    Military Infrastructure: Real Property Management Needs Improvement
    (Letter Report, 09/07/1999, GAO/NSIAD-99-100).

    Pursuant to a congressional request, GAO reviewed the Department of
    Defense's (DOD) management of the maintenance of its real properties,
    focusing on: (1) how the services determine and prioritize maintenance
    and repair requirements and how they allocate resources to meet their
    needs; (2) promising practices in facility management that the services
    could consider; and (3) barriers to implementing promising practices and
    ways to address them.

    GAO noted that: (1) DOD does not have a comprehensive strategy for
    maintaining the services' infrastructure; (2) rather, each service sets
    its own standards for maintaining infrastructure; (3) as a result, the
    services differ in the way they rate property conditions, prioritize
    repairs, and allocate resources; (4) the service headquarters cannot be
    certain that the most critical properties in need of maintenance and
    repair are targeted; (5) given incomplete and inconsistent data, and
    different real property maintenance (RPM) rating systems among the
    services, Congress cannot be assured that it is funding maintenance and
    repairs that will provide the best return on its investment; (6) there
    is little relationship between identified RPM needs and the funds the
    services allocate for RPM; (7) none of the services' RPM spending plans
    provide sufficient funding to keep their total backlog of repairs at
    current levels; (8) although DOD instructed the services in July 1997 to
    fund RPM to enable them to meet 75 percent of their RPM requirements by
    2003, DOD removed that goal from an update guidance in April 1999; (9)
    because the services' headquarters consistently underfund requirements,
    base and command officials request funding to cover only a portion of
    RPM needs; (10) for fiscal year 1997, major commands GAO surveyed
    reported they requested funding to cover an average of about one-fifth
    of the RPM needs of their bases and bases reported receiving funding
    equal to only about one-sixth of their needs; (11) many promising
    practices exist in the RPM area, including: (a) establishing a single
    system for counting and categorizing inventory; (b) having a single,
    valid engineering-based system for assessing facility conditions, with
    adequately trained personnel and multiple levels of review; (c)
    prioritizing budget allocations based on physical condition, relevance
    of facilities to the mission, and life-cycle costing and budgeting; (d)
    setting up a single property maintenance budget that is controlled by a
    central office with the power to shift resources to facilities in the
    greatest need; (e) creating incentives to demolish or vacate excess
    space; (f) restricting the use of RPM funds for other maintenance
    purposes; and (g) charging an annual maintenance fee, based on square
    feet used, to ensure adequate funding for facilities and to create an
    incentive for space conservation; and (12) none of the military services
    has implemented all the promising practices for RPM, and their adoption
    of these practices is hampered by several barriers.

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

     REPORTNUM:  NSIAD-99-100
         TITLE:  Military Infrastructure: Real Property Management Needs
    	     Improvement
          DATE:  09/07/1999
       SUBJECT:  Military facilities
    	     Facility maintenance
    	     Maintenance costs
    	     Military budgets
    	     Facility repairs
    	     Private sector practices
    	     Funds management
    	     Federal property management
    IDENTIFIER:  DOD Quadrennial Defense Review

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        United States General Accounting Office GAO                 Report
        to the Chairman and Ranking Minority Member, Subcommittee on
        Readiness and Management Support, Committee on Armed Services,
        U.S. Senate September 1999      MILITARY INFRASTRUCTURE Real
        Property Management Needs Improvement GAO/NSIAD-99-100 United
        States General Accounting Office
        National Security and Washington, D.C. 20548
        International Affairs Division B-280230
        Letter September 7, 1999 The Honorable James M. Inhofe Chairman
        The Honorable Charles S. Robb Ranking Minority Member Subcommittee
        on Readiness and Management Support Committee on Armed Services
        United States Senate The Department of Defense's (DOD) management
        of the maintenance of its properties has concerned the Congress
        because of the long-standing absence of accurate data for making
        funding decisions and increasing backlogs in infrastructure
        repairs.  As requested, our review of real property maintenance
        (RPM) management focused on the properties that the services
        maintain and repair using RPM funds from DOD's operation and
        maintenance (O&M) account.1  Specifically, we (1) analyzed how the
        services determine and prioritize maintenance and repair
        requirements and how they allocate resources to meet their needs,
        (2) identified promising practices2 in facility management that
        the services could consider, and (3) identified barriers to
        implementing promising practices and ways to address them. To
        address our objectives, we sent  questionnaires to 571 military
        bases and major commands3 worldwide; interviewed RPM personnel at
        35 bases and commands nationwide;4 reviewed literature of RPM
        experts; and 1These funds cover expenses for a wide variety of
        property controlled by the military services, for example,
        barracks, administrative and training facilities, utility systems,
        runways, schools, and grounds maintenance.  O&M RPM funds are not
        to be used for significant portions of property, such as family
        housing and medical facilities, which are paid for separately.
        RPM for many industrial-related activities is covered separately
        in contracts.  O&M also covers civilian pay, fuel, supplies,
        repair parts, and military operations. 2Promising practices are
        not necessarily fully proven, but rather are those that appear to
        be designed logically to work well and that seem worthy of wider
        trial involving sound evaluation. 3We received responses from 529,
        or 93 percent.  Major commands are the administrative entities for
        bases with similar missions, such as the fighter bases that are
        part of the Air Force's Air Combat Command. 4A complete list of
        sites visited may be found in app. IX, Objectives, Scope, and
        Methodology. Letter           Page 1
        GAO/NSIAD-99-100  Real Property Management B-280230 interviewed
        more than two dozen RPM experts and officials at U.S. corporate,
        university, religious and governmental entities.  Appendix IX
        further describes our scope and methodology. Results in Brief
        DOD does not have a comprehensive strategy for maintaining the
        services' infrastructure.  Rather, each service sets its own
        standards for maintaining infrastructure.  As a result, the
        services differ in the way they rate property conditions,
        prioritize repairs, and allocate resources.  For example, a
        barracks rated "satisfactory" by one service may be rated as
        "unsatisfactory" by another.  Also, within each service, answers
        to our survey indicated that bases and major commands apply
        condition and/or criteria for rating repairs differently.  As a
        result, the service headquarters cannot be certain that the most
        critical properties in need of maintenance and repair are
        targeted.  Given incomplete and inconsistent data, and different
        RPM rating systems among the services, the Congress cannot be
        assured that it is funding maintenance and repairs that will
        provide the best return on its investment. There is little
        relationship between identified RPM needs and the funds the
        services allocate for RPM.  None of the services' RPM spending
        plans provide sufficient funding to keep their total backlog of
        repairs at current levels; under new Navy plans, the total
        critical-rated backlog will crest in fiscal year 2003, and very
        slowly diminish thereafter.5  Although DOD instructed the services
        in July 1997 to fund RPM to enable them to meet 75 percent of
        their RPM requirements by 2003, DOD removed that goal from an
        updated guidance in April 1999.6  Because the services'
        headquarters consistently underfund requirements, base and command
        officials request funding to cover only a portion of RPM needs.
        For fiscal year 1997, major commands we surveyed reported they
        requested funding to cover an average of about one-fifth of the
        RPM needs of their bases and bases reported receiving funding
        equal to only about one-sixth of their needs.   (In response to
        the draft version of this report, the Navy staff at its
        headquarters Facilities and Engineering Division stated that a
        message had been sent to major claimants and bases that all
        critical RPM needs should 5The Navy divides its backlog into
        "critical" and "deferrable"; only the critical backlog is
        officially reported to the Congress, although both types are
        tracked by the Navy. 6DOD, Defense Planning Guidances for Fiscal
        Years 19992003 and 20012005. Letter    Page 2
        GAO/NSIAD-99-100  Real Property Management B-280230 be reported.
        However, this did not apply to non-critical RPM.  Non-critical
        repairs can deteriorate into critical over time.) Many promising
        practices exist in the RPM area, including * establishing a single
        system for counting and categorizing inventory; * having a single,
        valid engineering-based system for assessing facility conditions,
        with adequately trained personnel and multiple levels of review; *
        prioritizing budget allocations based on physical condition,
        relevance of facilities to the mission, and life-cycle costing and
        budgeting; * setting up a single property maintenance budget that
        is controlled by a central office with the power to shift
        resources to facilities in the greatest need; * creating
        incentives to demolish or vacate excess space; * restricting the
        use of RPM funds for other maintenance purposes; and * charging an
        annual maintenance fee, based on square feet used, to ensure
        adequate funding for facilities and to create an incentive for
        space conservation. Two nonmilitary organizations-the Capital
        Needs Analysis Center of the Church of Latter-day Saints at
        Brigham Young University and Lawrence Livermore National
        Laboratory7-have facility management systems that collectively use
        all of these practices.  Both report these practices enable them
        to maintain needed facilities at common levels, stabilize repair
        backlogs, accurately predict future RPM needs, satisfy customers
        that RPM funds are allocated fairly and based on actual need, and
        prepare credible budget requests.  Similarly, a military
        organization-the U.S. Army Health Facility Planning Agency-is
        implementing a life-cycle investment strategy that it expects to
        reduce major repair costs by 50 percent and cut programming time
        from years to months. None of the military services has
        implemented all the promising practices for RPM, and their
        adoption of these practices is hampered by several barriers,
        including 7The Laboratory, part of the University of California,
        is a management and operating contractor for the U.S. Department
        of Energy.  It derives most of its budget from the Department and
        has a 5-year contract. Page 3
        GAO/NSIAD-99-100  Real Property Management B-280230 * the use of
        RPM funds for other operations and maintenance purposes,
        complicating budget and contract stability; * the lack of common
        standards for allotting space to certain types of facilities; *
        the use of multiple budget accounts to pay for RPM, making it
        difficult to determine the cost of maintaining facilities; *
        incomplete and noncomparable RPM data; * legal and administrative
        restrictions that, while having distinct purposes, may hamper the
        services' ability to cost-effectively address RPM issues; and *
        insufficient training of personnel involved in assessing facility
        conditions. DOD and the services have multiple options for
        addressing these barriers, including changing their facility
        rating and cost accounting systems.  We are making recommendations
        to DOD to improve its management of infrastructure. Background
        According to the Office of the Secretary of Defense (OSD), the
        military services are collectively responsible for maintaining
        more real property than any other entity in the world-more than
        320,000 buildings (with about 2.1 billion square feet), tens of
        thousands of miles of roads, and 1.1 million square yards of
        pavement (like runways). DOD estimates the plant replacement
        value8 (PRV) of this property at more than $500 billion. RPM-which
        includes daily maintenance, small repairs, and minor construction
        (projects under $500,000 or environmental and health projects
        under $1 million)-is funded through the O&M account.  Facilities
        maintained by the O&M RPM funds include the services' barracks,
        administrative space, classrooms, ports, hangars and runways,
        roads and railroads, day care centers, schools and churches, and
        utility structures and systems (but not the cost of utilities'
        consumption).  RPM for family housing, many industrial-related and
        military medical facilities is funded by separate accounts. 8No
        standard definition of PRV could be identified; however, the
        Federal Facilities Council cites two methods used by federal
        agencies in report no. 131, Budgeting for Facilities Maintenance
        and Repair Activities (Washington, D.C., 1996), pp. 10-11.  In
        1997, we defined PRV as "the cost to replace current facilities
        using today's construction costs and standards."  See Defense
        Infrastructure: Demolition of Unneeded Buildings Can Help Avoid
        Operating Costs (GAO/NSIAD-97-125, May 1997), p. 7.  See app. VIII
        for a discussion of PRV-related issues. Page 4
        GAO/NSIAD-99-100  Real Property Management B-280230 Each service
        headquarters sets the annual budget for maintenance and repairs
        based on funding constraints and other priorities.  The budget is
        discussed among the headquarters, central facilities management
        offices, and bases and commands.  Adjustments may be made if a
        base or command can prove that the funds to be allocated are
        insufficient to meet RPM needs. Congressional concerns have been
        repeatedly expressed about DOD's management of RPM.  Despite net
        congressional increases of about $817 million for RPM over fiscal
        years 1992-98, the services' reported repair backlog increased 164
        percent during the same period in nominal terms.9 Covering more
        than 20 years, reviews by DOD, GAO,10 the Congressional Budget
        Office, and outside consulting organizations have found numerous
        problems with DOD's management of its properties.  (A list of
        related reports is at the end of this report.)  These problems
        include the lack of an overall strategy for managing RPM;
        unreliable and inadequate data on facilities' condition and
        inventory; lack of centralized data management and lack of access
        to basic data; insufficient funding to maintain facilities, in
        part resulting from moving RPM funds to other O&M accounts;11 and
        problematic service criteria for rating the condition of
        facilities or to allocate resources to facilities. As a result of
        a 1989 review of its RPM activities, DOD stated that it would (1)
        collect  RPM costs by facility investment category, (2)
        standardize reports on the backlog of maintenance and repairs, (3)
        institute 5-year maintenance planning, (4) standardize PRV
        computations, and (5) establish a meaningful goal for RPM
        investments.12  However, most of these actions 9Data provided by
        OSD.  We did not validate service backlog estimates.  Total
        reported backlog increased from $8.9 to $14.6 billion for fiscal
        years 1992-98.  RPM increases by the Congress above requested
        amounts totaled $1.615 billion during this period, but decreases
        totaled $798 million, for a net plus up total of $817 million.
