Army Aviation Testing: Need to Reassess Consolidation Plan (Letter
Report, 03/15/96, GAO/NSIAD-96-87).

Pursuant to a congressional request, GAO reviewed the Secretary of the
Army's tentative decision to move aviation testing activities now at
Edwards Air Force Base, California, to Fort Rucker, Alabama, and retain
Yuma Proving Ground.

GAO found that: (1) the Army failed to fully account for savings from
consolidating its aviation testing activities; (2) consolidation at Fort
Rucker and Yuma Proving Ground will result in the greatest short-term
and significant long-term savings; (3) single-site consolidation at Yuma
will result in the greatest long-term savings and an optimum testing
environment for future testing; (4) DOD and the services have not
reached consensus about how best to consolidate and downsize test
activities; (5) excess aviation testing capacity exists within the
Department of Defense and signals that consolidation is necessary to
reduce this excess; (6) the Secretary of Defense will need stronger
commitment and leadership to evaluate whether these options or other
options will serve DOD best.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  NSIAD-96-87
     TITLE:  Army Aviation Testing: Need to Reassess Consolidation Plan
      DATE:  03/15/96
   SUBJECT:  Test facilities
             Testing
             Military cost control
             Military downsizing
             Base realignments
             Army bases
             Air Force bases
             Military aviation
             Aircraft research
             Federal facility relocation
IDENTIFIER:  California
             Alabama
             Arizona
             
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Cover
================================================================ COVER


Report to Congressional Requesters

March 1996

ARMY AVIATION TESTING - NEED TO
REASSESS CONSOLIDATION PLAN

GAO/NSIAD-96-87

Army Aviation Testing

(709165)


Abbreviations
=============================================================== ABBREV

  ATTC - Aviation Technical Test Center
  ATCOM - Aviation and Troop Command
  BRAC - Base Realignment and Closure
  DOD - Department of Defense
  GAO - General Accounting Office
  MRTFB - Major Range and Test Facility Base
  TECOM - Test and Evaluation Command

Letter
=============================================================== LETTER


B-270877

March 15, 1996

The Honorable Jon Kyl
The Honorable John McCain
United States Senate

The Honorable Howard P.  (Buck) McKeon
The Honorable Ed Pastor
The Honorable Bill Thomas
House of Representatives

This report responds to your request that we examine a tentative
decision made by the Secretary of the Army on June 29, 1995, to move
Army aviation testing activities now at Edwards Air Force Base,
California, to Fort Rucker, Alabama, and retain Yuma Proving Ground. 
This decision represented a shift from previous Army studies, which
had recommended consolidating all Army aviation testing at Yuma.  Our
report addresses (1) the Army's cost and savings analyses for three
consolidation options involving Edwards Air Force Base, Fort Rucker,
and Yuma Proving Ground and (2) Defense-wide implications of the
Secretary's tentative decision. 


   BACKGROUND
------------------------------------------------------------ Letter :1

Technical testing of Army aviation systems, such as helicopters, and
related support equipment is the responsibility of the Test and
Evaluation Command (TECOM), under the U.S.  Army Materiel Command. 
Since 1990, TECOM has maintained three principal aviation testing
sites.  The Aviation Technical Test Center (ATTC) at Fort Rucker is
the primary site for testing aviation systems and support equipment. 
The Airworthiness Qualification Test Directorate at Edwards Air Force
Base is the primary site for airworthiness qualification testing. 
Yuma Proving Ground tests aircraft armaments and sensor systems.  The
principal customers for TECOM's aviation testing are the aviation
program managers who purchase this equipment for the Army and are
currently headquartered at the Aviation and Troop Command (ATCOM),
St.  Louis, Missouri.\1

Significant reductions in funding, personnel, and test workloads in
recent years, as well as projections for continued reductions as part
of overall defense downsizing,\2 drove TECOM in 1992 to examine
options\3

for reducing its testing infrastructure.  Internal TECOM studies
resulted in a recommendation ultimately endorsed by the Army's Vice
Chief of Staff in late 1993 to consolidate all three Army aviation
technical testing organizations at Yuma Proving Ground.  TECOM's
proposal was reinforced by the results of a separate study sponsored
by ATCOM and completed in December 1993. 

