Military Bases: Observations on DOD's 2005 Base Realignment and  
Closure Selection Process and Recommendations (18-JUL-05,	 
GAO-05-905).							 
                                                                 
On May 13, 2005, the Department of Defense (DOD) submitted 222	 
base realignment and closure (BRAC) recommendations, involving an
unprecedented 837 BRAC actions, to the Defense Base Closure and  
Realignment Commission for its review. DOD expects the proposals,
if approved, would generate net annual recurring savings of about
$5.5 billion beginning in fiscal year 2012 and net savings of	 
nearly $50 billion over a 20-year period, despite an expected	 
cost of over $24 billion to implement the recommendations. The	 
Commission is charged with reviewing these proposals and	 
submitting its own list to the President by September 8, 2005.	 
The Commission requested GAO to provide testimony before the	 
Commission summarizing the results of its report, issued on July 
1, 2005, on the 2005 BRAC process. This statement presents GAO	 
views on (1)whether DOD's selection process in developing BRAC	 
actions was logical and reasoned, (2) selected issues regarding  
the recommendations, and (3) certain challenges associated with  
implementing the BRAC recommendations, if approved.		 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-05-905 					        
    ACCNO:   A30217						        
  TITLE:     Military Bases: Observations on DOD's 2005 Base	      
Realignment and Closure Selection Process and Recommendations	 
     DATE:   07/18/2005 
  SUBJECT:   Base closures					 
	     Base realignments					 
	     Cost analysis					 
	     Defense cost control				 
	     Financial analysis 				 
	     Internal controls					 
	     Military bases					 
	     Military facilities				 
	     Military policies					 
	     Performance measures				 
	     Policy evaluation					 
	     Strategic planning 				 

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GAO-05-905

United States Government Accountability Office

GAO	Statement Before the Defense Base Closure and Realignment Commission

For Release on Delivery

Expected at 10:30 a.m. EDT MILITARY BASES

Monday, July 18, 2005

 Observations on DOD's 2005 Base Realignment and Closure Selection Process and
                                Recommendations

Statement of David M. Walker Comptroller General of the United States

GAO-05-905

[IMG]

July 18, 2005

MILITARY BASES

Observations on DOD's 2005 Base Realignment and Closure Selection Process and
Recommendations

  What GAO Found

DOD established and generally followed a logical and reasoned process for
assessing its bases and considering potential BRAC actions. The process
was organized in a largely sequential manner with an emphasis on ensuring
that reliable data were obtained and used, with special audit assistance
from military service audit agencies and the DOD Inspector General.
Despite some overlap in data collection and other phases of the process,
the three military departments and seven joint cross-service groups
generally followed the sequential BRAC process to evaluate facilities and
functions, and identify recommendations in their respective areas. DOD's
analytical process also addressed requirements of the BRAC legislation
regarding the certification of data, basing its analysis on its 20-year
force structure plan and emphasizing use of military value criteria as a
primary basis for decision making-including consideration of such facets
as homeland defense and surge capabilities--which the Congress added for
emphasis in 2005.

GAO did, however, identify a number of issues with the proposed
recommendations that may warrant attention by the BRAC Commission. For
example, while GAO believes savings could be achieved from DOD's
proposals, there are certain limitations associated with the magnitude of
the savings projected by DOD. About 47 percent, or $2.5 billion of DOD's
projected net annual recurring savings is associated with eliminating jobs
currently held by military personnel. However, rather than reducing
endstrength, DOD indicates the positions are expected to be reassigned to
other areas, which may enhance capabilities but also reduce or eliminate
dollar savings available for other uses. Sizeable savings are also
projected from efficiency measures and other actions related to a variety
of recommendations, but underlying assumptions have not been validated and
may be difficult to track and achieve over time. GAO also identified many
recommendations requiring far longer periods of time for savings to offset
the costs associated with implementing the recommendations than was
typical in the 1995 BRAC round, raising questions about the cost/benefit
ratio of selected recommendations.

There are significant implementation challenges that lie ahead, to the
extent proposed recommendations are approved, which could have a bearing
on the ultimate savings realized and overall success of the BRAC round.
They include the need for (1) transition planning to minimize the adverse
impacts on operations, including steps to mitigate the potential loss of
specialized human capital skills; (2) mechanisms to monitor implementation
of recommendations in line with approved actions, along with mechanisms to
ensure the tracking and periodic updating of savings that DOD expects from
implementing the recommendations; (3) plans to address and adequately fund
environmental restoration of unneeded property in order to expedite
property transfer and put property to productive reuse; and (4) assistance
for both losing and gaining communities affected by BRAC recommendations,
including costs to DOD and other federal agencies.

United States Government Accountability Office

Mr. Chairman and Members of the Commission:

I appreciate the opportunity to be here today to provide you with the
results of our work on the defense base realignment and closure (BRAC)
2005 selection process and recommendations. First, I would like to commend
you, Mr. Chairman, and your fellow Commissioners for undertaking the very
important, complex and controversial task of reviewing the Department of
Defense's (DOD) list of proposed recommendations and recognizing you have
to forward your recommendations to the President in September of this
year. I am well aware that your task is especially demanding, given the
limited time in which you have to do your work and the broad scope of your
responsibilities. However, I would like to point out that your work is of
critical importance since, while reasonable people can and will differ on
specific recommendations, it is clear that DOD must reduce its excess
support infrastructure in order to generate savings for higher priority
needs, including the military and business transformation efforts in light
of 21st century trends and challenges.

We have frequently reported in recent years on the long-term challenges
DOD faces in managing its portfolio of facilities, halting degradation of
facilities, and reducing unneeded infrastructure to free up funds to
better maintain enduring facilities and meet other needs. Because of these
longstanding issues, DOD's management of its support infrastructure has
been included in our list of high-risk areas since 1997. While the
previous four rounds of closures and realignments have helped reduce
excess infrastructure and generate savings, DOD's infrastructure costs
continue to consume a larger-than-necessary portion of the DOD budget, and
as a result, DOD has not been able to devote funds to more critical needs.

While the 2005 BRAC round affords the department an additional opportunity
to further reduce infrastructure and generate savings, it will not, in
itself, be sufficient to stem the overall rising costs of DOD's operations
and much more will need to be done to transform the department. It is
critical that DOD continue to search out ways to reduce unnecessary
spending and significantly improve its business processes. Further, it
must recognize that tough choices need to be made in connection with a
variety of initiatives (e.g., weapons systems) and areas (e.g., health
care) that are not affordable or sustainable over the longer term, given
our large and growing long-term deficits. Moreover, reducing unnecessary
defense costs and creating more efficiency within DOD is an important step
in addressing the nation's growing fiscal imbalances. Over the long term,
the nation's growing fiscal imbalances, if left unchecked, will ultimately
impede our economic growth; have an adverse impact on

our future standard of living; and in due course, affect our ability to
address key national and homeland security needs. These factors create the
need to make choices at a national level that will only become more
difficult the longer they are postponed.

Now, if I could turn your attention to the specifics of the 2005 BRAC
round. On May 13, 2005, the Secretary of Defense publicly announced his
list of recommended realignment and closure actions. The department's list
consists of 222 recommendations involving an unprecedented 837 closure and
realignment actions-including 33 major base closures and 30 major
realignments, plus numerous other closures and realignments. The
department expects that these recommendations, if approved, would generate
net annual recurring savings of about $5.5 billion beginning in fiscal
year 2012 and nearly $50 billion in net present value savings over a
20-year period, despite an up-front expected cost of over $24 billion to
implement those recommended actions. In my testimony today, I will address
(1) whether DOD's selection process in developing the recommended actions
was logical and reasoned; (2) selected issues regarding the
recommendations that the BRAC Commission may wish to consider as part of
its analysis of DOD's recommendations; and (3) certain challenges we see
in implementing DOD's proposed BRAC recommendations, if they are approved.

