Military Base Closures: Observations on Prior and Current BRAC	 
Rounds (03-MAY-05, GAO-05-614). 				 
                                                                 
The Defense Base Closure and Realignment Act of 1990, as amended,
authorized a new round of base realignment and closures (BRAC) in
2005, the fifth such round in recent years but the first since	 
1995. The legislation requires the Secretary of Defense to submit
his list of bases recommended for closure and realignment to an  
independent BRAC commission by May 16, 2005. The Commission is	 
charged with reviewing these recommendations and submitting its  
report with recommendations to the President for his acceptance  
or rejection of them in their entirety by September 8, 2005.	 
Subsequently, the Congress has final action to accept or reject  
the recommendations in their entirety later this year. By law,	 
GAO is mandated to review the Department of Defense's (DOD)	 
process and recommendations and to report its findings by July 1,
2005. For the inaugural hearing of the 2005 BRAC Commission GAO  
was asked to address: (1) the status of implementing		 
recommendations from previous BRAC rounds, (2) DOD's expectations
for the 2005 BRAC round, and (3) the analytical framework for the
2005 BRAC round. GAO offers some suggestions for the Commission  
to consider as it prepares for the 2005 BRAC round.		 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-05-614 					        
    ACCNO:   A23217						        
  TITLE:     Military Base Closures: Observations on Prior and Current
BRAC Rounds							 
     DATE:   05/03/2005 
  SUBJECT:   Base closures					 
	     Base realignments					 
	     Defense economic analysis				 
	     Federal law					 
	     Lessons learned					 
	     Military bases					 
	     Military facilities				 
	     Program evaluation 				 
	     Reporting requirements				 
	     DOD Cost of Base Realignment Action		 
	     Model						 
                                                                 

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GAO-05-614

                 United States Government Accountability Office

Statement Before the Defense Base Closure and Realignment Commission

For Release on Delivery

                Expected at 9:30 a.m. EDT Military Base Closures

Tuesday, May 3, 2005

Observations on Prior and Current BRAC Rounds

Statement of Barry W. Holman, Director Defense Capabilities and Management

                                       a

GAO-05-614

May 3, 2005

MILITARY BASE CLOSURES

  Observations of Prior and Current BRAC Rounds

[IMG]

    What GAO Found

DOD indicates that recommendations from the previous BRAC rounds were
implemented within the 6-year period mandated by law. As a result, DOD
estimated that it reduced its domestic infrastructure by about 20 percent;
about 90 percent of unneeded BRAC property is now available for reuse.
Substantial net savings of approximately $29 billion have been realized
over time. Most communities surrounding closed bases are continuing to
recover from the impact of BRAC and faring well compared with average U.S.
rates for unemployment and income growth. In examining DOD's proposed
closures and realignments, the Commission may want to ensure that all
proposed closure and realignment actions can be implemented within the
mandated 6-year period recognizing property transfers may take longer.

DOD's expectations for the 2005 BRAC round include the traditional
emphasis on eliminating unneeded infrastructure and achieving savings. It
also expects to use BRAC to further transformation and related efforts
such as restationing of troops from overseas as well as efforts to further
joint basing among the military services. DOD's preliminary assessment of
excess capacity completed outside the BRAC process in 2004 to help justify
the 2005 round has led to much speculation about the percentage of bases
likely to close. While DOD's assessment gave some indication of excess
capacity across certain functional areas, GAO's assessment showed the
methodology had significant limitations, such as use of varying capacity
metrics among the military services for similar type facilities. As a
result, it is difficult to use that data to make a reliable projection of
total excess capacity across DOD, or projections of number of bases likely
to close. Further, the methodology neither fully considered the potential
impact of major force structuring and other rebasing changes nor the
impact of analyzing facilities or functions on a joint or cross-service
basis, a priority for the 2005 round. As a result, we await the results of
DOD's proposed closures and realignments to see the extent of potential
capacity reduction and how the results of this round compare with prior
rounds. The Commission may want to look at such measures as projected net
reduction in plant replacement value or square footage of space as
reduction indicators.

The 2005 BRAC round process follows a historical analytical framework with
many elements of the process being carried forward or building upon
lessons learned from the past. A key part of that framework is the
selection criteria which essentially follow a framework similar to that
employed in prior BRAC rounds, with more specificity in selected areas
mandated by Congress. The Commission may want to be aware of changes for
the 2005 round based on lessons learned from the past related to such
issues as privatizing functions in place as a closure option, considering
total cost to the government in evaluating closure and realignment
recommendations, clarifying the size of reserve enclaves that may be
created, and strengthening the emphasis on cross-servicing of selected
functions and increased jointness in basing decisions.

