill (Training and Doctrine Command), Lawton, Oklahoma
                              Rock Island Arsenal (Army Materiel Command), Rock Island, Illinois
                              Texas Army National Guard, Austin, Texas

Major Commands                U.S. Army Forces Command, Fort McPherson, Atlanta, Georgia
                              U.S. Army Medical Command, Fort Sam Houston, San Antonio, Texas


Department of the Air Force   Air Force Deputy Chief of Staff for Installations and Logistics, Office of the
                               Civil Engineer, Programs Division, Crystal City, Virginia
                              Air Force Deputy Chief of Staff for Installations and Logistics, Office of the
                               Civil Engineer, Operations Division, Crystal City, Virginia
                              Air Force Real Estate Agency, Bolling Air Force Base, Washington, D.C.

Bases                         Alabama Air National Guard, Birmingham, Alabama
                              Eglin Air Force Base (Air Force Materiel Command), Fort Walton Beach,
                               Florida
                              Maxwell Air Force Base (Air Education and Training Command),
                               Montgomery, Alabama
                              Pope Air Force Base (Air Mobility Command), Fayetteville, North Carolina
                              Scott Air Force Base (Air Mobility Command), Belleville, Illinois
                              Seymour Johnson Air Force Base (Air Combat Command), Goldsboro,
                               North Carolina
                              Tinker Air Force Base (Air Force Materiel Command) Oklahoma City,
                               Oklahoma
                              Wright-Patterson Air Force Base (Air Force Materiel Command), Dayton,
                               Ohio

Major Commands                Air Combat Command, Langley Air Force Base, Langley, Virginia
                              Air Force Materiel Command, Wright-Patterson Air Force Base, Dayton,
                               Ohio
                              Air Mobility Command, Scott Air Force Base, Belleville, Illinois




                              Page 122                             GAO/NSIAD-99-100 Real Property Management
                           Appendix IX
                           Objectives, Scope, and Methodology




Department of the Navy     Navy Budget Office, Washington, D.C.
                           Deputy Chief of Naval Operations (Logistics), Facilities and Engineering
                            Division, Crystal City, Virginia

Bases                      Fleet Combat Training Center (Chief, Naval Education and Training),
                            Atlantic, Dam Neck, Virginia Beach, Virginia
                           California Naval Air Station North Island (U.S. Pacific Fleet), San Diego,
                            California
                           Naval Air Station Oceana (U.S. Atlantic Fleet), Virginia Beach, Virginia
                           Naval Air Station, Patuxent River (Naval Air Systems Command),
                            Lexington Park, Maryland
                           Naval Air Station Pensacola (Chief, Naval Education and Training),
                            Pensacola, Florida
                           Norfolk Naval Shipyard (Naval Sea Systems Command), Portsmouth,
                            Virginia
                           Naval Security Group Activity Northwest (Naval Security Group
                            Command), Chesapeake, Virginia
                           Naval Station Norfolk (U.S. Atlantic Fleet), Norfolk, Virginia
                           Norfolk Naval Shipyard (Naval Sea Systems Command), Portsmouth,
                            Virginia

Major Claimants            U.S. Atlantic Fleet, Norfolk, Virginia
                           Naval Air Systems Command, Patuxent River, Lexington Park, Maryland

Other Navy2                Public Works Center (Naval Facilities and Engineering Command), San
                            Diego, California
                           Public Works Center (Naval Facilities and Engineering Command),
                            Norfolk, Virginia2


Commandant of the Marine
Corps

Base                       Marine Corps Base, Quantico, Virginia




                           2
                           Navy Public Works Centers are not installations; for this reason, they are here listed as “Other Navy.”
                           They perform RPM on a reimbursable basis to Navy and Marine Corps bases and major claimants.




                           Page 123                                          GAO/NSIAD-99-100 Real Property Management
                           Appendix IX
                           Objectives, Scope, and Methodology




Nonmilitary Entities and   To identify promising practices in repair and maintenance of facilities that
RPM Experts                could be of potential use to the services, we contacted experts in the field
                           of facilities management to help identify nonmilitary entities with
                           reputations for high quality and innovation in facility management. These
                           experts were identified on the basis of their reputations in the field and
                           their publications, especially those by facilities management expert
                           organizations such as the Federal Facilities Council of the National
                           Research Council, the Logistics Management Institute, and the Association
                           of Higher Education Facilities Officers (formerly the Association of
                           Physical Plant Administrators of Universities and Colleges). We also
                           contacted facility management experts at universities, private companies,
                           and government agencies and surveyed relevant literature. We focused on
                           large entities, as requested, because they are more directly comparable to
                           the military services, with thousands of facilities around the world, than are
                           single-location institutions with just a few dozen buildings.

