Military Base Realignments and Closures: Plan Needed to Monitor  
Challenges for Completing More Than 100 Armed Forces Reserve	 
Centers (13-SEP-07, GAO-07-1040).				 
                                                                 
The Army is implementing 44 base realignment and closure (BRAC)  
recommendations to construct 125 new Armed Forces Reserve Centers
(AFRC) and close 387 existing reserve components facilities. The 
Department of Defense (DOD) expects the new AFRCs to increase	 
recruiting and retention and create greater efficiencies by	 
fostering jointness and consolidating functions. GAO (1) assessed
the extent DOD's cost and savings estimates to implement the	 
recommendations have changed from BRAC Commission projections and
(2) determined the extent the Army has identified potential	 
challenges that could affect BRAC implementation and has	 
developed a plan to address these challenges. GAO analyzed DOD's 
publicly available BRAC budget data and interviewed officials at 
Army offices, including Reserve Command, National Guard Bureau,  
and the National Guard in five states. This report, prepared	 
under the Comptroller General's authority to initiate		 
evaluations, is one of a series related to the BRAC 2005 round.  
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-07-1040					        
    ACCNO:   A76227						        
  TITLE:     Military Base Realignments and Closures: Plan Needed to  
Monitor Challenges for Completing More Than 100 Armed Forces	 
Reserve Centers 						 
     DATE:   09/13/2007 
  SUBJECT:   Armed forces reserves				 
	     Army facilities					 
	     Base realignments					 
	     Construction costs 				 
	     Cost analysis					 
	     Defense cost control				 
	     Military bases					 
	     Military facilities				 
	     Military facility construction			 
	     National Guard					 
	     Schedule slippages 				 
	     Strategic planning 				 
	     Cost growth					 
	     DOD Base Realignment and Closure Program		 

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GAO-07-1040

   

     * [1]Results in Brief
     * [2]Background
     * [3]Cost Estimates Have Increased from BRAC Commission's Project
     * [4]Potential Challenges Exist to Implement Army's BRAC Recommen

          * [5]Completing Construction of All AFRCs in Compressed Time Fram
          * [6]Realizing Efficiencies from New Military Construction Proces
          * [7]Potential Increasing Land and Supporting Infrastructure Cost
          * [8]Changing Force Structure and Mission Requirements for Units
          * [9]The Army's Ability to Monitor and Quickly Address Potential

     * [10]Conclusions
     * [11]Recommendation for Executive Action
     * [12]Agency Comments and Our Evaluation
     * [13]GAO Contact
     * [14]Acknowledgments
     * [15]GAO's Mission
     * [16]Obtaining Copies of GAO Reports and Testimony

          * [17]Order by Mail or Phone

     * [18]To Report Fraud, Waste, and Abuse in Federal Programs
     * [19]Congressional Relations
     * [20]Public Affairs

                 United States Government Accountability Office

Report to Congressional Addressees

GAO

September 2007

                    MILITARY BASE REALIGNMENTS AND CLOSURES

  Plan Needed to Monitor Challenges for Completing More Than 100 Armed Forces
                                Reserve Centers

GAO-07-1040

MILITARY BASE REALIGNMENTS AND CLOSURES

Plan Needed to Monitor Challenges for Completing More Than 100 Armed
Forces Reserve Centers

  What GAO Found

Since the BRAC Commission issued its projections in 2005, DOD's cost
estimates for implementing the reserve component recommendations have
increased at the same time savings estimates have decreased.
Implementation cost estimates increased from $2.9 billion to $3.2
billion--a 13 percent or $363 million increase in constant dollars--mostly
due to higher military construction cost estimates. Annual recurring
savings estimates decreased from $323 million to $288 million--an 11
percent decrease in constant dollars. However, GAO analysis suggests that
these savings could be significantly less than currently estimated because
over 90 percent of these savings are associated with eliminating positions
currently held by military personnel without corresponding decreases in
end strength in the force structure. GAO and the BRAC Commission have
previously reported that military personnel eliminations are not a true
source of savings because DOD does not expect to reduce end strength
correspondingly but rather intends to reassign or shift these personnel to
vacant positions in other areas. Although GAO agrees that transferring
personnel to vacant positions may enhance capabilities and allows DOD to
redirect freed-up resources to another area of need, GAO does not believe
that such transfers produce a tangible dollar savings that DOD can apply
to fund other defense priorities outside the military personnel accounts
because these personnel will remain in the end strength--continuing to
receive salaries and benefits. However, DOD's treatment of military
personnel savings represents a long-standing difference of opinion between
DOD and GAO.

The Army has identified several potential challenges in implementing the
44 reserve component recommendations. These include completing many
construction projects in a compressed time frame, realizing efficiencies
based on limited testing of new military construction processes, potential
increasing land and supporting infrastructure costs, and changing force
structure and mission requirements that may affect facility capacity. The
Army has started construction on 5 of the 125 AFRC projects, and the
extent these challenges might occur remains uncertain until the Army
receives and evaluates more AFRC construction proposals and more AFRCs are
built. However, because the Army does not have a plan to routinely bring
together the various key stakeholders involved in the construction of
these facilities, including the state Army National Guard when
appropriate, the extent the Army is able to monitor and quickly address
potential challenges is unclear. Best practices suggest that involving
stakeholders in planning can help create a clearer understanding among the
stakeholders of competing demands, the limited resources available, and
how those demands and resources require continuous balancing. Without a
plan that brings together key stakeholders, it could be more difficult for
the Army to monitor for implementation challenges and work through
alternatives to mitigate them in a timely manner.

                 United States Government Accountability Office

Contents

  Letter 1

[21]Results in Brief 3 [22]Background 7 Cost Estimates Have Increased from
BRAC Commission's

[23]Projections While Savings Estimates Decreased 10 Potential  Challenges
Exist to Implement Army's BRAC

[24]Recommendations Affecting Its Reserve Components 12 [25]Conclusions 21
[26]Recommendation for  Executive Action  21 [27]Agency  Comments and  Our
Evaluation 22

[28]Appendix I Scope and Methodology

[29]Appendix II Comments from the Department of Defense

[30]Appendix III GAO Contact and Staff Acknowledgments

[31]Related GAO Products

  Table

[32]Table 1: Comparison of BRAC Cost and Savings Estimates

  Figures

[33]Figure 1: Armed  Forces Reserve Center,  Greenville, North Carolina  8
Figure 2: Locations Where the Army Plans to Construct New

[34]Armed Forces Reserve Centers by September 15, 2011 10 Figure 3: Army's
Rescheduling of AFRC Project Construction

[35]Starts (Fiscal Years 2006 through 2011) 13

Abbreviations

AFRC       Armed Forces Reserve Center          
BRAC       base realignment and closure         
DOD        Department of Defense                
OSD        Office of the Secretary of Defense 

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United States Government Accountability Office
Washington, DC 20548