                 United States Government Accountability Office

Mr. Chairman and Members of the Commission:

I am pleased to have the opportunity today to provide you with an overview
of our work involving the Department of Defense's (DOD) base realignment
and closure (BRAC) process and give some context for the challenging task
before you through a retrospective view of prior rounds and some
perspectives on the unfolding 2005 round that the BRAC Commission may want
to consider. My testimony today addresses the (1) status of implementing
the recommendations from the four prior BRAC rounds; (2) Secretary of
Defense's expectations for BRAC 2005 and the difficulty in gettinga handle
on theamount of excess capacity that may be reduced; and (3) analytical
framework for the previous and current BRAC process, and how changes
related to the 2005 round could affect the work of this year's Commission.

GAO has played a long-standing role in the BRAC process. As requested by
congressional committees (1988 BRAC round) or mandated by law since 1990,
we have served as an independent and objective observer of the BRAC
process and have assessed and reported on DOD's decision-making processes
leading up to proposed realignment and closure recommendations in each of
the four prior rounds. To make informed and timely assessments, we have
consistently operated in a real-time setting since the 1991 BRAC round and
have had access to portions of the process as it has evolved, thus
affording the department an opportunity to address any concerns we raised
on a timely basis. We have been observing the 2005 BRAC process since
DOD's initial work began on the 2005 round. Because of our ongoing
monitoring of DOD's BRAC 2005 process, and some access to the internal
workings of that process, any comments by me today regarding specifics of
the 2005 round must of necessity be somewhat limited because of
nondisclosure requirements that remain in place until DOD releases its
list of recommended closures and realignments later this month.

In preparing this testimony, we relied largely on our prior work related
to assessing BRAC decision-making processes and implementation of the
previous four rounds. Appendix I has a listing of our previous reports on
the base realignment and closure process. Our previous work was performed
in accordance with generally accepted government auditing standards.

Summary	DOD reported that as of September 30, 2001, it had taken all
necessary actions to implement the recommendations of the BRAC Commissions
for the four prior rounds. As a result, DOD estimated that it had reduced
its domestic infrastructure by about 20 percent measured in terms of
facilities plant replacement value.1 The following summarize the status of
recommendations with respect to property transfer, savings, and economic
recovery of communities affected by the last four rounds.

o 	BRAC recommendations were implemented within the 6-year period mandated
by law. As of September 2004, DOD data show that about 72 percent (about
364,000 acres) of the approximately 504,000 acres of unneeded BRAC
property from the previous four rounds had been transferred to other
federal and nonfederal entities.2 When leased acreage is added to property
that has already been transferred, the amount of unneeded BRAC property
that is available for reuse rises to 90 percent. About 140,000 acres have
not yet been transferred, primarily because of delays resulting from
environmental cleanup requirements that DOD is obligated to address to
ensure that former base property is cleaned up to a level sufficiently
safe for its intended reuse. In looking at the Secretary of Defense's
recommendations for the 2005 BRAC round, the Commission may want to assure
itself that all proposed closure and realignment actions can be
implemented within the mandated 6-year period. Property transfers are not
subject to the 6-year implementation period.

o 	Based on our analysis of DOD data, the department generated substantial
net estimated savings (estimated total savings minus costs) of about $29
billion through fiscal year 2003 from the previous four BRAC rounds, and
it expects to save about $7 billion annually thereafter. Our work has
shown that these savings actually reflect cost avoidances, that is, money
that DOD would likely have needed to operate BRAC bases had they remained
open. At the same time, our reviews have found that DOD's savings
estimates are not precise but instead rough approximations of the likely
savings, in part because the military services have not regularly updated
their estimates over time and

1 DOD defines plant replacement value as the cost to replace an existing
facility with a facility of the same size at the same location, using
today's building standards.

2 In this statement, "transferred property" refers to property that has
been deeded to another user; it does not include leased property.

because DOD's accounting systems are not oriented toward identifying and
tracking savings. From the BRAC Commission perspective, it is important to
note that historically most reported DOD savings result from reductions in
operation and maintenance and military personnel costs.

o 	Most communities surrounding closed bases are continuing to recover
from the impact of BRAC. DOD data show that almost 85 percent of local DOD
civilian jobs that were lost on bases as a result of realignments and
closures have been replaced through development of the properties. Two key
economic indicators-the unemployment rate and the average annual real per
capita income growth rate-show that BRAC communities are generally doing
well when compared with average U.S. rates. As we havereported in the
past,the recovery process has not necessarily been easy with the strength
of the national economy and the diversity of local economies having a
significant bearing on the recovery of any particular community facing a
BRAC closure. From the BRAC Commission perspective,few bases were
eliminated from closure or realignment in prior rounds due to economic
impact, but this is an issue the Commission will hear much about as it
engages communities affected by the Secretary's proposed closures and
realignments.