The 1995 base realignment and closure (BRAC) process also looked at
testing facilities from a Defense-wide perspective.  That process
identified options for consolidating Army testing at a single-site as
well as an option for eliminating greater excess testing capacity by
consolidating aviation testing across service lines.  Consolidation
or cross-servicing of common support functions such as test and
evaluation activities proved very contentious among the services in
BRAC 1995 and produced limited results.  None of the aviation testing
options were adopted as part of the BRAC process.  However, Army BRAC
officials indicated to our staff in January 1995 that a consolidation
of its aviation testing was planned outside the BRAC process. 

While awaiting formal approval of the single-site consolidation at
Yuma, in the spring 1995, the Army Secretary's staff updated TECOM's
cost and savings analyses of two options:  the single-site at Yuma
and a dual-site at Fort Rucker and Yuma.  On June 29, 1995, the
Secretary tentatively approved the dual-site option because the
analyses showed that greater short-term savings could be achieved
with that option. 


--------------------
\1 Under a decision approved by the 1995 Base Closure and Realignment
Commission, ATCOM aviation missions are slated to be relocated to
Redstone Arsenal, Huntsville, Alabama. 

\2 In January 1993, ATTC was authorized 119 military and 179 civilian
positions.  As of January 1996, ATTC was authorized 95 military and
116 civilian positions for fiscal year 1996; those authorizations are
expected to be further reduced to 27 military and 102 civilian
positions for fiscal year 1997. 

\3 TECOM examined various options involving five sites for either a
single- or dual-site consolidation of its aviation testing
infrastructure.  They included Yuma Proving Ground, Arizona; Eglin
Air Force Base, Florida; Fort Rucker, Alabama; Edwards Air Force
Base, California; and Naval Air Station, Patuxent River, Maryland. 


   RESULTS IN BRIEF
------------------------------------------------------------ Letter :2

Our analysis confirmed the Army's position that a dual-site
consolidation involving Fort Rucker and Yuma Proving Ground provided
the greatest short-term savings to the Army and offers significant
long-term savings.  A single-site consolidation at Yuma also offers
significant long-term savings and, according to various Army testing
and program manager officials, a more optimum testing environment for
future testing.  On the other hand, the Office of the Secretary of
Defense has raised questions about whether either option would be the
optimum choice from a Defense-wide perspective if consolidation of
testing activities across the services could be achieved.  However,
the services and the Department of Defense (DOD) have not reached
consensus about how best to downsize and consolidate testing
activities, even though Congress has encouraged them to do so.  Given
this situation, DOD has an opportunity to seek other options from a
longer term DOD-wide perspective.  This will require stronger
commitment and leadership on the part of the Office of the Secretary
of Defense. 


   ADJUSTMENTS TO ARMY DATA NEEDED
   TO FULLY ACCOUNT FOR PROJECTED
   CONSOLIDATION SAVINGS
------------------------------------------------------------ Letter :3

Because TECOM analysts considered only the impacts on TECOM's budget,
they did not fully account for projected savings in operating costs,
particularly in the personnel area.  Also, some adjustments were
needed in the methodology for and calculations of recurring costs and
savings involving base operations, real property maintenance, and
aircraft maintenance to obtain a more complete picture of relative
costs and savings among the competing locations and the time required
to offset implementation costs.  (See app.  II for a discussion of
adjustments.)
Table 1 shows the Army's projected one-time implementation costs;
annual recurring savings; and the time it takes, from the year
consolidation begins, for savings to begin to exceed costs from each
consolidation option.\4 Table 2 shows the same information based on
our adjustments to the Army's data. 



                                Table 1
                
                  Army Projections of One-Time Costs,
                 Annual Recurring Savings, and the Time
                   Needed to Offset Costs From Three
                         Consolidation Options

                         (Dollars in millions)

                                          Fort                    Yuma
                                       Rucker/    Edwards/     single-
                                          Yuma        Yuma        site
                                        option      option      option
----------------------------------  ----------  ----------  ----------
One-time costs                            $3.2        $3.3       $16.5
Annual recurring savings                   2.3         2.1         3.5
Years before savings exceed costs          1.4         1.6         4.7
----------------------------------------------------------------------
Note:  The Army assumed that savings would begin the same year in
which the consolidation action was initiated. 