September 13, 2007

Congressional Addressees

On May 13, 2005, the Department of Defense (DOD) made public its
recommendations for base realignment and closure (BRAC) as part of an
effort to reduce excess infrastructure and costs, further transformation,
and foster jointness. After performing its own analysis, the BRAC
Commission ^[36]1 forwarded the recommendations to the President for
approval. These recommendations were accepted in their entirety by the
President and Congress, and became effective on November 9, 2005. The BRAC
Commission directed 56 BRAC 2005 recommendations to the Army, of which 44
pertained to the reserve components. ^[37]2 These 44 recommendations
represent more than 500 individual actions representing over 60 percent of
the BRAC actions for all the services and primarily direct the Army
National Guard and Army Reserve to construct 125 new Armed Forces Reserve
Centers (AFRC) and close 387 existing facilities. DOD expects the new
AFRCs will increase recruiting and retention and create greater
efficiencies and improved effectiveness by fostering jointness and
consolidating functions. Moreover, the Army reported to the BRAC
Commission that these new AFRCs will increase military value and improve
the readiness and ability of the reserve components to train and deploy in
support of current and future contingency operations. At the same time the
Army is to construct these AFRCs, it is also undertaking a massive
worldwide restationing initiative that involves the implementation of
other significant Army BRAC recommendations; the relocation of about
50,000 soldiers and their families from Germany and Korea to the United
States; the transformation of an Army force structure based on a division
organization to more rapidly deployable, brigade-based units; and an
increase in the Army's authorized end strength by 74,000 over the next 5
years. By statute, DOD must complete the recommendations for closing or
realigning bases made in the BRAC 2005 round within a 6-year time frame
ending September 15, 2011--6 years from the date the President submitted
to Congress his approval of the commission's recommendation. ^[38]3 As a
result, the ability to quickly identify and mitigate challenges that could
arise is imperative to the Army's success in managing the construction of
125 AFRCs, implementation of over 500 actions, and meeting the BRAC
statutory 2011 deadline.

^1BRAC legislation (Pub. L. No. 101-510, Title XXIX, as amended by Pub. L.
No. 107-107, Title XXX) provided for an independent commission to review
the Secretary of Defense's realignment and closure recommendations and
present its findings and conclusions on the Secretary's recommendations,
along with its own recommendations, to the President.

^2The Army National Guard, Army Reserve, Air Force Reserve, Air National
Guard, Navy Reserve, Marine Corps Reserve, and Coast Guard Reserve
constitute the DOD reserve components. The reserve component
recommendations addressed in this report only involve the Army. The other
reserve components are addressed in separate recommendations.

This report is one in a series of reports that detail the progress DOD has
made in implementing the base closures and realignments included in the
BRAC 2005 round. Because of the broad congressional interest in the BRAC
process, we performed our work under the Comptroller General's authority
to conduct evaluations under his own initiative. ^[39]4 In this report, we
assessed the extent to which (1) BRAC cost and savings estimates for the
Army reserve component recommendations have changed from BRAC Commission
projections and (2) the Army has identified potential challenges that
could affect the implementation of the recommendations and has developed a
plan to address these challenges. This report is addressed to you to
facilitate your oversight role for the Army's infrastructure and BRAC
implementation issues.

To accomplish these objectives, we assessed the changes to the cost and
savings estimates reported in the BRAC Commission report and the Army's
BRAC budget justification materials provided to Congress in support of the
President's fiscal year 2008 budget request. All cost and savings
estimates have been adjusted for inflation and are presented in fiscal
year 2005 constant dollars. In addition, we interviewed key officials
involved in implementing the recommendations to understand the potential
challenges the Army faces in completing the recommendations by the end of
the 6-year statutory completion period. We performed our work at the
Office of the Secretary of Defense's (OSD) BRAC Office, Office of the
Assistant Secretary of Defense for Reserve Affairs, Office of the
Assistant Secretary of the Army for Installations and Environment, Army's
Office of the Assistant Chief of Staff for Installation Management,
National Guard Bureau, Office of the Chief Army Reserve, Army Reserve
Command, and U.S. Army Corps of Engineers. We also interviewed National
Guard officials in five states and officials in two Army Reserve
regional readiness commands most affected by the BRAC 2005
recommendations. We found DOD's data to be sufficiently reliable for the
purposes of this report and for making broad estimated cost and savings
comparisons. We conducted our work from June 2006 through June 2007 in
accordance with generally accepted government auditing standards. Further
details on our scope and methodology can be found in appendix I.

^3Pub. L. No. 101-510, S 2904, as amended (1990).

^4 31 U.S.C. S 717.

                                Results in Brief

DOD's cost estimates for implementing the Army reserve component
recommendations have increased compared with those projected by the BRAC
2005 Commission while the savings estimates have decreased. Based on data
in DOD's fiscal year 2008 President's budget submission, estimated costs
to implement the recommendations have increased from $2.9 billion to $3.2
billion in constant fiscal year 2005 dollars--a 13 percent or $363 million
increase--mostly because of higher military construction cost estimates.
Furthermore, we calculated that the annual recurring savings projected to
accrue starting in 2012 decreased by 11 percent, to $288 million.
Moreover, our analysis suggests that these annual recurring savings could
be significantly less than what is projected in the fiscal year 2008
budget submission because more than 90 percent of these savings are
associated with eliminating positions currently held by military personnel
without corresponding force structure end-strength reductions. We have
previously reported, and the BRAC Commission agreed, that military
personnel position eliminations are not a true source of savings because
DOD does not expect to reduce end strength correspondingly but rather
intends to reassign or shift these personnel to vacant positions in other
areas. DOD's assumption behind the military personnel savings is that
transferring military personnel to vacant positions allows DOD to obtain
new and additional capabilities without having to request additional
appropriations to hire personnel for these positions. Although we agree
that transferring personnel to vacant positions may enhance capabilities
and allows DOD to redirect freed-up resources to another area of need, we
do not believe that such transfers produce a tangible dollar savings that
DOD can apply to fund other defense priorities outside the military
personnel accounts because these personnel will remain in the end
strength--continuing to receive salaries and benefits. In fact, the Army
plans to increase its reserve component's end-strength authorization by
about 9,000 military members over the next 5 years. Not recognizing that
these dollar savings cannot be readily applied elsewhere could create a
false sense of the savings available for use in other areas outside the
military personnel account, such as modernization. However, DOD's
treatment of military personnel savings represents a long-standing
difference of opinion between DOD and us.

The Army has identified several potential challenges that could affect its
ability to successfully construct all 125 AFRCs within the current $3
billion estimate and by the 2011 statutory deadline; ^[40]5 however, it is
unclear whether the Army will be able to successfully address these
challenges because the Army does not have a plan that routinely brings
together the various stakeholders, including the state Army National Guard
when appropriate, to help them monitor for implementation challenges and
to quickly take steps to mitigate those challenges should they occur.
Although the Army has started construction on only 5 out of 125 AFRCs (3
Reserve-led and 2 Guard-led) and none were completed at the time we
completed the work for this report, reserve component officials told us
that the more significant challenges that could affect BRAC implementation
are the following:

     o Completing construction of all AFRCs in compressed time frame: The
       Army rescheduled the construction for many AFRC projects to start
       later in the BRAC implementation period, thus increasing the number of
       projects to be managed in a more compressed time frame. This
       compressed construction time frame, in turn, reduces the time
       available to mitigate unforeseen problems that may arise and increases
       the risk that the AFRC projects and BRAC-recommended realignments may
       not be completed by the 2011 statutory deadline.
     o Realizing efficiencies from new military construction processes that
       have undergone limited testing: The Army recently transformed its
       military construction process in an effort to reduce costs and build
       facilities faster. Because these new processes have undergone limited
       testing, it remains uncertain whether these efficiencies will be
       realized although the Army has already included these projected
       efficiency savings in its BRAC budget estimates for fiscal years 2006
       through 2011.
     o Potential increasing land and supporting infrastructure costs: Cost
       estimates for land and supporting infrastructure could be higher
       because for many AFRCs earlier estimates were too low. Also,
       supporting infrastructure, such as access roads and utilities, are
       lacking because of the remoteness of some AFRC sites, which officials
       told us could increase costs.