        For fiscal year 1999, according to OSD, the Congress provided a
        net increase of  $455 million above the request for RPM, an amount
        equal to almost 57 percent of the total net increases of the
        previous 7 years.  However, since these funds are only now being
        spent, the effect on backlog has not yet been determined. 10See
        High-Risk Series: Defense Infrastructure (GAO/HR-97-7, Feb. 1997),
        p. 10; Defense Infrastructure: Demolition of Unneeded Buildings
        Can Help Avoid Operating Costs (GAO/NSIAD-97-125, May 1997), pp. 3
        and 21; and Deferred Maintenance Reporting: Challenges to
        Implementation (GAO/AIMD-98-42, Jan. 1998), pp. 32-34.  Numerous
        other GAO reports on RPM problems date back to 1976. 11To prevent
        this practice, the Congress had included a statutory floor in each
        military service's O&M section of DOD's appropriation acts until
        the late 1980s (e.g. stating that "not less than" a certain amount
        "shall be available only for the maintenance of real property
        facilities"). 12DOD, Renewing the Built Environment, March 1989,
        Executive Summary. Page 5
        GAO/NSIAD-99-100  Real Property Management B-280230 were not
        implemented at the time because DOD was concentrating on reducing
        its overall infrastructure through base realignments and closures.
        As noted in the Senate Appropriations Committee report on DOD's
        fiscalyear 1992 appropriations,13 most of the management problems
        remained.  To address the issues comprehensively, the Congress
        appropriated $50 million in fiscal year 1992 for an extensive
        pilot test of a system to evaluate the condition of all service
        facilities and to prioritize spending using a single set of
        criteria.  Outside contractors developed an exhaustive condition
        assessment system with detailed standards and instructions that
        was tested at 10 military installations between July 1994 and
        April 1995.  The services rejected the system (adoption was not
        mandatory), citing the estimated cost.  However, no analysis was
        done to compare this cost to costs the services incurred for
        individual annual assessments. Without an Overall
        In the absence of an overall, comprehensive management strategy
        for Management Strategy,  maintaining the services'
        infrastructure,14 each service has established its own criteria
        for assessing the condition of its properties and the urgency of
        the Services' RPM Is in  repairs, prioritizing RPM needs, and
        deciding how much to allocate for Disarray
        RPM.  As a result of the differences among the services' systems,
        however, a facility's condition may be rated as "satisfactory" by
        one service and "unsatisfactory" by another or might not be rated
        at all if the service rates a repair project's urgency rather than
        a facility's deficiencies.  Furthermore, respondents to our survey
        reported weaknesses in their services' assessment systems and a
        lack of trained inspectors and RPM personnel overall. Even though
        service bases do annually assess facility conditions and estimate
        the costs of required maintenance, service headquarters fund
        maintenance and repairs at far less than the bases' estimates of
        what is needed.  Moreover, the major commands do not request the
        amount actually needed to accomplish required maintenance and
        repairs because 13S. Rept 102-154, pp. 79-80 (1991). 14DOD was to
        issue a strategic plan for infrastructure in early 1999; however,
        the plan has been delayed indefinitely, as funding intended for it
        was used for other purposes.  We previously cited the absence of,
        but need for such a plan as well as measurable goals, milestones,
        and actions to specific DOD infrastructure problems in High-Risk
        Series (GAO/HR-97-7, Feb. 1997), p. 10, and in Defense
        Infrastructure (GAO/NSIAD-97-125, May 1997), pp. 3 and 21. Page 6
        GAO/NSIAD-99-100  Real Property Management B-280230 they believe
        that their headquarters will not fund RPM at that level.15  This
        situation may lead to a bow wave of backlogged repairs, as
        facilities continue to deteriorate when they are not maintained
        properly. Consistently funding maintenance at levels below what is
        needed to maintain infrastructure vitiates the intent if not the
        letter of OSD guidance, which is meant to prevent further
        deterioration of infrastructure.  In technical comments on the
        draft of this report, DOD stated that the April 1999 update of the
        Defense Planning Guidance for fiscal years 2001-2005 requires the
        services to fund RPM "to at least match" each year's planned RPM
        spending that had been set forth in the fiscal year 2000
        President's budget Future Years Defense Program.  However, since
        none of the services' RPM funding plans for fiscal year 2000 will
        measurably reduce existing total backlog, the spending levels do
        not appear sufficient to keep the overall backlog steady. Without
        data on the consistency of ratings of facilities across the
        services and a common standard by which to compare the services'
        RPM facilities' conditions, OSD and the Congress cannot reliably
        compare or prioritize the services' budget requests for RPM.   And
        if the services continue to delay maintenance on their facilities,
        costs for future repairs will increase. Services' Rating Criteria
        Are  The services' rating systems differ in how they assess
        facility condition, Different                            rate the
        urgency of repairs, prioritize RPM needs, and allocate
        resources.16 * The Army rates facilities at three levels, from
        worst (red), to fair (amber), to best (green), using worksheets
        with both written criteria and illustrations.  The Army's
        Installation Status Report (ISR) provides color-coded summaries of
        conditions at bases and commands and for the Army as a whole, and
        its software generates the estimated costs of improving
        facilities.  ISR summary data for every command and its component
        bases are maintained in an automated database and are accessible
        to facility management personnel at headquarters and to other
        authorized users. 15Although perhaps obvious, we mean the level of
        funding required to fully meet repair needs, rather than to
        partially address needs.  In technical comments, the Navy had
        stated that its major claimants had based funding requests on the
        amounts needed to bring facilities to levels ranging from C1
        (best) to C3.  A C3 condition is not one in which all needed
        repairs have been made, since it is not C1. 16The service's
        systems are discussed in detail in apps. I, II, III, and IV. Page
        7                                                GAO/NSIAD-99-100
        Real Property Management B-280230 * The Air Force rates
        facilities' deficiencies with regard to their estimated impact on
        four mission areas, at three levels (critical, degraded, and
        minimal) in its Facility Investment Metric (FIM) system. * The
        Navy uses an engineering-based assessment to determine facilities'
        deficiencies, which it reports in the Annual Inspection Summary
        (AIS). Data from the summary is then used to rate the
        deficiencies' impact on 28 mission areas at four levels, from has
        fully met demands (C1) to has not met vital demands (C4).  These
        ratings are shown in the Navy's Shore Base Readiness Report. * The
        Marine Corps, a part of the Navy, uses its Commanding Officer's
        Readiness Reporting System and, in addition, a version of the AIS.
        The system is modeled on the Navy's Shore Base Readiness Report,
        rating readiness in 26 mission areas at four levels, from fully
        mission capable to not mission capable. According to our survey,
        bases within the same service and between the services showed
        varying degrees of consensus with regard to how they ranked the
        reasons that facilities and/or mission areas received a "worst"
        rating.  We grouped the responses from bases for eight criteria
        used to assign a "worst" rating into three categories-most
        important, moderately important, or least important reason for a
        "worst" rating for a facility or mission area.  (Results for the
        Marines are not included because of the very few number of Marine
        bases that ranked these factors.)  Figure 1 shows how the
        responding bases ranked eight criteria or factors in this regard.
        Page 8                                GAO/NSIAD-99-100  Real
        Property Management B-280230 Figure 1:  Bases' Ratings of
        Importance of Criteria in Worst-Level Ratings Air Force
        Army                 Navy Age exceeded guidelines         10    20
        70        30     38     32    6         41    53 Severe physical
        deficiency         34    58       8         59     35     6     54
        46    0 Significant safety/health           68    29       3
        41    49      10              38     0 /environmental defects
        62 Configuration did not meet a goal          6    78       16
        19    68      13         5    90     5 (e.g., restroom vs.
        latrines) Configuration did not meet purpose of structure
        14    82       4         12    82      6      10       67    24
        Appearance                 39                        48
        33 severely deficient         2             59        8
        44         5           62 Inadequate space per guidelines
        13    85       2         26  60        14         5    81    14
        Conditions severely impede mission          73     27      0
        29  62        10     72       28     0 Percent of respondents
        rating factor as most important Percent of respondents rating
        factor as moderately  important Percent of respondents rating
        factor as least important Source: Responses to question 6, GAO
        survey.  Totals may not add exactly to 100 percent due to
        rounding. As shown in figure 1, in terms of cross-service
        diversity, three times as many Army bases as Air Force bases (30
        percent vs. 10 percent) rated "age exceeded guidelines" as a most
        important factor in assigning a "worst" rating.  On the other
        hand, more than twice as many Air Force and Navy bases as Army
        bases (73 and 72 percent vs. 29 percent) cited mission impact as a
        most important factor in assigning a "worst" rating.  Also, within
        the Army and the Air Force, bases lacked consistency on the Page 9
        GAO/NSIAD-99-100  Real Property Management B-280230 importance of
        several factors leading to ratings of "worst."  For example, 29
        percent of the Army bases reported "conditions severely impede
        mission" as a most important reason for a "worst" rating,  while
        62 percent ranked it as of moderate importance.  Similarly, 39
        percent of Air Force bases rated "severe physical deficiency" as a
        most important factor, while 59 percent rated it as of "moderate
        importance." Bases within each service also showed mixed
        consistency about the importance of nine criteria for allocating
        funds for repair projects for facilities rated "worst" at their
        base.  (See app.VI, table VI.1.)  For example, 35 percent of Army
        bases cited physical condition as the most important criterion for
        determining RPM allocations, but 59 percent rated it as moderately
        important.  Similarly, almost twice as many Air Force bases rated
        physical condition as moderately important as those citing it as
        the most important factor (63 percent vs. 36 percent).  In the
        Navy, 19 percent of bases ranked a commander's priority as a most
        important criterion, while more than two-thirds rated it as
        moderately important.  In the Air Force, almost twice as many
        bases rated commander's priority as moderately important as those
        that rated it most important (63 percent vs. 34 percent). RPM
        Assessment System Has                         In our
        questionnaire, we asked bases to indicate which weaknesses, if
        any, Several Weaknesses                                they
        associated with their facility condition assessment systems.
        Table 1 shows the percent of bases in each service that chose a
        given weakness. Table 1:  Weaknesses in Services' Condition
        Assessment Systems Percent of responding bases that checked
        weakness as relevant to RPM process Type of weakness
        Army           Air Force        Navy         Marines Little or no
        linkage between condition assessments/ determination of
        requirements and RPM budget estimation
        46                29           30               50 Little or no
        linkage between assessments/requirements and RPM allocation
        61                39           41               56 Cost estimates
        generally not accurate
        36                25           34               37 Ratings too
        subjective
        30                34           40               56 Using one
        rating for multiple facilities oversimplifies conditions
        51                37           38               37 Ratings not
        informative
        53                32           27               25 Ratings too
        broad
        32                30           28               44 Ratings not
        timely
        15                14           22               44 (continued)
        Page 10                                  GAO/NSIAD-99-100  Real
        Property Management B-280230 Percent of responding bases that
        checked weakness as relevant to RPM process Type of weakness
        Army              Air Force            Navy            Marines
        Assessments lack robust engineering base
        40                    25              18                 19
        Overemphasis on appearance
        38                     9               7                 12 Others
        21                    25              18                 25
        Source: Responses to question 12, GAO survey.  Vertical totals
        exceed 100 percent because more than one choice was possible.
        Bases identified several weaknesses in their assessment systems.
        First, in all the services, respondents reported budget-related
        problems-that there is little or no linkage between condition
        assessments and/or the determination of RPM requirements with
        either RPM budget estimates or the final allocation of resources.
        Base officials told us that they were concerned that their major
        commands and headquarters do not adequately consider the bases'
        identified needs in preparing RPM budgets or allocating resources.
        Also, 25-37 percent of respondents reported that cost estimates
        generated by condition assessments/requirements determination are
        generally not accurate. Second, as also shown in table 1, many of
        the services' bases identified four problems with their assessment
        systems.  First, the criteria for condition assessment are too
        subjective, involving individual judgment.  Second, the process of
        summing up ratings for a broad category (such as all community
        support buildings) with multiple facilities oversimplifies
        conditions.  Third, the ratings (e.g., critical or degraded) do
        not make clear what is wrong with a specific facility (making it
        necessary to go back to the original paperwork).  Finally, overall
        condition ratings are too broad (e.g., red, amber, and green).
        Substantial percentages among Army respondents also felt that the
        assessments lacked a robust engineering basis and overemphasized
        facility appearance. In addition, when asked in a different
        question about ways to improve the RPM process, in each service
        except the Navy, nearly two-thirds of the respondents endorsed the
        idea of a system that places more emphasis on long-term, strategic
        maintenance planning and de-emphasizes annual assessments of
        facilities.  Fifty percent of the Navy respondents endorsed this
        idea.  Similarly, there was substantial agreement among bases that
        RPM funding should be based on facilities' physical deficiencies
        (Air Force, 56 percent; Army, 53 percent; Navy, 48 percent; and
        Marines, 50 percent). There was even greater consensus that RPM
        funding should not be based Page 11
        GAO/NSIAD-99-100  Real Property Management B-280230 on a fixed
        increase above or below the previous year's level (Air Force, 51
        percent; Army, 59 percent; Navy, 61 percent; and Marines, 87
        percent). Survey responses from bases also indicated that bases
        lack procedures to ensure that assessments of facility conditions
        are valid and reliable, that is, that they actually reflect the
        facilities' physical conditions.  The responses are summarized in
        table 2. Table 2:  Percent of Bases Using Listed Methods to Ensure
        Condition Assessments Are Consistent Service-wide Type of
        validation procedure
        Army        Air Force           Navy         Marines
        average No formal procedure used to ensure consistency of
        assessments, other than expertise/training of assessor
        56               51             60              38
        55 Some number of facilities are reinspected by different
        assessors to determine consistency with initial review
        4                 3             4               6
        4 Random sample of facilities are reinspected by different
        assessors                    23                 7             7
        19               12 Outside contractors used to validate initial
        ratings                                   2                 1
        6              13                    3 Source: Responses to
        question 10, GAO survey. As table 2 shows, 55 percent of all
        survey respondents indicated that they had no formal standardized
        procedures to determine the reliability of inspectors' ratings.
