DERA Devolvement Report

[Aimee Houghton <aimeeh@igc.org>]

From: Aimee Houghton <aimeeh@igc.org>

 *************** WARNING ****************

This is a VERY LONG file. I suggest downloading the document first and 
then start reading.

Aimee Houghton
__________________________________

 Report to the Congress on the Devolvement of the
 Defense Environmental Restoration Account (DERA)

 March 31, 1996

CONTENTS

SECTION PAGE
Executive Summary............................................................I
1.0 Introduction.............................................................1
2.0 Answers to Congressional Questions.......................................3
 2.1 Ensuring Consistent funding and accountability......................4
 2.2 Monetary Savings and Administrative Efficiencies...................5
 2.3 ODUSD(ES) Funding and Staffing Reductions.......................6

LIST OF TABLES

TABLE PAGE
Comparison of Attributes of OSD Account with Four Seperate
Accounts (Component Cleanup Approriation) Based on Component
TOA Alternative.............................................................2

LIST OF FIGURES (not included in this electronic version)

FIGURE PAGE
1 Account Comparison Before and After Devolvement...........................1

APPENDIX

A. Benefits of Devolvement to Four Separate Accounts
B. Background of the Defense Environmental Restoration Program
C. Conference Report Language
D. Legislative Proposal

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EXECUTIVE SUMMARY

This report was prepared in response to questions from Congress on a proposed
legislative change to devolve the Defense Environmental Restoration Account
(DERA) from a single account at the Office of the Secretary of Defense 
(OSD) to a separate account for each Military Department and one DoD-wide
account. Congress will continue to have the same level and extent of
visibility into DERA as it did prior to devolvement. Indeed, Congress' 
visibility into DERA increased dramatically in FY96, when DoD introduced 
the Relative Risk Site Evaluation process into the cleanup program. Congress
now receives a list of all DERA projects by high, medium and low relative risk
categories. This effort will continue under devolvement. In relation to 
devolvement the conferees requested the following information:

 how DoD will ensure consistent funding and accountability
 identification of monetary savings and administrative efficiencies
 funding and staffing reductions for the office of the Deputy Under 
 Secretary of Defense for Enviromental Security [ODUSD(ES)]

CONSISTENT FUNDING AND ACCOUNTABILITY

 The Military Departments and OSD will ensure consistent funding 
and accountability through actions accomplished through devolvement. 
The primary benefit of devolvement is that it will bring to bear all of 
the institutional controls of the DoD's internal budget development and 
review process conducted by the Military Departments and OSD. At the 
Military Department level, incorporation of DERA into the Planning, 
Programming and Budgeting System (PPBS) process will allow competition 
for resources, and encourage program managers to consider fiscal 
constraints when negotiating restoration schedules. At the OSD level, 
strong oversight through the PPBS process will improve outyear planning 
and ensure consistent and comparable data from the military departments. 
OSD will accomplish this through DoD Directives, establishing goals, 
reviewing Military Department plans to meet the goals and monitoring 
execution of the plans. Other benefits include: aligning responsibility,
accountability, and funding within each department, providing Departments 
with access to appropriated funds earlier in the fiscal year, and 
focusing DoD oversight on evaluating the Military Departments' 
performance at achieving DoD established goals. 

MONETARY SAVINGS AND ADMINISTRATIVE EFFICIENCES

 Devolvement will streamline the flow of funds and increase the ownership
of those funds creating some administrative efficiencies. The changed 
account structure is not expected to reduce near-term funding requests 
for DERA, but support the continuation of the recent trend toward stable 
funding and reduce, or eliminate, any unanticipated cost growth in the 
future, resulting in more timely cleanup of sights. ODUSD(ES) will 
actively manage the program through policy making, goal setting, and
measurement of performance leading to a consistent program appropriately 
sized to deal with the environmental restoration problems caused by 
past activities.

FUNDING AND STAFF REDUCTIONS

 ODUSD(ES) is responsible for the program and policy development, 
strategic planning , analyzing data from the Departments to evaluate 
adherence to DoD established policies and goals. In FY1995, the 
ODUSD(ES) expended $5.64 million in DERA funds. ODUSD(ES) budgeted 
$3.98 million for FY1996 and the outyears, but because of Senate Armed 
Services Committee report language (Report 104-112) decreasing 
ODUSD(ES) funding by $1 million, ODUSD(ES) has reduced planned
expenditures for FY1996 to $2.98 million, and has budgeted $2.98 million 
for FY 1997 and beyond. Further cuts would reduce the capacity to 
perform adequate oversight and provide effective direction.

 Many factors were involved in the analysis of alternatives 
leading to devolvement. Reducing risk to human health and the 
environment, as a basic objective of the Defense Environmental Restoration
Program (DERP), was paramount. Other factors, such as stakeholder 
involvement, responsibilities for building and reviewing the budget, 
and effects on relationships with regulators were also considered.