To analyze the BRAC selection process and the proposed recommendations, we
monitored various aspects of the process as it evolved over time leading
up to and following the public release of the Secretary of Defense's
recommendations. We sought to assure ourselves that DOD followed a
logical, reasoned, and well-documented decisionmaking process leading to
the proposed recommendations. With the approval of the large number of
recommendations occurring in the final weeks of the process, the broad
scope and complexity of the recommendations, and the limited time
available for us to report our results, we generally focused greater
attention following the announcement of the proposed closures and
realignments on those issues affecting more than one recommendation than
on issues pertaining to the implementation of individual recommendations.
However, as time permitted, we visited selected installations to better
gauge the operational and economic impact of the proposed recommendations.
We generally experienced good access to relevant documentation and to key
senior officials and staff involved in the BRAC process.

My statement is based primarily on our July 1, 2005, report on the 2005
BRAC selection process and recommendations, which was provided to

  Summary

you at that time.1 Our work was performed in accordance with generally
accepted government auditing standards.

DOD's decision-making process for evaluating its facilities and studying
potential recommendations was generally logical, well documented, and
reasoned, although there were delays in making the supporting data
available to the Commission and to the public after the Secretary
announced his proposed recommendations on May 13, 2005. DOD established a
structured and largely sequential process for obtaining and analyzing data
that provided an informed basis for identifying and evaluating BRAC
options. At the same time, initial difficulties in obtaining complete and
accurate data in a timely manner often added to overlap and varying
degrees of concurrency between data collection efforts and other steps in
the process. That notwithstanding, DOD's process relied on certified data2
and the use of various analytical models to evaluate the data. Further, as
the military services and joint cross-service groups assessed the
importance of installations, facilities, and functions, they were
consistent in following the key considerations set forth in the BRAC
law-such as military value-although they varied somewhat in their
analytical approaches based on unique aspects of the functions being
evaluated. As Congress mandated, DOD prepared and considered its 20year
force structure plan in completing its BRAC analysis.3 Further, DOD
focused on the military value selection criteria as the predominant
decision-making factor, including legislatively mandated emphasis for this
BRAC round on such elements as homeland defense and surge capability. As
in previous rounds, military judgment was also interwoven throughout the
process. While the effort to ensure the accuracy of the voluminous amounts
of data used in the process proved challenging for the services and joint
cross-service groups, the DOD Inspector General and the military service
audit agencies played key roles in pointing out data limitations,
fostering corrections, and improving the accuracy of the data used in the
process through their validation efforts, and generally found the data
sufficiently reliable to support BRAC decision making.

1 GAO, Military Bases: Analysis of DOD's 2005 Selection Process and
Recommendations for Base Closures and Realignments, GAO-05-785
(Washington, D.C.: July 1, 2005).

2 During the BRAC process, data were certified by senior officials at DOD
offices and installations. Each official certified that the information
was accurate and complete to the best of his or her knowledge and belief.

3 P.L. 101-510, section 2912(a)(1)(A) required DOD to develop a 20-year
force structure plan as the basis for its BRAC analysis.

While we believe savings could be achieved, there are certain limitations
associated with DOD's savings projection. Much of the projected net annual
recurring savings (47 percent) is associated with eliminating jobs
currently held by military personnel. However, rather than reducing
endstrength levels, DOD indicates the positions are expected to be
reassigned to other areas, which may enhance capabilities but also reduce
or eliminate dollar savings available for other uses. Furthermore, about
$500 million of the net annual recurring savings is based on business
process reengineering efforts, but some assumptions supporting the
expected efficiency gains have not been validated; while savings are
likely to be realized, the precise magnitude of the savings is uncertain.
For example, one of DOD's recommendations-to create fleet readiness
centers in the Navy by integrating different levels of maintenance to
reduce repair time- is estimated to yield $215 million in net annual
recurring savings as a result of overhead efficiencies, but such
assumptions have not been validated and actual savings likely will be
shaped by how the recommendation is implemented. We have also identified
issues regarding lengthy payback periods associated with some proposals,
which is the time required to recoup up-front investment costs for closing
or realigning a facility or function and vacating lease space.
Collectively, the issues we identified suggest the potential for reduced
savings that are likely to be realized in the short term during the
implementation period, which could further reduce net annual recurring
savings realized in the long term. The shortterm impact is that these
reduced savings could adversely affect DOD's plans for using them to help
offset the up-front investment costs required to implement the
recommendations and could further reduce or eliminate the amount of dollar
savings available for transformation and modernization purposes.

Significant challenges lie ahead for implementing BRAC recommendations
that I would like to bring to the Commission's attention-challenges that
if not adequately met, could greatly affect how successful the BRAC round
will be viewed retrospectively. First, a need exists for proper transition
planning to minimize the impact of the loss of specialized human capital
skills in implementing recommended actions for ongoing defense operations.
For example, if the decision is made to close the Naval Shipyard
Portsmouth, Maine, with the expected loss of skilled personnel associated
with maintaining nuclear-powered submarines at the shipyard, these skills,
which Navy officials stated may take up to 8 years to fully develop, will
need to be replicated at other shipyards assuming the future workloads. A
similar concern was expressed by Army officials exist regarding the
planned closure of Fort Monmouth, New Jersey. Second, as we previously
recommended, DOD needs to establish mechanisms to monitor implementation
of the recommendations, including the tracking

Background

and periodic updating of savings estimates. This was not a routine
practice in the previous BRAC rounds. Third, DOD needs to ensure that it
has plans to adequately address and fund the environmental restoration of
unneeded property in order to expedite property transfer to other users.
Our prior work on the previous rounds has shown that environmental
restoration constraints have delayed the services from rapidly
transferring unneeded property to other users that can put the property to
productive reuse. Finally, as has been the practice in previous rounds,
there will likely be a need for assistance from various sources for
communities losing large numbers of jobs and personnel as a result of BRAC
recommendations. This time, assistance will also be needed by communities
faced with a significant influx of personnel, if the relevant BRAC
recommendations are approved, including costs to DOD and other federal
agencies.

The legislation authorizing the 2005 BRAC round, enacted as part of the
National Defense Authorization Act for Fiscal Year 2002, required DOD to
give priority to selection criteria dealing with military value and added
elements of specificity to criteria previously used by DOD in prior BRAC
rounds.4 In large measure, the final criteria closely followed the
criteria DOD employed in previous rounds, with greater specificity added
in some areas, as required by Congress. To ensure that the selection
criteria were consistently applied, the Office of the Secretary of Defense
(OSD) established a common analytical framework to be used by the three
military departments and the seven joint cross-service groups.5 Each
service and group adapted this framework, in varying degrees, to its
individual activities and functions in evaluating facilities and functions
and identifying closure and realignment options. Despite the diversity of
bases and cross-service functions analyzed, each of the groups was
expected to first analyze capacity and military value of its respective
facilities or functions, and then to identify and evaluate various closure
and realignment scenarios and provide specific recommendations. The
analysis relied on data calls to obtain certified data to assess such
factors as maximum potential capacity, current capacity, current usage,
excess capacity, and capacity needed to meet surge requirements.

The military value analysis consisted of assessments of operational and
physical characteristics of each installation, or specific functions on an

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

5 The seven joint cross-service groups were Education and Training;
Headquarters and Support Activities; Industrial; Intelligence; Medical;
Supply and Storage; and Technical.

installation related to a specific joint cross-service group's area of
responsibility. These would include an installation's or function's
current and future mission capabilities, physical condition, ability to
accommodate future needs, and cost of operations. This analysis also
relied on data calls to obtain certified data on the various attributes
and metrics used to assess each of the four military value criteria and
permit meaningful comparisons between like installations or facilities
with reference to the collective military value selection criteria.

The scenario development and analysis phase focused on identifying various
realignment and closure scenarios for further analysis. These scenarios
were to be derived from consideration of the department's 20year force
structure plan, capacity analysis, military value analysis, and, as
appropriate, the exercise of military judgment through consideration of
transformational options, applicable guiding principles, objectives, or
policy imperatives identified by individual military services or joint
crossservice groups.

