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Military Base Realignments and Closures: Estimated Costs Have Increased and Estimated Savings Have Decreased

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Publisher: DIANE Publishing

Published: 2007

Total Pages: 26

ISBN-13: 9781422398661

The Department of Defense (DoD) is currently implementing recommendations from the 2005 Base Realignment and Closure (BRAC) round, which is the fifth round undertaken by DoD since 1988. The 2005 round is, by GAO's assessment, the biggest, most complex, and costliest BRAC round ever, in part because, unlike previous rounds, the Secretary of Defense viewed the 2005 round as an opportunity not only to achieve savings but also to assist in transforming the department. GAO's testimony addresses the following: (1) GAO's role in the BRAC process, and (2) how DoD's current cost and savings estimates to implement the 2005 recommendations compare to the 2005 Defense Base Closure and Realignment Commission's (the Commission) cost and savings estimates. This testimony is based primarily on the report GAO issued yesterday (GAO-08-159) on the overall changes to DoD's cost and savings estimates for the 2005 BRAC round. To analyze these changes, GAO compared the Commission's estimates in its 2005 report to DoD's estimates in its fiscal year 2008 BRAC budget submission. This testimony is also based on several reports GAO has issued on the implementation of selected recommendations, and GAO's prior work assessing the 2005 decision making process. GAO's work was performed in accordance with generally accepted government auditing standards.

Military Base Realignments and Closures

Author: United States Government Accountability Office

Publisher: Createspace Independent Publishing Platform

Published: 2018-01-15

Total Pages: 28

ISBN-13: 9781983853548

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Military Base Realignments and Closures: Estimated Costs Have Increased and Estimated Savings Have Decreased

Military Base Realignments and Closures

Author: Brian J. Lepore

Publisher:

Published: 2009

Total Pages: 21

ISBN-13:

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The Department of Defense's (DOD) cost estimates to implement recommendations from the most recent Base Realignment and Closure (BRAC) round have steadily increased each budget year since 2005. Our review of DOD's fiscal year 2010 BRAC budget indicates that DOD plans to spend more to implement BRAC 2005 recommendations compared to last year's BRAC budget. DOD's estimated one-time costs to implement this BRAC round increased by almost $2.5 billion from fiscal year 2009 to fiscal year 2010, bringing the total implementation cost estimate for this BRAC round to $34.9 billion. To place this increase in perspective, in September 2005, the BRAC Commission estimated that it would cost DOD about $21 billion over the 6-year implementation period whereas this estimate is now about $35 billion, an increase of nearly 67 percent. Our analysis shows that over 80 percent of the estimated $2.5 billion in cost increases are associated with 10 recommendations. Military construction costs accounted for the majority of the increase, although other factors such as information technology requirements also contributed to some of the expected cost increases. After DOD implements all of the BRAC 2005 recommendations, which the department is required to do by the statutory deadline of September 2011, our analysis of DOD's fiscal year 2010 budget estimates shows that net annual recurring savings for fiscal year 2012 and beyond will have decreased by almost $94 million to about $3.9 billion, compared to DOD's estimates in fiscal year 2009. As we have previously reported, we believe DOD's net annual recurring savings estimates may be overstated because they include dollar savings from eliminating military personnel positions without corresponding decreases in end-strength. DOD disagrees with our position. The $3.9 billion estimate is calculated using DOD's method, which we nonetheless believe overstates savings. However, we included these estimates for consistency. Our calculations also show that BRAC savings DOD expects to generate over a 20-year period from 2006 through 2025 have declined to $10.9 billion in constant fiscal year 2005 dollars, compared to $13.7 billion that we reported based on the previous year's BRAC budget. To place this decrease in perspective, in September 2005 the BRAC Commission estimated that DOD would save about $36 billion, nearly 70 percent more, over the same 20-year period. We provided DOD with a draft copy of this report to obtain agency comments. DOD concurred with the findings of our report and these comments are reprinted at the end of this report.