^5Per  the  Commission's  recommendations,  the  Army  is  not  required  to
construct certain AFRCs if the Army is unable to acquire land suitable for
construction of the facilities.

Page 4 GAO-07-1040 Military Base Realignments and Closures

o Changing force structure and mission requirements for units slated to
occupy AFRCs: Future force structure and mission requirements could change
the composition and requirements of some units relocating into new AFRCs.
As a result, Army National Guard officials told us that some new centers
may not fully meet the personnel and equipment requirements of certain
types of newly-formed units, such as the fires brigades being created by
Army modularity. ^[41]6

It is unclear whether the Army will be able to successfully address these
challenges if they arise because the Army does not have a plan that
routinely brings together the various stakeholders, including the state
Army National Guard when appropriate, as a group to help them monitor for
potential challenges and develop plans to mitigate the challenges should
they occur. Effective development of such a plan for BRAC implementation
would better enable the Army to measure progress toward its goals and
identify strategies to meet goals that were not met because of
implementation challenges. Reserve component officials further noted that
this issue is important given that so many stakeholders with varying
viewpoints and perspectives on the potential challenges are involved in
the construction of the 125 AFRCs. Although the construction of these
reserve centers is guided by 44 separate business plans that describe
required actions, their timing, and resources, both Army National Guard
and Reserve Command officials told us that these plans do not provide the
information needed to quickly develop plans to mitigate these challenges
should they occur. In addition, Army officials told us that should some of
these challenges occur, they might have to adapt by choosing one or more
of the following alternatives: (1) requesting more BRAC funds,
(2) reducing the scope of a construction project, (3) expanding the
           use of alternative, less expensive construction materials, (4)
           requesting additional funds from the regular military construction
           appropriations, or
(5) using funds as allowable from operation and maintenance
           appropriations. Finally, National Guard officials said they could
           exercise additional alternatives, such as using state funds,
           seeking assistance from
state congressional delegations, or allowing temporary overcrowding of the
AFRCs. However, the extent to which challenges will occur and alternatives
will be used remains uncertain until the Army receives and evaluates more
AFRC construction proposals and more centers are built.

^6Army modularity, which has been referred to as the largest Army
reorganization in 50 years, encompasses the Army's total force and
directly affects the Army's combat units and its related support and
command and control. The foundation of Army modularity is the creation of
brigade combat teams that will have a common organizational design and
will increase the pool of available units for deployment. Many units of
the Army National Guard and the Army Reserve are being reorganized because
of Army modularity into organizations such as fires brigades, which
combine the functions of division artillery, general support field
artillery, and corps artillery into one organization.

To better ensure that BRAC 2005 recommendations affecting the Army's
reserve components and interests of the states are effectively managed and
any potential adverse effects are quickly identified, we are making a
recommendation to the Secretary of Defense to direct the Secretary of the
Army to develop a plan for routinely bringing together the various
stakeholders as a group, to include the state Army National Guard when
appropriate, to monitor for and develop steps to mitigate implementation
challenges should they occur. Without a plan that involves bringing
together the stakeholders to help monitor for challenges and work through
alternatives, early identification of challenges and development of steps
to mitigate them in a timely manner becomes more difficult. Best practices
suggest that involving stakeholders in planning can help create a clearer
understanding among the stakeholders of competing demands, the limited
resources available, and how those demands and resources require
continuous balancing.

In commenting on a draft of this report, DOD partially concurred with our
recommendation. While stating that we appropriately highlighted BRAC
implementation challenges due to transformation, modularity, mission
changes, and construction factors affecting BRAC military construction
projects, to include changes to initial BRAC cost savings projections and
military construction time frames, DOD believes that we overlooked the
existence of various groups, forums, or plans that the Army has in place
to assist with BRAC execution and management. Although we were aware of
these groups, forums, and plans during the course of our work, we
nonetheless found that these venues were not adequately meeting the needs
of many reserve component and state-level stakeholders. For example,
during our review many Army National Guard and Reserve officials still
expressed confusion and frustration over how to respond to certain
challenges associated with the construction of the 125 new AFRCs despite
the existence of these various venues. Moreover, these AFRCs are to be in
38 states and because local circumstances may vary, it is unclear how
planning groups that exclude the states will be positioned to effectively
mitigate the risks that may be unique to a given location. Consequently,
we still believe that the Army would benefit from routinely bringing
together the reserve component and state-level stakeholders who are
playing a vital role in the planning of the actual design and construction
of the AFRCs so that challenges and issues can be effectively
mitigated before the AFRCs are built and subsequently require potential
modification. As a result, we continue to believe that our recommendation
has merit. However, to clarify our intent, we modified our recommendation
to specifically include state National Guard stakeholders when
appropriate. DOD's written comments are reprinted in appendix II. DOD also
provided technical comments, which we have incorporated into this report
as appropriate.

                                   Background

The BRAC Commission directed 56 BRAC 2005 recommendations to the Army, of
which 44 pertained to the reserve components. After the 44 reserve
component recommendations became effective on November 9, 2005, OSD
required the Army to submit a detailed business plan for each
recommendation that includes information such as a listing of all BRAC
actions, schedules for personnel movements between installations and
reserve centers, updated cost and savings estimates, and implementation
completion time frames. In total, the 44 recommendations affecting the
reserve components direct the construction of 125 new AFRCs. Of the 44
recommendations, 5 involve the realignment of the Army Reserve's command
and control structure within five regional areas. An AFRC is a joint-use
facility that accommodates units from two or more reserve components. The
primary function of an AFRC is to provide administrative, training, and
storage areas for the assigned military units. As a joint-use facility,
the interior of an AFRC consists of space shared by all occupying
components--such as assembly halls, classrooms, conference rooms, physical
fitness areas, and restrooms--as well as space used exclusively by
individual components, such as offices, equipment storage, and weapons
vaults. In addition, a vehicle maintenance shop with work bays and
maintenance administrative support facilities is generally adjacent to the
AFRC to allow units to store and maintain their respective military
vehicles and related equipment. Figure 1 shows an example of an existing
AFRC.

       Figure 1: Armed Forces Reserve Center, Greenville, North Carolina

Source: Army Corps of Engineers.