The BRAC 2005 round is different from previous base closure rounds in
terms of number of actions, projected implementation costs, and estimated
annual recurring savings. While the number of major closures and
realignments is just a little greater than those in individual previous
rounds, the number of minor closures and realignments, as shown in table
1, is significantly greater than those in all previous rounds combined.6

DOD data indicate that over 200,000 military and civilian personnel jobs,
exclusive of personnel returning from overseas locations, will be affected
by the implementation of the DOD's BRAC recommended actions, if they are
approved. Further, it is likely that thousands of contractor personnel
will be similarly affected.

6 DOD defines a major closure as one where plant replacement value
exceeded $100 million. 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. DOD defines a major base
realignment as one with a net loss of 400 or more military and civilian
personnel.

Table 1: Comparison of BRAC 2005 with Previous Rounds

Dollars in billions

Major bases

Minor closures and realignments

Total actions Costs

                                                 Net annual recurring savings

                 Round                Closure Realignments               
                 1988                      16      4        23 43  $2.7  $0.9 
                 1991                      26      17       32 75   5.2  
                 1993                      28      12      123 163  7.6  
                 1995                      27      22       57 106  6.5  
Total (for previous BRAC rounds)        97      55      235 387 $22.0 $7.2 
      Total (for 2005 BRAC round)          33      30      774 837 $24.4 $5.5 

Source: DOD.

The large increase in minor closures and realignments is attributable
partly to actions involving the Army National Guard, Army Reserve, and Air
National Guard and vacating leased space.

DOD's projected cost to implement the proposed actions is $24.4 billion
compared to a $22 billion total from the four previous rounds through
2001, the end of the 6-year implementation period for the 1995 BRAC
round.7 The increase in costs is due partly to significant military
construction and moving costs associated with Army recommendations to
realign its force structure, and to recommendations to move activities
from leased space onto military installations. For example, the Army
projects that it will need about $2.3 billion in military construction
funds to build facilities for the troops returning from overseas.
Likewise, DOD projects that it will need an additional $1.3 billion to
build facilities for recommendations that include activities being moved
from leased space.

7 We most recently reported that these costs were $23.3 billion through
fiscal year 2003 and they excluded an estimated $3.6 billion in costs that
are needed to complete environmental cleanup at BRAC bases in future
years. Also, they did not include about $1.9 billion in costs incurred by
other DOD and federal agencies to provide assistance to communities and
individuals affected by BRAC as a result of prior BRAC rounds. GAO,
Military Base Closures: Updated Status of Prior Base Realignments and
Closures, GAO-05-138 (Washington, D.C.: Jan. 13, 2005).

  DOD Developed a Generally Logical and Reasoned Process for Making BRAC
  Decisions

DOD's decision-making process for evaluating its facilities and studying
potential recommendations was generally logical, well documented, and
reasoned, although there were delays in making the supporting data
available to the Commission and to the public after the Secretary
announced his proposed recommendations on May 13, 2005. In establishing
the framework for the 2005 BRAC round, DOD provided overall policy
guidance for the BRAC process, including a requirement that its components
develop and implement internal control plans to ensure the accuracy and
consistency of their data collection and analyses. These plans also helped
to ensure the overall integrity of the process and the information upon
which OSD considered each group's recommendations. OSD also established a
common analytical framework used by each military department to analyze
its service-unique functions and by each of the seven joint cross-service
groups to analyze its common businessoriented functions. The military
departments and each joint cross-service group adapted this framework, in
varying degrees, to its individual activities and functions in evaluating
facilities and functions that shaped its analysis. The process began with
a set of sequential steps by assessing capacity and military value,
developing and analyzing scenarios, then identifying candidate
recommendations, which led to the final list of recommendations. Military
judgment also played a role throughout the process. Figure 1 illustrates
the overall sequential analytical process generally employed to develop
BRAC recommendations.

Figure 1: Analytical Process Leading to BRAC Recommendations

Source: GAO.

aA scenario is a proposal that has been declared for formal analysis by a
military department or joint cross-service group deliberative body and is
officially accounted for and tracked by the Office of the Secretary of
Defense (OSD).

It must be noted, however, that while the process largely followed the
sequential process, initial difficulties associated with obtaining
complete and accurate data in a timely manner added to overlap and varying
degrees of concurrency between data collection efforts and other steps in
the process. To assist in the process for analyzing and developing
recommendations, the military services and joint cross-service groups used
various analytical tools that helped to ensure a more consistent approach
to BRAC analysis and decision making. For example, all of the groups used
the DOD-approved Cost of Base Realignment Actions

(COBRA) model to calculate costs, savings, and return on investment for
BRAC scenarios and, ultimately, for the final 222 BRAC recommendations.
DOD has used the COBRA model in each of the previous BRAC rounds and, over
time, has improved upon its design to provide better estimating
capability. In our past and current reviews of the COBRA model, we found
it to be a generally reasonable estimator for comparing potential costs
and savings among various BRAC options.

BRAC Process Incorporated Key Legislative Requirements

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. For example, the selection process
essentially followed a framework similar to that employed in previous BRAC
rounds, with more specificity in selected military value areas like surge
and homeland defense as required by Congress. At the same time, DOD
incorporated into its analytical process other legal considerations for
formulating its realignment and closure recommendations. As required by
BRAC legislation, DOD certified the data used in the selection process and
based its recommendations on the congressional specified selection
criteria, its 20-year force structure plan, and gave priority
consideration to the military value criteria.

DOD collected capacity and military value data that were certified as to
their accuracy by hundreds of persons in senior leadership positions
across the country.8 These certified data were obtained from corporate

databases and from hundreds of defense installations. In total, DOD
projects that it collected over 25 million pieces of data as part of the
BRAC process.9 Given the extensive volume of requested data from the 10

separate groups (3 military departments and 7 joint cross-service groups),
we noted that the data collection process was quite lengthy and required
significant efforts to help ensure data accuracy. In some cases,
coordinating data requests, clarifying questions and answers, controlling
database entries, and other issues led to delays in the data-driven
analysis DOD originally envisioned. As such, some groups had to develop
strategybased proposals. As time progressed, however, these groups
reported that they obtained the needed data, for the most part, to inform
and support their scenarios. At the same time, because of data
limitations, a few of the

8 Each official who submitted data for BRAC analysis certified that the
information was accurate and complete to the best of his or her knowledge
and belief.

9 Noted by the Secretary of Defense in his testimony before the BRAC
Commission on May 16, 2005.

joint cross-service groups relied on some data from commercially available
databases to support their decision making. While it was difficult for
these data to be validated in a fashion similar to most other DOD
collected-data, the data came from widely used databases and were approved
by the chairs of the relevant joint cross-service groups.

Each of the military services and the seven joint cross-service groups
considered DOD's 20-year force structure plan in its analysis. DOD based
its force structure plan for BRAC purposes on an assessment of probable
threats to national security during a 20-year period beginning with fiscal
year 2005. DOD provided this plan to Congress in March 2004, and as
authorized by the statute, it subsequently updated it 1 year later in
March 2005. Based on our analysis, updates to the force structure affected
some ongoing BRAC analyses. For example, the Industrial Joint
Cross-Service Group reassessed its data pertaining to overhauling and
repairing ships based on the updated force structure and decided that one
of its two smaller shipyards-Naval Shipyard Pearl Harbor or Naval Shipyard
Portsmouth-could close. However, as you know, much debate continues over
the size of the Navy's future force structure.

DOD gave primary consideration to its military value selection criteria in
its process. Specifically, military value refers to the first four
selection criteria: an installation's current and future mission
capabilities, condition, ability to accommodate future needs, and cost of
operations. The manner in which each military service or joint
cross-service group approached its analysis of military value varied
according to the unique aspects of the individual service or cross-service
function. These groups typically assessed military value by identifying
multiple attributes or characteristics related to each military value
criterion, then identifying qualitative metrics and measures and
associated questions to collect data to support the overall military value
analysis. For example, figure 2 illustrates how the Headquarters and
Support Activities Joint Cross-Service Group linked several of its
military value attributes, metrics, and data questions to the mandated
military value criteria.