 Based on the answers to the conferee questions in the FY 1996 
Department of Defense Authorization Act, DoD recommends that Congress 
approve the legislative proposal to devolve DERA (Appendix D). The 
proposal is contained in DoD's FY 1997 Omnibus Bill package.

 ------------

1.0 INTRODUCTION

 In a May 3, 1995 memorandum, the Deputy Secretary of Defense 
(DEPSECDEF) devolved the Environmental Restoration, Defense (ER,D) 
Account, also referred to as the Defense Environmental Restoration 
Account (DERA), to the Department of Defense (DoD) Components. Full 
implementation of devolvement requires modification of the statutory 
framework of DERA. Figure 1 shows the basic difference in account 
structure before and after devolvement. 

 The Conference Report (104-450) accompanying the fiscal year (FY) 
1996 DoD Authorization Act states that if DoD intends to pursue legislation 
to authorize devolvement for FY 1997, the Secretary of Defense should 
submit a report to Congress no later than March 31, 1996. The requirements for
that report are describes in the Conference Report as follows:

 The conferees are concerned the devolution of DERA would impede 
congressional oversight of the management and use of funds authorized 
for and appropriate to the account. In relation to devolvement, the 
conferees desire a thorough description of the means by which the Department of
Defense would ensure consistent funding and accountability for environmental 
restoration activities. Moreover, the Department of Defense needs to identify
the monetary savings and administrative efficiencies associated with 
DERA devolvement. The Department of Defense must also specify funding 
and staffing reductions for the Office of the Under Secretary of 
Defense for Environmental Security that would result from DERA devolution.

 This report will meet the requirements of the Conference Report and 
consists of the following sections. Section 2.0 addresses the issues and 
questions mentioned above. Appendix A summarizes the benefits for DoD 
and Congress for devolvement to four separate accounts. Appendix B provides 
a brief background of the Defense Environmental Restoration Program 
(DERP). The Conference Report language is included in Appendix C and 
Appendix D is the legislative proposal to devolve DERA.

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2.0 ANSWERS TO CONGRESSIONAL QUESTIONS

 Since 1984, the Defense Environmental Restoration Program (DERP) 
has had a large growth in requirements, greatly increased management 
attention, and significantly improved relationships with regulators and 
stakeholders. Bearing in mind that DERA is a large centrally managed 
account, and recognizing the maturity of DoD's cleanup program, DoD 
decided to analyze the account structure to determine if a different 
method might increase accountability and efficiency. The Office of the 
Deputy Under Secretary of Defense for Environmental Security 
[ODUSD(ES)] participated with the Under Secretary of Defense 
(Comptroller) [US(C)] and the Director of Program Analysis and Evaluation
(DPA&E) to conduct the analysis.

 Several alternatives were analyzed from many perspectives. 
Alternatives included: the "original system" where the Components 
submitted unconstrained requirements to the OSD, who developed the 
current and outyear budgets and distributed funds to the Components; the 
"current system" where the Components are given a funding target in the 
Future Year's Defense Plan (FYDP) while the account remains in the 
Office of the Secretary of Defense (OSD), who develops the current and outyear
budgets and distributes funds; an OSD account in the current year with 
Components specific Total Obligatory Authority (TOA) in the outyears; a 
separate account for each of the three Military Departments and a 
DoD-wide account; and incorporating DERA into the Components Base 
Operations account. The perspectives included each phase of the program 
development cycle; that is the planning, programming, budgeting, and 
execution phases.

 Devolvement to four separate accounts was selected as the best 
option for the environmental restoration program for a number of reasons. 
By using the full power of the DoD's planning, programming, and budgeting 
system to determine the appropriate level of investment based on a 
review of requirements, the full power of the PPBS system is brought to 
bear on the program. In addition to better and more accurate budgeting, 
the oversight by the OSD will be more clearly focused on results. To 
protect current activities from bearing the burden of paying for restoration 
of contamination related to past operations and practices, the DERA 
account has been "fenced." The fence on appropriated funds in the 
Component or DoD-wide account will remain in effect to prevent erosion 
of the appropriated funds to pay other bills or migration of funds into 
the account. Important considerations that pertain to direction and 
consistency of the program, internal and external perceptions, and 
acceptance on the part of regulators and other stakeholders were considered 
in the decision to devolve to four separate accounts. Devolvement will 
not impede Congressional oversight of the management and use of funds 
authorized and appropriated to DERA.

2.1 ENSURING CONSISTENT FUNDING AND ACCOUNTABILITY

 Over the last several years, DoD and the Components have made great 
strides in moving DoD cleanup forward. The rate at which sites are 
proceeding to the remedial action phase is at an all time high. Devolvement 
is considered to be another step by OSD to make the program as effective 
as possible. With devolvement, OSD is putting responsibility, 
accountability and funding together within each Military Department. 