        Four percent reported that they used different inspectors for
        follow-up visits to verify reported problems. Lack of Trained
        Inspectors                       According to our survey and
        discussions during visits to 35 bases and Affects the Quality of
        RPM                       commands, training and resource
        shortages are an unresolved RPM Assessments
        problem for large majorities of service installations, and these
        problems constrain the quality of the assessment process.  About
        25 percent of survey respondents in the Army and the Air Force, 31
        percent in the Marines, and about 51 percent in the Navy, reported
        that they do not provide or require some form of standardized
        training for personnel that assess the condition of facilities.
        Bases reported that 83 percent of the facility inspectors are
        building users who are not trained professionals such as engineers
        or craftsmen.17  Given this situation, we question how 17The Air
        Force bases reported that 86 percent of inspectors were building
        users; the Army, 82 percent; the Navy, 71 percent; and the
        Marines, 64 percent.  Bases were asked to identify the
        qualifications of "persons who determine requirements or conduct
        assessments/inspections of facility conditions." Page 12
        GAO/NSIAD-99-100  Real Property Management B-280230 these
        inspectors can be expected to produce reasonably accurate and
        consistent ratings of facilities. In our survey, many bases also
        reported shortages of personnel in the RPM area, sufficiently
        trained personnel, and personnel to carry out RPM administrative
        work.  The responses are summarized in table 3. Table 3:  Percent
        of Bases Identifying Training and Resource Constraints Service-
        wide Type of  constraint
        Army       Air Force           Navy       Marines         average
        Shortage of  personnel for RPM
        61              45             35           44               47
        Shortage of trained personnel (i.e., with skilled craft or
        engineering expertise)
        48              42             28           63               41
        Shortage of resources-time, budget-to carry out assessments
        72              61             71           75               67
        Source: Responses to question 11, GAO survey. Insufficient RPM
        Funding                          The services' plans for funding
        RPM could result in the further deterioration of infrastructure
        and an increase in backlogs of repairs.  The Defense Planning
        Guidances since 1997 were intended, in part, to get the services
        to increase spending in areas considered as underfunded.  The
        April 1999 guidance update for fiscal years 20012005 requires that
        RPM funding at least match the annual levels in the fiscal year
        2000 President's budget Future Years Defense Program while
        eliminating a previously established goal to meet 75 percent of
        RPM requirements.  However, even if the service headquarters
        comply with the update, they do not plan to fund RPM at levels
        that will meet identified RPM requirements (both critical and
        noncritical).  Furthermore, many bases and commands do not request
        funding to meet all their RPM needs and some receive uneven
        allocations of funds for RPM, relative to their identified needs.
        Services' Plans May Lead to                       None of the
        services' plans provide sufficient RPM funds to keep the
        Deterioration of Facilities and                   backlog of
        repairs at current levels, as measured by their own rating
        Increases in Backlogged Repairs systems.  As a result, overall
        service infrastructure conditions may deteriorate over the next 4
        to 5 years, although improvements in some specific type of
        facilities, such as barracks, may result from targeted spending.
        Delaying repairs is not cost-effective, as noted at a March 1999
        congressional hearing, where an OSD official remarked that the
        lack of Page 13
        GAO/NSIAD-99-100  Real Property Management B-280230 timely
        maintenance leads to expensive repairs in the future.18  Despite
        this situation, the services plan to fund RPM at varying levels as
        follows: * The Air Force plans no funding for repair projects
        until fiscal year 2003; preventive maintenance is funded at 1
        percent of PRV.  The Air Force estimates that through fiscal year
        2005, it will provide funding for only 40 percent of the repairs
        identified as critical or degraded. * The Navy plans to fund RPM
        at 1.84 percent of PRV in fiscal year 2001, increasing that
        gradually to 2.59 percent by fiscal year 2005; under this plan,
        critical backlog will increase about 10 percent, from about $2.5
        billion to about $2.75 billion in fiscal year 2003, and then begin
        to decline.  While critical backlog in barracks will be virtually
        eliminated, according to the Navy, other facilities will continue
        to be at C2 and C3 levels,19 and noncritical backlog is not
        addressed. * The Marine Corps estimates that by fiscal year 2005,
        backlogged repairs will increase 60 percent in dollar value. * The
        Army plans to increase RPM spending from 64 percent of its
        requirements to about 84 percent over fiscal years 20002005, but
        because of the RPM requirements baseline the Army uses, it is
        unclear that this increase will stabilize backlog.20 Further
        backlog increases may produce a bow wave of more costly repairs in
        the future.  It was estimated that the services' reported backlog
        would increase by $2 billion (13.6 percent) in 1 year, to more
        than $16.6 billion in 18Prepared statement of Randall A. Yim,
        Acting Deputy Under Secretary of Defense (Installations), to
        Senate Armed Services Subcommittee on Readiness, March 10, 1999,
        p. 6. 19The Navy defines the C3 level as the one at which the
        condition of facilities permits meeting the demands of assigned
        mission "only marginally," "but with major difficulty."  According
        to the Navy, the RPM funding levels for fiscal year 2001 are
        intended to bring aviation, waterfront operations, training
        facilities, and utilities to the C2 level ("has substantially met
        all demands"),  "with all other facility categories at the C3
        level." 20The Army defines its RPM requirement as the "estimated
        cost for the minimum annual sustainment of facilities . . . at
        existing levels plus the cost of renovations that are not new
        construction."  The Army plans to fund this requirement on an
        upward slope; it estimates it will reach 84 percent of this
        requirement by 2005.  According to the Army, however, it would
        today take about $14.8 billion to bring O&M RPM-funded facilities
        up to the highest level of its condition assessment system, the
        ISR.  The Army requested extra annual funding of $1.4 billion to
        address these deficiencies, but it is slated to receive only $178
        million annually, if it becomes available, or about 1.3 percent of
        total ISR-estimated needs.  Therefore, it is unclear how backlog
        will be constrained.  See app. I. Page 14
        GAO/NSIAD-99-100  Real Property Management B-280230 fiscal year
        1999.21  A contributing cause may be, as we reported in 1997, that
        total RPM spending decreased 38 percent during fiscal years 1987-
        96, while the services reduced the square footage they maintained
        only about 10 percent during the same period.22 RPM Budgets Not
        Consistent     The services' future plans are a reflection of the
        services' long-standing With Requirements              practice of
        failing to fund RPM at levels sufficient to meet identified total
        requirements.  Responses to our survey showed little relationship
        between the known, identified RPM needs and the funds requested to
        address those needs.  For example, major commands' overall
        requested an average of 20.4 percent of their bases' total
        identified needs in fiscal year 1997.23 Similarly, bases reported
        receiving 16.2 percent of known RPM needs from their commands in
        fiscal year 1997.  Of their needs, Army bases reported that they
        received funding equal to 15.4 percent; Air Force bases received
        18.3 percent; Navy bases, 14.2 percent; and Marine Corps, 28
        percent. According to headquarters facility management officials
        of each service, funding RPM is not their service's first
        priority.  An Army official described it as the last of four
        priorities.  The major commands and bases understand that this is
        the culture for RPM and have acted accordingly-as reflected in the
        data reported to us by the commands and the bases.  For example,
        base officials said that in their view service headquarters do not
        adequately consider RPM needs identified during the assessment
        process in making decisions about budget and allocation of
        resources.  In light of the lack of apparent connection between
        the assessments, requests, and actual subsequent RPM funding
        allocations, some base officials questioned the wisdom of
        expending resources on annual assessments. 21House Report 105-591,
        p. 48 (1998).  We did not validate service backlog estimates.  The
        calculation of changes in reported backlogs has become
        increasingly problematic since the Army's method is different from
        that of the other services.  The Army estimates backlog as the
        amount required to bring designated facilities to a higher level
        of condition according to its condition assessment system.  The
        Army previously defined backlog as the unfunded cost of all
        identified repairs, regardless of their criticality or relevance
        to mission. The Navy reports only critical-rated project costs as
        backlog; it excludes noncritical "deferrable" repairs.  The Air
        Force categorizes backlogs at three levels and reports only the
        most urgent top two as its backlog. 22Defense Infrastructure:
        Demolition of Unneeded Buildings Can Help Avoid Operating Costs
        (GAO/NSIAD-97-125, May 1997), p. 4. 23Request by Army, 9.3
        percent; Air Force, 31 percent; Navy, 28 percent; and Marines, 30
        percent.  The overall average percentage was reduced because the
        Army's identified needs were more than double the next highest of
        any service, and Army commands requested 9.3 percent of this
        total. Page 15
        GAO/NSIAD-99-100  Real Property Management B-280230 In addition to
        the disconnect among RPM needs, requests, and allocations,
        responses to our survey suggest that the division of RPM funds
        among bases has been inequitable.  Some bases reported allocations
        as much as 27 times the amount that other bases received relative
        to their needs.  For example, for fiscal year 1997, bases in one
        Air Force command reported receipt of 7 percent to 191 percent of
        their needs; bases in one Army command reported receipt of 9
        percent to 118 percent of their needs; and bases in a Navy command
        reported receipt of 3.5 percent to 39 percent of their needs.  The
        scope of these differences suggests that funding is based on
        criteria other than need. Promising Practices     On the basis of
        experts' recommendations and other criteria, we had Could Help DOD
        discussions with almost 2 dozen nonmilitary entities about their
        facility assessment, planning, and budgeting systems.24  The other
        criteria included Improve RPM             citations in the expert
        literature of entities with good reputations for RPM Management
        practices, size of the organization, and comparability of entities
        to the military services in terms of goals of maintaining
        infrastructure for long periods.  Of these, we found two that have
        a set of particularly promising practices that bear consideration
        by the military services.  These are (1) Brigham Young
        University's Capital Needs Analysis (CNA) Center, Provo, Utah, and
        (2) the University of California's Lawrence Livermore National
        Laboratory (LLNL), Livermore, California.25 Two Organizations'
        The practices used by CNA and LLNL are designed to ensure reliable
        and Promising Practices     valid property assessments, rational
        prioritization of needs, equitable allocation of resources, and
        cost-effectiveness in terms of making repairs at the appropriate
        time to avoid the deterioration of facilities and thus more
        expensive repairs. CNA and LLNL have incorporated the following
        six practices into facilities management, which they say have made
        maintenance management more efficient and cost-effective: *
        established a single system for counting and categorizing
        inventory; 24App. IX contains a complete list of these experts and
        the organizations we queried. 25The CNA Center manages the
        worldwide facilities of the Church of Latter-day Saints at more
        than 7,000 locations, including 4 universities.  The LLNL system
        encompasses 600 diverse buildings (6.2 million square feet) with a
        PRV of almost $3 billion. Page 16
        GAO/NSIAD-99-100  Real Property Management B-280230 * have a
        single, valid engineering-based system for assessing facility
        conditions, using adequately trained personnel at multiple levels
        of review; * prioritized budget allocations based on physical
        condition, relevance of facilities to the mission, and life-cycle
        costing and budgeting; * set up a single property maintenance
        budget that is controlled by a central office with the power to
        shift resources to facilities in the greatest need; * created
        incentives to demolish or vacate excess space; and * restricted
        the use of RPM funds for other maintenance purposes. As discussed
        below, one of these practices-life-cycle planning-requires further
        explanation; and LLNL uses a seventh practice-an annual
        maintenance charge. Life-Cycle Planning a Key        Life-cycle
        planning is a core element of LLNL's and CNA's management of
        Element to Managing Facility     facility maintenance.  Under the
        life-cycle concept, a building's useful life is Maintenance
        limited by the durability of facility components such as
        electrical systems.26 The two organizations have created databases
        on facilities and their components (such as heating, ventilation,
        and air conditioning units) based on their inspections.  With this
        data, the two organizations can estimate facility components'
        remaining life cycles (taking into account previous results as
        well) and replace components only when necessary.  For example, a
        component such as an air-conditioning system would be replaced
        only when its repair cost exceeded a given percentage of its
        replacement cost or it broke down so often that it was ineffective
        to repair it both in terms of cost and maintenance time. With
        life-cycle data, both organizations can project peaks and valleys
        of future maintenance spending and estimate the RPM funding level
        required to sustain facilities through their life cycles.  CNA
        budgets RPM based on a 40-year life cycle27 and a 4-year budget
        that it adjusts annually based on condition assessments and the
        resulting estimated future costs.  The center states that the
        transparency of the life-cycle system and its objectivity in
        26Sean C. Rush, Managing the Facilities Portfolio: A Practical
        Approach to Institutional Facility Renewal and Deferred
        Maintenance (Washington, D.C.: National Association of College and
        University Business Officers, 1991), p. 48. 27For more details,
        see app. VIII and Robert E. Hutson and Frederick M. Biedenweg,
        "Before the Roof Caves In: A Predictive Model for Physical Plant
        Renewal," in APPA, Capital Renewal and Deferred Maintenance in
        Critical Issues in Facilities Management, vol. 4 (1989), pp. 12-
        29, and Managing the Facilities Portfolio, pp. 52-62. Page 17
        GAO/NSIAD-99-100  Real Property Management B-280230 assessing RPM
        needs have helped reshape the culture of its component
        institutions; the change has permitted the center to base
        maintenance on real needs rather than on the internal influence of
        different entities within CNA.  With this process, CNA as ensured
        overall systemwide minimum adequate conditions for all facilities;
        entities that choose higher standards must use external funding.