Military Base Realignments and Closures

Author:

Publisher:

Published: 2007

Total Pages: 24

ISBN-13:

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Military Base Realignments and Closures: Estimated Costs Have Increased While Savings Estimates Have Decreased Since Fiscal Year 2009

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Publisher:

Published: 2009

Total Pages: 24

ISBN-13:

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The Department of Defense's (DOD) cost estimates to implement recommendations from the most recent Base Realignment and Closure (BRAC) round have steadily increased each budget year since 2005. This BRAC round is the fifth such round undertaken by DOD since 1988 and, by our assessment, it is the biggest, most complex, and costliest BRAC round ever. With this round, DOD plans to execute hundreds of BRAC actions affecting over 800 defense locations and relocate over 123,000 personnel. Before it can realize savings from BRAC, DOD must first invest billions of dollars in facility construction, renovation, and other up-front expenses. To implement BRAC 2005, DOD plans to spend nearly $35 billion-an unprecedented amount, given that it has spent only about $25 billion to implement the four previous BRAC rounds combined. At the outset of BRAC 2005, the Office of the Secretary of Defense (OSD) indicated its intent to reshape DOD's installations and realign DOD forces to meet defense needs for the next 20 years. Moreover, both DOD and the BRAC Commission reported that their primary consideration in making recommendations for the BRAC 2005 round was military value. As such, instead of base closures, many of the BRAC 2005 recommendations involve complex realignments, such as designating where military forces returning to the United States from overseas bases would be located; establishing joint military medical centers; creating joint bases; and reconfiguring the defense supply, storage, and distribution network. The BRAC statute requires DOD to implement all BRAC 2005 recommendations by September 15, 2011.

Military Base Realignments and Closures

Author: United States. Government Accountability Office

Publisher:

Published: 2007

Total Pages: 0

ISBN-13:

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The 2005 Base Realignment and Closure (BRAC) round is the biggest, most complex, and costliest ever. DOD viewed this round as a unique opportunity to reshape its installations, realign forces to meet its needs for the next 20 years, and achieve savings. To realize savings, DOD must first invest billions of dollars in facility construction, renovation, and other up-front expenses to implement the BRAC recommendations. However, recent increases in estimated cost have become a concern to some members of Congress. Under the Comptroller General's authority to conduct evaluations on his own initiative, GAO (1) compared the BRAC Commission's cost and savings estimates to DOD's current estimates, (2) assessed potential for change in DOD's current estimates, and (3) identified broad implementation challenges. GAO compared the BRAC Commission's estimates, which were the closest estimates available associated with final BRAC recommendations, to DOD's current estimates. GAO also visited 25 installations and major commands, and interviewed DOD officials. Since the BRAC Commission issued its cost and savings estimates in 2005, DOD plans to spend more and save less, and it will take longer than expected to recoup up-front costs. Compared to the BRAC Commission's estimates, DOD's cost estimates to implement BRAC recommendations increased from $21 billion to $31 billion (48 percent), and net annual recurring savings estimates decreased from $4.2 billion to $4 billion (5 percent). DOD's one-time cost estimates to implement over 30 of the 182 recommendations have increased more than $50 million each over the BRAC Commission's estimates, and DOD's cost estimates to complete 6 of these recommendations have increased by more than $500 million each. Moreover, GAO's analysis of DOD's current estimates shows that it will take until 2017 for DOD to recoup up-front costs to implement BRAC 2005--4 years longer than the BRAC Commission's estimates show. Similarly, the BRAC Commission estimated that BRAC 2005 implementation would save DOD about $36 billion over a 20-year period ending in 2025, whereas our analysis shows that BRAC implementation is now expected to save about 58 percent less, or about $15 billion. DOD's estimates to implement BRAC recommendations are likely to change further due to uncertainties surrounding implementation details and potential increases in military construction and environmental cleanup costs. Moreover, DOD may have overestimated annual recurring savings by about 46 percent or $1.85 billion. DOD's estimated annual recurring savings of about $4 billion includes $2.17 billion in eliminated overhead expenses, which will free up funds that DOD can then use for other priorities, but it also includes $1.85 billion in military personnel entitlements, such as salaries, for personnel DOD plans to transfer to other locations. While DOD disagrees, GAO does not believe transferring personnel produces tangible dollar savings since these personnel will continue to receive salaries and benefits. Because DOD's BRAC budget does not explain the difference between savings attributable to military personnel entitlements and savings that will make funds available for other uses, DOD is generating a false sense that all of its reported savings could be used to fund other defense priorities. DOD has made progress in planning for BRAC 2005 implementation, but several complex challenges to the implementation of those plans increase the risk that DOD might not meet the statutory September 2011 deadline. DOD faces a number of challenges to synchronize the realignment of over 123,000 personnel with the completion of over $21 billion in new construction or renovation projects by 2011. For example, the time frames for completing many BRAC recommendations are so closely sequenced and scheduled to be completed in 2011 that any significant changes in personnel movement schedules or construction delays could jeopardize DOD's ability to meet the statutory 2011 deadline. Additionally, BRAC 2005, unlike prior BRAC rounds, included more joint recommendations involving more than one military component, thus creating challenges in achieving unity of effort among the services and defense agencies