DOD's expectations for the 2005 BRAC round include the traditional
emphasis on eliminating unneeded infrastructure and achieving savings, but
they also extend to using BRAC to further transformation efforts such as
restationing of troops from overseas as well as improving joint basing
among the military services. Nevertheless, much emphasis has been given to
estimating the amount of excess capacity in advance of the BRAC round and
that has led to much speculation about the number or percentage of bases
that are likely to close. That is a tougher issue to deal with than it
might seem on the surface as evidenced by an earlier assessment of excess
capacity that DOD was required to complete in advance of the BRAC round.
The results of that analysis were included in a 2004 report to Congress3
in justifying the need for the 2005 BRAC round. While that report did give
indications of excess capacity, our work shows the analysis did not give a
well-grounded assessment of total excess capacity across DOD or the
potential for achieving greater efficiencies in use of that capacity. It
has also led to much speculation on the number of bases likely to be
closed in this BRAC round. Our analysis indicated that DOD's methodology
for that

3 Report required by Section 2912 of the Defense Base Closure and
Realignment Act of 1990.

report had limitations, such as use of varying capacity metrics among the
military services for similar type facilities, that made it difficult to
get a precise reading on excess capacity across various functional areas,
and made it even more difficult to credibly project a total amount of
excess capacity across DOD. Moreover, in completing its analysis, the
military services assessed their bases as though they were being used for
a single function, and did not consider either the existing or the
potential for increased multi-functional/joint use that was identified as
an objective of the 2005 BRAC round-and which provides the potential for
better identifying excess capacity or opportunities to use existing
capacity more efficiently for multiple purposes. As a result, we must
await the results of DOD's proposed closures and realignments to see the
extent of capacity reductions and to determine how this round compares
with prior rounds in that regard. The Commission may want to look at such
measures as projected net reduction in plant replacement value or square
footage of space as meaningful indicators of the magnitude of reductions
in BRAC 2005.

The BRAC process follows a historical analytical framework with many
elements of the process being carried forward or building upon lessons
learned from previous rounds. First, the selection criteria essentially
follow a framework that is similar to that employed in previous BRAC
rounds, with more specificity in selected areas-especially in those that
speak to military value. In this regard, the criteria give priority to
military value and incorporate such factors as joint warfighting,
training, readiness, and the ability to accommodate contingency and
mobilization requirements, as is called for in the fiscal year 2002
legislation.4 In addition, the 2005 round is expected to incorporate
several lessons learned from the previous rounds, such as privatizing
functions in place rather than closing facilities and moving affected work
to other locations, not always considering total cost to the government
when examining individual closure or realignment decisions, clarifying the
size of reserve enclaves that may be created when bases are closed or
realigned, and strengthening the role of the joint crossservice teams.

4 P.L. 107-107, section 3002 (Dec. 28, 2001).

Background	To enable DOD to close unneeded bases and realign other bases,
Congress enacted legislation that instituted BRAC rounds in 1988, 1991,
1993, and 1995.5 A special commission established for the 1988 round made
realignment and closure recommendations to the Senate and House Committees
on Armed Services. For the 1991, 1993, and 1995 rounds, special BRAC
Commissions were set up, as required by legislation, to make specific
recommendations to the President for his approval, who in turn sent the
Commissions' recommendations to Congress. The four Commissions generated
499 recommendations-97 major closures and hundreds of smaller base
realignments, closures, and other actions.6 Of the 499 recommendations,
451 required action; the other 48 were modified in some way by a later
commission. DOD was required to complete BRAC realignment and closure
actions for the 1988 round by September 30, 1995, and for the 1991, 1993,
and 1995 rounds within 6 years from the date the President forwarded the
recommended actions to Congress.

Legislation authorizing the BRAC rounds has also stipulated that closure
and realignment decisions must be based upon selection criteria, a current
force structure plan, and infrastructure inventory developed by the
Secretary of Defense. Further, the selection criteria were required to be
publicized in the Federal Register to solicit public comments on the
criteria before they were finalized. The criteria historically have
included four related to military value, one related to return on
investment, and three related to community impacts. However, the National
Defense Authorization Act of 20027 required DOD to give priority to the
criteria dealing with military value for the 2005 BRAC round.