        Further, according to CNA, the use of life-cycle analysis has made
        its budget requests more credible, helping it to obtain adequate
        funding for true RPM needs. Even though LLNL operates on a 1-year
        budget, as do most federal agencies and the military, it uses
        life-cycle data to prioritize RPM spending: that is, the
        components most likely to fail receive funding first.  LLNL
        management has used the life-cycle process to demonstrate the need
        to adequately fund preventive maintenance and thus preclude costly
        component failures. Both LLNL and CNA also require departments and
        programs to use their own funds to pay for improvements that do
        not address a repair or maintenance need, such as replacing
        carpeting that is not worn out. One government entity, the Army's
        Health Facility Planning Agency (HFPA),28 uses life-cycle
        principles for facility management.  HFPA has developed a costing
        and budgeting process based on life cycles that it is extending
        across 1,600 hospitals, clinics, and other health-related
        facilities worldwide.  The agency prioritizes RPM spending based
        on a combined assessment of predicted needs over a life cycle,
        known physical deficiencies, and mission impact, and it targets
        funds for those facilities that serve the largest number of
        people.  It assumes a 50-year facility replacement cycle and uses
        life-cycle estimates to optimize investments in operations,
        maintenance, repairs, and minor construction.29  HFPA reports that
        in the 5 years it has used life-cycle costing and budgeting, it
        has reduced its anticipated major repair costs by 50 percent.30
        28HFPA is in charge of RPM for Army hospitals and clinics
        worldwide; its funding comes from the Defense Health Program, not
        from the Army's O&M RPM account.  HFPA also develops long-term
        strategic RPM plans and the methods used to assess the condition
        of facilities and allocation priorities. 29Army HFPA mission
        booklet, p. 4. 30Army HFPA mission booklet, second to last page.
        We did not validate the claimed savings but find that RPM experts
        emphasize that adequate preventive maintenance can reduce overall
        RPM costs by avoiding costly, catastrophic repairs resulting from
        neglect. Timely and adequate preventive maintenance is widely
        regarded as essential to making RPM cost-effective. Page 18
        GAO/NSIAD-99-100  Real Property Management B-280230 Lawrence
        Livermore's               LLNL has another practice that stands
        out as potentially promising and Annual Maintenance Charge cost-
        effective in managing facilities.  It charges an annual fee of $6
        per square foot for maintenance and repair, cleaning, grounds
        care, and waste disposal costs.  According to Laboratory
        officials, the charge compares favorably to those incurred by
        other organizations for the same range of services.  Also,
        external reviewers have twice examined the LLNL charge and found
        it to have been based on incurred costs.  According to Laboratory
        officials, the charge has focused facility users' attention on
        their maintenance costs and has, as intended, led to reductions in
        the amount of space claimed to be necessary.  Through the fee, the
        Laboratory has generated sufficient revenue to pay for repairs,
        thereby preventing increases in its maintenance backlog.  It has
        not reduced the existing backlog (at current rates) but does not
        consider this significant because the backlog includes
        deficiencies in buildings that are excess to its needs and that
        are being maintained at a minimum level. Charging for maintenance
        by the square foot makes clear how much space costs, and such a
        charge could be a required component of any military base's budget
        to create a minimum annual funding level to ensure adequate
        maintenance.  Military entities that use working capital funds
        have a similar system in that RPM and other overhead costs are
        included in the rates that are charged to military customers for
        services rendered. Barriers Hinder the                None of the
        services use all of the promising maintenance practices we
        Services' Use of                   found at CNA and LLNL, and they
        would have to overcome several barriers to successfully adopt
        these practices.  These barriers include the services' Promising
        Practices                differing cultures related to RPM
        standards for maintaining facilities, budget limitations and the
        low priority given to fund RPM, the lack of comparable and
        adequate data, the lack of common space allocation standards, and
        legal and administrative rules.  These barriers would be a
        significant challenge to overcome; however, other organizations
        have faced similar challenges and met them. Services' Cultural
        Barriers        DOD's 1999 Annual Defense Report recognizes that
        base facility conditions affect quality of life and retention.31
        At the same time, each service has different standards to which
        facilities are maintained.  As a result, the 31DOD, 1999 Annual
        Defense Report, ch. 9, p. 10. Page 19
        GAO/NSIAD-99-100  Real Property Management B-280230 services have
        created widely varying living and working conditions.  For
        example, the Air Force emphasizes high-quality conditions in part
        because Air Force bases are collocated with their platforms (their
        aircraft). However, Air Force RPM spending plans, as well as those
        of the other services, permit increases in backlog, including
        critical-rated repairs, over the next several years. RPM Budgeting
        Barriers Migration of O&M RPM Funds    The services have long used
        RPM funds for other O&M purposes (such as unfunded emergency
        military operations), moving funds from the RPM account for other
        purposes considered more pressing.  Although the RPM funds are
        generally returned toward the end of the fiscal year, urgent
        repairs may be delayed if contracts are canceled.  Thus, the
        flexibility afforded by fungibility makes cost-effective planning
        and management of RPM problematic.  Migration or even the outright
        reduction of planned funding also greatly hinders the use of life-
        cycle costing and budgeting. Although the Army's HFPA uses life-
        cycle principles to assess its facilities and to plan its RPM
        budgets, its ability to implement its plans was compromised in
        fiscal year 1999 by the arbitrary movement of its RPM funds to
        other accounts.  As noted, both LLNL and CNA prohibit RPM fund
        migration because it creates budgeting and contracting
        instability. Budget Process                There is little, if
        any, clear connection between the detailed assessments of actual
        repair needs made at the base level and subsequent RPM budget
        requests or allocations.  While RPM needs are reported by bases
        and major commands to headquarters, the service headquarters have
        funded only about one-sixth of the total known RPM needs,
        according to the budget data reported on the surveys.  Moreover,
        we were told that commanders do not request the full amounts
        needed, knowing that funding will never be provided at those
        levels. Federal Budget Cycle          The single-year O&M budget
        constrains each service; all are barred from accumulating reserves
        to address future, predictable surges in repair needs.  However,
        some organizations that are similarly constrained, such as LLNL
        and the Army's HFPA, use life-cycle analyses for planning purposes
        to set RPM budgets at levels sufficient to address predicted RPM
        needs. Multiple Accounts             Military RPM is paid for from
        multiple accounts, some of which are quite large in dollar terms
        (e.g., military family housing, industrial activities Page 20
        GAO/NSIAD-99-100  Real Property Management B-280230 under working
        capital funds, hospitals and health clinics) and not included in
        O&M.  For example, the Army pays for RPM from 27 different
        accounts; O&M RPM accounted for just 55 percent of the Army's
        expenses related to real property maintenance in fiscal year 1997.
        In addition, the Center for Naval Analyses found that the Navy had
        110 different accounts for RPM use in 1995.  Navy O&M RPM applied
        to just 45 percent of the estimated total of Navy plant value in
        1995.32  As a result of these multiple accounts, funding for RPM
        is fragmented, creating problems in tracking how much is actually
        being spent. Barriers Created by             The services have
        different coding schemes to record their inventory of
        Incomparable, Inaccessible,     facilities; as a result, this
        information across the services is not and/or Incomplete Data
        comparable.  In addition, inventory data are often inaccessible
        and/or incomplete.  Only the Army published an annual report-
        called the Annual Summary of Operations (now discontinued)-that
        specified spending per square foot at every base worldwide, by
        type of facility and by different type of maintenance.33  The
        Army's database contained separate costs in standard metrics
        (e.g., per square foot, per railroad mile, per square yard of
        pavement) for 113 different facility types and RPM-related
        activities. The Air Force and the Navy (and, the Marines, whose
        inventory is recorded in the Navy's database) already have large
        property inventory databases, but they are neither on-line nor
        nearly as detailed as the Army's in terms of RPM-related spending
        categories.34  In addition, OSD has not required the Navy to fully
        fill out budget exhibit data sheets, making it impossible to
        compare Navy RPM spending to the other services' spending on a per
        square foot basis. 32Ackerman, Glenn, et.al., The Backlog of
        Maintenance and Repair: Preventing Its Growth and Measuring Its
        Impact, Center for Naval Analyses (Alexandria, Va.: Apr. 1995), p.
        7. 33Department of the Army, Directorates of Public Works, Annual
        Summary of Operations, for any fiscal year through 1997.  We found
        no comparable report by other services.  The Army's Installation
        Support Center reports that the requirement for publishing the
        annual summary has been withdrawn, as of fiscal year 1998, and
        that no comparable report will be forthcoming.  The report was
        also available on-line. 34Although the Army's database is more
        comprehensive, it requires greater clarity regarding who is paying
        for what, and over what time period, since RPM expenditures by DOD
        entities for which the Army has technical responsibility are
        listed as Army spending, when in fact the spending is by non-Army
        entities and is actually reimbursed.  For example, at one base, we
        found that an intelligence entity made extensive renovations
        through RPM at an annual cost of $8 per square foot (four times
        more than the Army average for comparable space), and the cost was
        recorded as Army RPM spending. Although reimbursed, the spending
        was averaged into Army accounts, and the $8 cost noticeably
        increased the average cost per square foot for both that base and
        for the command in which its spending was averaged. Page 21
        GAO/NSIAD-99-100  Real Property Management B-280230 Without valid,
        reliable data, OSD and the services cannot adequately evaluate the
        cost-effectiveness of real property management or even know how
        much is being spent on RPM.  A March 1998 Logistics Management
        Institute analysis found that during the Quadrennial Defense
        Review (QDR), DOD analysts and managers often worked with
        databases 20 years behind modern systems and practices used in
        private industry.  The Institute noted that the databases "lacked
        the capability, flexibility, and responsiveness to meet analysts'
        needs."35 In April 1999, OSD issued a cost factors handbook for
        facilities that reduced about 3,000 service facility category
        codes to about 400 and that reports average RPM costs per square
        foot for each of these codes, as well as new construction costs
        per square foot.  These were based on commercial cost-estimating
        guidelines compiled by multiple expert sources, including the
        Building Owners Management Association, the International
        Facilities Management Association, R.S. Means, Whitestone, and the
        Army Cost and Economic Analysis Center.36  OSD intends to use
        these cost factors, once validated, to show the services the level
        of spending required to sustain facilities.  However, the services
        have not yet decided whether to accept the revised facility
        category codes. Barrier Due to Lack of Common  The services set
        their own space standards for facilities and workers (e.g., Space
        Allocation Standards          the Army allocates 162 square feet
        per administrative worker; the Navy and the Marines allocate 110
        to150 square feet).  Without common standards, it is difficult to
        constrain the use of space, including identifying "excessive" use.
        (The Army uses space standards to determine RPM funding and
        penalizes bases that have excess space.)  Although some facilities
        will always be service-unique (e.g., nuclear submarine repair
        facilities; intercontinental ballistic missile silos), many (such
        as barracks, standard classrooms, administrative space, and family
        housing) are common across the services. Legal and Administrative
        Certain laws and administrative restrictions can hamper the
        services' Barriers                            ability to cost-
        effectively address RPM issues, even though they have other
        35Gerald W. Westerbeck and Jordan W. Cassell, Infrastructure
        Planning and Real Property Management: New Facility Category
        Coding (Logistics Management Institute, McLean, Va.: Mar. 1998).
        36DOD Facilities Cost Factors Handbook, DOD (Apr. 1999),  p. 2.
        Page 22                                          GAO/NSIAD-99-100
        Real Property Management B-280230 important purposes.  For
        example, the National Historic Preservation Act37 places
        restrictions on the demolition of some buildings and imposes
        potentially costly standards of repair on some historic
        structures.  At one base, for example, decorative fireplace tiles
        in officers' homes were deemed historic, and replacements had to
        be ordered from England because no source for them could be found
        in the United States.  At another base, windowsills for "historic"
        buildings required repair by craftsmen with special certification.
        However, the base could not afford the specialist craftsmens'
        rates and chose to let the sills continue to fall apart.  Under
        the McKinney Act,38 the services must rate properties slated for
        demolition in the contiguous 48 states, Alaska, and Hawaii, to
        determine their potential utility to house the homeless; in fiscal
        year 1998, the Army rated nearly 9,900 buildings for this purpose,
        including facilities at remote locations. Conclusions and     In
        the absence of a sound DOD strategy for managing the upkeep of its
        Recommendations     infrastructure, the services use different
        methods and criteria for assessing the condition of properties,
        prioritizing maintenance and repair needs, and allocating
        resources.  Without standard assessment criteria, DOD cannot
        compare maintenance costs or facility conditions across the
        services.  This hampers the development of a sound strategy for
        managing the upkeep of the military's infrastructure.  Moreover,
        the services cannot ensure that their ratings of facilities'
        conditions or urgent repairs are valid or reliable either at
        individual bases or within each of the services because facility
        assessors do not apply their service's criteria consistently.  As
        a result, DOD does not have accurate and comparable databases on
        facility conditions, mission impact, and repair costs, and the
        Congress cannot be assured that it is funding maintenance and
        repairs that will provide the best return on its investment. Bases
        report little connection between their efforts and actual budget
        allocations from their headquarters.  Furthermore, RPM funds are
        reallocated for non-RPM purposes.  Given the uncertainty and
        instability in RPM funding, contracting and rational planning for
        maintenance are made 37The National Historic Preservation Act (16
        U.S.C. 470h-2) governs the preservation of historic buildings and
        can prevent the services from demolishing a historic building.