 Full integration of the environmental restoration program into the 
planning, programming and budgeting system (PPBS) at the Component level 
will bring the institutional checks and balances of that system to bear. 
Including environmental restoration in the program and budget reviews by the
Components' financial managers will allow restoration requirements to compete 
with other mission requirements, improve the planning and execution of 
the restoration program, thus minimizing the requirements to make last 
minute adjustments to mission requirements in order to fund restoration
shortfalls. In addition, it will encourage environmental restoration program 
managers to consider fiscal realities when negotiating restoration 
schedules. In order to be competitive with other mission requirements, 
environmental restoration will need to demonstrate accountability and 
efficiency. The increased scrutiny and application of proven financial 
management procedures will lead to program stability and improved 
accountability and efficiency.

 Inclusion of the environmental restoration account within each 
Department will lead to broader support within each Department on the 
need for environmental restoration. This inclusion increases the 
military chain-of-command's awareness of the environment and its 
responsibility for environmental restoration.

 By creating separate appropriations for the Military Departments 
and maintaining a central DoD-wide appropriation, funds will be 
dispensed more quickly and provide all stakeholders with the clearest
view of the Component environmental restoration programs. Creating four 
separate accounts limits the flexibility to move funds during 
execution; however, there have been very few reprogramming actions
among Components and those few have only involved a minor percentage of 
the appropriated funds.

 As part of the PPBS, ODUSD(ES) establishes program goals based on 
reduction of risk to human health and the environment. These goals are 
cornerstones on which the Components build their plans for execution of 
the program. The Component plans are reviewed. to ensure they are built toward
achieving the established goals. Adjustments to the Component plans are made, 
if necessary, and then are combined to formulate the DoD budget. After 
the DoD budget submission and Congressional appropriation, the Components 
execute the program as established in their plans. ODUSD(ES) and the
Components use a set of performance measures to evaluate the execution of 
the plan against the established goals. Reporting requirements for 
these reviews have been expanded to collect data concerning funding, 
costs to complete the program execution, and reduction of risk to human 
health and the environment. Based on this evaluation, adjustments to 
the program are made through program management guidance from OSD to 
the Components or through refining of the goals of the program.

 ODUSD(ES) will continue to provide leadership and program development 
guidance to the Components under devolvement. In its leadership and 
oversight roles, ODUSD(ES) will serve as the central program advocate 
to maintain and further enhance the credibility of the program by assuring
accountability. ODUSD(ES), in its oversight role, will ensure standardization 
across the Components and the consistency of the restoration program. 
ODUSD(ES) will provide oversight of long-term and short-term planning 
and execution of the DERP, with clear goals and guidance to the Components.
Effective performance measures and other program management indicators have 
been developed and are used to evaluate whether the goals of the DERP 
are being met and the pertinent guidance implemented.

 Improved data gathering and management activities (since 1992) have 
served many purposes. Under devolvement, ODUSD(ES) will use the data to 
determine the magnitude of the program, to measure progress in cleaning 
up sites and to manage the program. Comparable data from site-to-site and
Component-to-Component will aid in establishing consistency and accountability.

 Program oversight includes regular examination of both financial 
and management information, which could be incorporated into mutually 
supportive management information systems. ODUSD(ES) conducts in-progress 
reviews to measure progress toward annual goals, as depicted in the execution
plan that accompanies the President's budget. The execution plan constitutes 
a step toward meeting the goals of the program set forth by the OSD. If 
a Component does not plan to meet the established goals, institutional 
enforcement mechanisms may be applied. Such circumstances will be examined 
for their effect on strategic planning and the following year's budgets.

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2.2 Monetary Saving and Administrative Efficiencies

 The creation of separate appropriations avoids the current problem 
of making appropriate and timely decisions about allocations of funds 
among the Components when the DoD DERA budget request or recissions are 
made during the year of execution. Congress will have the clearest view of 
each Component's program and the performance of each of those programs 
and consequently be able to make more informed authorization and 
appropriation decisions. Since devolvement is only a different account 
structure, it is not expected to reduce near-term funding requests for 
DERA, but should support the continuation of the recent trend towards 
stable funding and reduce, or eliminate, any unanticipated cost growth 
in the future, resulting in more timely cleanup of sites. As the Components
identify requirements they will continue to look for the most cost effective 
method for fulfilling those requirements to avoid funding environmental 
restoration at the expense of mission requirements.

 By subjecting environmental restoration requirements to the scrutiny 
of financial managers during the strategic planning and budgeting process 
within the Components, environmental restoration program managers are 
motivated to consider fiscal realities when negotiating restoration schedules.
Devolvement creates new incentives for cost savings because the components 
will be spending funds from their own accounts as opposed to an OSD 
account. Financial managers will be better able to apply proven financial 
management techniques and challenge the program to increase efficiencies.
Under devolvement, more departmental control systems are applied to the 
planning and execution of the program. Once Component budgets are finalized, 
pass through all levels of scrutiny, and become authorized and 
appropriated, the flow of funds from the DoD Comptroller to the executing
organization will be greatly streamlined. 