                           Among the experts or expert entities with which we spoke to identify
                           promising practices in facilities management, and/or from which we
                           obtained reports, were the following:

                           Applied Management Engineering, Virginia Beach, Virginia
                           Association of Higher Education Facilities Officers, Alexandria, Virginia
                           Army Health Facility Planning Agency, Falls Church, Virginia
                           Building Owners and Managers Association International, Washington, D.C.
                           Capital Needs Analysis Center, Brigham Young University, Provo, Utah
                           Civil Engineering Research Foundation, Washington, D.C.
                           Construction Engineering Research Laboratories, Champaign, Illinois
                           Congressional Budget Office, Washington, D.C.
                           Richard Coullahan, Senior Vice President, Parsons Brinckerhoff Energy
                            Services, Inc., Herndon, Virginia
                           Edward R. Damphousse, Manager, Consulting Services Group, R.S. Means
                            Company, Inc., Kingston, Massachusetts
                           Department of Energy, Washington, D.C.
                           Federal Facilities Council, Washington, D.C.
                           Mark M. Fagan, AIA, President, and Thomas K. Davies, AIA, Executive Vice
                            President, Vanderweil Facility Advisors, Boston, Massachusetts
                           General Services Administration, Washington, D.C.
                           Harvey H. Kaiser, Ph.D., HHK, Syracuse, New York and Reston, Virginia
                           International Facility Management Association, Houston, Texas
                           Lawrence Livermore National Laboratory, Livermore, California
                           Logistics Management Institute, McLean, Virginia




                Lte
                  rt       Page 124                              GAO/NSIAD-99-100 Real Property Management
                       Appendix IX
                       Objectives, Scope, and Methodology




                       Peter Lufkin, Principal, Economics, Whitestone Research, Santa Barbara,
                        California
                       NASA, Facilities Engineering Division, Washington, D.C.
                       NASA, Goddard Space Flight Center, Greenbelt, Maryland
                       National Institutes of Health, Division of Engineering Sciences, Rockville,
                        Maryland
                       Private Sector Council, Washington, D.C.
                       Ronald Reagan Building and International Trade Center, Washington, D.C
                       City of San Jose, California, Department of Public Works
                       Leif Steinert, Senior Consultant, WorkPlace: A Bentley Strategic Affiliate,
                        Littleton, Massachusetts
                       Eric Teicholz, President, Graphic Systems, Inc., Cambridge, Massachusetts

                       We visited the Capital Needs Analysis Center, Brigham Young University,
                       Provo, Utah; the Lawrence Livermore National Laboratory, Livermore,
                       California; and George Washington University, Washington, D.C.

                       We spoke to facility management officials from the following universities
                       about their RPM practices:

                       Harvard University, Cambridge, Massachusetts
                       Massachusetts Institute of Technology, Cambridge, Massachusetts
                       University of California, Facilities Management and Construction (Office of
                        the President), Oakland, California
                       University of California, Berkeley, California
                       University of California, San Diego, California
                       University of North Carolina, Chapel Hill, North Carolina

                       We spoke to officials from the following corporations about their facilities
                       management:

                       Hughes Electronics Corporation
                       Lockheed Martin Corporation
                       Mobil Business Resources Corporation
                       The Boeing Company
                       Trammel Crow Company (Washington, D.C.)



Other Literature and   In addition to the methods cited above to identify promising practices, we
Internet Searches      attended relevant conferences sponsored by the Federal Facilities Council,
                       and conducted an extensive review of the literature on facilities
                       management, using libraries, database searches, and the Internet. We also



                       Page 125                             GAO/NSIAD-99-100 Real Property Management
Appendix IX
Objectives, Scope, and Methodology




obtained reports prepared by some private consulting firms. A
bibliography can be found at the end of this report. We reviewed relevant
legislation and legislative history with regard to RPM issues over the past
45 years.

We conducted our work between May 1997 and March 1999, in accordance
with generally accepted government auditing standards.




Page 126                             GAO/NSIAD-99-100 Real Property Management
Appendix X

Our Survey on Real Property Maintenance for
Installations                                                       Appenx
                                                                         X
                                                                         di




              Page 127      GAO/NSIAD-99-100 Real Property Management
Appendix X
Our Survey on Real Property Maintenance
for Installations




Page 128                                  GAO/NSIAD-99-100 Real Property Management
Appendix X
Our Survey on Real Property Maintenance
for Installations




Page 129                                  GAO/NSIAD-99-100 Real Property Management
Appendix X
Our Survey on Real Property Maintenance
for Installations




Page 130                                  GAO/NSIAD-99-100 Real Property Management
Appendix X
Our Survey on Real Property Maintenance
for Installations




Page 131                                  GAO/NSIAD-99-100 Real Property Management
       Appendix X
       Our Survey on Real Property Maintenance
       for Installations




Lte
  rt   Page 132                                  GAO/NSIAD-99-100 Real Property Management
Appendix X
Our Survey on Real Property Maintenance
for Installations




Page 133                                  GAO/NSIAD-99-100 Real Property Management
Appendix X
Our Survey on Real Property Maintenance
for Installations




Page 134                                  GAO/NSIAD-99-100 Real Property Management
Appendix X
Our Survey on Real Property Maintenance
for Installations




Page 135                                  GAO/NSIAD-99-100 Real Property Management
Appendix XI

Comments From the Department of Defense                                         Appex
                                                                                    X
                                                                                    ndIi




Note: GAO comments
supplementing those in the
report text appear at the
end of this appendix.




                             Page 136   GAO/NSIAD-99-100 Real Property Management
Appendix XI
Comments From the Department of Defense




Page 137                                  GAO/NSIAD-99-100 Real Property Management
                 Appendix XI
                 Comments From the Department of Defense




See comment 1.




                 Page 138                                  GAO/NSIAD-99-100 Real Property Management
                 Appendix XI
                 Comments From the Department of Defense




See comment 2.