                                Table 2
                
                  Adjusted Estimate of One-Time Costs,
                 Annual Recurring Savings, and the Time
                         Needed to Offset Costs

                         (Dollars in millions)

                                          Fort                    Yuma
                                       Rucker/    Edwards/     single-
                                          Yuma        Yuma        site
                                        option      option      option
----------------------------------  ----------  ----------  ----------
One-time costs                            $3.2        $3.3       $16.5
Annual recurring savings                   4.4  3.0 to 3.3  5.4 to 6.3
Year savings exceed costs                  1.8  2.2 to 2.1  4.4 to 3.9
----------------------------------------------------------------------
Notes:  1.  Our adjusted estimate assumes that savings would begin to
accrue in the year following initiation of the consolidation action.

2.  Because of uncertainties about actual recurring savings under the
consolidation options, our adjusted data used the Fort Rucker/Yuma
option as a baseline and reflected a range of recurring savings at
the other two locations.  See discussion in appendix II. 

As table 2 shows, the adjusted data indicates higher annual recurring
operating savings from each option.  Recurring savings remain the
greatest from the Yuma single-site option, but the offsetting of
implementation costs (including military construction) still takes
longer with this option than with the other two options. 


--------------------
\4 Since the updated data developed for the Secretary's decision
included only two consolidation options, we also obtained data from
the Army to update its previously considered Edwards/Yuma dual-site
option in order to more accurately compare the three options. 


      LONG-TERM SAVINGS
---------------------------------------------------------- Letter :3.1

Like the Army, we projected savings from the consolidation options
over a 20-year period, following the approach used by DOD in its base
realignment and closure process.\5 The Army discounted long-term
savings at a 2.75 percent rate--the same rate it used in conjunction
with its 1995 base realignment and closure analysis.\6 However, as
noted in our report on the 1995 BRAC process,\7 the current Office of
Management and Budget approved discount rate of 4.85 percent would
have been more appropriate for the 1995 BRAC process. 

Table 3 shows the projected net present values of the savings for
each option using the Army's cost data and the 2.75 percent discount
rate. 
Table 4 shows our adjustments to the Army's data, including use of
the 4.85 percent discount rate. 



                                Table 3
                
                Discounted Savings Using the Army's Data

                         (Dollars in millions)

                                          Fort                    Yuma
                                       Rucker/    Edwards/     single-
                                          Yuma        Yuma        site
Return period                           option      option      option
----------------------------------  ----------  ----------  ----------
Short term (6 years)                      $9.7        $8.4        $3.0
Mid term (10 years)                       17.2        15.1        14.2
Long term (20 years)                      32.7        29.2        37.3
----------------------------------------------------------------------
Note:  Includes the Army's assumption that savings would begin the
same year in which the consolidation action was initiated. 



                                Table 4
                
                  GAO's Estimate of Discounted Savings

                                          Fort                    Yuma
                                       Rucker/    Edwards/     single-
                                          Yuma        Yuma        site
Return Period                           option      option      option
----------------------------------  ----------  ----------  ----------
Short term (6 years)                     $15.6     $9.5 to     $6.8 to
                                                      10.8        10.6
Mid term (10 years)                       27.6     17.7 to     21.6 to
                                                      19.8        27.9
Long term (20 years)                      49.4     32.6 to     48.4 to
                                                      36.2        59.2
----------------------------------------------------------------------
Notes:1.  Assumes that savings would begin in the year following
initiation of the consolidation.

2.  Because of uncertainties about actual recurring costs under the
consolidation options, our adjusted data used the Fort Rucker/Yuma
option as a baseline and reflected a range of recurring savings at
the other two locations.  See discussion in appendix II. 

As tables 3 and 4 show, the Fort Rucker/Yuma dual-site option offers
the Army the greatest short-term savings, which the Army considers
important in today's constrained budget environment.  The adjusted
data show that both the Fort Rucker/Yuma dual-site and Yuma
single-site options have long-term savings that are much greater than
those for the Edwards/Yuma dual-site option.  The 20-year cost
savings for the Yuma single-site option are at least comparable to,
and possibly greater than, the Fort Rucker/Yuma dual-site option. 
Under the least savings case shown, for those two options, there
would be about a $1 million difference in projected long-term savings
between the two options--a difference that could be eliminated with a
reduction of about $100,000 in annual operating costs for the Yuma
single-site option.  The costs and savings from the Yuma single-site
option are based on the premise that required military construction
would be completed before the consolidation.  Completing the military
construction after the consolidation would result in increased
operating costs and reduced savings.\8


--------------------
\5 All BRAC costs and savings were projected to occur over a 20-year
period and were adjusted, or discounted, to fiscal year 1996 dollars. 
Discounting reflects the time value of money by transforming gains
and losses from different time periods to a common unit of
measurement.  The discount rate is also used as a factor in
determining the number of years before the government realizes a
return on its investment, that is, the point at which savings begin
to exceed costs associated with the consolidation action. 