The implementation of these BRAC recommendations involves many key
stakeholders with differing levels of responsibilities.

        o Army headquarters level has four main offices with BRAC
          responsibilities.

             o Assistant Secretary of the Army for Installations and
               Environment establishes overall Army BRAC policy, direction,
               and oversight.
             o Assistant Chief of Staff for Installation Management manages
               the overall execution of Army BRAC actions. This office has
               two primary divisions with BRAC responsibilities. First, the
               BRAC Division serves as the program manager for Army base
               closures, realignments, and disposals and manages the
               financial aspects of the BRAC program. Second, the Army
               Reserve Division serves as the principal advisor for the Army
               Reserve BRAC recommendations.
             o Army Reserve Command oversees the Army Reserve's
               transformation and integrates it with the BRAC program.
             o National Guard Bureau serves as the central coordinator for
               the individual states and for the Army National Guard BRAC
               recommendations.

        o At the state and regional level, there are two other organizations
          with BRAC responsibilities.

             o Reserve regional readiness commands manage the facilities for
               the Army Reserve units assigned in their respective region. In
               partnership with the Army Reserve Division, these commands
               develop the requirements and budget justification documents
               needed to construct the 76 Reserve-led AFRCs.
             o State National Guard Construction and Facilities Management
               Offices are the principal administrators for the states'
               military real property, facilities, military construction, and
               environmental programs. In partnership with the National Guard
               Bureau, these state offices develop the requirements and
               budget justification documents needed to construct the 49
               National Guard-led AFRCs.

     o The Army Corps of Engineers is the Army's primary construction agent
       and provides military construction execution oversight for Reserve-led
       AFRCs. It also assists the Army Reserve Division in the development
       and preparation of the requirements and budget justification documents
       needed to construct the Reserve-led AFRCs.

Responsibility for managing the actual construction of the AFRCs is
divided between the two Army Reserve Components--Army National Guard and
the Army Reserve--with land ownership being a key determinant of which
component manages which AFRC project. For AFRCs built on federal land,
whether already owned or to be acquired by the federal government, the
Army Reserve is the lead component (76 centers out of 125). In these
cases, the Army Reserve in partnership with the Army Corps of Engineers
identifies and purchases the land, if needed, and the Corps manages the
construction. In contrast, for AFRCs built on state land, whether already
owned or to be acquired by the state, each state's respective Army
National Guard is the lead component (49 centers out of 125). The National
Guard became the lead for these 49 projects because it indicated to the
Army that it either already owned suitable land for the AFRC or was able
to acquire it at no cost to the federal government. For these National
Guard-led AFRCs, each state's Construction and Facilities Management
Office, rather than the Army Corps of Engineers, manages the contracting.
Regardless of the reserve component that manages the construction and
where the AFRCs are built, DOD provides 100 percent of the funding to
construct the 125 AFRCs. States are not required to share in AFRC
construction cost. The expected cost of the 125 AFRCs ranges from $1.5
million to up to $81 million. The Army started construction on 5 AFRCs in
2006 and expects to start construction on 27 more in late fiscal year 2007
if funding becomes available. Figure 2 shows the location of the 125 AFRCs
expected to be constructed because of BRAC recommendations.

 Figure 2: Locations Where the Army Plans to Construct New Armed Forces Reserve
                         Centers by September 15, 2011

                 Source: BRAC Commission (data); MapInfo (map).
					  
  Cost Estimates Have Increased from BRAC Commission's Projections While Savings
  Estimates Decreased

Data from the fiscal year 2008 President's budget submission show that
expected costs for implementing the BRAC Army reserve component
recommendations have increased and expected savings have decreased from
the BRAC Commission projections. We calculated that DOD's onetime costs to
implement the BRAC Army reserve component recommendations increased $363
million or 13 percent, from $2.9 billion to $3.2 billion, during the BRAC
6-year implementation period compared to the BRAC Commission's estimates.
After the BRAC implementation period, we calculated that DOD will achieve
a net annual savings of $288 million, 11 percent less than the BRAC
Commission's estimate of $323 million, as shown in table 1.

Table 1: Comparison of BRAC Cost and Savings Estimates
Dollars in millions (constant fiscal year 2005 dollars)
                                                                   Difference
                               2005 BRAC DOD's fiscal                 
                              Commission year 2008                    
                                reported          budget              
                               estimates      estimates  Amount    Percentage
Onetime costs during           $2,857         $3,220      $363          13
implementation through fiscal                                  
year 2011                                                      
Net annual recurring savings        323          288     (35)         (11) 
after the implementation                                       
period                                                         

Source: GAO's analysis.

Increases in projected military construction costs account for 97 percent
of the increase in onetime costs during implementation. Projected military
construction costs mainly rose because of increased requirements that
resulted from the BRAC Commission's estimates either underestimating the
amount of construction needed or omitting certain requirements, such as
vehicle maintenance shops, that have now been included. For example, the
estimated military construction costs for the recommendation to build 17
AFRCs in Texas increased from $313 million to $387 million, or 24 percent,
mostly because the original square footage estimates for many of the new
AFRCs were underestimated and lacked vehicle maintenance shops.

In addition, the savings projected to accrue from the BRAC 2005 reserve
component recommendations starting in fiscal year 2012 have decreased.
Although achieving savings is one of the rationales for undertaking a BRAC
round, DOD also cited other goals such as achieving reserve component
transformation and increasing recruiting and retention to justify the need
for the reserve component recommendations. Once implementation is
completed, DOD believes it will achieve a steady rate of annual savings.
The BRAC Commission estimated that the BRAC 2005 Army reserve component
recommendations would result in an annual recurring savings of $323
million. Based on data in DOD's fiscal year 2008 President's budget
submission, annual recurring savings decreased by 11 percent, to $288
million. However, 92 percent or $265 million of the annual recurring
savings are attributable to eliminating positions currently held by
military personnel, which both we and the BRAC Commission do not consider
savings because the Army reserve components do not plan to
reduce their military personnel end strength. If the savings due to
military personnel eliminations are removed, then annual recurring savings
would be reduced from $288 million to $23 million. We have previously
reported, and the BRAC Commission agreed, that military personnel position
eliminations are not a true source of savings because DOD does not expect
to reduce end strength correspondingly but rather intends to reassign or
shift these personnel to vacant positions in other areas. DOD's assumption
behind the military personnel savings is that transferring military
personnel to vacant positions allows DOD to obtain new and additional
capabilities without having to request additional appropriations to hire
personnel for these positions. Although we agree that transferring
personnel to vacant positions may enhance capabilities and allows DOD to
redirect freed-up resources to another area of need, we do not believe
that such transfers produce a tangible dollar savings that DOD can apply
to fund other defense priorities outside the military personnel accounts
because these personnel will remain in the end strength--continuing to
receive salaries and benefits. In fact, the Army plans to increase its
reserve component's end-strength authorization by about 9,000 military
members over the next 6 years. Not recognizing that these dollar savings
cannot be readily applied elsewhere could create a false sense of the
savings available for use in other areas outside the military personnel
account, such as modernization. However, DOD's treatment of military
personnel savings represents a long-standing difference of opinion between
DOD and us.

  Potential Challenges Exist to Implement Army's BRAC Recommendations Affecting
  Its Reserve Components

The Army identified several challenges that it may face when implementing
the BRAC 2005 reserve component recommendations to build 125 AFRCs.
Although the Army has started construction on only 5 out of 125 AFRCs (3
Reserve-led and 2 Guard-led) and none were completed at the time we
completed the work for this report, reserve component officials told us
that the more significant challenges that could affect BRAC implementation
include completing many construction projects in a compressed time frame,
realizing efficiencies when using new military construction processes,
potential increasing land and supporting infrastructure costs, and
changing force structure and mission requirements that affect facility
capacity.