See comment 3.


See comment 4.


See comment 5.


See comment 6.




See comment 7.




See comment 8.




                 Page 139                                  GAO/NSIAD-99-100 Real Property Management
                  Appendix XI
                  Comments From the Department of Defense




See comment 9.




See comment 10.




                  Page 140                                  GAO/NSIAD-99-100 Real Property Management
                         Appendix XI
                         Comments From the Department of Defense




See comment 11.




See comment 11.




See comment 12.




See comment 13.




                  Lte
                    rt   Page 141                                  GAO/NSIAD-99-100 Real Property Management
                  Appendix XI
                  Comments From the Department of Defense




See comment 14.




See comment 15.




                  Page 142                                  GAO/NSIAD-99-100 Real Property Management
               Appendix XI
               Comments From the Department of Defense




               The following are GAO’s responses to the Department of Defense’s (DOD)
               comments, dated June 18, 1999.



GAO Comments   1. While DOD partially concurs with our recommendation, we note that it
               has made no firm commitment to actually provide the funding to formulate
               a comprehensive plan. We believe that DOD’s original commitment to an
               overall plan was sound and that it should be funded as we recommended.

               2. We disagree that uniform standards are not feasible or desirable. Many
               types of facilities across the services are essentially identical in function—
               barracks and family housing, administrative offices, runways, classrooms,
               commissaries, daycare centers, and so forth. We noted that DOD has
               already demonstrated, in its $50 million development and field testing of a
               Condition Assessment Survey (CAS) in 1994-95, that it is feasible to
               develop a set of uniform standards to assess the condition of similar types
               of facilities across the services.

               Moreover, the Office of the Secretary of Defense (OSD) has developed a
               cost factors handbook that condenses almost all service facilities down to
               400 category codes, making it possible to compare them across services. If
               this can be done for cost factors, we believe it can also be done for
               assessments of physical conditions. For example, based on the 1994-95
               CAS, and the best RPM practices we identified, it appears feasible to apply
               the condition assessment system used by any one of the military services to
               all the other services for like facilities (e.g., barracks). Each service’s
               system has strengths and weaknesses, but none is inherently inapplicable
               to the common facilities of the other services. Since each service has
               diverse facilities—but many in common with the other services—it would
               not be difficult to use just one of the services’ systems for all the services.

               3. We note that each military service already defines “minimum condition”
               in its rating systems. These definitions may draw upon safety standards,
               and they can be quite precisely detailed to eliminate confusion over the
               meaning of “minimum.” For example, exposed live wires in a building
               typically violates minimum safety standards. The Army’s Installation Status
               Report (ISR) system uses detailed graphical representations of deficiencies
               to rate virtually every type of facility; these are sufficiently specific to be
               readily understandable. The Marines quantify condition and readiness by
               using percentage cutoffs (if a runway cannot be used a specified
               percentage of the time, it fails to meet the minimum required condition).
               While we recognize that subjectivity is a valid concern in administering



               Page 143                                  GAO/NSIAD-99-100 Real Property Management
Appendix XI
Comments From the Department of Defense




rating systems, the definitions can be set reasonably precisely, as currently
demonstrated by each service’s system.

4. While DOD states that defined minimums often become maximums, this
does not appear to be a sound ground on which to avoid setting minimum
standards or goals. If minimums becoming maximums is indeed a problem,
then DOD can exercise the oversight to correct it.

5. While we recognize DOD’s concerns about “dictating” common
standards, we believe that there is a compelling need to set common
standards for assessing facility conditions, to permit the Congress to be
able to evaluate requests for RPM funding across the services. Since each
service annually rates, in one way or another, the condition of thousands of
facilities around the world, it is not clear why the like facilities of each
service (e.g., barracks) should be rated by different systems that preclude
meaningful comparisons of physical condition. Specifically, the purpose of
like facilities is essentially the same. While impact on mission may vary in
some regards, depending on location and other factors, this has no
relevance to the actual condition of the buildings. (It can be a factor in
deciding how to prioritize RPM spending.) Personnel need sound, decent
facilities in which to live and work; the condition of these facilities should
be known by DOD based on common criteria.

6. The configuration of barracks space is more a quality of life than a repair
and maintenance issue. As DOD notes, changing configuration is part of
efforts to improve retention; a barracks with a central latrine could be in
excellent condition but would still be rated unacceptable given the
standard of 1+1 (two rooms, one bathroom). The services are permitted to
use both RPM and military construction funds to pay for such changes in
barracks space. We note that according to current service estimates, no
service will meet the 1+1 standard before 2013 at the earliest. The Marines
will not meet the goal of providing its lower standard (2+0, or two persons
per room, one bathroom) until the year 2035. In contrast, the other
services will meet the DOD 1+1 standard by 2020 (Army), 2013 (Navy), and
2019 (Air Force).

7. While DOD states that the standardized condition assessment system it
developed was too expensive to implement, it never compared this
system’s costs to the costs of administering the four separate systems in the
services. Such a comparison is necessary to be able to conclude that a
single system would be too costly compared to the four major systems
currently used. In addition, while DOD states that it needs a “more positive



Page 144                                  GAO/NSIAD-99-100 Real Property Management
Appendix XI
Comments From the Department of Defense




approach” that “provides sufficient funding up-front to sustain facilities in
good condition,” it is also the case that a single set of standards would
permit determining which facilities are in the worst condition and,
therefore, are in greater need of limited funds than others. Without such
cross-service standards, the Congress is unable to prioritize among the
competing requests.