\6 While the Army staff applied a discount rate to project long-term
savings, it did not use a discount rate in determining a payback
period.  The payback periods for options that the Army staff briefed
to the Secretary of the Army, as shown in table 1, were developed
using simple division rather than discounted dollars. 

\7 See Military Bases:  Analysis of DOD's 1995 Process and
Recommendations for Closure and Realignment (GAO/NSIAD-95-133, Apr. 
14, 1995). 

\8 The chief of ATCOM's Test and Evaluation office told us that it
would be difficult to consolidate testing at Yuma without completing
the military construction. 


      OTHER COST AND SAVINGS
      ISSUES
---------------------------------------------------------- Letter :3.2

Neither we nor the Army included several factors in cost and savings
calculations because they were not easily quantified and because no
consensus could be reached on what those costs and savings should be. 

According to officials at Edwards, movement of the base's testing
operation to Fort Rucker could result in significant recurring costs
to transport test aircraft and personnel to distant ranges, such as
Yuma, to complete necessary testing operations.  An Army aviation
official at Edwards estimated these costs could be about $400,000 per
year, based on prior tests conducted at Edwards.  Another estimate
from a Yuma official, based on an evaluation of future testing of the
new Comanche aircraft, suggested that additional transportation costs
could run as high as $1 million annually.  Fort Rucker officials,
while acknowledging that transportation costs could increase, believe
that the actual costs would not be as high as projected.  A number of
factors made it difficult for us to identify the most likely costs. 
First, prior tests are not necessarily indicative of future testing
requirements.  Second, Army testers already use multiple sites around
the United States for various tests--sites other than the three
discussed in this report.  Third, Fort Rucker officials indicted they
would likely seek testing sites closer to Fort Rucker if the
consolidation plan is enacted.  Thus, while we believe that
additional transportation costs are likely with the Fort Rucker/Yuma
option, it is not clear what those costs would be. 

Officials at Fort Rucker noted that it has a contractor-operated
mini-depot repair capability to maintain the large number of aircraft
associated with its aviation school.  Documentation showed that the
aviation test center can use this capability, particularly the
electronic equipment test facility, to achieve significant savings in
time and dollars over the costs of repair at a regular depot
facility.  Center officials estimated 1-year savings of about $1.9
million through the use of this contract.  Army testing officials at
Yuma and Edwards agreed that this mini-depot does provide an
advantage to aviation testing at Fort Rucker.  However, our other
reviews of depot operations have shown that the services have excess
depot capacity, which increases customer costs.  At the same time, to
the extent to which the practices of the mini-depot at Fort Rucker
minimize customer costs over those at a regular depot, it raises a
question why depot maintenance practices should not be modified more
broadly so that such savings would not be limited to just Fort
Rucker.  These variables make it unclear what maintenance savings
should be attributed to any testing consolidations involving Fort
Rucker. 

Officials at each of the locations identified additional benefits and
synergism from being located with other activities at their
respective locations.  However, such benefits, while undoubtedly
real, were more qualitative in nature and not easily quantified from
a cost standpoint or had cost advantages insufficient to affect the
relative savings associated with a particular consolidation option. 
Additionally, other issues such as air space, safety, and weather
were raised by officials at selected locations to suggest the
relative merits of one location over the other.  These also were more
qualitative in nature and not easily quantified from a cost
standpoint.  While various Army officials and Army testing
consolidation studies point to Yuma Proving Ground as providing the
optimum testing environment for the Army, we found no indication that
testing could not be conducted safely at the other locations. 


   EXCESS CAPACITY IN DOD TESTING
   INFRASTRUCTURE SIGNALS NEED FOR
   CONSOLIDATIONS
------------------------------------------------------------ Letter :4

Various studies in recent years, including DOD's 1995 base
realignment and closure review, have concluded there is excess
aviation test and evaluation capacity across DOD and have noted the
need for reductions in keeping with overall defense downsizing. 
Likewise, Congress has urged DOD to downsize and consolidate testing
activities.  However, the services have been unable to agree on how
best to achieve such consolidations. 