        38The McKinney Act (16 U.S.C. 11411) requires DOD to work with the
        Department of Housing and Urban Development to determine whether
        unused or underused facilities scheduled to be demolished are
        suitable for use by the homeless. Page 23
        GAO/NSIAD-99-100  Real Property Management B-280230 more
        difficult.  When maintenance is deferred, facilities further
        deteriorate and become more expensive to repair. DOD has the
        opportunity to improve its infrastructure management through the
        adoption of promising practices already in place in the private
        sector.  We recognize that barriers to implementing these
        practices exist and that DOD will face challenges in overcoming
        some of these barriers. However, in the long term, the adoption of
        sound standards, measures, and processes will help DOD maximize
        its RPM investment and ensure that needed facilities are
        adequately maintained, and those that are unneeded are removed
        from inventory.  Development and issuance of a meaningful,
        comprehensive cross-service strategic plan is essential to
        eliminating the disarray in the management of the services'
        infrastructure.  Such a strategic plan should provide for
        effective and equitable methods to connect actual repair needs to
        budget allocations to repair and maintain those facilities that
        are essential to the multiple missions of most bases, from
        operations to community welfare. To improve DOD's RPM management
        and address barriers to change, we recommend that the Secretary of
        Defense 1.  fund the development of DOD's strategic facilities
        plan and 2.  develop a cross-service integrated strategy, in close
        coordination and consultation with the heads of facilities
        infrastructure of each service, to comprehensively address RPM
        issues; the strategy should provide, at a minimum, for * uniform
        standards that set the minimum condition in which military
        facilities are to be maintained and standardized condition
        assessment criteria; * standard criteria by which the services are
        to allocate space for different types of facilities (e.g.,
        barracks, classrooms, administrative buildings) and against which
        RPM funding allocations will be measured; * standard criteria for
        inventorying DOD and service property (except for relatively few
        service-unique facilities); * computerized, on-line inventory and
        cost databases that permit meaningful comparisons, across and
        within the services, of RPM spending by type, size, and location
        of facility and RPM activity, including direct data access by OSD;
    * standard cost accounting methods by which the services will
        record and track their RPM expenditures so that they and DOD know
        how much is Page 24                               GAO/NSIAD-99-100
        Real Property Management B-280230 being spent, where it is being
        spent, and on what type of facility or RPM-activity it is being
        spent, by common metric, using the Army's Directorate of Public
        Works' Annual Summary of Operations report (published through
        1997) as a potential model; * the identification of priorities for
        the services to use to explicitly link needs assessments with
        resource allocations and tracking systems that show whether or not
        identified high priority needs are allocated the funds intended
        for them by the Congress; * mandated training standards
        (curriculum and hours) for all those involved in condition
        assessment and ratings of repair urgency; and * the services'
        adoption of a comprehensive, valid, engineering-based assessment
        system that incorporates life-cycle planning into facilities
        maintenance based on the well-developed methods already used by
        nonmilitary entities. In addition, the Department's RPM strategy
        needs to deal with the issue of funding instability, particularly
        the migration of RPM funds to non-RPM uses and the lack of RPM
        reserve funds.  In this regard, the Department should consider the
        feasibility of adopting the promising practices identified in this
        report.  To the extent that adoption of any of these practices
        would require changes to existing law, we recommend that the
        Department develop a legislative proposal for submission to the
        Congress. Agency Comments and  DOD stated that, overall, our
        report provides a good review of the Our Evaluation
        Department's real property maintenance program.  In addition, it
        stated that our survey results provided the Department feedback on
        efforts to improve existing policy and methodologies. DOD
        concurred or partially concurred with 9 of 12 components of two
        overall recommendations, nonconcurred with 3 of  the 12, and
        provided a number of comments that it characterized as technical.
        Where appropriate, we made minor changes and clarifications in
        responses to these technical comments.  However, we believe that
        some of the agency's comments warrant further discussion. DOD
        believes that our report does not give credit to the services for
        their accomplishments in better defining their RPM requirements
        and determining RPM funding allocation.  DOD also stated that it
        has previously examined some of our recommendations but did not
        implement them because-in the case of condition assessment
        surveys-of their high cost or because of "policy decisions
        regarding devolution of DOD-wide Page 25
        GAO/NSIAD-99-100  Real Property Management B-280230 standards or
        establishment of working capital funding."  DOD also expressed the
        view that "anomalies of the survey results may be attributable to
        misunderstandings of the survey instrument by installation level
        personnel rather than an indicator of a lack of clear policy for
        field activity personnel." With regard to crediting the services'
        efforts to better define RPM requirements, we recognized the
        services' efforts in our report.  We analyze the systems used by
        each service in detail, with a separate appendix on each system,
        citing the strengths we found, such as the Army's annually
        published RPM inventory database.  We also noted advanced
        techniques for RPM used by the Army's Health Facility Planning
        Agency, which could be used as a model by other service branches
        and other Army components. With regard to the cost of implementing
        a DOD-wide standardized Condition Assessment Survey (CAS), we
        found that no cost comparison had been made by DOD of a CAS to the
        systems used by the services when a CAS was field tested in the
        early 1990s.  Moreover, we note that without a standard CAS,
        conditions, mission impact, and inventory data cannot be compared
        from one service to another and, therefore, DOD cannot prioritize
        the RPM needs of the services. We do not agree that answers to our
        questionnaire were due to "misunderstandings of the survey
        instrument."  DOD does not cite any particular issue on which they
        believe personnel were confused by the survey.  In order to
        eliminate potential misunderstanding in the survey instrument, we
        pretested it at 15 Army, Navy, and Air Force bases and commands,
        and provided for its review by each services' headquarters
        facility management staffs.  Revisions were made based on feedback
        from the field pretests and from the headquarters' RPM experts.
        Moreover, at some bases, facility management personnel told us
        orally that they found the regulations and policies confusing and
        contradictory. DOD nonconcurred with our recommendations that 1.
        DOD's strategy for RPM should, at a minimum, provide for standard
        cost accounting methods by which the services will record and
        track their RPM expenditures, stating that "the level of
        recommended detail is too great to provide a meaningful
        evaluation;" Page 26                                GAO/NSIAD-99-
        100  Real Property Management B-280230 2.  DOD should consult with
        the Congress on the most feasible method by which to restrict the
        use of RPM funds for non-RPM purposes, stating that commanders
        need the maximum flexibility possible; and 3.  DOD should mandate
        training standards (curriculum and hours) for all those involved
        in RPM assessments, stating that it is not certain such training
        is needed and is unwilling, without further study, to commit
        resources to it. We continue to believe that requiring standard
        cost accounting methods to track how much each service is spending
        on RPM and by what type of facility will help DOD provide
        oversight responsibility.  Also, we believe that meaningful
        evaluation of the comparative costs of maintaining the same types
        of facilities across services (e.g., barracks, classrooms, and
        administrative space) requires the kind of detail provided in the
        Army's Directorate of Public Works annual reports.  The same data
        are required for major commands to be able to compare expenditures
        of their bases.  With current databases and budget data, it is not
        possible to readily compare RPM spending per square foot for like
        facilities across the services.  OSD's new facility category code
        system, which includes industry cost standards, will have no clear
        purpose unless these costs-which are per square foot- can be
        compared to what military installations spend.  The Army's
        databases permit such comparisons and are on-line; these should be
        used as the model for the other services. We note that many
        officials told us migration of funds out of RPM for other purposes
        routinely disrupts rational planning and contracting.  Therefore,
        while we appreciate the need for flexibility, we continue to
        believe that fund migration is an issue for DOD to address.  As
        the National Research Council notes, "Spending below targets set
        for normal maintenance . . . may substantially increase costs of
        repair, replacement, and loss of use, costs that might have been
        avoided."39  It would appear, therefore, that better management of
        fund migration could prove cost-effective in both the short and
        long term.  We have modified our recommendation to suggest that
        DOD consider the feasibility of adopting the promising practices
        identified in this report and seek legislative changes, if needed.
        Concerning the need for DOD to mandate standard training for
        personnel conducting RPM assessments, we note that common training
        will help 39Quoted in DOD Facilities Cost Factors Handbook,
        Version 1.0, April 1999, p. 3. Page 27
        GAO/NSIAD-99-100  Real Property Management B-280230 ensure
        consistency in the assessment of facility conditions and RPM
        needs. The Navy noted in its technical comments that its guidance
        on RPM inspector qualifications "addresses such things as
        technical trade background, formal education in theory, experience
        in maintenance and repair operations, and skills in inspection
        techniques, planning and estimating, maintenance standards, and
        building codes."  This guidance could well serve as the model for
        a DOD-wide standard for all facility inspectors. DOD's comments
        and our evaluation can be found in appendix XI. We conducted our
        review from May 1997 to March 1999 in accordance with generally
        accepted government auditing standards. We are sending copies of
        this report to the Honorable William S. Cohen, Secretary of
        Defense; the Honorable William J. Lynn III, Under Secretary of
        Defense (Comptroller); the Honorable F. Whitten Peters, Secretary
        of the Air Force; the Honorable Louis Caldera, Secretary of the
        Army; the Honorable Richard Danzig, Secretary of the Navy; General
        James L. Jones, Commandant of the Marine Corps; the Honorable
        Jacob J. Lew, Director, Office of Management and Budget; and
        interested congressional committees and members.  We will also
        make copies available to others upon request. Please contact me at
        (202) 512-3092 if you or your staff have any questions concerning
        this report.  GAO contacts and staff acknowledgments are listed in
        appendix XII. Kwai-Cheung Chan Director, Special Studies and
        Evaluations Page 28                              GAO/NSIAD-99-100
        Real Property Management Page 29    GAO/NSIAD-99-100  Real
        Property Management Contents Letter
        1 Appendix I
        36 Army Strategy,              Background 36 Methods, and Criteria
        Army RPM Funding Strategy
        37 Army Systems to Determine RPM Needs
        38 for Determining Real        ISR System
        39 Property  Maintenance  Facility Inspections
        42 Requirements                ISR Ratings
        42 Review and Validation Process
        46 Resource Allocation
        51 Bases Visited
        54 Appendix II
        56 Air Force Strategy,         Background 56 Methods and Criteria
        Air Force RPM Funding Strategy
        58 FIM Assessment System
        59 for Determining Real        Allocation of RPM Resources
        70 Property Maintenance  Bases Visited
        72 Requirements Appendix III
        74 Navy Strategy,              Background 74 Methods, and Criteria
        Navy RPM Funding Strategy
        75 Methods and Criteria to Determine Maintenance Needs
        76 for Determining Real        Validation of Inspection Results
        81 Property Maintenance  Allocation of RPM Resources
        83 Requirements                Bases Visited
        86 Page 30                              GAO/NSIAD-99-100  Real
        Property Management Contents Appendix IV
        88 Marine Corps' Strategy,  Background 88 Methods, and Criteria
        RPM Funding Strategy
        88 RPM Assessment System
        89 for Determining Real           CORRS: A New System
        89 Property Maintenance  Survey 93 Requirements
        RPM Needs Exceed Requests Fivefold
        93 Bases Visited
        93 Appendix V
        95 Summary Comparison of Service Methods and Criteria Appendix VI
        96 Criteria for Allocation of Funds Appendix VII
        99 Percent of Value Measures for Estimating RPM Requirements
        Appendix VIII
        106 Promising Practices in  Sources of Expertise on Promising
        Practices                                      106 Facilities
        Management Criteria Used to Select Entities for Interviews
        107 Experts and Expert Organizations Consulted
        107 Entities Contacted for Information on Management Practices 108
        Fragmented Knowledge Base of Promising Practices
        109 Federal Facilities Council's Promising Practices
        110 Life-Cycle Principles of Facility Management
        111 Preventive Maintenance and Life-Cycle Management 113 Summary:
        Identified Promising Practices
        118 Page 31                             GAO/NSIAD-99-100  Real
        Property Management Contents Appendix IX
        119 Objectives, Scope, and  Scope of the Study
        119 Methodology                 Methodology 119 Appendix X
        127 Our Survey on Real Property Maintenance for Installations
        Appendix XI
        136 Comments From the Department of Defense Appendix XII
        149 GAO Contacts and Staff Acknowledgments Bibliography
        150 Related GAO Products
        160 Tables                      Table 1:  Weaknesses in Services'
        Condition Assessment Systems              10 Table 2:  Percent of
        Bases Using Listed Methods to Ensure Condition Assessments Are
        Consistent                                                12 Table
        3:  Percent of Bases Identifying Training and Resource Constraints
        13 Table I.1:  Steps to Ensure Assessments Are Valid
        47 Table I.2:  Steps to Ensure Assessments Are Consistent
        47 Table I.3:  Army Installation Views on Constraints
        49 Table I.4:  How Army Bases Would Change Methods
        50 Table I.5:  Fiscal Year 1997 Requirements Versus Funding
        Requested          52 Table I.6:  Army Bases' Views on ISR
        Weaknesses                             53 Page 32
        GAO/NSIAD-99-100  Real Property Management Contents Table I.7:
        How Army Bases Would Change the Funding Allocation Process 54
        Table II.1:  Air Force FIM Spending Plans Versus Needs Fiscal
        Years 1998-2005 58 Table II.2:  Fiscal Year 1998 Air Force FIM
        Project Ratings and Cost         60 Table II.3:  Steps to Ensure
        FIM Project Ratings Are Valid                   66 Table II.4:
        Steps to Ensure Consistency                                     67
        Table II.5:  Factors That Constrain Assessment Quality
        67 Table II.6:  How Bases Would Change Determining RPM
        Requirements  68 Table II.7:  Additional Assessment Tools That
        Supplement FIM                 68 Table II.8:  Top Five Frequently
        Cited Weaknesses                            71 Table II.9:  How
        Bases Would Change Funding Allocations                      72
        Table III.1:  Type and Frequency of Inspection 80 Table III.2:
        Steps to Ensure Inspections Are Valid                          82
        Table III.3:  Steps to Ensure Consistency
        82 Table III.4:  Factors That Constrain the Quality of Assessments
        83 Table III.5:  Top Weaknesses in RPM System
        85 Table III.6:  Bases' Choices to Proposed Changes in Allocation
        Process  86 Table IV.1:  Dimensions and Ratings in CORRS
        91 Table IV.2:  How Installations Would Change Methods to
        Determine Requirements 93 Table V.1:  Basic Characteristics of
        Services' Condition Assessment Systems 95 Table VI.1:  Ranking of
        Factors Affecting Allocation of Funds, by Service
        96 Table IX.1:  Responses to GAO Questionnaires 121 Figures
        Figure 1:  Bases' Ratings of Importance of Criteria in Worst-Level
        Ratings 9 Figure VIII.1:  Life-Cycle Model for a Single Building
        112 Figure VIII.2:  Effect of Adequate and Timely Maintenance and
        Repairs on the Service Life of a Building
        114 Page 33                               GAO/NSIAD-99-100  Real
        Property Management Contents Abbreviations AIS         Annual
        Inspection Summary ANG         Air National Guard ASIP        Army
        Stationing and Installation Plan BASEREP Shore Base Readiness
        Report BCE         base civil engineer CAS         Condition
        Assessment Survey CEAC        Cost and Economic Analysis Center
        CFA         Commander's Facility Assessment CNA         Capital
        Needs Assessment CNET        Chief, Naval Education and Training
        CPV         current plan value DOD         Department of Defense
        FCG         facility category group FDM         facilities
        degradation module FII         facility investment index FIM
        facility investment metric FOMA        facility operation and
        maintenance activities HFPA        Health Facility Planning Agency
        ISR         Installation Status Report LLNL        Lawrence
        Livermore National Labortory LMI         Logistics Management
        Institute MARM        Mission Area Rating Matrix NASA
        National Aeronautics and Space Administration NAVFAC Naval
        Facilities Engineering Command NRC         National Research
        Council O&M         operation and maintenance OSD         Office
        of the Secretary of Defense PCMS        Projects by Contract
        Management System PM          preventive maintenance PML
        preventive maintenance level PRV         plant replacement value
        PWC         Public Works Center QDR         Quadrennial Defense
        Review RDT&E       research, development, test, and evaluation
        RPLANS Real Property Planning and Analysis System RPM         real
        property maintenance USAF        U.S. Air Force USMC        U.S.