 Reporting obligation and outlay rates, as well as indicating how those
obligations and outlays affect restoration progress by phase and relative risk
category are very basic but effective program management and financial 
management tools. Reporting data in a timely and consistent manner, by month, 
at the end of the fiscal year, and during the annual budget review contributes
greatly to effective evaluation of performance measures for DoD's internal 
management purposes. The ability reconcile information in the annual 
report to Congress with DERA budget and execution data enhances the 
credibility of information in both reporting mechanisms. Integrating the 
management data with the budget system, such as the DERA cost report 
that the Defense Finance Accounting Service is currently implementing, 
will provide more timely and accurate information. 

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2.3 ODUSD(ES) Funding and Staffing Reductions

 ODUSD(ES) creates the program policies, goals, expectations and 
performance measures to oversee the execution of DERP. These policies, 
goals, expectations and measures result from the program requirements 
levied by the Congress, regulatory agencies and senior DoD officials. Since 
1992, staff has been added to cover increasing responsibilities in the 
areas of program and policy development, strategic planning, analyzing 
data that evaluates adherence to broad policies and goals, reviewing the
extent to which Component programs have achieved stated goals, developing 
and instituting changes to policies and goals, if necessary, and 
answering congressional inquiries.

 DoD maintains the policy and oversight function at the OSD level, 
which will prevent the Components from setting individual goals and 
expectations that may be inconsistent with Congressional, regulator or 
DoD intentions. The ODUSD(ES) staff will continue to develop and maintain 
DoD policy and goals, and measure Component progress against those goals, 
regardless of the status of devolvement. Under devolvement, there 
continues to be a central DoD office for oversight of the management and
use of funds at the aggregate policy or program issue level. Questions that 
deal with a particular Service will be answered specifically by that 
Service. ODUSD(ES) will continue to communicate the status of the program 
to regulators, communities, and other stakeholders. The staff monitors progress
of Base Realignment and Closure (BRAC) cleanup against specific BRAC goals as 
well as active base restoration activities against specific DERA 
restoration goals. These activities will still include review of Component 
program and budget submissions for adherence to policy and goals, review of 
program execution, preparing the annual report to congress, preparing 
supporting legislation for the DoD Authorization and Appropriations bills, 
and commenting on environmental legislation, such as Superfund 
reauthorization. Other responsibilities of the ODUSD(ES) staff include: 
expanding stakeholder involvement and Superfund reauthorization.

 The Cleanup within ODUSD(ES) originally had only twelve professionals 
and two support staff. Two of the twelve professional positions have been 
eliminated and the cleanup office is now staffed to operate in a devolved 
environment. This equates to a 17% reduction professional staff. While the
nature of ODS's oversight changes under devolvement, the quantity of work 
changes little. Indeed, in the transition to devolvement, OSD'S workload has 
increased. In FY 1995, ODUSD(ES) expended $5.64 million in DERA funding. 
ODUSD(ES) budgeted $3.98 million for FY 1996 and the outyears, but because 
of Senate Armed Services Committee report language (Report 104-112) decreasing
ODUSD(ES) funding by $1 million, ODUSD(ES) has reduced planned expenditures 
for FY 1996 to $2.98 million, and has budgeted $2.98 million for FY 1997 
and beyond. Further cuts would reduce the capability to perform 
oversight and conduct activities to maximize the performance of the program. 

 As described above, the oversight functions are many. ODUSD(ES) 
activities that are curtailed by devolvement are offset by a 
significantly larger oversight role intended to ensure that Components
fulfil their obligations in the management of the DERP. ODUSD(ES) quality 
assurance and quality control functions are critical in identifying 
activities that could lead to divergent Component programs; inappropriate 
realignment of funds into or out of the restoration accounts; and proper 
adherence to the covenants of the program, protecting human health and 
the environment. Evaluation of performance measures and other program 
management indicators requires substantial effort. Since regulators and
other stakeholders consider the environmental restoration program a unified 
activity, rather than individual programs of each Component, OSD must 
continue to plan, oversee, and defend the program from an overall DoD 
perspective and provide information on implementation to those stakeholders.

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 APPENDIX A

BENEFITS OF DEVOLVEMENT TO FOUR SEPARATE ACCOUNTS

 Devolvement causes a number of actions to occur that have direct and 
indirect benefits to DERP. Some of those actions are:

 Integrating environmental restoration into the Planning, Programming 
 and Budget System (PPBS) process of each Component;
 - aligning responsibility, accountability, and funding within each 
 Department;
 - computing restoration accounts within each Department;
 providing access to restoration funds earlier in the process;
 focusing ODUSD(ES) oversight;
 building broad overall consensus within Components on the need for 
 environmental restoration;
 providing an opportunity to reward good performance;
 allowing better outyear planning when combined with stable funding.