During the 1995 BRAC process, a cross-service review group,
comprising representatives of each of the services and the Office of
the Secretary of Defense, identified several alternatives for the
services to consider as they evaluated their bases for potential
closure or realignment.  One alternative was to shift Army aviation
testing from Fort Rucker and Edwards Air Force Base to Yuma.  Another
option, with greater excess capacity reduction potential across the
services, was to consolidate the test and evaluation of air vehicles
at a single DOD center at either the Navy's Patuxent River, Maryland,
testing facility or Edwards Air Force Base.  Consolidation of Army
aviation testing at one of these sites was contingent upon agreement
by the Air Force and Navy for consolidation of their aviation
testing.  However, the services disagreed greatly over how to reduce
their excess testing capacity, and little progress was made,
particularly in the area of cross-servicing.\9

Congress has also encouraged downsizing, consolidation, and
restructuring of the services laboratories and test and evaluation
infrastructure, including rotary wing aircraft.  Section 277 of the
National Defense Authorization Act for Fiscal Year 1996 (P.L. 
104-106), requires that the Secretary of Defense, acting through the
Test and Evaluation Agent Executive Board of Directors,\10 develop
and report to congressional defense committees, by May 1, 1996, a
plan to consolidate and restructure DOD's laboratories and test and
evaluation centers by the year 2005. 

Of more immediate concern to DOD was the Army Secretary's June 1995
tentative decision to consolidate Army aviation testing at Fort
Rucker/Yuma.  The Director, Test Systems Engineering and Evaluation,
in the Office of the Under Secretary of Defense for Acquisition and
Technology, expressed concern that Fort Rucker was not part of DOD's
Major Range and Test Facility Base (MRTFB).  He noted in a letter to
the Test and Evaluation Executive Agent Board of Directors on
September 12, 1995, that there had been a long-standing understanding
within the DOD testing community that any consolidation of test and
evaluation activities should be at a MRTFB facility unless there was
a compelling reason otherwise.  He also noted the principle of
selecting courses of action that are optimum for DOD rather than for
a single program or service.  The Army, tasked with responding on
behalf of the Board, noted that personnel and budget constraints
required the Army to take immediate action to reduce costs in many
areas; additionally, the Army noted that it was these economic
circumstances, as well as the Army requirement to achieve short- and
medium-term budgetary savings, that led to its decision. 

Several service officials we met with also questioned the selection
of a non-MRTFB facility (Fort Rucker) in light of future directions
of aviation testing.  These officials indicated that advanced
helicopter systems are increasingly employing integrated electronics
and, as a result, it is important to test the electronics and
airworthiness at the same time.  Various officials also suggest that
it is important to do testing of the aircraft configured with its
weapon systems, operating the electronic equipment, and firing the
weapons.  They also said it is important to do integrated testing to
avoid gaps in testing programs.  ATCOM's 1993 study of aviation
testing noted that as weapons and electronic warfare equipment become
a more integral part of the air vehicle, it is increasingly important
that the whole system, not merely its parts, be tested.  This
suggests the importance of locating testing at a MRTFB facility. 


--------------------
\9 See Military Bases:  Analysis of DOD's 1995 Process and
Recommendations for Closure and Realignment (GAO/NSIAD-95-133, Apr. 
14, 1995). 

\10 According to an agreement reached in August 1993, the vice chiefs
of staff of the services serve as a board of directors with executive
agent authority over the services' test and evaluation infrastructure
investments and consolidation. 


   RECOMMENDATION
------------------------------------------------------------ Letter :5

There is a continuing need to reduce and consolidate excess
infrastructure within DOD, including that which exists within the
services testing community.  Also, the Army has a compelling need to
consolidate its aviation testing because of reductions in its
workload and continuing reductions in authorized personnel. 
Consequently, we recommend that the Secretary of Defense, in
conjunction with the Test and Evaluation Executive Agent Board of
Directors, reexamine the Army's aviation consolidation plan within
the context of its congressionally mandated plan for consolidating
laboratories and test and evaluation facilities.  Such a
reexamination should include a timely determination of whether DOD
could reduce excess testing capacity and achieve greater long-term
savings Defense-wide through consolidation of Army aviation testing
on a cross-service basis and, if so, determining the appropriate
locations and action plan for achieving such a consolidation. 