5 The 1988 round was completed under the Defense Authorization Amendments
and Base Closure and Realignment Act (P.L. 100-526, Title II (Oct. 24,
1988), as amended). The last three rounds were completed under the Defense
Base Closure and Realignment Act of 1990 (P.L. 101-510, Title XXIX (Nov.
5, 1990), as amended).

6 The number of recommendations may vary depending on how they are
categorized. In this report, the recommendations include closures,
realignments, disestablishments, relocations, and redirections. In a
closure, all missions that are carried out at a base either cease or
relocate, while in a realignment, a base remains open but loses and
sometimes gains missions. "Disestablishments" and "relocations" refer to
missions; those disestablished cease operations, while those relocated are
moved to another base. "Redirections" refer to cases in which a BRAC
Commission changes the recommendation of a previous commission.

7 P.L. 107-107, Section 3002 (Dec. 28, 2001).

While DOD has closed or realigned bases as recommended by the various BRAC
Commissions, other actions, such as the cleanup of environmentally
contaminated property and the subsequent transfer of unneeded property to
other users, have extended beyond the 6-year implementation period for
each round. Once DOD no longer needs BRAC property, the property is
considered excess and is offered to other federal agencies. As shown in
figure 1, any property that is not taken by other federal agencies is then
considered surplus and is disposed of through a variety of means to state
and local governments, local redevelopment authorities,8 or private
parties.

Figure 1: DOD's Usual Procedures for Transferring Property

Excess Surplus

Public benefit conveyance Economic development conveyance Conservation
conveyance Lease termination/expiration Negotiated and public sale Special
legislation

Source: GAO.

The various methods noted in figure 1 to convey unneeded property to
parties external to the U.S. government are targeted, in many cases, to a
particular end use for the property. For example, under a public benefit
conveyance, state and local governments and local redevelopment
authorities acquire surplus DOD property for such purposes as schools,
parks, and airports for little or no cost. Under an economic development
conveyance, property is transferred for uses that promote economic
recovery and job creation. Conservation conveyances, which were introduced
in the Bob Stump National Defense Authorization Act for Fiscal Year 2003,9
provide for the transfer of property to a state or political subdivision
of a state or qualified not-for-profit groups for natural resource

8 A local redevelopment authority is any authority or instrumentality
established by a state or local government and recognized by the Secretary
of Defense, through the Office of Economic Adjustment, as the entity
responsible for developing the redevelopmentplan with respect to an
installation or for directing implementation of the (land reuse) plan.

9 P.L. 107-314, S: 2811, 2812 (Dec. 2, 2002).

and conservation purposes. Property can, in other cases, also be conveyed
to nonfederal parties through the other cited methods as shown in figure 1
without regard, in many cases, to a particular end use. For example,
property can be sold or special congressional legislation can dictate
transfer to a particular entity.

The National Defense Authorization Act for Fiscal Year 200210 extended the
authority of the Defense Base Closure and Realignment Act of 1990, with
some modifications, to authorize an additional BRAC round in 2005. The
2002 legislation also required the Secretary of Defense to publish in the
Federal Register the selection criteria proposed for use in the BRAC 2005
round and to provide an opportunity for public comment. The proposed
selection criteria were published on December 23, 2003, with a public
comment period ending January 30, 2004. The final criteria were published
on February 12, 2004. The criteria for the 2005 BRAC round continue the
tradition of having four criteria related to military value that are to be
given priority consideration, and four others that require consideration.
As discussed more fully later in this statement, while the eight criteria
essentially follow a framework similar to that employed in previous BRAC
rounds, greater specificity was added to selected criterion as mandated by
Congress for the 2005 round.

    Status of Prior BRAC Recommendations

Following the adoption of the previous BRAC recommendations, DOD declared
504,000 acres of property as unneeded and available for transfer to other
federal or nonfederal entities. As of September 30, 2004, DOD had
transferred about 72 percent of that property while 28 percent had not
been transferred, due primarily to the need for environmental cleanup.
According to DOD data, the BRAC recommendations have generated substantial
savings-an estimated $29 billion in savings or cost avoidances through
fiscal year 2003, with expectations of an additional $7 billion in annual
net recurring savings thereafter. Finally, while BRAC can have a traumatic
short-term effect on communities in the vicinity of closing or realigning
bases, most nearby communities continue to recover from BRAC actions. Our
analysis of key economic indicators shows that most communities are
generally faring well in terms of national averages for unemployment and
income growth rates.

10 P.L. 107-107, Title XXX (Dec. 28, 2001).

      Implementation of Previous Recommendations and Status of Property
      Transfers