        Marine Corps Page 34                                  GAO/NSIAD-
        99-100  Real Property Management Page 35    GAO/NSIAD-99-100  Real
        Property Management Appendix I Army Strategy, Methods, and
        Criteria for Determining Real Property  Maintenance Requirements
        Appendix I In this appendix we discuss the Army's strategy,
        methods and criteria for determining its real property maintenance
        (RPM) requirements and for allocating resources to those needs.
        We also include the responses to our questionnaire on RPM-related
        issues that we sent to Army bases.1  In particular, we examine a
        key part of the Army's system for evaluating infrastructure
        conditions and estimating costs for facility sustainment and
        improvement, the Installation Status Report (ISR), Part I--
        Infrastructure. (A Part II--Environment--addresses compliance with
        environmental rules and regulations and was outside the scope of
        this report.  Part III, under development, addresses performance
        standards.)  For brevity, we refer henceforth to part I as the
        "ISR." Background      The Army owns and manages a very large
        amount of real property at about 1,900 installations and sites
        worldwide (including active, Reserve, and National Guard-related
        sites), on 14.1 million acres of land.  This property is managed
        by over 200 parent installations in 15 major commands.2  As of
        September 30, 1997, the real property at these locations consisted
        of 178,256 buildings (including 53,999 family housing buildings),
        with 1.039 billion square feet and an average age of 40 years.
        The Army's infrastructure also includes 3,016 miles of railroads,
        965 vehicular bridges, 623 central heating plants, and 77,114
        miles of surfaced areas (such as roads).  The Army estimates its
        plant replacement value (PRV) at about $212 billion.3  (We did not
        verify the accuracy of the Army's inventory report, or its PRV
        estimate.  However, in 1998, we reported that, with regard to all
        of DOD's property, plant and equipment, DOD's Inspector General
        stated that control procedures over assets were inadequate and
        cause inaccurate reporting of real property, capital leases,
        construction in progress, inventory, and preparation of
        footnotes.)4 Army RPM is funded by several sources.  The Army's
        operation and maintenance (O&M) account is the largest funding
        source, representing about 55 percent of the total real property
        maintenance activity costs in 1The survey, which asked about
        bases' facility inventory, RPM processes and funding, was sent to
        180 Army bases; 149 returned the questionnaires, or 83 percent.
        See app. X for a copy of the survey. 2Parent installations have
        responsibility for managing and supporting several
        subinstallations. 3Army Directorate of Public Works, Annual
        Summary of Operations, Fiscal Year 1997, vol. I, p. 2-13.  The
        Army defines PRV as the cost of replacing current facilities with
        state-of-the-art facilities.  Ibid., p. 1-3. 4See Deferred
        Maintenance Reporting: Challenges to Implementation (GAO/AIMD-98-
        42, Jan. 30, 1998, p. 32). Page 36
        GAO/NSIAD-99-100  Real Property Management Appendix I Army
        Strategy, Methods, and Criteria for Determining Real Property
        Maintenance Requirements fiscal year 1997. The remainder is funded
        through other sources, such as the Army's Defense Health Program,
        Military Family Housing, and Army Working Capital Fund.  The
        Army's fiscal year 1999 O&M RPM appropriation was $1.446 billion
        (active, Reserves and National Guard). Currently, the Army
        estimates that it would cost $14.8 billion to improve all O&M RPM-
        funded facilities from their current levels to the "C-1" (i.e.,
        best level) in the Army's condition assessment report, the ISR.5
        Army RPM Funding     The Army defines its RPM requirement as the
        amount needed "for the Strategy             minimum annual
        sustainment of facilities" to maintain them "at existing levels
        plus the cost of renovations that are not new construction."
        Estimates are adjusted annually for inflation. For fiscal year
        1999, the Army's RPM appropriation was $1.446 billion, or 64
        percent of the $2.26 billion estimated as its requirement to
        sustain facilities, according to the Office of the Assistant Chief
        of Staff for Installations Management (ACSIM), the office
        responsible for the Army's infrastructure.6  However, the Army
        currently plans to increase O&M RPM funding over the next 6 years
        to about 84 percent of its RPM sustainment requirement, which is
        expected to increase to about $2.7 billion.  As a result, annual
        O&M RPM funding would increase 53 percent  (in nominal terms) from
        $1.446 billion in fiscal year 1999 to $2.21 billion in fiscal year
        2005, if the Department of the Army provides the funds.  However,
        these plans appear uncertain, as the Army reduced the goal from 91
        percent in March 1999 to 84 percent in August 1999. The Army's RPM
        sustainment requirement is only a fraction of the amount required
        to fix all identified repair needs, as of fiscal year 1997, that
        Army bases reported in responses to our survey.  Army bases
        reported to us that they had $12.4 billion in outstanding repair
        needs, compared with the estimated Army-wide sustainment
        requirement of about $2.26 billion, or less than one-fifth that
        amount.7  The responses were from 83 percent of 5This amount is
        different than backlog of maintenance and repair, which is the
        estimated cost to fix all identified repairs, regardless of
        urgency or mission relevance.  The Army no longer reports this as
        backlog, rather, it cites the ISR-generated estimate. 6Figures
        cited are for all Army components-active, Reserve, and National
        Guard. 7The $2.26 billion was calculated by taking the Army's
        statement that $1.446 billion in fiscal year 1999 RPM funding
        represented meeting 64 percent of its RPM requirement.  One
        hundred percent would be $2.26 billion. Page 37
        GAO/NSIAD-99-100  Real Property Management Appendix I Army
        Strategy, Methods, and Criteria for Determining Real Property
        Maintenance Requirements the Army bases to which we sent
        questionnaires, suggesting that additional needs were not
        reported, given 17 percent nonrespondents.  Therefore, while the
        Army plans to significantly increase its RPM funding, the 53-
        percent increase by 2005 does not appear to come near to fully
        funding currently identified repair needs.  The Army states that
        because it has other priorities, it chooses to accept a risk of
        deterioration in some facilities in order to fund these other
        priorities. In addition, the Army's ACSIM stated that it would
        cost $14.8 billion to bring all O&M RPM-funded facilities from the
        current ISR levels, ranging from C-4 to C-2, up to the highest (C-
        1).  (The ISR software estimates costs for going from one C-level
        to a higher C-level.)  The ISR estimate is not the same as
        backlog; these are different ways to estimate RPM needs.  The Army
        used the $14.8 billion as the basis for competing for "unfinanced
        requirements" in fiscal year 1999, requesting one-tenth that
        amount ($1.48 billion) from the Office of the Secretary of
        Defense, if extra monies became available.  However, the Army
        stated that OSD reduced the requested amount by first cutting it
        to the estimated cost of bringing facilities up to the C-2 level
        (versus C-1), which was $7.12 billion, and spreading that over 40
        years.  As a result, the Army's "request" for unfunded
        requirements was reduced from $1.48 billion to $178 million. Army
        Systems to                  The Army uses a number of computerized
        databases to determine its RPM Determine RPM Needs needs and
        allocate resources to them.  These have been referred to as the
        Infrastructure Decision Architecture (IDA).  This architecture
        assists "in management and funding decisions and enables
        leadership to implement non-incremental, comprehensive decisions
        on Army infrastructure management issues."8  The IDA databases and
        related decision support systems include: * An on-line
        computerized database of the total inventory of real property,
        called the Integrated Facilities System. * The Real Property
        Planning and Analysis System (RPLANS), a decision support system
        that provides a 7-year estimate of needed space at installations,
        based on predetermined space allowances for each type of Army
        facility.  RPLANs calculate how much excess (or deficit) space an
        8Army contractor paper for FDM, p. 1.  According to the Army, the
        term IDA is not currently widely used, but that no other term has
        replaced it to describe the "broad conceptual framework" of
        databases and decision support systems that make up the IDA. Page
        38                                           GAO/NSIAD-99-100
        Real Property Management Appendix I Army Strategy, Methods, and
        Criteria for Determining Real Property Maintenance Requirements
        installation has or will have by comparing existing and projected
        space to the permitted amount. * The Army Stationing and
        Installation Plan (ASIP), which defines and projects installation
        population, also over a 7-year period, based upon Army force
        structure databases. * The facilities degradation module (FDM), a
        computerized database that predicts the life-cycle condition of
        facilities over specified time periods, given different funding
        levels for maintenance, based in part on data from 80,000 Army
        facilities. * The ISR, a facilities rating database that includes
        software that generates condition ratings and estimated cost of
        repairs of facility categories. * The Headquarters Executive
        Information System (HQEIS), an on-line decision support tool that
        allows users to access a variety of institutional data sources and
        to view it at multiple levels (Army headquarters, major commands,
        bases, etc.).  Data that are on-line include the Headquarters ISR
        (summary data), Integrated Facilities System, and the Army
        Stationing and Installation Plan.9 The Army emphasizes that it
        manages property, including maintenance and repair, by using all
        of these systems.  The ISR was the central focus of our analysis
        because the Army uses it to assess the condition of its facilities
        and its data can be used to predict the consequences of funding at
        levels below (or above) those required to maintain facilities in
        their current state. ISR System     Implementation of part I of
        the ISR began in 1995.  It assesses the physical condition of
        certain facilities or facility category groups (FCG) using the
        same standards. The objectives of the ISR are to: 1.  assess and
        report the current condition of Army facilities and nonbuilding
        infrastructure (such as roads), measured in terms of quality and
        quantity; 2.  provide Army-wide indicators on such things as
        conditions, trends, facility shortfalls, and deviations from
        standards; 9We did not verify the reliability of the data in the
        various Army databases.  Access to the HQEIS data requires a
        password. Page 39
        GAO/NSIAD-99-100  Real Property Management Appendix I Army
        Strategy, Methods, and Criteria for Determining Real Property
        Maintenance Requirements 3.  assist in allocating resources and
        prioritizing infrastructure programs; 4.  provide information for
        determining changes in Army policy or needs for new policies; and
        5.  provide information for use in stationing and force structure
        decisions. The majority of Army installations are required to
        complete the ISR.  (In general, only installations scheduled for
        closure under the Base Realignment and Closure program or coded as
        "Lay Away" are exempt.) However, government-owned, contractor-
        operated installations have not conducted ISR assessments,
        contrary to ISR instructions. Management of ISR System    The
        ACSIM is responsible for overall ISR policies, standards, and
        procedures.  Army headquarters develops facility standards and
        issues guidance to meet Army-wide infrastructure goals and
        objectives.  Army major commands are responsible for program
        management and administration.  Each command is to ensure that the
        ISR is implemented at the installations it controls and that the
        bases comply with ISR requirements.  Each installation commander
        is responsible for completing the ISR as required, certifying the
        results, and forwarding it to the major commands.  Parent
        installations are responsible for ISR assessments at their
        subinstallations. ISR Structure               To achieve the
        objectives of the ISR, Army installations annually evaluate the
        quality (physical condition) and quantity of real property and
        enter the results into a database.  These data, along with data
        from the other Army databases, are used to generate overall
        ratings for each base, including the extent to which facilities
        meet unit needs, Army standards, and mission requirements.  The
        ISR system includes software that estimates the costs to improve
        facilities from the level they are rated at in the ISR up to any
        higher level-such as from C-4 to C-3, or C-4 to C-1. ISR results
        are generated for four infrastructure levels: * 5 broad top-level
        areas (mission, mobility, housing, community, and installation
        support); * 28 categories; * 60 subcategories; and * 219 facility
        category groups. Page 40
        GAO/NSIAD-99-100  Real Property Management Appendix I Army
        Strategy, Methods, and Criteria for Determining Real Property
        Maintenance Requirements In some categories, there is no FCG lower
        than the subcategory; this is the case for unaccompanied personnel
        housing (i.e., barracks.)  The installations evaluate facilities
        by FCG and these ratings form the basis for all
        ratings/calculations rolled-up in the ISR software to subcategory,
        category, and area levels. ISR Assessment Criteria    The ISR
        established common Army-wide standards for assessing facility
        quality.  Criteria for quality evaluations are contained in
        separate standards booklets for most of the 60 ISR subcategories
        (e.g. operations buildings, small arms ranges, maintenance
        facilities, and barracks).  Facility groups are rated in terms of
        green, amber, or red: * red indicates dysfunctional or
        substandard, "overall poor condition"; * amber indicates that the
        facility "does not fully meet standards," but is in "overall fair
        condition"; and * green indicates that it "complies with
        standards" and is in "overall good condition." These color levels
        are further defined in considerable detail in ISR standards
        booklets with narrative statements that characterize the area
        being assessed and, in most cases, pictures that illustrate the
        general condition for each rating level.  For example, four
        criteria are spelled out for each of the 3 color levels for the
        lobby of an administrative facility; there are eight criteria for
        a green rating for building exteriors.  Criteria are written in
        layman's terms, such as "building walls, windows and doors in
        sound condition"; "entry in good repair"; "inadequate exterior
        signage." According to the Army, the ISR "articulates facility
        conditions and RPM requirements through an affordable and
        understandable process."  "It provides data showing possible
        problem areas and trends, which at HQDA [Headquarters, Department
        of the Army] level, influence development of facility investment
        programs."10 Only permanent and semi-permanent assets identified
        in the ISR database are to be assessed.  Temporary structures are
        generally not rated because they are not considered long-term
        solutions to facility requirements. Certain other facilities at
        installations using he ISR also are not required to be rated.  For
        example, World War II wooden structures, even if in use, do 10Army
        technical comments on the draft of this report. Letter      Page
        41                                          GAO/NSIAD-99-100  Real
        Property Management Appendix I Army Strategy, Methods, and
        Criteria for Determining Real Property Maintenance Requirements
        not have to be rated under ISR because they are expected to be
        demolished. Facility Inspections    Under the ISR system,
        inspections can be done by anyone designated to do the ratings,
        including engineers, contractors, and building users (occupants).