8. We have noted the development of the cost factors handbook by the
OSD (Installations) Directorate of Analysis and Investment, and we regard
it as an important step in the standardization of RPM data.

9. We believe that a computerized on-line database accessible to both OSD
and each service is essential to better and more effective RPM management
by DOD. Under current arrangements, “data calls” or requests are issued
by OSD in order to gather basic inventory and budget data. We found that
the data held by OSD and the services on inventory and RPM spending
often did not match or could not be readily compared. Even the services’
headquarters RPM offices reported problems with obtaining basic and
reliable data from their components. In contrast, at both Lawrence
Livermore and Brigham Young University’s Capital Needs Analysis Center
(CNA), all RPM inventory and condition data were available immediately
on-line to central management. Similarly, the Army’s ISR data are
computerized and summary data are available to headquarters and other
facility management personnel. These are management practices that
clearly constitute a minimum requirement for effective RPM management
across DOD. A system with common facility codes—which OSD is
attempting to implement—should be readily and inexpensively amenable
to being kept on-line. Comparisons of data are an essential component of
RPM management. Until such comparisons are made, DOD will not know
where RPM dollars are truly needed, where they are being spent, or how
much property it actually has.

OSD has developed a system of common facility category codes (published
in DOD Facilities Cost Factors Handbook, Version 1.0, Apr. 1999) that the
services are now reviewing, but have not yet agreed to use. The purpose of
this system is to compare service RPM and construction spending on
similar types of facilities (e.g., administrative space, classroom buildings,
and barracks) to, as DOD states, industry standards. The data required to
make these comparisons must be gathered and inputted into a computer
database if the effort is to be manageable. Further, if “meaningful”
comparisons are to be made, it is essential that these cost and inventory
data be computerized and put on-line.



Page 145                                  GAO/NSIAD-99-100 Real Property Management
Appendix XI
Comments From the Department of Defense




10. Tracking how much each service is spending on RPM by type of facility
and by square foot (or other common metric) will enable DOD to exercise
effective oversight. We note that OSD has published cost factors and is
now using them to assess the adequacy of each service’s RPM spending by
facility type. We further note that meaningful evaluation of the comparative
costs of maintaining the same types of facilities across services requires a
high level of detail in order for major commands to be able to compare
expenditures of their bases. Without consistent, comparable data for like
facilities, no meaningful evaluations are possible. With current databases
and budget data, it is not possible to readily compare RPM spending per
square foot for like facilities across services. OSD’s new facility category
code system, including industry cost standards, will have no clear purpose
unless these costs—which are per square foot—can be compared to what
military installations spend. The Army’s Directorate of Public Works’
inventory/cost per square foot databases permitted such comparisons and
were on-line; these databases should be restored and expanded to include
the other services.

11. We appreciate the need for flexibility in funding decisions, but in some
cases this can lead to insufficient repairs or cancellation of repair
contracts. Migration of RPM funds is at least partly responsible for the
accumulation of $16 billion in repair backlogs. This is an issue that DOD
needs to address. Although restricting the migration of RPM funds may
reduce flexibility, some of the organizations we reviewed found the
practice yielded beneficial results. Accordingly, we continue to believe that
the Department ought to consider the feasibility of adopting some form of
this promising practice. We have modified our recommendation to that
effect.

12. We commend DOD—more specifically, OSD’s (Installations)
Directorate of Analysis and Investment office—for the cost factors
handbook they published in April 1999. They are also investigating
methods to put this handbook on-line, which is essential to its effective use
by military personnel worldwide. However, given the costs per square foot
identified, we believe that many will exceed the level of actual spending by
the military services, rather than validate current spending levels. For
example, the Army spent $1.81 per square foot for RPM for administrative
buildings in the United States and its territories according to the fiscal year
1997 annual summary issued by the Army’s Directorate of Public Works




Page 146                                  GAO/NSIAD-99-100 Real Property Management
Appendix XI
Comments From the Department of Defense




(the last year of publication available). 1 In contrast, OSD’s cost factors
show RPM spending for such buildings nationwide at $2.46 per square foot,
or 36 percent higher. Even taking into account the (low) inflation over the
past 2 or 3 years, this would not narrow the difference measurably.
Therefore, we question whether OSD’s cost factors will validate the levels
of RPM spending by the services. At the same time, it is exactly these kinds
of comparisons that DOD should be undertaking as part of a more vigorous
RPM oversight management program.

13. DOD states that it has considered the “taxing” arrangement used by
LLNL (which assesses facility costs to activities based on the square
footage occupied, and total facility maintenance costs) and also states that
working capital funds were deemed unsuitable as a funding mechanism for
base operations. However, the Navy has used working capital funds for
many years at numerous locations and continues to do so. At a minimum,
DOD needs to reinvent the way in which facilities maintenance is carried
out across the services, to ensure that repair spending is prioritized on the
basis of which facilities are needed, and of those, which need repair the
most. The U.S. Army’s Health Facility Planning Agency has developed
metrics to prioritize such spending in line with its mission. Its work might
be taken as a potential model.