Military Base Realignments and Closures

Author: Brian J. Lepore

Publisher: DIANE Publishing

Published: 2009-05

Total Pages: 54

ISBN-13: 143791330X

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Military Base Realignments and Closures: Higher Costs and Lower Savings Projected for Implementing Two Key Supply-Related BRAC Recommendations

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Publisher:

Published: 2008

Total Pages: 72

ISBN-13:

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Since the BRAC Commission issued its BRAC costs and savings estimates in 2005, DOD will spend more, save less, and take longer than expected to recoup up-front costs for the SS & D and DLR recommendations. Over the 2006-2011 implementation period, our analysis of DLA's data indicates that estimated net savings will be reduced by more than $1.8 billion compared to the BRAC Commission s estimate, with a net cost of about $222 million to DOD, because of increased estimated costs, decreased savings, and DLA s inclusion in the business plans of almost $243 million in expected savings that we believe should not be counted as BRAC savings. The $243 million in savings were to be achieved from implementing inventory reduction initiatives that were not directly the result of BRAC actions and would have occurred regardless of BRAC. While DLA asserts that these particular savings were enabled by the BRAC process, we believe that including savings unrelated to specific BRAC actions distorts and effectively overstates projected savings from implementing the BRAC recommendations. Our analysis further shows that the projected net annual recurring savings for both recommendations beginning in fiscal year 2012 have been reduced from $360 million to approximately $167 million, and the expected savings over a 20-year period ending in fiscal year 2025 have been reduced from almost $4.8 billion to about $1.4 billion. While some variances with initial estimates are to be expected as plans are refined, the magnitude of these variances is large and has resulted from a number of factors, such as the use of inaccurate or outdated data, misinterpretation of terms and specific data, and changes in operational requirements that occurred during the decision-making process for formulating the recommendations.

Military Base Realignments and Closures

Author: Brian J. Lepore

Publisher:

Published: 2009

Total Pages: 49

ISBN-13:

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The 2005 Base Realignment and Closure (BRAC) round is the biggest, most complex, and costliest BRAC round ever. In addition to base closures, many recommendations involve realignments, such as returning forces to the United States from bases overseas and creating joint bases. However, anticipated savings remained an important consideration in justifying the need for the 2005 BRAC round. The House report on the National Defense Authorization Act for Fiscal Year 2008 directed GAO to monitor BRAC implementation. Therefore, GAO assessed (1) challenges that might affect timely completion of recommendations, (2) any changes in DOD's reported cost and savings estimates since fiscal year 2008, and (3) the potential for estimates to continue to change. To address these objectives, GAO reviewed documentation and interviewed officials in the Office of the Secretary of Defense (OSD), the services' BRAC offices, and the Army Corps of Engineers; visited installations implementing some of the more costly realignments or closures; and analyzed BRAC budget data for fiscal years 2008 and 2009. DOD has made progress in implementing the BRAC 2005 round but faces challenges in its ability to meet the September 15, 2011, statutory completion deadline. DOD expects almost half of the 800 defense locations implementing BRAC recommendations to complete their actions in 2011; however, about 230 of these almost 400 locations anticipate completion within the last 2 weeks of the deadline. Further, some of these locations involve some of the most costly and complex BRAC recommendations, which have already incurred some delays and thus have little leeway to meet the 2011 completion date if any further delays occur. Also, DOD must synchronize relocating about 123,000 personnel with an estimated $23 billion in facilities that are still being constructed or renovated, but some delays have left little time in DOD's plans to relocate these personnel by the deadline. Finally, delays in interdependent recommendations could have a cascading effect on other recommendations being completed on time. OSD recently issued guidance requiring the services and defense agencies to provide status briefings to improve oversight of issues affecting timely implementation of BRAC recommendations. However, this guidance did not establish a regular briefing schedule or require the services to provide information about possible mitigation measures for any BRAC recommendations at risk of not meeting the statutory deadline. DOD's fiscal year 2009 BRAC budget submission shows that DOD plans to spend more to implement recommendations and save slightly less compared to the 2008 BRAC budget. DOD's 2009 estimate of one-time costs to implement this BRAC round increased by $1.2 billion to about $32.4 billion. Net annual recurring savings estimates decreased by almost $13 million to about $4 billion. Also, GAO's calculations of net present value, which includes both expected cost and savings over a 20-year period ending in 2025 and takes into account the time value of money, show that implementing the 2005 BRAC recommendations is expected to save $13.7 billion. This compares to an estimated $15 billion in net present value savings based on last year's BRAC budget and the BRAC Commission's reported estimate of about $36 billion. Although DOD is about 3? years into the 6-year implementation period, the potential remains for BRAC cost estimates to continue to increase, but the potential for changes in savings estimates is unclear. Greater than expected inflation and increased market demands for construction materials could cause estimated construction costs to increase, although the extent of this increase is uncertain given today's economic market conditions. However, the potential for changes in savings estimates is unclear because BRAC headquarters officials at both the Army and the Air Force told us they do not plan to update their savings estimates regardless of factors that may cause those estimates to change, and OSD is not enforcing its own regulation requiring them to do so. Hence, congressional and defense decision makers could be left with an unrealistic sense of the savings this complex and costly BRAC round may actually produce, an issue that could be important in considering whether another round of BRAC may be warranted.