Figure 2: Selected Attributes, Metrics, and Data Questions Used to Assess
Military Value for Major Administrative and Headquarters Activities

Source: GAO analysis of Headquarters and Support Activities Joint
Cross-Service Group data.

a The BRAC military value criteria are the first four BRAC selection
criteria.
b Military value attributes are characteristics of each criterion. The
major administrative and
headquarters activities subgroup used a total of 14 military value
attributes.
c Military value metrics are measures for the attributes. The major
administrative and headquarters
activities subgroup used a total of 20 military value metrics.
d The major administrative and headquarters activities subgroup used a
total of 31 data call questions.

Based on congressional direction, there was enhanced emphasis on two
aspects of military value-an installation's ability to serve as a staging
area for homeland defense missions and its ability to meet unanticipated

surge.10 Each military department considered homeland defense roles in its
BRAC analysis and coordinated with the U.S. Northern Command-a unified
command responsible for homeland defense and civil support. Our analysis
shows that all three military departments considered homeland defense
needs, with the Air Force recommendations having the most impact.
According to Air Force officials, the U.S. Northern Command identified
specific homeland defense missions assigned to the Air Force, which it
incorporated into its decision-making process. Navy officials likewise
discussed the impact of potential BRAC scenarios on the Navy's maritime
homeland defense mission with U.S. Northern Command, U.S. Strategic
Command, and the U.S. Coast Guard. In this regard, for example, the Navy
decision to retain Naval Air Station Point Mugu, California, was
influenced, in part, because the U.S. Coast Guard wanted to consolidate
its West Coast aviation assets at this installation for homeland defense
purposes. According to Army officials, most of the Army's role in
supporting homeland defense is carried out by the Army National Guard. The
U.S. Northern Command reviewed the recommendations and found no
unacceptable risk to the homeland defense mission and support to civil
authorities.

DOD left it to each military service and joint cross-service group to
determine how surge would be considered in its analysis. Generally, all
the groups considered surge by retaining a certain percentage of
infrastructure, making more frequent use of existing infrastructure, or
retaining difficult-to-reconstitute assets. For example, the Technical
Joint Cross-Service Group set aside 10 percent of its facility
infrastructure for surge, while the Industrial Joint Cross-Service Group
factored additional work shifts in its analysis. The military services
retained difficult-toreconstitute assets as the primary driver to
satisfying the statutory requirement to consider surge capability. Both
the Army and Navy gave strong consideration to infrastructure that would
be difficult to reconstitute, such as large tracts of land for maneuver
training purposes or berthing space for docking ships. For example, the
Navy has a finite number of ships and aircraft and would likely have to
increase operating tempo to meet surge needs. The Air Force addressed
surge by retaining sufficient capacity to absorb temporary increases in
operations, such as responding to emergencies or natural catastrophic
events like hurricane damage, and the capacity to permanently relocate all
of its aircraft stationed overseas in the United States if needed.

10 Homeland defense and surge considerations are in the military value
selection criteria 2 and 3, respectively, as reflected in P.L. 101-510,
section 2913(b)(2)&(3).

As noted earlier, the BRAC process used in 2005 followed a historical
analytical framework with many elements of the process being carried
forward or building upon lessons learned from previous rounds. We have
noted previously in examining lessons learned from prior BRAC rounds the
general agreement that this framework has served the BRAC decisionmaking
process well, even as improvements were made to the process for each BRAC
round.11 If future BRAC rounds are held, as suggested by the

Secretary of Defense in transmitting his 2005 BRAC recommendations to the
Commission, we believe it will be important to document lessons learned
from this round to determine what actions might be needed to strengthen
the process for the future. We believe that will be especially important
given the broad range of realignment actions proposed for this BRAC round,
compared with previous rounds.

DOD Audit Agencies Helped to Improve the Accuracy of Data Used during the
BRAC Process

  Issues Related to DOD's Recommendations

The DOD Inspector General and the services' audit agencies played an
important role in ensuring that the data used in the BRAC analyses were
accurate and certified by cognizant senior officials. Through extensive
audits of the capacity, military value, and scenario data collected from
field activities, these audit agencies notified various BRAC teams of data
discrepancies for corrective action. The audit activities included
validation of data, compliance with data certification requirements
employed throughout the chain of command, and examination of the accuracy
of the analytical data. While the auditors initially encountered problems
with regard to data accuracy and the lack of supporting documentation for
certain questions and data elements, most of these concerns were resolved.
In addition, the auditors worked to ensure certified information was used
for BRAC analysis. These audit agencies also reviewed other facets of the
process, including the various internal control plans, the COBRA model,
and other modeling and analytical tools that were used in the development
of recommendations.

We identified issues regarding various DOD's recommendations that may
warrant further attention by the BRAC Commission. The issues we are
highlighting in this statement relate to cost and savings estimates,
lengthy payback periods for many recommendations, and efforts to move DOD
organizations out of leased space onto military bases. Other issues are
further discussed in our July 1, 2005, report on the 2005 BRAC process.

11 GAO, Military Bases: Lessons Learned From Prior Base Closure Rounds,
NSIAD-97-151 Washington D.C.: July 25, 1997).

Issues Related to Projected Savings

DOD projects that its proposed recommendations will produce nearly $50
billion in 20-year net present value savings, with net annual recurring
savings of about $5.5 billion. While we believe the 2005 BRAC process
could produce savings for DOD, we must emphasize that the majority of the
projected savings are related to a small percentage of the recommendations
(see app. I). Also, a large portion of projected savings are related to
military personnel reductions but the lack of planned endstrength
reductions reduces dollar savings available for other purposes. Also, we
believe there is uncertainty regarding the magnitude of savings likely to
be realized in other areas, given unvalidated assumptions regarding
expected efficiency gains from business process reengineering efforts and
projected savings from sustainment, recapitalization, and base operating
support.12 Table 2 summarizes the projected one-time cost, the cost or
savings anticipated during the 6-year implementation period for the
closure or realignment, the estimated net annual recurring savings, and
the projected 20-year net present value cost or savings of DOD's
recommendations.13

      Table 2: Projected Costs and Savings from BRAC 2005 Recommendations

                 Fiscal year 2005 constant dollars in millions

                                                      Net annual 
                                                  Net recurring   20-year net 
                                       implementation (cost) or       present 
        DOD component         One-time      (cost) or  savings a value (cost) 
                                (cost)        savings             or savingsb 
            Army            ($9,963.4)     ($8,519.1)     $497.6   ($3,038.6) 
            Navy             (2,099.8)          440.7      753.5      7,713.7 
          Air Force          (1,883.1)        2,635.5    1,248.5     14,560.3 
     Joint cross-service    (10,466.1)        1,372.8    2,985.1     29,569.1 
           groups                                                
            Total          ($24,412.4)     ($4,070.1)   $5,484.7    $48,804.5 

                       Source: GAO analysis of DOD data.

12 Sustainment refers to recurring maintenance and repair activities
necessary to keep facilities in good working order. Recapitalization
refers to major renovation or reconstruction activities (including
facility replacement) needed to keep facilities modern and efficient in an
environment of changing standards and missions. Base operating support
refers to a collection of day-to-day programs, activities, and services,
such as food services, grounds maintenance, and custodial services, needed
to keep the bases and installations in running order.

13 These projections exclude environmental restoration costs, which
historically have not been included in BRAC costs and savings analyses
because restoration is a liability that exists regardless of whether a
base is closed, but are included in implementation budgets once BRAC
recommendations have become binding.

aProjected annual recurring savings after the 6-year implementation
period.

bDOD used a 2.8 percent discount rate to calculate net present value.