14. We note that consistent training standards are common throughout the
military for virtually every activity it undertakes. Common training for
RPM personnel will help ensure consistency in the assessment of facility
conditions and RPM needs. Responses to our questionnaire showed
variations in training within the services. Since training is widely
understood as essential to competent job performance and is generally
treated as such for other activities in the military, it is not clear why DOD
objects to common training for RPM. The Navy noted in its technical
comments that its guidance on RPM inspector qualifications “addresses
such things as technical trade background, formal education in theory,
experience in maintenance and repair operations, and skills in inspection
techniques, planning and estimating, maintenance standards, and building
codes.” This guidance could well serve as the model for a DOD-wide
standard for all facility inspectors.




1
 The average for worldwide spending was $1.96 per square foot, or about 8.2 percent more than for just
the United States and territories. See Department of the Army, Directorates of Public Works, Fiscal
Year 1997 Annual Summary of Operations, vol. II, p. 2 and p. 5.




Page 147                                         GAO/NSIAD-99-100 Real Property Management
Appendix XI
Comments From the Department of Defense




15. In examining the documents associated with DOD’s efforts in the mid
1990s to implement a Condition Assessment Survey (CAS), we found that
no cost comparison had been made between the cost of the CAS and
systems used by the services to evaluate the condition of their properties.
Further, no evaluation was presented in the materials we were provided by
DOD of the costs versus benefits of such a system. We were told by a
number of persons involved in the CAS effort that the services had no
interest in a servicewide RPM needs assessment system that would require
common standards.




Page 148                                  GAO/NSIAD-99-100 Real Property Management
Appendix XII

GAO Contacts and Staff Acknowledgments                                                       AppenX
                                                                                                  dxIi




GAO Contacts      Kwai-Cheung Chan, (202) 512-3092
                  Dr. Sushil K. Sharma, (202) 512-3460
                  Dr. Jonathan R. Tumin, (202) 512-3595



Acknowledgments   In addition to those named above, Mary K. Quinlan, Lorelei St. James,
                  Robert C. Mandigo Jr., Venkareddy Chenareddy, and Raymond J. Wyrsch
                  made key contributions to this report.




                  Page 149                           GAO/NSIAD-99-100 Real Property Management
Bibliography



Reports and            Ackerman, Glenn, et. al., The Backlog of Maintenance and Repair:
                       Preventing Its Growth and Measuring Its Impact, Alexandria, Virginia:
References Consulted   Center for Naval Analyses, April 1995.

                       Adams, Matthew C., Successful Funding Strategies for Facility Renewal;
                       Alexandria, Virginia: APPA, 1997.

                       American Public Works Association:

                       • “Good Practices in Public Works.” Special Report 54, 988 (np).
                       • Committing to the Cost of Ownership: Maintenance and Repair of Public
                         Buildings: Building Research Board, National Research Council, Special
                         Report #60 (np; nd).

                       APPA (The Association of Higher Education Facilities Officers):

                       • Capital Renewal and Deferred Maintenance, Vol. 4 in “Critical Issues in
                         Facilities Management” (Alexandria, Virginia: 1989).
                       • Operations and Maintenance, Vol. 8 in Critical Issues in Facilities
                         Management (Alexandria, Virginia: 1992).
                       • “Proceedings of the 1997 Educational Conference and 84th Annual
                         Meeting” (collected papers).
                       • Same, 1996.
                       • Facilities Stewardship in the 1990s (Washington, D.C.,1990).
                       • Facilities Management: A Manual for Plant Administration, vols. 1 and 2,
                         second ed. (Alexandria, Virginia: 1995).
                       • Facilities Management: A Manual for Plant Administration (3rd edition),
                         Part II: Maintenance and Operations of Buildings and Grounds
                         (Alexandria, Virginia: 1997).

                       Audet-Lapointe, Patrice, “A Condition Assessment Process Developed for
                       Use in the Private Sector,” in Kelley, Stephen J. and Marshall, Philip C., eds.,
                       Service Life of Rehabilitated Buildings and Other Structures (Philadelphia,
                       Pennsylvania: American Society for Testing and Materials, 1990), pp. 25-35.

                       Biedenweg, Rick, and Cummings, Alan A., “Before the Roof Caves in Part II:
                       A Predictive Model for Physical Plant Renewal,” in APPA, “Proceedings of
                       the 1997 Educational Conference and 84th Annual Meeting, July 1997,
                       pp. 13-20.




            Leter      Page 150                               GAO/NSIAD-99-100 Real Property Management
        Bibliography




        “Budgeting for Maintenance and Repair of Facilities (Summary of a
        Symposium),” Federal Construction Council Technical Report No. 88
        (Washington, D.C.: Naval Academy Press, 1988).

        Bowlin, Maj. Wm. F., “Evaluating the Efficiency of RPMA in the Tactical Air
        Command,” Air University, USAF, March 1985.

        1998 BOMA Experience Exchange Report: Operating a Cost Effective
        Office Building (Washington, D.C.: Building Owners and Managers
        Association (BOMA) International, 1998).

        Burco, Al, “Budgeting for Facility Repair and Maintenance,” Journal of
        Management in Engineering, July-August 1994.