Completing Construction of All AFRCs in Compressed Time Frame

Other BRAC funding priorities caused the Army
recently to shift the start of many of its AFRC projects to the later
years of the time frame ending 
with the BRAC statutory 2011 deadline. This approach compresses the amount
of time available to construct the facilities and respond to any
construction delays that might arise and consequently increases the risk
that the projects will not be completed in time to meet the BRAC statutory
completion deadline. As shown in figure 3, the Army rescheduled the start
of 20 projects that originally were slated to begin construction in either
fiscal year 2008 or 2009 to fiscal year 2010--the second to last year of
the BRAC statutory completion period.

Figure 3: Army's Rescheduling of AFRC Project Construction Starts (Fiscal
Years 2006 through 2011)

    Number of projects

50 49

40

3331 31 29

30

27 27

20

13

10

55

0 2006 2007 20082009 2010

    Year

Number of projects scheduled to start according to business plans (Spring
2006)

Number of projects scheduled to start according to fiscal year BRAC
2008budget justification (Spring 2007) Source: GAO'sanalysis of OSD and
Army data.

Note: Data are from OSD-approved business plans and the fiscal year 2008
Army budget justification submission to Congress.

According to Army officials, the Army's reasoning for shifting many AFRCs
to the later implementation years was to fund the more costly and complex
BRAC recommendations first, such as those that could affect Army combat
missions at locations like Fort Bliss, Texas, and Fort Riley, Kansas,
earlier in the implementation period than originally planned. Also
according to Army officials, the Army would assume less risk as smaller
projects theoretically can be completed within shorter time frames
compared to  larger projects,  which we  believe is  reasonable given  our
understanding of the BRAC construction process.

    Realizing Efficiencies from New Military Construction Processes That Have
    Undergone Limited Testing

Army officials also stated that the Army could be challenged in realizing
anticipated cost savings from the Army Corps of Engineers' recent military
construction transformation efforts. To reduce construction costs and
complete construction projects faster, the Corps is currently transforming
and streamlining its process for managing and contracting military
construction projects by allowing contractors flexibility in using a wider
variety of less expensive commercial construction materials while still
meeting all the applicable building codes and functional and technical
requirements. A major component of the transformation initiative is the
use of a standard request for proposal that is less prescriptive. Based on
these and other transformation changes, the Corps expects that
construction costs of the primary facilities will be reduced by 15
percent. As such, the Army has already incorporated a 15 percent reduction
in its construction estimates for all the AFRCs it is expected to build
under BRAC. Although preliminary results are encouraging for several
active Army construction projects, results based on a few AFRC projects
remain inconclusive. Specifically, the Corps initiated three Army
Reserve-led AFRC construction projects in 2006, which were awarded for
amounts less than the amount budgeted by the Army. However, it is
uncertain whether this cost reduction can be totally attributable to
military construction transformation, as the supporting infrastructure
costs to develop the sites for these projects were lower than what would
typically be expected for an AFRC. According to Corps officials, these
three pilot AFRC projects were located on Army installations with access
to roads and available utilities, whereas most Army AFRC projects are
expected to be located at remote or undeveloped sites that could be more
expensive to develop because they generally require more road development
and utility access. Moreover, it is uncertain whether the National Guard
will achieve any of the military construction transformation savings
because it does not generally use the Corps for managing construction
projects and the states are not obligated to incorporate many of these
transformational practices into the construction of the 49 Guard-led
AFRCs, even though the projects are federally funded.

Further, Army Corps of Engineers officials told us that some of the
expected military construction transformation savings could decrease if
the cost of construction materials escalates or there is a shortage of
construction labor, especially in locations of high construction volume.
Corps officials told us that in the last several years, the actual rate of
construction inflation has exceeded the federal government's inflation
rate as determined by the Office of Management and Budget, which DOD is
required to use in budgeting for its construction projects. While this
difference was as high as 6.1 percentage points in 2004, the difference
between the actual rate of construction inflation and the government's
inflation rate has diminished recently. We note, however, that this trend
may not necessarily continue into the future depending on the economics
surrounding the construction industry. However, if construction inflation
continues to exceed the rates used in the construction budget process,
Corps officials told us they will try to overcome the inflation difference
by negotiating with the building contractors for a lower construction
price, redirecting funds from other sources, or reducing the scope of some
construction projects. ^[42]7 Given the potential for underestimated
future inflation rates, combined with the fact that DOD is still early in
the BRAC implementation process and the Corps has only started
construction on three reserve-led AFRC projects (with the efficiencies
gained from military construction transformation for those three being
inconclusive), the Army lacks assurance it will be able to achieve the 15
percent reduction in military construction costs for the AFRC projects
until it receives bids from more projects. Thus, it might have been
premature of the Army to have already incorporated these anticipated
savings into its BRAC budget requests before the Corps has more
information with which to evaluate the results.

Some Army officials also expressed concern that the Army Corps of
Engineers' military construction transformation could result in a
reduction in quality for the centers. Under military construction
transformation, the Corps is broadening the construction materials
standards for the AFRC projects it is managing. According to the Corps,
broadening the standards will allow contractors to pursue a wider variety
of alternate building systems in lieu of typical reserve standards, which
is expected to help keep costs down. Previously, the Reserves generally
required their AFRCs to be built using brick or concrete block. Now
contractors--while still meeting all applicable building codes and
technical requirements for the facility--may propose less expensive
alternatives, such as wood frame, prefabricated and modular construction
systems. For example, in two 2006 pilot projects the typical reserve
standard of concrete blocks covered with a brick veneer was replaced with
a less expensive metal frame
covered with a brick veneer. However, several state-level Army National
Guard officials and some Corps officials we met viewed this broadening of
standards as a reduction in quality and maintain that the savings
generated from using alternative construction materials may be offset
later by increased maintenance and repair costs. Corps officials told us
that they will be monitoring construction quality under these new
processes but the actual outcome remains uncertain until the Army receives
and evaluates more AFRC construction proposals and more centers are built.

^7The House Armed Services Committee has directed the Secretary of Defense
to submit an analysis of the construction cost inflation differences by
February 1, 2008. H.R. Rep. No. 110-146, at 520 (2007) (Conf. Rep.).

    Potential Increasing Land and Supporting Infrastructure Costs

Army Corps of Engineers officials indicated that cost estimates for
acquiring needed land and building supporting infrastructure could be
higher than estimated because earlier estimates were too low for many
Reserve-led projects ^[43]8 and because supporting infrastructure, such as
access roads and utilities, is lacking because of the remoteness of some
AFRC sites. Although the BRAC Commission attempted to estimate purchase
prices for land while developing the recommendations, cost projections for
many AFRCs are expected to be higher based on some recent site visits. For
example, in Connecticut, land has not been identified for a Reserve-led
AFRC slated to start construction in 2007 because according to Corps
officials the average cost of several proposed locations is $2
million--$1.1 million higher than initially projected. This could be even
more problematic in the later years of BRAC's implementation period
because as land identification is delayed, inflation and market demands
could further increase land costs. According to our analysis, the Reserves
have 18 projects slated to begin from 2008 to 2010 where land costs are
expected to exceed the amount estimated by the BRAC Commission. However,
the extent these costs could increase will depend on the economics of the
real estate market at the time of purchase. Moreover, Corps officials told
us that because some Reserve-led AFRCs are expected to be at remote
undeveloped sites, actual costs for supporting infrastructure, such as
access roads and electricity, water, and sewer lines, could be higher than
currently projected. Other Army officials, on the other hand, stated to us
that higher than expected land acquisition and infrastructure support
costs will not be a significant issue because the Army can use funds from
other BRAC projects if costs for those other projects are lower than
expected. For example, a challenging site location at Fort Lewis caused an
increase in the cost estimate and as a result the
Army recently initiated action to increase the programmed amount by $4
million. Although the Army was able to reallocate money for the Fort Lewis
project, Corps of Engineers officials told us that some future projects
could incur significantly higher supporting costs that the Army may be
challenged in funding.