Military Base Realignments and Closures

Author:

Publisher:

Published: 2009

Total Pages: 38

ISBN-13:

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As a result of a 2005 Defense Base Realignment and Closure (BRAC) recommendation, the Defense Logistics Agency (DLA) is charged with consolidating supply, storage, and distribution functions at 13 military service depot maintenance locations to streamline operations and save money. The BRAC Commission data indicate that these consolidations would generate net savings of nearly $1 billion through 2011 and about $137 million annually thereafter. Because these actions could affect depot maintenance operations, the conference report accompanying the National Defense Authorization Act for Fiscal Year 2008 directed GAO to assess implementation issues associated with the consolidations. GAO's objectives were to assess (1) DLA's progress and challenges to implement these consolidation actions and (2) the extent to which DLA's most recent cost and savings estimates related to these consolidations differ from those of the BRAC Commission. To meet these objectives, GAO visited three depot locations where consolidation actions had begun, interviewed service and DLA officials, and analyzed estimated cost and savings data. While DLA has made progress to consolidate supply-related functions at the 13 depot maintenance locations recommended by BRAC and has taken steps to minimize the risk to ongoing operations, some of the most difficult tasks are yet to be undertaken and pose implementation challenges for DLA. For example, the Army and DLA officials are still negotiating what specific functions and personnel will transfer to DLA and the information technology interfaces needed to consolidate DLA's and the services' supply inventories continue to evolve and have experienced delays. Nevertheless, DLA anticipates that the consolidation actions will be completed by the mandated September 2011 BRAC deadline for completing recommended actions. For the actions to be complete, DLA officials told GAO the military services must have transferred all related personnel positions to DLA and physically consolidated all applicable inventories with DLA. While personnel transfers are under way, DLA has not begun physically consolidating inventories. And, although DLA has taken several steps to mitigate risk to ongoing depot operations such as involving stakeholders in the decision-making process, ensuring high-level leadership to drive these transformational actions, and employing time-phased transfers, continued collaboration between the services and DLA and periodic monitoring by DOD are critical to ensure the timely completion of these BRAC actions. Compared to the BRAC Commission's 2005 cost and savings estimates, DOD expects to spend more and save significantly less by implementing the supply-related consolidation actions. DLA's current data indicate that the cost to implement the recommended consolidation actions has increased by about $158 million (378 percent) while estimated savings have decreased by $753 million (73 percent). Consequently, estimated net savings of about $82 million over the 2006-2011 BRAC implementation period are considerably less than the BRAC Commission's estimate of about $993 million. Further, net annual savings beyond 2011 are projected to be $52 million per year, rather than the Commission's $137 million estimate--an annual decrease of about $85 million (62 percent). Moreover, GAO found that DLA's most recent savings estimates are unrealistic because they are based on practices that count some savings that GAO believes are not attributable to BRAC actions, use 4-year-old data, assume an inventory reduction scenario that is unlikely to occur, and employ an overall methodology that has not been approved by senior-level officials. DOD's financial management regulation requires BRAC savings estimates to be based on the best projection of savings that will actually accrue, but GAO's analysis indicates that DLA could actually incur a net cost of $22 million during the implementation period if non-BRAC-related savings were removed from the estimate, compared to the $82 million in net savings that DLA currently projects. Although the potential exists for DLA to eventually realize savings over time as it assumes control over supply-related operations, updated savings estimates based on sound estimating practices would provide better information for congressional oversight and help maintain public confidence in the BRAC process.