Table 2 also shows the Navy, Air Force, and joint cross-service groups all
projecting net savings within the 6-year implementation period, as well as
significant 20-year net savings. In contrast, because of the nature of the
Army's proposed actions and costs, such as providing infrastructure for
troops returning from overseas and the consolidation and recapitalization
of reserve facilities, the Army does not achieve net savings either during
the implementation period or within 20 years.

As figure 3 shows, 47 percent of the net annual recurring savings can be
attributed to projected military personnel reductions. About 40 percent
($2.1 billion) of the projected net annual recurring savings can be
attributed to savings from operation and maintenance activities, which
include terminating or reducing property sustainment and recapitalization,
base operating support, and civilian payroll.

Figure 3: Estimated Net Annual Recurring Savings

Dollars in millions

Civilian personnel $1,271

Military personnel $2,530

Base operations support $400

Sustainment and recapitalization $457

All other savings $699 Source: GAO.

Note: Analysis does not include data from one classified recommendation.

Furthermore, about $500 million of the "other" savings is based on
business process reengineering efforts, but some of the assumptions
supporting the expected efficiency gains have not been validated. Also, a
significant portion of the projected savings involving sustainment and
recapitalization is for space being vacated as functions and activities
are moved from one base to another. However, in various instances, plans
for the vacated space are uncertain as is the magnitude of the projected
savings.

Military Personnel Savings	Much of the projected net annual recurring
savings (47 percent) is associated with eliminating positions currently
held by military personnel; but end-strength levels will not be reduced as
DOD indicates the positions are expected to be reassigned to other areas.
Without reducing endstrength levels, there are no dollar savings from
military personnel that

can be applied elsewhere. At best, these freed-up resources could be
viewed as a cost avoidance, if the resources are redeployed to an area of
need and, as a result help offset any expected congressional action to
otherwise authorize an increase in end-strength. On the other hand, if an
increase in end-strength is not planned and you are simply redirecting the
freed-up resources to another area of need, it could be viewed as
enhancing capabilities and achieving more effective utilization of your
personnel resources, not dollar savings.

For example, although the Air Force projects net annual recurring savings
of about $732 million from eliminating about 10,200 military positions,
Air Force officials stated the active duty positions will be reassigned to
relieve stress on high demand career fields and the reserve positions to
new missions yet to be identified. Likewise, the Army is projecting
savings from eliminating about 5,800 military positions, but it has no
plans to reduce its end strength. Finally, the Navy is projecting it will
eliminate about 4,000 active duty military positions, which a Navy
official noted will help it achieve the end-strength reductions already
planned. As we noted during our review of DOD's process during the 1995
BRAC round, since these personnel will be assigned elsewhere rather than
taken out of the force structure, they do not represent dollar savings
that can be readily reallocated outside the personnel accounts.14 Not
recognizing that these are not dollar savings that can be readily applied
elsewhere could create a false sense of savings available for use in other
areas traditionally cited as beneficiaries of BRAC savings, such as making
more funds available for modernization and better maintenance of remaining
facilities.

DOD is also projecting savings from the sustainment and recapitalization
of facilities that are scheduled to be demolished, as well as from
facilities that might remain in DOD's real property inventory when
activities are realigned from one base to another. For example, the
Industrial Joint Cross-Service Group is claiming about $20 million in
annual recurring savings from the recapitalization of facilities at
installations responsible for destroying chemical weapons at three
locations recommended for closure.15 However, the Army had already
expected to demolish these chemical destruction facilities upon completing
the destruction of the chemical weapons at each site and the Army has not
identified future

Sustainment, Recapitalization, and Base Operating Support Savings

14 GAO, Military Bases: Analysis of DOD's 1995 Process and Recommendations
for Closure and Realignment, GAO/NSIAD-95-133 (Washington, D.C.: Apr. 14,
1995).

15 The sites are the Newport Chemical Depot, Indiana; Umatilla Chemical
Depot, Oregon; and Deseret Chemical Depot, Utah.

Savings Based on Business Process Reengineering

missions for these installations. As a result, we do not believe it is
appropriate for the Industrial Joint Cross-Service Group to claim any
recapitalization savings related to these installations.

DOD is also projecting savings from the recapitalization and sustainment
of facilities in cases where functions or activities would be realigned
from one base to another. However, it is not clear to what extent the
proposed realignments would result in an entire building or portion of a
building being vacated, or if entire buildings were vacated, whether they
would be declared excess and removed from the military services' real
property inventory. Our analysis shows that the supply and storage group's
recommendations project about $100 million in sustainment and
recapitalization savings from realigning defense distribution depots. The
group estimates its recommendations will vacate about 27 million square
feet of storage space. Supply and storage officials told us their goal is
to vacate as much space as possible by rewarehousing inventory and by
reducing personnel spaces, but they do not have a specific plan for what
will happen to the space once it is vacated. In addition, until these
recommendations are ultimately approved and implemented, DOD will not be
in a good position to know exactly how much space is available or how this
space will be disposed of or utilized. As a result, it is uncertain how
much of the estimated $100 million in annual recurring savings will
actually occur.

DOD projected net annual recurring savings in the "other" category as
shown in figure 3 include about $500 million that is based on business
process reengineering efforts. Our analysis indicates that four
recommendations-one from the Industrial Joint Cross-Service Group and
three from the Supply and Storage Joint Cross-Service Group-involve
primarily business process reengineering efforts. However, the expected
efficiency gains from these recommendations are based on assumptions that
are subject to some uncertainty and have not been validated.

Our analysis indicates that $215 million, or 63 percent, of the estimated
net annual recurring savings from the Industrial Joint Cross-Service Group
recommendation to create fleet readiness centers within the Navy is based
on business reengineering efforts that would result in overhead
efficiencies. Although the data suggest there is the potential for
savings, we believe the magnitude of the savings is somewhat uncertain
because the estimates are based on assumptions that have undergone only
limited testing. Realizing the full extent of the savings would depend on
actual implementation of the recommended actions and modifications to the
Navy's supply system. The industrial group and the Navy assumed that
combining depot and intermediate maintenance levels would reduce the

time needed for an item to be repaired at the intermediate level, which in
turn would reduce the number of items needing to be kept in inventory, as
well as the number of items being sent to a depot for repair. These
assumptions, which were the major determinant of the realignment savings,
were reportedly based on historical data and pilot projects and have not
been independently reviewed or verified by the Naval Audit Service, the
DOD Inspector General, or us.

Furthermore, our analysis indicates that $291 million, or about 72
percent, of the net annual recurring savings expected from the Supply and
Storage Joint Cross-Service Group's three recommendations are also based
on business process reengineering. In the COBRA model, the savings are
categorized as procurement savings and are based on the expanded use of
performance-based logistics and reductions to duplicate inventory.16
Supply and storage group staff said that these savings accrue from reduced
contract prices because the Defense Logistics Agency (DLA) will have
increased buying power since it is responsible for purchasing many more
items that before were purchased by each of the services. In addition,
savings accrue from increased use of performance-based agreements,17 a key
component of performance-based logistics. The group estimates DLA can save
2.8 cents on each contract dollar placed on performance-based agreements.
In addition, savings result from reductions in the amount of stock that
must be held in inventory. Supply and storage staff said that these
savings are attributable to reductions in the cost of money, cost of stock
losses due to obsolescence, and cost of storage. The group estimates that
together these factors save about 17 percent of the estimated value of the
acquisition cost of the stock that is no longer required to be held in
inventory. These savings estimates, for the most part, are based on
historical documentation provided by DLA, which time did not allow us to
validate. The extent to which these same savings will be achieved in the
future is uncertain. As noted above, how these actions are implemented
could also affect savings. We are concerned that this is another area that
could lead to a false sense of savings and lead to premature reductions in
affected budgets in advance of actual savings being fully realized, as has
sometimes occurred in past efforts to achieve savings through business
process reengineering efforts.

16 Performance-based logistics is defined as the purchase of weapon system
sustainment as part of an integrated weapon system package based on output
measures, such as weapon system availability, rather than input measures,
such as parts and technical services.

17 Performance-based agreements are defined as the negotiated agreements
between the major stakeholders that formally document the performance and
support expectations and resources to achieve the desired outcome.