        Cable, John and Wilson, Thomas P., Benchmarking of Facilities Support
        Services at the National Institutes of Health (McLean, Virginia: Logistics
        Management Institute, July 1996).

        Cable, John, et.al., Repair and Alteration Services at the U.S. Postal Service
        (McLean, Virginia: Logistics Management Institute, April; 1995)
        (PS406MR1).

        Cable, Jon, et.al, Benchmarking Results at Four Defense Logistics Support
        Command Sites (McLean, Virginia: Logistics Management Institute: August
        1998).

        Chouinard, L.E., Anderson, G.R., and Torrye, V.H. III; “Ranking Models
        Used for Condition Assessment of Civil Infrastructure Systems,” Journal of
        Infrastructure Systems, Vol. 2, No. 1, March 1996, pp. 23-29.

        Christensen, Douglas K., “Integrating Capital Studies Within Physical Plant
        Operations,” in Capital Renewal and Deferred Maintenance, Vol. 4 in
        “Critical Issues in Facilities Management” (Alexandria, Virginia: APPA),
        pp. 89-104.

        Christian, John, and Pandeya, Amar, “Cost Predictions of Facilities;”
        Journal of Management Engineering, Vol. 13, No. 1, Jan.-Feb. 1997, pp.
        52-61.

        Civil Engineering Research Foundation (CERF): Level of Investment Study
        Facilities and Infrastructure Maintenance and Repair (Washington, D.C.:
        August 1996).



Leter   Page 151                              GAO/NSIAD-99-100 Real Property Management
Bibliography




Cuciti, Peggy, and Overman, E. Sam, “The Assessment of Investment
Needs: A Review of Current Estimates and Approaches” (np: National
Council on Public Works Improvement), Oct. 20, 1986.

Derrick, Robert R., “Military Infrastructure: Is It as Bad as the Nation's
Infrastructure?,” Master’s Thesis, U.S. Army Command and General Staff
College (Fort Leavenworth: 1990).

Federal Facilities Council:

• Budgeting for Facilities Maintenance and Repair Activities (Washington,
  D.C.: National Academy Press, 1996), Report No. 131.
• Government/Industry Forum on Capital Facilities and Core
  Competencies (Washington, D.C.: National Academy Press, 1998),
  Report No. 136.

Facilities Manager, official publication of The Association of Higher
Education Facilities Officers (APPA), especially March/April 1997,
“Attacking Deferred Maintenance,” and May/June 1998, “Assessment &
Evaluation: Measuring Up in Today’s Facilities.”

Frye, Major David C., “Decision Support for Infrastructure Renewal in the
US Army” (West Point, NY: U.S. Military Academy, June 1992), Operations
Research Center Technical Report No. FY92/91-1.

Goodhart, Christopher A., “Allocation of Navy Real Property Maintenance
Funding,” Master’s Thesis, Naval Postgraduate School, Monterey,
California, March 1997.

Harmon, Wm. E., “Decision Support for Installations of the U.S. Army”
(West Point, NY: U.S. Military Academy, June 1993) Operations Research
Center Technical Report No. FY93/92-1.

Hawkins, Jeffrey A., et. al, “Managing Real Property Maintenance: Meeting
the Challenge of Declining Budgets" (McLean, Virginia: Logistics
Management Institute, March 1990).

Iselin, Donald G. and Lemer, Andrew C., eds., The Fourth Dimension in
Building: Strategies for Minimizing Obsolescence,) Committee on Facility
Design to Minimize Premature Obsolescence, National Research Council
(Washington, D.C.: National Academy Press), pp. 14-25.




Page 152                             GAO/NSIAD-99-100 Real Property Management
Bibliography




Kaiser, Harvey H., A Foundation to Uphold: A Study of Facilities Conditions
at U.S. Colleges and Universities, (NACUBO, APPA, and Sallie Mae)
(Alexandria, Virginia: APPA, 1996).

Kaiser, Harvey H., The Facilities Audit: A Process for Improving Facilities
Conditions (Alexandria, Virginia: APPA, 1993).

Kaiser, Harvey H., “Capital Renewal and Deferred Maintenance Programs,”
in Glazner, Steve, ed., Maintenance and Operations of Buildings and
Grounds (Alexandria, Virginia: APPA, 1997).

Kinnaman, Margaret, P.: “S.A.M. [strategic assessment model]:
Benchmarking with APPA’s Strategic Assessment Model,” September 1997,
APPA website (www.appa.org).

Lufkin, Peter and Silsbee, Robert M., The Whitestone Building Maintenance
and Repair Cost Reference 1998, Fourth Annual Edition, Whitestone
Research, Santa Barbara, California, April 1998.

Managing the Facilities Portfolio: A Practical Approach to Institutional
Facility Renewal and Deferred Maintenance (Washington, D.C.: National
Association of College and University Business Officers), 1991. Applied
Management Engineering, Virginia Beach, Virginia. Rush, Sean, principal
investigator.

McCauley, Janet M., “Backlog of Maintenance and Repair (BMAR): The
Navy’s Approach to Funding,” Master’s Thesis, Naval Postgraduate School,
Monterey, California, June 1980.

“Minutes of the Annual Meeting of the Association of Superintendents of
Buildings and Grounds of the Universities and Colleges,” University of
Rochester, Rochester, NY, May 1932. (From the APPA library.)