        The installation's ISR coordinator identifies which offices are
        responsible for base facilities within the ISR categories and each
        unit designates who will inspect what facilities.  According to
        ISR instructions, the inspectors should be the primary users of
        the facility and knowledgeable of the facilities' condition and
        uses.  For example, the base facilities maintenance staff
        (engineers or other skilled craftsmen from public works or the
        engineering offices) should rate all base utilities and other
        facilities managed by this office. Having building users do the
        inspections is intentional, according to headquarters staff, as
        this is more likely in the Army's view to ensure that those most
        familiar with a facility's condition over time are doing the
        rating.  Among the 149 Army installations that responded to our
        questionnaire, 82 percent of inspectors were described as building
        users. Inspector Training      Each inspector should receive a
        short training session on the facility inspection process.
        Headquarters level training is provided for the installation ISR
        team/coordinator.  These staff can then train unit inspectors at
        the base.  This training generally includes a briefing (about 2
        hours), a video, and a self-teaching computer-based training
        package. According to some facilities management personnel, it is
        challenging to get all inspectors to attend training and the
        preponderance of building-user inspectors change annually. ISR
        Ratings             The ISR requires inspectors to rate the
        physical condition of facilities against Army-wide
        standards/criteria for that type facility.  For example, the ISR
        Standards Booklet 5 contains rating criteria for maintenance
        facilities that apply to 14 FCGs, including aircraft maintenance
        facilities, vehicle maintenance shops, and depot ammunition
        maintenance shops. Inspectors are to use the appropriate standards
        booklet to evaluate facilities and record the results on an
        inspection worksheet.  In some instances, if a required "critical"
        component, such as a restroom, is not in the facility, the item is
        rated red automatically.  Similarly, a barracks cannot Page 42
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        Strategy, Methods, and Criteria for Determining Real Property
        Maintenance Requirements be rated above red if it has a common
        latrine.  The overall facility rating cannot exceed that of the
        worst critical component. A separate inspection and rating is to
        be prepared for each purpose/FCG in the same building; these are
        not averaged to produce one rating for the facility.  Therefore,
        if a building/facility were multipurpose, there would not be a
        building-specific rating.  Separate color ratings for each FCG are
        to be entered into the ISR database.  However, at one of the Army
        sites we visited, one unit did not complete separate ratings for
        each FCG within a building.  The unit inspector said that if the
        building housed more than one FCG, the user who occupied the
        largest part of the facility also included the other area in his
        rating (in other words, there was a "building" inspection). When
        there are a number of similar facilities for the same FCG, a
        representative sample may be taken if the number is large enough
        and the facilities are of the same design.  The color ratings of
        the sample are to be proportionately entered into the ISR database
        to generate an overall C-rating for the FCG.  For example, in
        fiscal year 1996, one base we visited inspected about 5 percent of
        family housing units (139 out of 2,924) because these were all
        from the same FCG. As we observed during our site visits, most
        base ISR files contained the Summary Mission facilities
        worksheets, and, in some cases, supporting documentation (the
        pertinent standards booklets with checkmarks of each related
        element indicating the reason(s) for the inspection rating
        results). At one base, many files also contained a copy of the
        engineering report on the building's structural condition (e.g.,
        walls, window, mechanical, electrical, and fire alarm). Once the
        inspection worksheets are completed, they are returned to the
        installation ISR coordinator.  Based on discussions during our
        site visits, the ISR coordinating office generally reviews
        selected worksheets to ensure they accurately reflect the
        conditions of the facilities.  The reviewers focus on any
        significant changes or apply their expertise or personal knowledge
        of the facilities.  Some subsequent checks are made. However,
        because of limited resources, facilities' staff told us that it is
        not possible to check them all.  The ISR coordinating office and
        the public works directorate then check if there are any
        disconnects with the inspection results and work orders. Page 43
        GAO/NSIAD-99-100  Real Property Management Appendix I Army
        Strategy, Methods, and Criteria for Determining Real Property
        Maintenance Requirements Software Generated Quality  The ISR
        software calculates separate quality and quantity ratings (C-1,
        the and Quantity Ratings               highest, to C-4, the
        lowest), and then an overall C-rating (the lower of the two
        ratings) using installation ratings and information from existing
        Army databases.  A C-1 rating indicates that an infrastructure
        group requires little immediate attention; a C-4 rating highlights
        a significant problem area for the installation.  C-ratings are
        calculated for all four infrastructure levels, beginning with the
        FCG.  The C-ratings for the three higher levels are an aggregation
        of all the lower level ratings.  For example, the "area" C-ratings
        result from the aggregation of FCG, subcategory, and category
        ratings that comprise the area.  However, the base commander can
        adjust the overall area C-ratings (raise or lower) with a written
        justification.  No C-rating overwrites are allowed below the area
        level. The method of calculating quality C-ratings and area and
        category level C-ratings changed for the 1998 ISR cycle.  Rather
        than using the percentage of inventory rated green, amber, or red,
        it is now based on a numerical (weighted) value assigned to each
        color rating.  Area and category level C-ratings are now a
        weighted average of the lower level ratings rather than a
        nonweighted average.  This change is intended to correct having a
        small, less important FCG counting the same as a large important
        group.  The C-ratings from previous years will be normalized to
        reflect the changes. The quality C-ratings are generated by
        comparing the facility condition ratings for each FCG to space
        allowances specified in the Headquarters Real Property Planning
        and Analysis System.  The color ratings are first linked to system
        data on the number of facilities in a given FCG and the ISR
        software calculates the amount that is green, amber, and red.
        Next, quality points are awarded based on the amount of inventory
        rated green, amber, and red.  For example, facilities rated green
        are given three quality points; amber and red get two and one
        quality point(s), respectively.  The total points are summed and
        the C-rating is awarded.  The cut-off values for ratings are * C-1
        equals 90 percent or greater, * C-2 equals 75 percent or greater,
    * C-3 equals 60 percent or greater, and * C-4 less than 60
        percent. The quantity C-ratings are calculated by the ISR
        software, which compares reported space to installation mission
        requirements.  The inventory data Page 44
        GAO/NSIAD-99-100  Real Property Management Appendix I Army
        Strategy, Methods, and Criteria for Determining Real Property
        Maintenance Requirements are obtained from the Integrated
        Facilities System.11  The quantity C-ratings-based on a percentage
        requirement satisfied by either permanent or semi-permanent-are
        defined as follows: * C-1-95 percent or more of required
        facilities are available and meet the unit's needs and Army
        standards.  There are very minor, if any, functional deficiencies.
        Infrastructure fully supports mission performance. * C-2-80
        percent or more of required facilities are available and meet the
        unit's needs and Army standards, but there are some minor
        functional deficiencies.  Infrastructure supports the majority of
        assigned missions. * C-3-60 percent or more of required facilities
        are available and meet the majority of the unit's needs and Army
        standards.  However, there are some functional deficiencies and
        mission performance is impaired. * C-4-less than 60 percent of
        required facilities on hand do not meet needs or Army standards
        and significantly impair mission performance. * C-5-an
        installation is undergoing major reorganization, inactivated, or
        closure. Software-Generated Cost     The C-ratings are then linked
        to ISR cost factors to calculate the cost of Estimates
        new construction requirements, renovation, and annual sustainment
        (maintaining permanent/semi-permanent facilities as well as
        temporary facilities at current condition).  All cost factors are
        at the FCG level of detail.  Cost factors for new construction are
        expressed as dollars per unit of measure for each FCG (e.g., for
        FCG F7218P-enlisted barracks, trainee, there is a designated
        dollar cost per sleeping space).  Local cost factors are built
        into the software to reflect geographic differences.  The Army
        Cost and Economic Analysis Center (CEAC) develops the cost factors
        to estimate the costs for installation infrastructure sustainment
        and improvement. ISR Reporting               The ISR is a
        computerized system.  Its rating results and inventory are
        transferred by disk from individual bases to their major commands
        and then to a central computer maintained by the Department of the
        Army and available to ACSIM staff and other authorized users.
        11The ISR does not include the condition rating for each Army
        building/facility listed in the Integrated Facilities System
        database. The system uses a five-level rating scale (A=
        serviceable/excellent, B=serviceable/fair, C=serviceable/poor,
        I=functionally inadequate, and N= physically not serviceable) for
        each item. Page 45
        GAO/NSIAD-99-100  Real Property Management Appendix I Army
        Strategy, Methods, and Criteria for Determining Real Property
        Maintenance Requirements The installation commander submits the
        ISR report to the major command with a cover memorandum containing
        the commander's narrative statement prioritizing five broad
        infrastructure areas (1) mission facilities, (2) mobility
        facilities, (3) housing, (4) community facilities, and (5)
        installation support-and highlighting mission impacts due to
        infrastructure deficiencies.  Each major command aggregates data
        from its installations, prepares a written assessment of the
        status of its installations, and submits the reports to Army
        headquarters. Other reports include the category/subcategory
        report, the assets/requirement report, the renovation/new
        construction cost report, and the sustainment cost report.  The
        facility quality condition report, used at the installation level,
        lists the ratings from inspection worksheets for each
        permanent/semi-permanent asset at the installation.  It includes
        the facility number, FCG, size of asset, color rating, and unit
        identification code.  Other reports can be generated from the ISR
        software such as appropriations reports. Once the ratings have
        been reviewed and approved at the headquarters level, the results
        for every rated installation are available on-line to authorized
        users.12  This makes it possible to compare installations
        worldwide across various outcome and cost measures, both by
        command and by base, and by type of mission.  ISR data can be
        viewed in many ways. For example, it can provide information on
        how many sleeping spaces in barracks are rated at what level,
        either at an individual installation, across all bases within a
        command, or across the entire Army. Review and Validation  At the
        installations we visited, we were told that the ISR coordinating
        office Process                           generally reviews
        selected worksheets to ensure they accurately reflect the
        conditions of the facilities, based on their personal knowledge of
        the facilities, including work that may have been done during the
        year.  Some subsequent checks are made.  However, facilities staff
        at bases we visited stated that because of limited resources, it
        is not possible for them to check all the facilities. Responses
        from Army installations to our survey reflected what we were told
        in field visits, with most bases stating that the primary
        validation 12According to the Army Installation Support Center,
        any Army employee in facilities management is assigned a password
        for access to the ISR results that are kept on-line upon request.