^8 Per  the  Commission's  recommendations,  the  Army  is  not  required  to
construct certain AFRCs if the Army is unable to acquire land suitable for
construction of the facilities.

    Changing Force Structure and Mission Requirements for Units Slated to Occupy
    AFRCs

Army officials noted that the Army's changing force structure and mission
requirements may affect the capacity of the AFRCs to meet the personnel
and equipment requirements of some units relocating into new AFRCs. Army
modularity is restructuring combat and combat support units from a
division organization to smaller, more rapidly deployable brigade-size
units. Reserve and National Guard officials told us that they planned for
Army modularity changes in determining facilities requirements to the
extent information was known, but some units were reconfigured,
disestablished, or newly activated after the BRAC recommendations became
effective, which complicates how the BRAC recommendations will be applied
to these units. Furthermore, some Army National Guard officials told us
that the new centers may not fully meet the personnel and equipment
requirements of certain types of units. For example, Guard officials told
us that personnel requirements for the newly formed fires brigade were
less defined when the BRAC recommendations became effective and these
requirements have doubled since then (e.g., fires brigades have grown from
350 to 750 personnel). As more force structure and mission change
challenges emerge, Army BRAC offices, the National Guard Bureau, the Army
Audit Agency, and the individual affected states are discussing BRAC
implications. Although they are uncertain about precise outcomes due to
Army modularity, Guard officials we interviewed did not see modularity as
posing an insurmountable implementation challenge at this time because
they tried to incorporate future modularity changes--to the extent the
changes were known--into AFRC requirements and because state governors
have flexibility to balance space requirements of their units with
available facilities in the states to station their Guard units. However,
because so few AFRCs have actually begun construction the extent to which
pending force structure and mission changes could be potential problems
remains uncertain.

    The Army's Ability to Monitor and Quickly Address Potential Challenges Is
    Unclear

It is unclear whether the Army will be able to successfully address
potential implementation challenges affecting the completion of 125 AFRC
projects because it does not have a plan that routinely brings together
the various stakeholders, including the state Army National Guard when
appropriate, to monitor and address these challenges. Although the Army
has several venues in place to assist with BRAC execution and management,
^[44]9 in discussions with Army BRAC headquarters officials they
acknowledged to us that they could be more proactive in outreaching and
communicating with the stakeholders over how to deal with and mitigate
particular challenges associated with constructing 125 AFRCs. Effective
development of a plan to address challenges associated with the BRAC
implementation would enable the Army to better communicate with
stakeholders, measure progress toward its goals, and identify strategies
to meet goals that were not met because of implementation challenges. Such
planning is important to ensure that an organization's activities support
its goals and are guided by good business principles, such as those
embodied in the Government Performance and Results Act of 1993. ^[45]10
Although the construction of the AFRCs is guided by 44 separate business
plans that describe required actions, their timing, and resources, Guard
and Reserve officials said that these plans do not provide the information
needed to monitor for potential challenges or the steps needed to quickly
mitigate them. Furthermore, we have previously reported that involving
stakeholders in planning efforts can help create a clearer understanding
among the stakeholders of the competing demands that confront most
agencies, the limited resources available to them, and how those demands
and resources require careful and continuous balancing. ^[46]11 Because
the Army's reserve components recommendations involve so many
stakeholders, comprehensive and routine stakeholder involvement is
essential to the success of the Army's implementation planning efforts.
Additionally, a plan that involves key stakeholders would be important
because AFRCs will be truly joint facilities--the Guard will be
cooccupants of centers built by the Reserves and the Reserves will be
cooccupants of centers built by the Guard--and because there are so many
stakeholders involved in ensuring that construction is completed on time.

^9These include the Stationing Senior Review Group chaired by the Army Vice
Chief of Staff, the Installation Management Board of Directors, and at the
installation level, the Deputy Garrison Commander for Transformation, who
provides project feedback to various installation stakeholders on a
routine basis. In addition, the Army plans to begin quarterly BRAC program
reviews with the Assistant Secretary of the Army for Installations and
Environment to further provide a forum for discussing issues associated
with the BRAC program. Moreover, the Army stated that it has venues where
stakeholders meet for BRAC project reviews and conferences.

^10Pub. L. No. 103-62 (1993).

^11GAO, Executive Guide: Effectively Implementing the Government Performance
and Results Act, GAO/GGD-96-118 (Washington, D.C.: June 1996).

In addition to the various Army headquarters offices that provide overall
BRAC direction and oversight, key stakeholders involved with the Army's
BRAC recommendations associated with Army reserve components include the
Reserves, which is represented by officials from the Army Reserve Division
of the Assistant Chief of Staff for Installation Management; the Office of
the Chief Army Reserve; and the various regional readiness commands.
Similarly, the Guard is represented by officials from the National Guard
Bureau and officials in each state's respective Adjutant General and
Construction and Facilities Management Office. Moreover, the U.S. Army
Corps of Engineers plays a vital role in the construction of many AFRCs
because it is the Army's primary construction agent, responsible for
construction management of the Reserve-led AFRCs. In our discussions with
officials, we found that many times component and state-level stakeholders
were confused and frustrated regarding how to respond to potential
challenges and had varying viewpoints and perspectives on how these
challenges should be addressed if they occur. For example, some state
National Guard officials said that they are concerned about the potential
for a reduction in quality for many of the Reserve-led AFRCs because the
Corps' military construction transformation effort is allowing alternative
building materials to be used in lieu of the traditional brick and mortar.
Conversely, Reserve officials told us that they were concerned about the
extent to which the Guard might make what these officials deemed
unsatisfactory scope reductions in the Guard-led AFRCs for such space as
classrooms, assembly rooms, maintenance bays, and parking lots. Because of
varying viewpoints and perspectives on the potential challenges and how
they might be handled, opportunities for these stakeholders to express and
address their concerns is of importance, particularily the resolution of
potential issues before too many AFRCs are built. Army officials told us
that should some of these challenges occur, they might have to adapt by
choosing one or more of the following alternatives, many with potentially
adverse effects: (1) request more BRAC funds, which would place additional
demands on an account with a set limit of funds and potentially undermine
DOD's ability to complete other BRAC recommendations unless OSD requests
and receives more funds from Congress; (2) reduce the scope of a
construction project to stay within the price limit, which could result in
an overcrowded facility or inadequate space for storing mission-needed
equipment and supplies;
(3) work with the contractors to lower the cost by using more alternative,
less expensive construction materials; (4) request additional funds from
the regular military construction appropriations; or (5) use funds as
allowable from operation and maintenance appropriations, which would leave
other maintenance and repair requirements unfunded.