Neely, Edgar Samuel Jr. and Neathammer, Robert, “Life-Cycle Maintenance
Costs by Facility Use,” Journal of Construction Engineering and
Management, Vol. 117, No. 2, June 1991, pp. 310-320.

O'Hara, Thomas E., Kays, James L., and Farr, John V., “Installation Status
Report,” Journal of Infrastructure Systems, Vol. 3, No. 2, June 1997,
pp. 87-92.




Page 153                             GAO/NSIAD-99-100 Real Property Management
Bibliography




Owens, James W. II and Shultz, Robert L., “Backlog of Maintenance and
Repair (BMAR) at PWC San Diego, Definition and Methodology for
Reduction,” Master’s Thesis, Naval Postgraduate School, Monterey,
California, March 1979.

"Paying for Military Readiness and Upkeep: Trends in Operation and
Maintenance Spending," Congressional Budget Office, September 1997.

"Pavement Maintenance Prediction and Runway Repair Materials"
(Washington, D.C.: National Academy of Sciences, Transportation
Research Board), 1984, Transportation Research Record 943.

"Pay Now or Pay Later: Controlling Cost of Ownership From Design
Throughout the Service Life of Public Buildings," (Washington, D.C.:
National Academy Press), 1991, Building Research Board, Committee on
Setting Federal Construction Standards to Control Building Life-Cycle
Costs, National Research Council.

Price, Lynn A., "Managing Backlog of Maintenance and Repair (BMAR) in
the Marine Corps," thesis, Naval Postgraduate School, Monterey, California,
Dec. 1987.

R.S. Means Company, Inc.:

• Cost Planning and Estimating for Facilities Maintenance (Kingston,
  Massachusetts) 1996.
• Facilities Construction Cost Data, 13th Annual ed., 1998.
• Facilities Maintenance and Repair Cost Data, 1998.

Saito, Mitsuru, ed., Infrastructure Condition Assessment: Art, Science, and
Practice (NY: American Society of Civil Engineers), 1997.

Selman, Jon R., Cable, Jon H., and Silverman, Robert P., “Public Sector
Benchmarking: A Diagnostic Approach,” Logistics Management Institute
(McLean, Virginia: nd, c. 1998).

Serving the American Public: Best Practices in Customer-Driven Strategic
Planning (Washington, D.C.: Federal Consortium Benchmarking Study
Team, February 1997).

Simon, Benjamin M., “Infrastructure Investment Decisions: Setting
Facilities Repair and Rehabilitation Priorities for the Department of the



Page 154                             GAO/NSIAD-99-100 Real Property Management
Bibliography




Interior,” Public Budgeting and Financial Management, vol. 5, No. 3, 1993,
pp. 529-549.

“Special Report : Deferred Maintenance,” American Association of State
Colleges and Universities,” April 1997,
http://www.aascu.nche.edu/home.htm.

Stewardship of Federal Facilities (Washington, D.C.: National Academy
Press), 1998, National Research Council.

Syme, Preston T., and Oschrin, Jay, "How to Inspect Your Facilities and Still
Have Money Left to Repair Them," (Alexandria, Virginia: 1996), APPA, in
"Proceedings of the 1997 Educational Conference and 83rd Annual
Meeting, July 1996, APPA.

Teicholz, Eric, "Facility Condition Assessment Technology," (http://www.
graphsys.com/articles), February 1999.

Trainor, Major Timothy E., "Decision Support for Installations of the U.S.
Army: The Installation Status Report Part I—Infrastructure" (West Point,
NY: U.S. Military Academy), Operations Research Center Technical Report
No. FY 94/93-1, June 1995.

The Urban Institute, Washington, D.C.:

• Literature Review on Deferred Maintenance (Washington, D.C.: July
  1994) & Guides to Managing Urban Capital Series, Hatry, Harry P. and
  Steinthal, Bruce G., ed.
• Guide to Assessing Capita Stock Condition (Washington, D.C.: 1985).
• Guide to Maintenance Strategies for Capital Facilities (Washington,
  D.C.: 1985).
• Guide to Setting Priorities for Capital Investment (Washington, D.C.:
  1985).
• Guide to Benchmarks of Urban Capital Condition (Washington, D.C.:
  1985).

VW International, “Military Health Services System Facility Life-Cycle
Maintenance: Investment Strategy and Maintenance Cost Model” (VWI,
Alexandria, Virginia, 31 Dec. 1996), prepared for Office of the Assistant
Secretary of Defense (Health Affairs).




Page 155                             GAO/NSIAD-99-100 Real Property Management
                       Bibliography




                       Westerbeck, Gerald W., and Cassell, Jordan W., “Infrastructure Planning
                       and Real Property Management: New Facility Category Coding” (McLean,
                       Virginia: Logistics Management Institute), March 1998.



Armed Services         Department of the Army: Plant Replacement Value Analysis for Fiscal Year
                       1996 (Army Center for Public Works) (13 August 1997).
Documents/Guidances/
Reports                DOD:

                       • Renewing the Built Environment, March 1989
                       • Quadrennial Defense Review Infrastructure Panel, “Installation Support
                         Task Force Final Report,” dated February 24, 1997.
                       • Annual Defense Report, 1999.
                       • “What Does the Future Hold for Defense Installations?: A White Paper
                         for DOD Commanders,” February 26, 1997, OSD, Directorate for
                         Installations Management.