Transformation Cited as Justification for Many Recommendations despite
Lack of Clear Agreement on Transformational Options

While furthering transformation was one of the BRAC 2005 goals, there was
no agreement between DOD and its components on what should be considered a
transformational effort. As part of the BRAC process, the department
developed over 200 transformational options for stationing and supporting
forces as well as for increasing operational efficiency and effectiveness.
The OSD BRAC office narrowed this list to 77 options, but agreement was
not reached within the department on these options, so none of them were
formally approved. Nonetheless, each service and joint cross-service group
was permitted to use the transformational options as appropriate to
support its candidate recommendations. Collectively, these draft options
did not provide a clear definition of transformation across the
department. The options ranged from those that seemed to be service
specific to those that suggested new ways of doing business. For example,
some transformational options included reducing the number of Army Reserve
regional headquarters; optimizing Air Force squadrons; and colocating
various functions such as recruiting, military and civilian personnel
training, and research, development and acquisition and test and
evaluation, across the military departments. In contrast, some options
suggested consideration of new ways of doing business, such as privatizing
some functions and establishing a DOD agency to oversee depot-level
reparables.

While the transformational options were never formally approved, our
analysis indicates that many of DOD's recommendations reference one or
more of the 77 transformational options as a resulting benefit of the
proposed actions. For example, 15 of the headquarters and support
activities group recommendations reference the option to minimize leased
space and move organizations in leased space to DOD-owned space. Likewise,
37 of the Army reserve component recommendations reference the option to
co-locate guard and reserve units at active bases or consolidate guard and
reserve units that are located in proximity to one another at one
location. Conversely, a number of the scenarios that were initially
considered but not adopted reference transformational options that could
have changed existing business practices. For example, the education and
training group developed a number of scenarios- privatizing graduate
education programs and consolidating undergraduate fixed and rotary wing
pilot training-based on the draft transformational options, but none were
ultimately approved by the department.

Some Proposals Have Many of the 222 recommendations DOD made in the 2005
round are

Lengthy Payback Periods 	associated with lengthy payback periods, which,
in some cases, call into question whether the department would be gaining
sufficient monetary value for the up-front investment cost required to
implement its

recommendations and the time required to recover this investment. Our
analysis indicates that 143, or 64 percent, of DOD's recommendations are
associated with payback periods that are 6 years or less while 79, or 36
percent, of the recommendations are associated with lengthier paybacks
that exceed the 6-year mark or never produce savings. Furthermore, our
analysis shows that the number of recommendations with lengthy payback
periods varied across the military services and the joint cross-service
groups, as shown in table 3.

Table 3: Payback Periods for BRAC Recommendations by DOD Component Payback
                                     period

                                 Number of                     10 years 
                                                                 and    
        DOD component      recommendations Immediate to 7 to 9 greater  Never 
                                           6 years      years           
            Army                        56           26      3       22 
            Navy                       53a           45      2        6 
          Air Force                     42           29      6        7 
Education and training                9            5      0        3 
      Headquarters and                  21           14      2        5 
           support                                                      
         activities                                                     
         Industrial                     17           13      3        1 
        Intelligence                     2            0      2        0 
           Medical                       6            3      1        2 
     Supply and storage                  3            3      0        0 
          Technical                     13            5      5        3 
            Total                      222          143     24       49 
         Percentage                    100           64     11       22 

Source: GAO analysis of DOD data.

aWhile the DOD BRAC report lists 21 Navy recommendations, several of these
have multiple actions, thus bringing the total to 53 recommendations.

As shown in table 3, the Army has five recommendations and the education
and training group has one recommendation that never payback, as described
below:

o  	Army realignment of a special forces unit from Fort Bragg, North
Carolina, to Eglin Air Force Base, Florida;

o  	Army realignment of a heavy brigade from Fort Hood, Texas, to Fort
Carson, Colorado;

o  	Army realignment of a heavy brigade to Fort Bliss, Texas, and infantry
and aviation units to Fort Riley, Kansas;

o  Army reserve component consolidations in Minnesota;

o  Army reserve component consolidations in North Dakota; and

o  	Education and Training Joint Cross-Service Group's establishment of
Joint Strike Fighter aircraft training at Eglin Air Force Base, Florida.

According to Army officials, these five recommendations have no payback
because, in part, they must build additional facilities to accommodate the
return of about 47,000 forces currently stationed overseas to the United
States as part of DOD's Integrated Global Presence and Basing Strategy
initiative. According to the education and training group, its one
recommendation with no payback period is due to the high military
construction costs associated with the new mission to consolidate initial
training for the Joint Strike Fighter aircraft for the Navy, the Marine
Corps, and the Air Force.

We also identified some portions of DOD's individual recommendations that
are associated with lengthy payback periods for certain BRAC actions but
are imbedded within larger, bundled recommendations. The following example
illustrates this point.

o  	A proposal initially developed by the Headquarters and Support
Activities Joint Cross-Service Group to move the Army Materiel Command
from Fort Belvoir, Virginia, to Redstone Arsenal, Alabama, had more than a
100-year payback period with a net cost over a 20-year period. However,
the proposal did not include some expected savings that if included, would
have reduced the payback period to 32 years. Concurrently, the group
developed a separate proposal to relocate various Army offices from leased
and government-owned office space onto Fort Sam Houston, Texas, which
would have resulted in a 3-year payback period. The headquarters group
decided to combine these two stand-alone proposals into one
recommendation, resulting in an expected 20-year net present value savings
of about $123 million with a 10-year payback.

Vacating Leased Space 	Fifteen of the Headquarters and Support Activities
Joint Cross-Service Group's recommendations include a one-time savings of
over $300 million from moving activities from leased space onto military
installations. These recommendations, if approved, would reduce total DOD
leased space within the National Capital Region18 from 8.3 million square
feet to about 1.7 million square feet, or by 80 percent. While our prior
work

18 The National Capital Region includes Washington, D.C.; the Maryland
counties of Montgomery and Prince George's; and the Virginia counties of
Fairfax, Loudoun, and Prince William and the City of Alexandria, Virginia.

generally supports the premise that leased property is more expensive than
government-owned property, the recommendations related to vacating leased
space also raise questions about a limitation in projected savings and
impact on local communities.

The one-time cost savings represents costs expected to be avoided in the
future by moving from leased facilities into government owned and
protected facilities rather than upgrading existing leased space to meet
DOD's antiterrorism/force protection standards.19 According to a DOD
official, after the June 1996 Khobar Tower bombing incident in Dhahran,
Saudi Arabia, the department created a task force of mostly engineers to
develop minimum force protection standards for all DOD-occupied locations.
The official also stated that the standards were not the result of a
formal threat assessment. The force protection standards for leased
buildings apply only where DOD personnel occupy at least 25 percent of the
net interior usable area; only to the portion of the building occupied by
DOD personnel; to all new leases that are executed on or after October 1,
2005, and to leases renewed or extended on or after October 1, 2009.

Initially, the joint cross-service group prepared military value data call
questions that could determine whether a leased location met the force
protection requirements. However, group officials stated that most of
these questions were discarded because of inconsistencies in how the
questions were answered. As noted in our July 1 report, we have also
learned that the Pentagon Force Protection Agency will shortly begin
10month antiterrorism and force protection vulnerability assessments of
about 60 DOD-occupied leased buildings in the National Capital Region. One
could question whether this action should not have been completed prior to
recommending a broad-based divestiture of leased space.20

Another significant issue related to the leased space, at least in the
National Capital Region, is the impact of such a major divestiture of
leased space on community infrastructure. Four of the Headquarters and
Support Activities Joint Cross-Service Group's recommendations involve
moving personnel from leased space to Fort Belvoir, Virginia, increasing
Fort

19 Unified Facilities Criteria: DOD Minimum Antiterrorism Standards for
Buildings (UFC 4010-01, 8 Oct. 2003).

20 After DOD's recommendations were published, we obtained data from the
General Services Administration indicating that leased termination costs
associated with 10 leases that are scheduled to expire after the BRAC
implementation period would be approximately $76 million.