   AGENCY COMMENTS AND OUR
   EVALUATION
------------------------------------------------------------ Letter :6

In official oral comments, DOD generally concurred with this report
and agreed to examine the Army's aviation consolidation plan within
the context of its congressionally mandated plan for consolidating
laboratories and test and evaluation facilities, due to Congress by
May 1, 1996.  However, DOD also agreed to the Army proceeding with
it's current aviation consolidation plan, but only to the extent that
near-term savings can be realized, and holding in abeyance any
actions such as construction or other investments that could be lost
if far-term consolidation plans differ from the Army's short-term
actions.  DOD's agreement with the Army moving forward with its
current consolidation plan raises questions about the extent to which
the issue of cross-servicing will be dealt with in the near-term.  We
continue to believe that a serious examination of the potential for
cross-servicing in the test and evaluation arena is warranted. 

DOD also expressed the view that our adjustments to the Army's cost
and savings analysis, while not affecting the outcome of our review,
did result in what it considered an inflated estimate of expected
annual savings in our report.  Our approach, following methodology
employed in the BRAC process, made appropriate and consistent
calculations of one-time and long-term costs and savings for each
location option; in doing so, we considered costs and savings both to
the Army as a whole as well as to the test and evaluation program. 
We believe that this is an appropriate approach to fully account for
expected costs and savings. 

Our scope and methodology are discussed in appendix I. 


---------------------------------------------------------- Letter :6.1

Unless you announce its contents earlier, we plan no further
distribution of this report until 15 days after its issue date.  At
that time, we will send copies to the Chairmen, Senate Committee on
Armed Services; Subcommittee on Defense, Senate Committee on
Appropriations; House Committee on National Security; and
Subcommittee on National Security, House Committee on Appropriations;
the Director, Office of Management and Budget; and the Secretaries of
Defense and the Army. 

Please contact me at (202) 512-8412 if you or your staff have any
questions concerning this report.  Major contributors to this report
were Barry W.  Holman, Assistant Director; Raymond C.  Cooksey,
Evaluator-in-Charge; and David F.  Combs, Senior Evaluator. 

David R.  Warren, Director
Defense Management Issues


SCOPE AND METHODOLOGY
=========================================================== Appendix I

We obtained and reviewed various studies completed by the Army's Test
and Evaluation Command (TECOM) and others pertaining to the
consolidation of aviation test facilities.  Discussions were held
with pertinent officials at the Department of the Army headquarters;
TECOM headquarters at Aberdeen Proving Ground, Maryland; and TECOM
test sites at Yuma Proving Ground, Arizona; Edwards Air Force Base,
California; and Fort Rucker, Alabama.  We obtained and analyzed
various data at each of these locations to assess the completeness
and reasonableness of the data included in the Army's consolidation
studies and data used by the Secretary of the Army in making his June
1995 tentative decision to consolidate testing and two sites.  We did
not attempt to develop budget quality data, but focused on the
adequacy of data to provide relative comparisons among competing
locations.  Because we had concerns about the comparability of
private sector wage data used by the Army in projecting aircraft
maintenance costs, we obtained current Department of Labor wage rate
data to provide another basis for comparing potential costs.  In
assessing projected costs and savings for each consolidation option,
we also performed selected sensitivity analyses to determine how
changes in some data elements would affect the relative costs and
savings of each location. 

To broaden our perspective on aviation test and evaluation issues and
future requirements, we held discussions with key testing officials
in the Office of the Secretary of Defense, the Army's Aviation and
Troop Command, the Air Force Flight Test Center at Edwards Air Force
Base, and the Naval Air Warfare Center at Patuxent River, Maryland. 
Additionally, we reviewed pertinent documentation and analyses from
the 1995 base realignment and closure process. 

We conducted our work between August 1995 and January 1996 in
accordance with generally accepted government auditing standards. 