 Full Integration of Environmental Restoration Into the Planning, 
Programming and Budgeting System Process. 

 Before devolvement, each Component was given a TOA for all of its 
programs. DERA funding, being in a single account at OSD, was distributed 
to the Components above and beyond their TOA. The DERA funds were "fenced" 
from all other DoD programs and could not be used to make up shortfalls.
In that sense, DERA funds were considered separate from, and not a part of, 
Military Department TOA. However, if requirements exceeded resources, 
the Military Departments were required to provide funding.

 The single greatest benefit to devolution is that fir the first time 
the environmental restoration program is fully integrated into the DoD 
PPBS process. It places environmental restoration into the mainstream
resource allocation decision process beginning at the Component level making 
it an internal program of the Components. It also gives the environmental 
restoration program the full scrutiny applied to the overwhelming 
majority of other DoD programs. Decisions to increase or decrease funding for
environmental restoration are considered with all other requirements of the 
Components. This results in consensus from all program managers in resource 
allocation decisions. These allocation decisions must still pass the 
scrutiny of programming and budget reviews within the OSD. Allocations will 
have the full backing, understanding and active participation of not 
just the environmental constituents, but of the military and civilian 
leadership within the Component. Any increases or decreases to environmental 
restoration funding will be fully understood by the Components.

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Aligns Responsibility, Accountability, and Funding

 Prior to devolvement, responsibility for program execution and 
accountability for meeting program goals and objectives rested with the 
Components, but funding remained the province of ODUSD(ES). The 
Components submitted environmental restoration funding requirements to 
ODUSD(ES). ODUSD(ES) reviewed the requirements and either reallocated 
existing DERA funds to cover existing shortfalls, or more commonly 
sought additional funding for the program, either from within OSD and
more recently, from within the Military Departments.

 With devolvement, responsibility, accountability and funding are 
all under the individual Components. Each Component evaluates whether 
there is sufficient funding for environmental restoration to support
cleanup based on relative risk, or to meet the commitments in signed legal 
agreements with regulators. Each Component builds plans to meet the 
goals established by OSD and is accountable for executing those plans.

 The Components have always executed the program, actually done the 
cleanup work, and dealt directly with regulators and community leaders 
on cleanup of contamination at military bases. The Components have 
signed agreements with the federal and state regulators, requiring the 
commitment of future funding. With devolvement, the Components will 
have better input to funding decisions throughout the PPBS process 
because their agreements should consider both the requirements to
restore the environment and the availability of resources to accomplish 
that restoration.

 Devolvement of environmental restoration means that cleanup funding 
is now an internal cost to the Components. The funding will remain fenced 
in the year of execution to prevent the restoration program from being 
used to makeup for shortfalls in other areas. The management scrutiny by OSD 
in the planning and programming phases will prevent the program from 
being used as a bill payer for other programs before the year of execution.

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Provides Early Access to Funds at the Beginning of the Fiscal Year

 After the President signs the annual DoD Authorization and 
Appropriation bills prepared by the Congress, the Office of Management 
and Budget and the Office of the Secretary of Defense Comptroller begin 
a series of actions to distribute the new fiscal year funds to the 
Components. Before devolvement, ODUSD(ES)was required to allocate 
Congressional changes in the funding and incorporate other management 
adjustment with the funds distribution. This process has taken up to
two months. With devolvement, environmental restoration funding will go 
directly to the Components. This will shorten allocation timelines and 
should improve overall execution performance.

 ***********

 APPENDIX B

BACKGROUND TO THE DEFENSE ENVIRONMENTAL RESTORATION PROGRAM

 Existing laws and regulations require DoD to properly address 
contaminated sites based on procedures, requirements, and standards 
specified in those laws and regulations. In recognition of the effect on DoD 
of the laws and regulations, the FY1984 Defense Appropriations Act provided 
funding for the restoration program and initiated environmental restoration 
activities at FUDS. In October 1986, Congress passed the Superfund 
Amendments and Reauthorization Act (SARA), which formally established DERA 
and authorized the Secretary of Defense to carry out the restoration program.
Supported by DoD, some members of Congress asserted that the costs of 
environmental could not, and should not, compete with requirements 
related to the readiness mission of the DoD. To protect current activities 
from bearing the burden of paying for restoration and contamination related 
to past operations and practices, the DERA account has been "fenced." 
While the fence is written as a prohibition against moving DERA funds 
into other accounts during execution, the fence has the effect of 
protecting the entire operations and maintenance account from being 
available. Under a devolved program, restoration requirements first 
compete at a Service level and then at the DoD level, but the fence 
would remain around the separate environmental restoration accounts 
providing the same protections subsequent to appropriation.