Because it is early in the BRAC implementation process, the extent to
which challenges will occur and alternatives will be used remains
uncertain until the Army receives and evaluates more AFRC construction
proposals and more centers are built. However, there are indications that
some of the challenges identified by the Army are already beginning to
occur. For example, the Army Corps of Engineers is currently debating what
to do about two projects expected to start in 2007--Fort Detrick,
Maryland, and Fort Lewis, Washington--where current construction estimates
exceed the amount budgeted. According to the Corps, higher-than-expected
supporting infrastructure costs and estimate reductions based on
anticipated military construction transformation efficiencies contributed
to the difference between the current estimated cost to construct the
AFRCs and what was actually budgeted, and consequently the projects might
run out of money. In addition, several Corps officials expressed concern
that many of the 2007 and the 2008 project proposals may exceed the cost
estimate set for the projects. If this happens, Corps officials told us
that they could work with the contractors to expand the use of alternative
construction materials or reduce the scope of a particular project to stay
within the price limit. However, if the Corps has to reduce the scope,
this increases the risk that the facility will be too small for the number
of personnel or their equipment. Likewise, Guard officials told us that if
they experience similar problems, they would consider other alternatives
such as using operation and maintenance appropriated funds as allowed or
requesting funds from the regular military construction appropriation.
Finally, Guard officials said that they could use additional options if
project proposals exceed cost estimates, such as using state funds,
seeking assistance from state congressional delegations, allowing
temporary overcrowding of the AFRC, or leaving open readiness centers
expected to close under BRAC. For example, some Army Guard officials told
us that if a newly built AFRC is overcrowded and does not adequately
support the unit's personnel and equipment, they might retain certain
existing armories or readiness centers that were expected to close under
BRAC, which could further reduce BRAC savings
and increase operation and maintenance  costs should the centers  continue
to support a federal mission. ^[47]12

  Conclusions

As the Army begins its $3 billion BRAC construction of 125 new AFRCs
around the nation, it will need to carefully manage many potential
challenges that could place the successful implementation of the program
at risk. We recognize that implementing these BRAC recommendations while
the Army simultaneously implements other BRAC recommendations and ongoing,
worldwide restationing and transformation initiatives is an extremely
difficult and daunting task. Although we realize the Army has several
venues in place to assist with BRAC execution and management, the Army has
not established a plan that routinely brings together the various
stakeholders, that includes the state Army National Guard when
appropriate, to help monitor and address potential implementation
challenges associated with completing the Army reserve component BRAC
recommendations. Developing such a plan would better ensure clear
communication and collaboration between key stakeholders, which is
especially important given that many stakeholders have varying viewpoints
and perspectives on these potential challenges and the possible adverse
effects. Development of such a plan for BRAC implementation would also
enable the Army to better measure progress toward its goals and identify
strategies to meet goals that were not met because of implementation
challenges. Without a plan that brings together key stakeholders including
the state Army National Guard when appropriate, it will be more difficult
for the Army to monitor for implementation challenges and work through
alternatives to mitigate them in a timely manner.

  Recommendation for Executive Action 

To better ensure that BRAC 2005 recommendations affecting the Army's
reserve components and  interests of  the states  are effectively  managed
and any potential adverse effects are quickly identified, we recommend
that the Secretary of Defense direct the Secretary of the Army to develop
a plan for routinely bringing together the various stakeholders as a
group, to include the state Army National Guard when appropriate, to
monitor for and develop steps to mitigate implementation challenges should
they occur. These steps should include ways to monitor and mitigate the
effects of potential challenges on BRAC completion time frames, project
cost and scope, construction quality, and capacity of the facility to meet
changing mission requirements.

^12In developing its BRAC recommendations for the reserve components the Army
allowed the states to voluntarily participate in the process. The
Department of the Army worked very closely with the state adjutants
general throughout the BRAC 2005 process, and understands that the state
governors will close 211 Army National Guard facilities with the intent of
relocating their tenant units into the 125 new AFRCs. According to some
state guard officials, because many of the Army National Guard facilities
slated to close under BRAC are owned by the states, a state has the option
to keep these facilities open if the state determines that the new AFRC
will not sufficiently meet the requirements of the units slated to occupy
it.

                       Agency Comments and Our Evaluation

In written comments on a draft of this report, DOD partially concurred
with our recommendation. DOD's comments are reprinted in appendix II and
addressed as appropriate in the body of the report. DOD further provided
technical comments, which we also incorporated into this report as
appropriate.

DOD partially concurred with our recommendation that the Secretary of
Defense direct the Secretary of the Army to develop a plan for routinely
bringing together the various stakeholders as a group to monitor for and
develop steps to mitigate implementation challenges should they occur to
better ensure that BRAC recommendations affecting the Army's reserve
components are effectively managed and any potential adverse effects are
quickly identified and mitigated. While stating that we appropriately
highlighted BRAC implementation challenges due to transformation,
modularity, mission changes, and construction factors affecting BRAC
military construction projects, to include changes to initial BRAC cost
savings projections and military construction time frames, DOD believes
that we overlooked the various groups, forums, or plans that the Army has
in place to assist with BRAC execution and management. Although we were
aware of these various venues and we changed our report to acknowledge
them, we nonetheless found that these venues were not adequately meeting
the needs of the various state Army National Guard and Reserve officials
who share in the responsibility for the design and construction of the
AFRCs. Throughout our work we found that many of these officials were
still confused and frustrated regarding how to respond to potential
challenges associated with the construction of the 125 new AFRCs despite
the existence of the Army's various venues. Moreover, because the AFRCs
are to be in 38 states and because local circumstances may vary, it is
unclear how executive-level planning groups or other forums that exclude
the states will be positioned to effectively mitigate the risk that may be
unique to a given location. Although DOD stated in its comments that the
Army already has a plan in place to bring the various stakeholders
together, Army BRAC headquarters officials acknowledged that they could be
more proactive in outreaching and communicating with the stakeholders on
how to deal with and mitigate particular challenges associated with
constructing 125 AFRCs. Moreover, because of varying viewpoints on how
potential challenges should be addressed, opportunities for these
stakeholders to meet and express their concerns is of importance,
especially so that any potential issues can be resolved before too many
AFRCs are built and the Army can meet the BRAC statutory 2011 deadline.
Consequently, we continue to believe that the Army would benefit from
routinely bringing together the reserve component and state-level
stakeholders who are playing a vital role in the actual design and
construction of the AFRCs so that challenges and issues can be effectively
mitigated before they rise to the Army's executive headquarters level.
Additionally, best practices suggest that involving stakeholders in
planning can help create a clearer understanding among the stakeholders of
competing demands, the limited resources available, and how those demands
and resources require continuous balancing.

In addition to the existing groups, forums, or plans, DOD also stated that
the Army BRAC office will begin quarterly BRAC program reviews with the
Assistant Secretary of the Army for Installations and Environment, which
will further provide a forum for discussing and vetting issues affecting
the BRAC program. Although we commend the Army for initiating these
reviews, it remains unclear the extent to which the reserve components and
state National Guard offices will be routinely involved until these
reviews take place and it is this involvement that forms the basis of our
recommendation. In addition, DOD stated that OSD-approved business plans
are in place and updated biannually as needed. As we stated in the report,
although the construction of the AFRCs is guided by 44 separate business
plans that describe required actions, their timing, and resources, Army
National Guard and Reserve officials said that these plans do not provide
adequate information needed to monitor for potential challenges or the
steps needed to quickly mitigate them.