ADJUSTMENTS TO THE ARMY'S COST AND
SAVINGS DATA
========================================================== Appendix II

We made adjustments to the Army's costs and savings data to obtain a
more complete picture of expected savings from consolidated testing
activities.  We factored in savings in two areas not fully reflected
in the Army's analysis.  The first involved the fact that TECOM had
claimed only the savings proportional to its direct funding. 
Approximately 40 percent of TECOM's budget involves direct funding;
the remainder is derived from customer billings.  We, therefore,
adjusted the savings upward to more fully account for total Army
savings.  The second area involved savings attributable to reductions
in military personnel that would occur as a direct result of the
consolidations.  TECOM's written organizational concept outlining
plans for consolidation cited specific expected reductions in
military personnel because of consolidation.  It had not included
these savings in its analysis; we added them in.\1 These changes
produced significant increases in projected annual recurring and
long-term savings to the Army. 

We made some adjustments to the Army's calculations of base operating
support and real property maintenance services.  Cost comparisons for
this area had proven problematic for the Army, since the Aviation
Technical Test Center was not billed for these services at Fort
Rucker.  Therefore, TECOM opted to develop average base operating and
real property management costs based on actual costs at Fort Rucker
and Edwards Air Force Base and apply that average to all three
locations.  TECOM officials did not have actual cost data for Yuma. 
We used the Army's data for Fort Rucker and Edwards to assess the
impact on base operating costs for the various consolidation options. 
The effect was some decrease in projected savings from a
consolidation at Edwards Air Force Base and increase in savings at
Fort Rucker.  Because comparable base operating cost data were not
readily available for Yuma, and assuming that actual base operating
costs at Yuma would likely be somewhere between those at Fort Rucker
and Edwards, we applied an average cost figure to base operating
costs at Yuma.  The effect on the Yuma option was negligible. 

We recognized a concern expressed by the Edwards community that
actual Army/TECOM reimbursements to the Air Force for base operations
were about $400,000 less than those included in the Army's analysis. 
A counter, according to TECOM officials, is that the Aviation
Technical Test Center is not directly billed for any base operating
support costs at Fort Rucker.  Absent time for a more detailed
assessment of base operating costs at each of the locations, we
considered the Army's methodology, with adjustments as noted above,
to represent a reasonable approach for comparing such costs. 
Nevertheless, we conducted a sensitivity analysis, reducing base
operating costs at Edwards by $400,000 to determine the impact on
recurring savings at Fort Rucker and found that the relative cost
advantage of each competing location remained unchanged. 

In reviewing contracted aircraft maintenance cost estimates, we found
broad differences in estimates of labor costs at the three locations. 
The Army's most recent study had used a wage differential of 5.7
percent between Fort Rucker and Yuma, based on actual experience at
the two locations.  However, it used a wage difference of 19 percent
between Fort Rucker and Edwards Air Force Base, based on federal wage
grade tables.  The study assumed the work, if moved to Edwards, would
be contracted out.  Most recent Department of Labor wage rate data
for aircraft mechanics showed the differences between Fort Rucker and
Yuma and between Fort Rucker and Edwards Air Force Base, to be 28.2
percent and 25.8 percent, respectively.  While Department of Labor
wage rates provide a uniform basis for comparison, various Army
officials have expressed concern that actual costs at the time a
contract would be negotiated would be somewhat less than indicated by
the Department of Labor data.  For uniformity in comparing
differences among the three locations, we chose to adjust the Army's
data to reflect current Department of Labor wage differences among
the three locations.  However, assuming that actual costs could
likely fall somewhere between the two approaches, our adjusted data
on savings show a range of savings to reflect each approach.  The low
end, with smaller recurring savings, are based on Department of Labor
wage differentials. 

Our adjustments to the Army's data affected various cost and savings
data elements.  For example, the aircraft maintenance adjustments had
the effect of increasing projected annual operating costs at Yuma and
Edwards relative to Fort Rucker and reducing projected long-term
savings at those locations.  Also, while Yuma, as a single-site
option, had greater savings in personnel costs, Yuma's aggregate
savings were diminished by higher projected contract maintenance
costs attributed to differences in area wage rates. 

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\1 It has been the standard practice of each military service, in
recent Base Realignment and Closure Commission (BRAC) rounds, to
include projected savings from military personnel reductions
associated with BRAC actions.  Such was the case regarding the Army
in the 1995 BRAC round, although there was no indication that the
Army expected to make commensurate adjustments in its authorized end
strengths.  To the extent end-strength reductions are not made, these
reductions do not result in direct budgetary savings to the
government.  However, they, like other reduction savings, do free up
resources to be reassigned elsewhere as needed, providing a broader
benefit to the Army. 

*** End of document. ***