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Basic Tenet of Risk Reduction Remains Unchanged

 The objective of the restoration program has always been to reduce 
the risk to human health and the environment from contamination from 
past DoD activities. In 1995, OSD instituted its relative risk site 
evaluation framework to aggressively manage risk reduction efforts 
consistently across the Components. This in keeping with the original 
Congressional concern that the program be driven by the requirement to 
reduce the risk to human health and the environment. In addition, the 
relative risk concept is used to sequence restoration. More serious 
threats to human health and the environment carry more weight and are 
scheduled for restoration before lesser threats, to the extent consistent
within legal requirements. Lower risks are moved in the sequence for 
restoration where budget constraints, slower technical progress on 
higher risk sites, or engineering and business judgment dictate. 

 In the early years of the restoration program, risk to human health 
and the environment was not accepted as a traditional responsibility of 
DoD and projects based on this requirement were not competitive for 
budgeting priority within Components. Over the years, the Components have
increasingly become committed to the mission of minimizing the risk to human 
health and the environment. Civilian and military leaders have advanced 
to their current positions while living day to day with the operation 
of the environmental restoration program. The military chain-of-command,
from the base level environmental coordinator to senior policy decision 
makers in the Pentagon, has increased its awareness of the relationship 
between the environment mission requirements to maintain mission 
readiness, the environment must be protected.

External Factors

 In addition to being more visible internally, environmental 
restoration has significantly improved its external visibility. Other 
stakeholders, in addition to regulators, are now deeply involved in the 
process to cleanup military installations. Restoration Advisory Boards 
(RABS) are an integral part of the program. A RAB is a group consisted 
of DoD, regulators, and community members formed to act as a forum for 
discussion and exchange of information between agencies and the community 
and to provide an opportunity for stakeholders to review progress and 
participate in dialogue with the decision makers at DoD installations 
(and formerly used defense sites) undergoing restoration activities. RABs
are involved in reviewing and commenting on relative risk site evaluations 
which lead to development of restoration program requirements. Staying 
attuned to public concerns about the cleanup program helps create 
meaningful dialogue on the program.

 The climate surrounding the program has changed substantially since 
1986. From a regulatory perspective, the program has matured from having 
an adversarial relationship with the regulators to a relationship that 
fosters partnering. Regulators are no longer dictating terms of federal 
facility agreements. The process of negotiating federal facility 
agreements is now more good faith negotiation and, in many cases, 
compromising to reach a mutually acceptable form of agreement. The recent
discussions of the Federal Facility Environmental Restoration Dialogue 
Committee are encouraging flexible milestones and priority setting.

The Planning, Programming and Budgeting System

 DoD will ensure appropriate visibility and commitment of necessary 
resources to accomplish the activities of the PPBS. Before 1992, the 
management and oversight of the program by OSD consisted of performing 
of activities for the PPBS process including generating projections for 
program requirements for the budget and FYDP years. Management and 
oversight included promulgation of policy and management guidance and 
conduct of quarterly in-progress reviews during the year of execution. 
The reviews focused primarily on the status of sights and obligation of 
funds. Beginning in 1992, OSD increased the oversight of the restoration 
program to include conducting more involved planning, programming and 
budgeting activities. The methods by which the Components establish
program requirements and the process for review of those requirements by 
OSD have been significantly refined since the inception of the program.

 ODUSD(ES) establishes program goals based on reduction of risk to 
human health and the environment. These goals are the cornerstones upon 
which the Components build their plans for execution of the program. 
The Component plans are reviewed to ensure they are built toward achieving 
the established goals. Adjustments to the Component's plans are made, if 
necessary, and are then combined to formulate the DoD budget. After the 
DoD budget submission and Congressional appropriation, the Components 
execute the program as established in their plans. ODUSD(ES) and the
Components use a set of performance measures to evaluate the execution of 
the plan against the established goals. Reporting requirements for these 
reviews have been expanded to collect data concerning budgets, costs to 
complete the program execution, and reduction of risk to human health
and the environment. Based on this evaluation, adjustments to the program 
are made through program management guidance from OSD to the Components 
or through refining of the goals of the program.

 Prior to devolvement, the Components developed their restoration 
requirements separately from the mission requirements. Once the 
restoration requirements were identified, the Components compared their 
requirements to the resources available. If a Component needed additional 
resources for restoration, then the Component had to reduce mission 
resources to fund the requirements. DoD added resources to restoration 
in the late 1980s and the early 90s. So even before devolvement, restoration
competed with mission requirements for Defense resources.

 With the expanded management scrutiny, growth in requirements, and 
maturity of the program, DERA should be managed like other DoD programs 
contained in Military Department TOA.