For the reasons stated above, we continue to believe that our
recommendation has merit. To clarify the intent, however, we modified our
recommendation to specifically include state National Guard stakeholders
when appropriate, because it is unclear how existing executive-level
planning groups that may not include the states will be positioned to
effectively mitigate the risk that may be unique to a given state.

DOD also noted in its comments that it continues to disagree with us
regarding the treatment of military personnel savings. DOD considers
military personnel reductions attributable to a BRAC recommendation as
savings that are just as real as savings generated through end-strength
reductions. As we stated in the report, the issue of military personnel
savings represents a long-standing difference of opinion between DOD and
us. Although we agree that transferring personnel to vacant positions may
enhance capabilities and allows DOD to redirect freed-up resources to
another area of need, we do not believe that such transfers produce a
tangible dollar savings that DOD can apply to fund other defense
priorities outside the military personnel accounts because these personnel
will remain in the end strength and will continue to receive salaries and
benefits. Not recognizing that these dollar savings cannot be readily
applied elsewhere could create a false sense of the savings available for
use in other areas outside the military personnel account, such as
modernization.

We are sending copies of this report to interested congressional
committees; the Secretary of Defense; the Under Secretary of Defense for
Acquisition, Technology, and Logistics; the Secretary of the Army; the
Chief of the National Guard Bureau; and the Director, Office of Management
and Budget. We will also make copies available to others upon request. In
addition, the report will be available at no charge on GAO's Web site at
[48]http://www.gao.gov.

If you or your staff have any questions concerning this report, please
contact me at (202) 512-4523 or [49][email protected]. Contact points for
our Offices of Congressional Relations and Public Affairs may be found on
the last page of this report. GAO staff who made major contributions to
this report are listed in appendix III.

Brian J. Lepore, Director
Defense Capabilities and Management

List of Congressional Addressees

The Honorable Carl Levin
Chairman
The Honorable John McCain
Ranking Member
Committee on Armed Services
United States Senate

The Honorable Daniel K. Inouye
Chairman
The Honorable Ted Stevens
Ranking Member
Subcommittee on Defense
Committee on Appropriations
United States Senate

The Honorable Tim Johnson
Chairman
The Honorable Kay Bailey Hutchison
Ranking Member
Subcommittee on Military Construction, Veterans Affairs,
  and Related Agencies
Committee on Appropriations
United States Senate

The Honorable Ike Skelton
Chairman
The Honorable Duncan L. Hunter
Ranking Member
Committee on Armed Services
House of Representatives

The Honorable John P. Murtha
Chairman
The Honorable C.W. Bill Young
Ranking Member
Subcommittee on Defense
Committee on Appropriations
House of Representatives

The Honorable Chet Edwards
Chairman
The Honorable Roger F. Wicker
Ranking Member
Subcommittee on Military Construction, Veterans Affairs,
  and Related Agencies
Committee on Appropriations
House of Representatives

The Honorable Tom Davis
Ranking Member
Committee on Oversight and Government Reform
House of Representatives

                       Appendix I: Scope and Methodology

We performed our work at various Office of the Secretary of Defense (OSD)
and Army base realignment and closure (BRAC) offices involved in the
implementation of the Army reserve component recommendations and at
various states affected by the recommendations.

To determine changes in estimated cost and savings, we used data in the
Army's BRAC budget justification materials provided to Congress in support
of the President's fiscal year 2008 budget request and compared them to
the estimates in the 2005 BRAC Commission report, both publicly available
data. All cost and savings estimates have been adjusted for inflation and
are presented in fiscal year 2005 constant dollars because the BRAC
Commission reported its estimates in 2005 constant dollars. BRAC
Commission estimates are based on the Department of Defense's (DOD)
quantitative model, known as the Cost of Base Realignment Actions. DOD has
used this cost model in each of the previous BRAC rounds and, over time,
has improved upon its design to provide better estimating capability,
although the model is not intended to produce budget quality estimates. We
did not validate the Army's military construction requirements because the
Army Audit Agency was in the process of validating these requirements at
the time of our review. To assess the reliability of DOD's BRAC cost and
savings estimates, we talked with officials at the OSD BRAC Office about
their data quality control procedures and reviewed relevant documentation.
We determined the Army's budget justification data to be sufficiently
reliable for the purposes of this report and for making broad cost and
savings comparisons. We also analyzed data from OSD-approved business
plans for each recommendation to determine reasons for changes in cost and
savings estimates.

To identify what Army officials said were the more significant potential
challenges that could affect the implementation of the BRAC 2005 reserve
component recommendations, we interviewed numerous stakeholders to the
process. These stakeholders included officials in the OSD BRAC Office,
Office of the Assistant Secretary of Defense for Reserve Affairs, Office
of the Assistant Secretary of the Army for Installations and Environment,
Army's Office of the Assistant Chief of Staff for Installation Management,
National Guard Bureau, Army Reserve Command, Office of the Chief Army
Reserve, and U.S. Army Corps of Engineers Headquarters and Louisville
District offices. We also interviewed National Guard officials in five
states and officials in two Army Reserve regional readiness commands most
affected by the 2005 BRAC recommendations. Specifically, we visited state
National Guard officials in Alabama, Arkansas, Kentucky, Oklahoma, and
Texas. With the exception of Kentucky, we selected these states because
they either had a large number
of Armed Forces Reserve Centers (AFRC) slated for construction, had a
National Guard headquarters located near a reserve regional readiness
command, or both. We selected Kentucky because its National Guard
headquarters is located near the U.S. Army Corps of Engineers' Louisville
District, which is managing the BRAC construction of the Reserve-led
AFRCs. In the states we visited, we spoke with the chief construction and
facilities management officers. In two states, we met with the adjutants
general. Additionally, we met with officials in two reserve regional
readiness commands--one in Alabama and one in Arkansas. During these
meetings, we interviewed key officials involved in implementing the
recommendations to understand the potential challenges the Army faces in
completing the recommendations by the end of the 6-year statutory BRAC
completion period and summarized their views. We conducted our work from
June 2006 through July 2007 in accordance with generally accepted
government auditing standards.

Appendix II: Comments from the Department of Defense

Appendix III: GAO Contact and Staff Acknowledgments

  GAO Contact

Brian J. Lepore, (202) 512-4523 or [50][email protected]

Acknowledgements

In addition to the contact named above, Barry Holman, Director (retired);
Laura Talbott,  Assistant Director;  Shawn Arbogast;  Rachel Beers;  Grace
Coleman; Jennifer  Edwards;  Julie  Matta; and  Charles  Perdue  made  key
contributions to this report.

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  48. http://www.gao.gov/
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  51. http://www.gao.gov/cgi-bin/getrpt?GAO-07-1007
  52. http://www.gao.gov/cgi-bin/getrpt?GAO-07-1203R
  53. http://www.gao.gov/cgi-bin/getrpt?GAO-07-304
  54. http://www.gao.gov/cgi-bin/getrpt?GAO-07-641
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  56. http://www.gao.gov/cgi-bin/getrpt?GAO-05-905
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