Belvoir's population by about 10,700.21 The recommendations include
military construction projects to build facilities for these personnel on
Fort Belvoir. In addition, the recommendations include $55 million to
improve roads and other infrastructure in the area surrounding the base.
However, it is uncertain at this time whether this will be sufficient to
fully support the impact on the surrounding community's infrastructure or
the likelihood that local governments will seek federal assistance to help
communities reduce the impact-costs that will have the effect of
increasing one-time costs and offsetting short-term savings from the
recommendations.

  Significant Challenges Ahead for Implementing BRAC Recommendations

While we realize that the BRAC Commission is charged with reviewing DOD's
proposed list of recommended BRAC actions and submitting its own list to
the President by September 8, 2005, there are significant challenges ahead
for implementing BRAC recommendations which I would like to bring to the
Commission's attention-challenges that will likely affect how successful
this BRAC round could be viewed historically. These challenges include the
need for (1) transition planning to minimize the impact of the loss of
specialized human capital skills in implementing recommended actions on
ongoing defense operations; (2) mechanisms to monitor implementation,
including the tracking and periodic updating of savings that DOD expects
from implementing BRAC recommendations; (3) plans to address and
adequately fund environmental restoration of unneeded property in order to
expedite property transfer and put property to productive reuse; and (4)
assistance for both losing and gaining communities affected by the BRAC
recommendations.

Transition Plans for Minimizing Disruption of Operations due to Loss of
Specialized Skills

A significant challenge facing the department is the need for transition
plans to address the human capital skills that are likely to be lost and
in need of replacement in order to provide for uninterrupted operations as
BRAC recommendations are implemented. In its cost and savings analyses,
the department estimated in most instances that, as a standard factor in
its COBRA model, about 75 percent of the personnel at a facility being
closed or realigned would move to the gaining installation receiving the
mission or workload.

However, in some cases, this percentage may be overstated resulting in
less actual movement than anticipated, which may in turn present
challenges for gaining bases. For example, Industrial Joint-Cross Service

21 The Intelligence Joint Cross-Service Group is also proposing to move
about 8,500 personnel to Fort Belvoir.

Mechanisms for Monitoring Implementation and Tracking and Updating Savings
Estimates

Group officials told us that based on the Navy's prior experience in
closing shipyards, they did not expect many personnel to move to other
shipyards if the Portsmouth shipyard were closed. They further told us
that because it takes about 8 years for personnel to become fully
proficient in maintaining nuclear-powered submarines, this would present a
challenge for the other yards to replicate the loss in skills due to the
unwillingness of workers to move with the relocated workload. Officials at
Fort Monmouth, New Jersey, expressed similar concerns regarding the
planned closure of the base and plans for a large portion of the work to
be transferred to the Aberdeen Proving Ground in Maryland. Information
provided by these officials suggest that the potential loss of a large
retirement age population must be balanced against the impact on ongoing
mission activities providing real-time assistance to warfighters and
transformation initiatives.

In other cases, the loss of personnel skills at a location may cause some
concern but may not be as difficult to reconstitute. For example, DOD
projects that about 7,400 personnel would move under the proposal to
consolidate the Defense Finance and Accounting Service from 26 to 3 sites.
While the actual number of personnel that may move is unknown, a Defense
Finance and Accounting Service official stated that the accounting skills
required are available at the receiving sites. Our analysis indicates that
over 4,590, or 62 percent, of the workforce at the 26 sites are classified
as accounting-related civilian positions at General Schedule grade 11 or
below.

Should there be recommendations where the loss of personnel is extensive,
particularly for those skills requiring extensive education, training, and
experience, it could prove challenging to the department to satisfactorily
provide for the replacement of these critical skills. In this regard, it
is important that the department develop transition plans that would
recognize the loss of human capital skills and provide for replacement
capability to minimize disruption of ongoing defense operations. Without
such a plan, the department could be at risk in providing the necessary
support to our military forces.

As noted in our July 1, 2005, report, the department has proposed various
BRAC actions involving business process changes and other actions, such as
in joint basing, where likely savings will very much depend on
implementation actions, the details of which are yet to be developed. We
believe it will be important that DOD monitor implementation of these
actions to ensure compliance with proposed actions. With respect to
savings estimates, we believe it is also critical that the department
devise a

mechanism to track and periodically update its savings estimates from the
final recommendations in order to provide not only Congress but the public
with a full accounting of the dollars saved through the BRAC process. Our
interest in this area is evidenced by our recommendation in our July 2005,
report to provide for this. However, given the problems in tracking
savings from the previous rounds, and the large volume of BRAC actions
that are more oriented to realignments and business process engineering
rather than closures, along with our concerns about claimed military
personnel savings, we believe it is of paramount importance that DOD put
in place a process to track and periodically update its savings estimates.

Plans for Addressing Environmental Restoration

In accordance with long-standing DOD practice in previous rounds,
estimated environmental restoration costs for bases undergoing closure or
realignment are not included in DOD's cost and savings analyses. Such
costs are excluded for comparative purposes based on DOD's position that
restoration is a liability that the department must address regardless of
whether a base is kept open or closed. Nevertheless, DOD did give
consideration to such costs in addressing selection criterion 8, and
included available information on estimated restoration costs as part of
the data supporting its BRAC recommendations. DOD data indicate that
estimated restoration costs for its 33 major base closures would be about
$949 million, as shown in table 4.

Table 4: Estimated Environmental Restoration Costs for DOD's Recommended
Major Base Closures

                              Dollars in millions

                                                      Estimated environmental 
            Military service Number of major closures      restoration costsa 
                        Army                       14                  $723.3 
                        Navy                        9                   154.5 
                   Air Force                       10                    71.3 
                       Total                       33                  $949.1 

Source: GAO analysis of DOD data.

aEstimated costs include some costs not specifically reported in DOD's May
2005 report to the Defense Base Closure and Realignment Commission. While
the Army and Navy generally reported

these costs, the Air Force did not but its costs were noted in supporting
documentation.

As shown in the table 4, the Army is expected to incur the largest share
of estimated restoration costs due to the proposed closure of several
ammunition plants and chemical depots. While the DOD BRAC report does not
specifically identify the potential for additional restoration costs at
DOD installations, available supporting documentation does identify some
additional costs. For example, the Army estimated that range restoration
at Hawthorne Army Depot could cost between $27 million to $147 million in
addition to the $383 million reported and included in the estimates in
table 4. Further, the Army recognizes that additional restoration costs
could be incurred at six additional locations that have ranges and
chemical munitions, but these costs have not yet been determined.

More recent environmental restoration cost data indicate that the
estimates are increasing. As noted in a June 2005 Congressional Research
Service report,22 the estimates for the recommended 33 major base

closures have increased by nearly $600 million to over $1.5 billion.
Estimated costs to complete environmental restoration now exceed $100
million at each of the following proposed major closures: Hawthorne Army
Depot, Nevada ($465 million); Otis Air National Guard Base, Massachusetts
($373 million); Fort Monroe, Virginia ($201 million); and Deseret Chemical
Depot, Utah ($180 million).

22 Congressional Research Service, Military Base Closures: Role and Costs
of Environmental Cleanup, (Washington, D.C.: June, 27, 2005). The report
used information from the Department of Defense, Defense Environmental
Programs Annual Report to Congress for FY 2004, dated April 2005.

Service officials told us that the projected cost estimates for
environmental restoration are lower, in general, than evidenced in
previous rounds, because the environmental conditions of today's bases are
much better than those closed or realigned in previous rounds, primarily
because of DOD's ongoing active base environmental restoration program.
Nonetheless, our prior work has indicated that as closures are
implemented, more intensive environmental investigations occur and
additional hazardous conditions may be uncovered that could result in
additional, unanticipated restoration and higher costs. Finally, the
services' preliminary estimates are based on restoration standards that
are applicable for the current use of the base property. Because reuse
plans developed by communities receiving former base property sometimes
reflect different uses for the property, this could lead to more stringent
and thus more expensive restoration in many cases.