                       OSD: "Report on Real Property Maintenance Migration of Funds," (April 7,
                       1997) (Office of the Deputy Under Secretary of Defense) (Logistics),
                       Analysis and Investment Directorate.

                       Air Force:

                       • "The Air Force Plant Replacement Value: Short Term Analysis Report,"
                         Oct. 1997
                       • "Facility Investment Metric Program," Implementation and Operation
                         Guide (August 1997).

                       "Validation of the Army's Fiscal Year 1989 Reported Backlog of
                       Maintenance and Repair," U.S. Army Audit Agency, 31 Jan. 1991.

                       Data on Assessment procedures and/or guidelines from:

                       Tennessee Air National Guard, HQ 134th Air Refueling Wing (Oct. 1997).

                       Air Combat Command HQ, dated 6 Aug. 1997: "Real Property Maintenance
                       by Contract (RPMC) Methodology" and "CERM Implementation" Seymour
                       Johnson AFB, 1994-1997.




                       Page 156                           GAO/NSIAD-99-100 Real Property Management
Bibliography




“Facilities Condition Assessment Program for Naval Station Mayport,
Florida,” prepared by Navy Public Works Center, Norfolk, Virginia, Fiscal
Year 1998.

“Strategic Maintenance Execution Plan: 1998-2000, Commander Fleet
Activities Yokosuka Japan,” prepared by PAE Facility Management
Services, May 1997.

Army Health Facility Planning Agency.

U.S. Army Corps of Engineers

• Construction Engineering Research Laboratories (CERL): "Facility Cost
  Simulation Models: A Basis for Replacement Policy," October 1988
  (technical report P-89/01).
• CERL: An Analysis of the Building Renewal Problem, June 1987,
  Technical report P-87/11.
• Water Resources Support Center, Institute for Water Resources: "The
  Federal Role in Funding State and Local Infrastructure: Two Reports on
  Public Works Financing" (Ft. Belvoir, Va) August 1993.

The Federal Infrastructure Strategy Program series:

• "Framing the Dialogue, Strategies, Issues and Opportunities," May 1993.
• "Infrastructure in the 21st Century Economy: A Review of the Issues
  and Outline of a Study of the Impacts of Federal Infrastructure
  Investments," July 1993.
• "Challenges and Opportunities for Innovation in the Public Works
  Infrastructure—Vol. I," June 1993.
• "Challenges and Opportunities for Innovation in the Public Works
  Infrastructure—Vol. II," June 1993.
• "Federal Public Works Infrastructure R&D: A New Perspective," July
  1993.
• "Consolidated Performance Report on the Nation's Public Works: An
  Update," December 1994.
• "Public Works Management Practices—Vol. I: A Public Works
  Perspective of the Road Blocks and Opportunities to Improve
  Performance," August 1994 (co-published with American Public Works
  Association--APWA--written by Melvin, Eric and Throne, James D.,
  APWA).




Page 157                            GAO/NSIAD-99-100 Real Property Management
Bibliography




• "Public Works Management Practices—Vol. II: Local Government Public
  Works Agencies: The Effect of Federal Mandates on Their Activities and
  Improving Their Management Performance," August 1994.




Page 158                           GAO/NSIAD-99-100 Real Property Management
Page 159   GAO/NSIAD-99-100 Real Property Management
Related GAO Products


                   Deferred Maintenance Reporting: Challenges to Implementation
                   (GAO/AIMD-98-42, Jan. 1998).

                   Defense Infrastructure: Demolition of Unneeded Buildings Can Help Avoid
                   Operating Costs (GAO/NSIAD-97-125, May 1997).

                   Financial Audit: 1997 Consolidated Financial Statements of the U.S.
                   Government (GAO/AIMD-98-127, Mar. 1998).

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

                   Older Americans Act: Promising Practice in Information and Referral
                   Services (GAO/PEMD 91-31, Aug. 1991).




(713021)   Leter   Page 160                            GAO/NSIAD-99-100 Real Property Management
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, VISA and
MasterCard credit cards are accepted, also.

Orders for 100 or more copies to be mailed to a single address are
discounted 25 percent.

Orders by mail:

U.S. General Accounting Office
P.O. Box 37050
Washington, DC 20013

or visit:

Room 1100
700 4th St. NW (corner of 4th and G Sts. NW)
U.S. General Accounting Office
Washington, DC

Orders may also be placed by calling (202) 512-6000
or by using fax number (202) 512-6061, or TDD (202) 512-2537.

Each day, GAO issues a list of newly available reports and
testimony. To receive facsimile copies of the daily list or any list
from the past 30 days, please call (202) 512-6000 using a touchtone
phone. A recorded menu will provide information on how to obtain
these lists.

For information on how to access GAO reports on the INTERNET,
send an e-mail message with “info” in the body to:

info@www.gao.gov

or visit GAO’s World Wide Web Home Page at:

http://www.gao.gov
United States                       Bulk Rate
General Accounting Office      Postage & Fees Paid
Washington, D.C. 20548-0001           GAO
                                 Permit No. GI00
Official Business
Penalty for Private Use $300

Address Correction Requested
PAGE 163   GAO/XXXX-98-??? NAME OF DOCUMENT