Alternatives and Analysis Leading to Devolvement

 The external and internal factors discussed above affecting the 
program were all considered in the analysis leading to the decision to 
devolve. A multi-disciplinary, multi-service team was convened in the fall 
of 1994 to review DERP and BRAC environmental restoration program. The team 
was tasked to address the following topics: obligation and outlay rates 
for remediation activities; growth in spending; annual change in number 
of sites; cost to complete restoration activities; a plan to devolve,
including modifications to existing policies and procedures, identification 
of other steps that would be required to devolve, and changes in oversight 
tools that would be required for effective oversight. The team looked 
at several options for devolvement and met regularly to discuss the pros 
and cons of each. Discussions included comparing the management 
structure under devolvement with that of other similarly managed programs. 
The team approach brought to bear the ideas, concerns and strengths of
each group involved in the process. Table 1 shows the differences between 
pre-devolvement and post-devolvement in distinct aspects of the DoD 
program management structure. The decision to devolve was made by the 
DEPSECDEF on May 3, 1995

 Under devolvement each Service receives its own transfer 
appropriation. The FUDS portion of the program will stay in the ODUSD(ES) 
account in FY 1997. The Army will remain Executive Agent but should not 
be responsible for the costs of restoration of contamination which they did 
not generate. The Army will continue to act as the executing agency for 
the Agency for Toxic Substances Disease Registry (ATSDR) program and the 
executive agent for the Defense State Memorandum of Agreement (DSMOA) 
program. This will make each Service account depict the requirements for that
Service only. At the end of the analysis that led to devolvement, the funds 
in the single OSD account were distributed to the Services using the FYDP 
estimates submitted by the Services and reconciled by ODUSD(ES). The FY 
1997 budget submissions from the Services and OSD are based on
devolvement.

 -----------

 Table 1

COMPARISON OF ATTRIBUTES OF OSA ACCOUNT WITH FOUR SEPARATE ACCOUNTS
(COMPONENT CLEANUP APPROPRIATION) BASED ON COMPONENT TOA
ALTERNATIVE

DEFENSE PLANNING GUIDANCE
Central Account (Before Devolvement)
 OSD establishes program goals
Component Restoration Appropriation (After Devolvement)
 OSD establishes program goals

PROGRAMMING
Central Account (Before Devolvement)
 Requirements compete for increased funding in OSD
 Components submit to ODUSD(ES)
 ODUSD(ES) officially submits to OSD
 OSD reviews central account
 ODUSD(ES) functional lead/Components assist
 OSD adjusts central account
Component Restoration Appropriation (After Devolvement)
 Requirements compete for funding with other Component programs
 Components include in POM submission
 OSD and ODUSD(ES) review like other programs
 OSD lead/ODUSD(ES) and Components assist
 OSD adjusts Components accounts

BUDGET BUILD
Central Account (Before Devolvement)
 Component Program Manager submits budget to ODUSD(ES); no Financial Management review in Component
 ODUSD(ES) submits budget to USD(C)
Component Restoration Appropriation (After Devolvement)
 Component Financial Management reviews budget
 Component includes in budget submission as a separate account

OSD/OMB BUDGET REVIEW
Central Account (Before Devolvement)
 USD(C)/OMB review validity, execution, and other factors
 ODUSD(ES) defends with Component backup
 PBD reflects full review; FYDP updated for central account
Component Restoration Appropriation (After Devolvement)
 USD(C)/OMB review like all other programs
 Components defend with ODUSD(ES) backup
 PBD sets Component funding level in FYDP

PRESIDENT'S BUDGET
Central Account (Before Devolvement)
 ODUSD(ES) assembles Component input and submits to USD(C)
 USD(C) submits through OMB to Congress; as part of defense-wide O&M J books
 ODUSD(ES) testifies with Component backup
Component Restoration Appropriation (After Devolvement)
 Component prepares and submits budget through OSD/OMB
 Components prepare J books and submit through OSD and OMB to Congress as part of O&M
 J books
 ODUSD(ES) overview with Component specific testimony

CONGRESSIONAL ACTION
Central Account (Before Devolvement)
 Central ER,D authorization and appropriation
Component Restoration Appropriation (After Devolvement)
 Component ER authorization and appropriation

EXECUTION
Central Account (Before Devolvement)
 ODUSD(ES) distributes among Components
Component Restoration Appropriation (After Devolvement)
 Allocation goes to Components: no inter-Component transfer is possible

 *************

NATIONAL DEFENSE AUTHORIZATION ACT FOR FISCAL YEAR 1996
CONFERENCE REPORT
S1124

Restriction on devolving the Defense Environmental Restoration 
Account to the military services

 In a memorandum dated May 3, 1995, the Deputy Secretary of Defense 
announced a proposal to devolve the Defense Environmental Restoration 
Account (DERA), a single transfer account administered by the Department of 
Defense, to four separate transfer accounts administered by the individual 
military services. The execution of the Deputy Secretary of Defense's proposal
would require modification to the DERA statutory framework.
 