While it is uncertain at this point what the ultimate restoration costs at
BRAC-affected bases will be, it is likely that environmental restoration
has the potential to slow the transfer of unneeded base property freed up
by the BRAC process to communities surrounding those bases. Our prior work
has shown that environmental restoration is the primary impediment to the
transfer of unneeded property to others for reuse. In our January 2005
report23 we noted that, as of September 30, 2004, the reasons why most of
the 140,000 acres from the prior four rounds remained untransferred were
due to issues regarding environmental restoration. Such delays in the
transfer of property have adverse effects on BRAC communities, as this
property cannot be put to productive reuse. In this regard, we believe it
is critical that the department adequately plan for and fund environmental
restoration requirements to provide for the expedited transfer of unneeded
property to others for subsequent reuse.

Assistance for BRAC-Affected Communities

The recommended actions for the 2005 BRAC round will have varying degrees
of impact on communities surrounding bases undergoing a closure or
realignment. While some will face economic recovery challenges as a result
of a closure and associated losses of base personnel, others, which expect
large influxes of personnel due to increased base activity, face a
different set of challenges involving community infrastructure necessary
to accommodate growth. These communities may likely require assistance
from various sources to help them address

23 GAO, Military Base Closures: Updated Status of Prior Base Realignments
and Closures, GAO-05-138 (Washington, D.C.: Jan. 13, 2005).

the many challenges facing them as they plan for either economic recovery
or infrastructure growth as a result of recommended BRAC actions.

DOD data indicate that most economic areas across the country are expected
to be affected very little by DOD's recommended actions, but a few could
face substantial impact. Almost 83 percent of the 244 economic areas
affected by BRAC recommendations fall between a 1 percent loss in
employment and a 1 percent gain in employment.24 However, for some of
these areas, the projected impact is fairly significant, ranging up to a
potential direct and indirect loss of up to nearly 21 percent. In this
regard, six communities-Cannon Air Force Base, New Mexico; Hawthorne Army
Depot, Nevada; Naval Support Activity Crane, Indiana; Submarine Base New
London, Connecticut; Eielson Air Force Base, Alaska; and Ellsworth Air
Force Base, South Dakota-had negative employment impacts ranging from 8.5
percent to 20.5 percent.

Our prior work has shown that a variety of factors will affect how quickly
communities are able to rebound from the negative economic consequences of
closures and realignments. They include such factors as trends associated
with the national, regional, and local economies; natural and labor
resources; effective planning for reuse of base property; and federal,
state, and local government assistance to facilitate transition planning
and execution. Our prior work has shown that most communities surrounding
closed bases in the previous rounds have been faring well in relation to
key national economic indicators- unemployment rate and the average annual
real per capita income growth rates.25 In our January 2005 report, for
example, we further reported that

while some communities surrounding closed bases were faring better than
others, most have recovered or were continuing to recover from the impact
of BRAC, with more mixed results recently, allowing for some negative
impact from the economic downturn nationwide in recent years.

The 2005 round, however, also has the potential to significantly affect a
number of communities surrounding installations, which are expected to
experience considerable growth in the numbers of military, civilian, and

24 Some of the recommendations had multiple actions that affected more
than one economic area.

25 GAO, Military Base Closures: Updated Status of Prior Base Realignments
and Closures, GAO-05-138 (Washington, D.C.: Jan. 13, 2005); GAO, Military
Base Closures: Progress in Completing Actions from Prior Realignments and
Closures, GAO-02-433 (Washington, D.C.: Apr. 5, 2002); and GAO, Military
Bases: Status of Prior Base Realignment and Closure Rounds,
GAO/NSIAD-99-36 (Washington, D.C.: Dec. 11, 1998).

civilian support personnel. DOD indicated that about 20 installations are
expected to experience a net gain of over 2,000 military and civilian
personnel. This is particularly evident for several Army bases, such as
Fort Belvoir, Virginia which is expected to have a net gain of over 20,000
military and civilian personnel, where personnel increases are likely to
place additional demands on community services, such as providing adequate
housing, schools, and other infrastructure support, for which the
communities may not have adequate resources in the short term.

Based on the experience from the previous BRAC rounds, we believe it is

likely that additional federal costs are likely to be incurred, although
these

costs are not required to be included in DOD's cost and savings analyses,

for providing assistance to BRAC-affected communities. These costs

include transition assistance, planning grants, and other assistance made

available to communities by DOD and other federal agencies. As we

reported in January 2005,26 in the previous four BRAC rounds, DOD's

Office of Economic Adjustment, the Department of Labor, the Economic

Development Administration within the Department of Commerce, and the

Federal Aviation Administration provided nearly $2 billion in assistance

through fiscal year 2004 to communities and individuals, and according to

DOD officials, these agencies are slated to perform similar roles for the

2005 round. We believe it is important that those agencies that have

traditionally provided assistance are prepared and adequately budget for

the necessary funds to provide assistance to those communities affected

by the BRAC 2005 process. As previously discussed, the number of bases

in the 2005 BRAC round that will gain several thousand personnel from the

recommended actions could increase pressure for federal assistance to

mitigate the impact on community infrastructure, such as schools and

roads, with the potential for more costs than in the prior rounds.

This concludes my statement. I would be pleased to answer any questions
you or other members of the Commission may have at this time.

For further information regarding this statement, please contact Barry W.
Holman at (202) 512-5581. Individuals making key contributions to this
statement include Nelsie Alcoser, Shawn Arbogast, Raymond Bickert, Andrew
Edelson, Mike Kennedy, Glenn Knoepfle, Nancy Lively, Warren Lowman, Tom
Mahalek, David Mayfield, Richard Meeks, Hilary Murrish,

                                  Contact and

                                Acknowledgments

26 GAO, Military Base Closures: Updated Status of Prior Base Realignments
and Closures,GAO-05-138 (Washington, D.C.: Jan. 13, 2005).

Charles Perdue, Robert Poetta, Jim Reifsnyder, James Reynolds, and Laura
Talbott.

Appendix I: 20-Year Net Present Value Savings from the Top 10 Percent of
DOD's BRAC 2005 Recommendations

                              Dollars in millions

                Recommendation 20-year net present value savings

           Realign to establish Navy Fleet Readiness Centers $4,724.2

          Realign supply, storage, and distribution management 2,925.8

                   Realign Eielson Air Force Base, AK 2,780.6

                    Close Cannon Air Force Base, NM 2,706.8

                    Realign Pope Air Force Base, NC 2,515.4

                     Realign to create joint basing 2,342.5

                 Realign Grand Forks Air Force Base, ND 1,982.0

Consolidate/co-locate active and reserve personnel and recruiting centers
for Army and Air 1,913.4 Force

Realign inventory control points and consolidate depot-level reparable
procurement 1,889.6 management

                   Close Ellsworth Air Force Base, SD 1,853.3

                  Close Submarine Base New London, CT 1,576.4

           Consolidate Defense Finance and Accounting Service 1,313.8

             Consolidate transportation command components 1,278.2

                  Close Naval Shipyard Portsmouth, ME 1,262.4

                        Close Fort Monmouth, NJ 1,025.8

                        Realign maneuver training 948.1

Close Brooks City-Base, TX 940.7

Realign to establish Combat Service Support Center at Fort Lee, VA 934.2

Close Naval Air Station Atlanta, GA 910.9

Close Fort McPherson, GA 895.2

Close and realign Naval Station Ingleside, TX, and Naval Air Station
Corpus Christi, TX, 822.2 respectively

Realign various medical activities by converting inpatient services to
clinics 818.1

Total savings from recommendations listed above $38,359.6 Total savings
from all BRAC 2005 submitted recommendations $48,804.5 Percentage of
recommendations listed above of all recommendations 79%

Source: GAO analysis of DOD data.

(350728)

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