[CPEO-IRF] BRAC costs and savings

[Lenny Siegel <lennysiegel@gmail.com>]

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

Government Accountability Office
GAO-08-341T
December 12, 2007

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 (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.

GAO has played two long-standing roles in the BRAC process. First, as
requested by congressional committees in the 1988 round or mandated by
law since 1990, GAO has served as an independent and objective observer
of the BRAC process and has assessed and reported on DOD's
decision-making processes leading up to proposed realignment and closure
recommendations. GAO reported in its assessment of the 2005 round that
DOD's decision-making process for developing its recommendations was
generally logical, well documented, and reasoned. However, GAO
identified some limitations with cost and savings estimates, some BRAC
recommendations having lengthy payback periods, and some with limited
savings relative to implementation costs. GAO's second role has focused
on reviewing the implementation of realignment and closure actions once
the BRAC recommendations became effective in November 2005. GAO has
issued several reports on DOD's implementation of its 2005 BRAC
recommendations. GAO will continue to review the implementation of the
2005 BRAC recommendations, including a final report to be issued within
1 year after the end of the 6-year BRAC implementation period, which
ends in September 2011. DOD plans to spend more and save less than
originally estimated for the 2005 BRAC round. DOD's cost estimates to
implement the 2005 recommendations, as reported in its fiscal year 2008
BRAC budget submission, have increased by 48 percent, from $21 billion
to $31 billion, for the 6-year implementation period. Nearly two-thirds
of the expected cost increase is due to increased military construction
costs. For example, the expected military construction cost to close
Fort Monmouth, New Jersey, has increased by more than $550 million,
largely because the Army decided to build new facilities instead of
renovating existing facilities at one location and share existing
facilities at another location. GAO believes there is potential for
further cost increases due to uncertainty in whether the Army's new
initiative designed to reduce construction costs will achieve the
planned results. While projected costs have increased, projected net
annual recurring savings have decreased about 5 percent, from $4.2
billion to $4.0 billion annually. DOD attributed the decrease in its
savings estimate primarily to changes in initial assumptions or plans.
GAO believes that DOD's reported savings estimates may be overstated by
$1.85 billion largely because the estimates include savings from
military personnel entitlements without a corresponding reduction in end
strength. As a result of the increases in costs and decreases in
savings, GAO's analysis shows that accumulated savings are projected to
offset accumulated costs in 2017 rather than 2013 as projected by the
Commission. The time required for accumulated savings to offset
accumulated costs would increase to 2025 with the exclusion of the
expected savings from military personnel entitlements and Cannon Air
Force Base, New Mexico, that GAO questions. While the overall payback
period for DOD's BRAC recommendations is less than 20 years, the number
of individual recommendations that are not expected to pay back within
20 years has increased from 30, as estimated by the Commission, to 73,
based on DOD's fiscal year 2008 budget submission.


...

For the original summary plus a link to the full Testimony, go to
http://www.gao.gov/docsearch/abstract.php?rptno=GAO-08-341T.
-- 


Lenny Siegel
Executive Director, Center for Public Environmental Oversight
a project of the Pacific Studies Center
278-A Hope St., Mountain View, CA 94041
Voice: 650/961-8918 or 650/969-1545
Fax: 650/961-8918
<lsiegel@cpeo.org>
http://www.cpeo.org





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