 The conferees are concerned the devolution of DERA would impede 
Congressional oversight of the management and use of funds authorized 
for and appropriated to the account. In relation to devolvement, the 
conferees desire a thorough description of the means by which the Department 
of Defense would ensure consistent funding and accountability for 
environmental restoration activities. Moreover, the Department of Defense 
needs to identify the monetary savings and administrative efficiencies 
associated with DERA devolvement. The Department of Defense must also specify
funding and staffing reductions for the Office of the Deputy Under Secretary 
of Defense for Environmental Security that would result from DERA devolution.
 
 The conferees agree that, in the event that the Department of Defense 
intends to pursue legislation to authorize devolvement for fiscal year 1977, 
the Secretary of Defense must submit a report to Congress no later than 
March 31, 1996. The report should provide full justification for DERA 
devolvement and address the matters outlined above. In the absence of the 
requested information this year, the conferees decline to authorize a 
change to the existing statutory scheme for DERA at this time.

 *********
 

 APPENDIX D

PROPOSED LEGISLATIVE CHANGE

SEC___. DEVOLUTION OF ENVIRONMENTAL RESTORATION

 Section 2703 of title 10, United States Code, is amended to read as 
follows:
 "Sec.2703. Environmental restoration transfer accounts
 "(a) ESTABLISHMENT OF TRANSFER ACCOUNTS.-
 "(1) ESTABLISHMENT.-There is hereby established in the Department of
Defense and each of the Military Departments, an account to be known as 
the "Environmental Restoration Account" (hereinafter in this section 
referred to as the "transfer accounts"). All sums appropriated to carry 
out the functions of the Secretary of Defense and the Secretaries of the 
Military Departments relating to environmental restoration under this 
chapter or to environmental restoration under any other provision of 
law shall be appropriated to their respective transfer accounts.

 "(2) REQUIREMENT OF AUTHORIZATION OF APPROPRIATIONS.- No funds
may be appropriated to the transfer accounts unless such sums have been 
specifically authorized by law.

 "(3) AVAILABILITY OF FONDS IN TRANSFER ACCOUNTS.- Amounts
appropriate to the transfer accounts shall remain available until transferred 
under subsection (b).
 "(b) AUTHORITY TO TRANSFER TO OTHER ACCOUNTS.- Amounts in their 
respective transfer accounts shall be available to be transferred by the 
Secretary of Defense or the Secretaries of the Military Departments to any 
appropriation account or fund of their departments for obligation from 
that account or fund to which transferred.

 "(c) OBLIGATION OF TRANSFERRED AMOUNTS.- Funds transferred under 
subsection (b) may only be obligated or expended from the account or 
fund to which transferred in order to carry out the functions of the 
Secretary of Defense or the Secretaries of the Military Departments under this
chapter or environmental restoration functions under any other provision of 
law.
 "(d) BUDGET REPORTS.- In proposing the budget for any fiscal year 
pursuant to section 1105 of title 31, the President shall set forth 
separately the amounts requested for environmental restoration programs 
by the Department of Defense and the Military Departments under this chapter or
any other Act.
 
 "(e) AMOUNTS RECOVERED UNDER CERCLA.- Amounts recovered under section
107 or section 113 of CERCLA for response actions of the Secretary of 
Defense or Secretary of a Military Department shall be credited to 
their respective transfer account.

 "(f) PAYMENTS OF FINES AND PENALTIES.- None of the funds appropriated 
to the transfer accounts for fiscal years 1995 through 1999 may be used 
for the payment of a fine or penalty imposed against the Department of 
Defense unless the act or omission for which the fine or penalty is imposed 
arises out of any activity funded by the transfer account.

 "(g) CONFORMING AMENDMENT.- Reference to the "Defense Environmental 
Restoration Account" elsewhere in the law shall be construed as referring 
to the "Environmental Restoration Account" of the Department of Defense 
and each of the Military Departments.

Sectional Analysis

 The proposal modifies the authorization and appropriation of the 
Environmental Restoration, Defense Account. It changes the existing 
authorization of one central transfer account by providing additional 
transfer accounts for each of the Military Departments. The legislation 
would also provide for the direct appropriation of Environmental Restoration 
funds into these newly established transfer accounts.

 The amendment is required to implement the Department's decision to 
devolve the Environmental Restoration Program to the Military Departments. 
Devolving the Account to the Military Departments will involve them more 
directly in validating the cleanup efforts and balancing the cleanup 
programs with other military requirements in the budget preparation.

PROBLEM: Without this amendment, the Department's decision to devolve the 
Environmental Restoration Program to the Military Departments cannot be 
fully implemented.

EXPECTED IMPROVEMENT: Devolvement will provide the Military Departments with 
greater over the execution of the cleanup program and more incentive to 
ensure environmental restoration efforts are prioritized appropriately.

BUDGET IMPACT: The amendment does not impact environmental restoration 
requirements.