        Page 46                                           GAO/NSIAD-99-100
        Real Property Management Appendix I Army Strategy, Methods, and
        Criteria for Determining Real Property Maintenance Requirements
        method was review of selected worksheets by facility management
        staff, based on the staff knowledge of facilities.  Table I.1
        summarizes the bases' responses. Table I.1:  Steps to Ensure
        Assessments Are Valid Step taken to ensure validity
        Percent citing step Selected worksheets are reviewed by facility
        management                                  65 office staff Rely
        on expertise of  assessor; no formal procedures used
        24 Facility staff makes follow-up visits to verify reported
        problems                        20 on a sample of selected rating
        worksheets Other validation methods.
        18 Outside contractors are used to validate facility ratings.
        5 Source:  Responses to question 9, GAO survey. Ensuring
        Consistency of     We also asked installations how they ensured
        that the consistency of Assessments                 facility
        condition assessments given by one rater would be, on average, the
        same reported by other raters.  Most respondents said they had no
        formal procedures or mechanisms other than the expertise and/or
        training of their staff who do the ratings.  Table I.2 shows the
        responses. Table I.2:  Steps to Ensure Assessments Are Consistent
        Steps taken to ensure consistency
        Percent citing step No formal procedures other than expertise
        and/or training of                             56 the assessors
        Other method to ensure consistency
        26 A random sample of facilities is reinspected by different
        23 assessors from our base to determine whether the second set of
        ratings is similar to the first A set number of percentage of
        facilities are reinspected by                                4
        different assessors from our base to determine if second set of
        ratings were similar to the first Outside contractors are used to
        validate facility ratings                                  2
        Source:  Responses to question 10, GAO survey. Page 47
        GAO/NSIAD-99-100  Real Property Management Appendix I Army
        Strategy, Methods, and Criteria for Determining Real Property
        Maintenance Requirements As the table shows, the Army respondents
        rely primarily on the expertise/training of its raters to ensure
        assessments are consistent. Outside contractors are used
        relatively infrequently. However, despite the detailed
        instructions and worksheets, during our site visits we found a
        lack of consistency in assessments.  Some inspectors were very
        conscientious about using the standards booklets whereas others
        did not use them at all.  Consistency and accuracy in ratings were
        a prominently cited concern in an Army analysis of the 1994 field
        testing of the ISR, as was a related concern about adequate
        personnel understanding of ISR "standards and processes" in a
        September 1998 After Action Report.13 At the installations we
        visited, the inspectors used several different approaches to
        complete their ISR ratings.  Based on a comparison of several
        ratings to the appropriate standards booklets and our observations
        of actual facility conditions, we found there were some cases
        where individual building areas could have been rated differently
        or worksheets were incorrectly summarized and the overall quality
        rating should have been different (in some cases higher, in some,
        lower).  We also found that some Army units believe that they do
        not have the resources to adhere to all ISR instructions (such as
        having enough facility inspectors).  In one case, according to
        base officials, staff from the base assigned amber ratings to all
        the facilities at various subinstallations.  They said that this
        was done without inspecting the buildings and with no input from
        building users, because there were not enough resources (staff,
        time, or money) to comply with ISR instructions.  Based on our
        inspection of building conditions at one of these sub-
        installations, the amber ratings did not reflect the actual, more
        deteriorated condition of some buildings. At another installation,
        we were told that some ratings were questioned because the
        facility was rated green; yet, there were several high-cost repair
        projects scheduled for the building.  Based on our observations,
        the exterior of this facility was in extreme disrepair, having
        crumbling concrete walls, cracks, and leaking windows. 13Army,
        "ISR Test After Action Review," June 8, 1994, pp. 5 and 7, and
        September 2, 1998, p. 1. Page 48
        GAO/NSIAD-99-100  Real Property Management Appendix I Army
        Strategy, Methods, and Criteria for Determining Real Property
        Maintenance Requirements Army Installations         We asked
        installations to cite any or all of four factors that might
        constrain Comments on the ISR        the quality of facility
        condition assessments at their bases.  Regarding the overall
        quality of the ISR process, 72 percent of the Army respondents
        reported the primary factor affecting overall quality was the
        shortage of resources-insufficient time and/or budget to carry out
        assessments. (See table I.3.) Table I.3:  Army Installation Views
        on Constraints Percent that checked Constraining factor
        factor as a constraint Shortage of personnel
        61 Shortage of trained personnel with engineering or craft
        48 backgrounds Shortage of resources (i.e., insufficient time
        and/or budget to                          72 carry out
        assessments) Other
        11 Does not apply-no factors create a significant constraint on
        13 the quality of reviews of facility conditions Source: Responses
        to question 11, GAO survey. It is readily apparent that a large
        majority of Army installations reported a shortage of resources
        and personnel as a constraining factor on the quality of condition
        assessments. How to Improve             We also asked facilities
        management personnel at bases to choose what Assessment Methods
        and     they would change about the methods or criteria used to
        determine real Criteria                   property maintenance
        requirements. Page 49
        GAO/NSIAD-99-100  Real Property Management Appendix I Army
        Strategy, Methods, and Criteria for Determining Real Property
        Maintenance Requirements Table I.4:  How Army Bases Would Change
        Methods Percent choosing Change in method
        proposed change Rate building/facilities primarily according to
        engineering,                             64 life-safety, and
        health criteria, while decreasing the role of aesthetics Place
        much more emphasis on long-range maintenance,
        64 while de-emphasizing annual assessments of facilities Other
        20 Source:  Responses to question 13, GAO survey. These responses
        show that 64 percent of Army respondents agree that the role of
        appearance should be reduced in facility assessments and the same
        percentage agree that "much more emphasis" should be placed on
        long-range maintenance. At one base we visited, the facilities
        staff said that because the deficiencies causing poor ratings are
        not identified, the urgency of the repair work cannot be assessed.
        They suggested that each red rating be accompanied by a work order
        to fix the condition.  They also suggested including a
        standardized deficiency database as part of the ISR process to
        better manage problems identified.   In their view, such a system
        would allow sorting by type of deficiency and priority, provide
        trend data, and post correction of deficiencies. Other Systems
        Used to     In addition to the ISR, the Army National Guard
        maintains a Project Determine Repair and      Inventory Evaluation
        Report for all guard units for use in preparing budget Maintenance
        Needs         submissions.  Each state prepares a comprehensive
        list of repair projects that includes data such as individual
        project description, costs, installation name and location, and
        status.  The report is updated periodically and sent to the
        National Guard Bureau annually. Yet another system is used to fund
        RPM for Army government-owned, contractor-operated installations,
        such as industrial plants that produce ammunition.  In general,
        these sites have contracts that govern what the contractor is
        required to do, with maintenance included as part of the
        operator's responsibility.  Some survey government-owned,
        contractor-operated respondents stated that they use some type of
        assessment/inspection of facility conditions. Page 50
        GAO/NSIAD-99-100  Real Property Management Appendix I Army
        Strategy, Methods, and Criteria for Determining Real Property
        Maintenance Requirements Resource Allocation      According to
        ACSIM personnel, there is no direct link between the ISR
        assessments and the allocation of resources.  The emphasis of the
        ISR, they said, is to take a "snapshot" of the condition of the
        inventory; its software then estimates what it would cost to
        improve facilities to C-1 or to intermediate levels, from the
        rated level.  In budget terms, the installations do not actually
        request RPM funds.  Instead, Army officials told us, the
        Department of the Army decides how much "risk" to infrastructure
        they are willing to tolerate, given other competing funding needs,
        and this leads to an overall Army RPM spending total.   This total
        is then divided downwards, with each major command receiving a
        "target" figure; in turn, each major command informs its component
        bases how much each will receive in RPM funding. How Bases
        Prioritize     Certain bases we visited had formal systems to
        review projects and Spending                 priorities or make
        funding decisions.  At one base, resources are allocated after
        projects are prioritized by a project priority list determined by
        their installation planning board.  The panel includes members
        from the major staff directorates and tenants (such as the school
        house dean) and is chaired by the base commander.  There are about
        20 voting members and 20 nonvoting members.  The board is
        supported by working panels. Customer work requests are evaluated
        using a local "project priority matrix." Projects are categorized
        (medical, operations/training, housing, utilities, maintenance,
        administrative, supply, and community support) and classified by
        type of work--health/safety, force protection, mission/readiness,
        infrastructure).  The matrix "points" are then weighted according
        to the seriousness of the problem to be corrected (complete
        failure, component failure, failure is imminent, system
        functional, or little deterioration). Work orders for repairs are
        not linked to the ISR and can be prepared at any time.  However, a
        customer can reference the ISR results as a basis for the work
        (which could help when prioritizing all base projects).  Other
        bases implied that there simply is too little money to focus on
        prioritizing spending.  Substantial funds are used to pay for
        "must pay" items such as utilities.  Finally, the major command
        and base level commanders have the authority and can use RPM funds
        for other needs. Page 51
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        Strategy, Methods, and Criteria for Determining Real Property
        Maintenance Requirements Maintenance Needs Versus     We asked
        installations to report the funding they requested for RPM and
        Requested Funding            the amount they would need to meet
        all identified repairs.  This unconstrained RPM requirement is how
        much it would cost to fix all deficiencies previously identified
        but not funded and is commonly referred to as backlog.  These data
        are no longer officially collected or reported by the Army to OSD
        or to the Congress.  Instead, the ISR software generates the
        estimated cost to bring ISR-rated facilities to the C-1 condition
        level (or any lower level above the rated one). At the Army bases
        we visited, we found a general sense among facilities staff that
        although they made a significant effort to identify deficiencies,
        the subsequent funding was so low that it appeared their efforts
        were meaningless.  The large difference between total backlog
        requirements and the funding actually requested by bases for RPM,
        as reported on the surveys, is shown in table I.5. Table I.5:
        Fiscal Year 1997 Requirements Versus Funding Requested Army bases'
        unconstrained RPM requirements (total cost of fixing all
        $12.4 billion identified deficiencies) RPM funding requested by
        bases from major commands, fiscal year 1997            $1.96
        billion Funding requested as a percent of unconstrained
        requirement                           15.8% Source: Responses to
        question 15, GAO survey. As the table shows, Army bases reported
        that they requested funding equal to only about one-sixth (15.8
        percent) of their identified RPM needs.  We were told by
        facilities staff that these differences were due to the fact that
        everyone knows the funding environment is low and that total needs
        are not expected to be funded given the gap between available
        funding and identified requirements.  It is also the case,
        however, that total repair and maintenance needs are not a
        statement of priority, but rather what it would cost to fix all
        known things that need fixing, regardless of importance to mission
        or severity of defect. We asked installations to indicate which of
        several factors they saw as weaknesses in their facility condition
        assessment system.  The results with regard to the top rated
        items, in descending order of percent, are shown in table I.6.
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        Real Property Management Appendix I Army Strategy, Methods, and
        Criteria for Determining Real Property Maintenance Requirements
        Table I.6:  Army Bases' Views on ISR Weaknesses Percent that
        checked Weakness
        option Little or no linkage between condition assessment and
        61 allocation of resources Ratings do not tell what is wrong
        within facility or mission                            53 category;
        reasons not readily available Rollup oversimplifies conditions
        51 Little or no linkage between condition assessment and budget
        46 estimation Assessment process lacks robust engineering base
        40 Focuses too much on facility appearance
        38 Cost estimates are generally not accurate
        36 Overall condition ratings are too broad
        32 Source: Responses to question 12, GAO survey. The major ISR
        weakness, according to Army base respondents, is that there is
        little or no linkage between condition ratings and subsequent
        resource allocations.  A majority of respondents also reported
        that the system does not reflect the reason(s) for the ratings and
        that "rollup" ratings for a category with multiple facilities
        oversimplify conditions. Installation Views on     We also asked
        installations about their views with regard to how they Proposed
        Changes to       would change the RPM funding allocation process.
        Table I.7 shows the Allocation Processes      percentage of
        installations that cited any of four alternatives. Page 53
        GAO/NSIAD-99-100  Real Property Management Appendix I Army
        Strategy, Methods, and Criteria for Determining Real Property
        Maintenance Requirements Table I.7:  How Army Bases Would Change
        the Funding Allocation Process Suggested change
        Percent checking option Funding should not be based on a fixed
        increase above or                                    59 below the
        previous year's level Funding should be based primarily on the
        physical                                           53
        deficiencies, with "needier" bases receiving more funds than those
        in better condition Funding should be based on average age, total
        square                                        45 footage and
        number of facilities RPM funding/allocation should not be
        centrally managed by                                   39 major
        command. Source: Responses to question 22, GAO survey.  Total
        exceeds 100 percent because more than one choice could be made.
        The top choice among Army respondents was that RPM funding should
        not be based on a fixed increase above or below the previous
        year's level.  A majority of respondents also favored basing
        funding on physical deficiencies, with more for "needier" bases.
        Consequences at Base Level Personnel responsible for real property
        maintenance at bases we visited were virtually unanimous in
        pointing out that they could not adequately maintain their
        facilities at the funding levels allocated to them in recent
        years.  For example, at one base, we were told that there is
        simply not enough money to maintain all the required facilities.
        The major command allocates a recurring base amount by activity;
        officials said that resources were not adequate to provide the
        amount needed to take care of requirements.  At another base, the
        real property maintenance budget level is "incremental"; i.e., it
        receives a fixed increase above or below the previous year's
        allocation. Bases Visited                     The following sites
        were visited to ask facilities management officials at each about
        how RPM requirements are determined, how funds are allocated, and
        their views on the RPM process in their service.  The
        questionnaire was pretested at some, and subsequently validated at
        others, as indicated.  In addition, we visited Fort Bragg (Forces
        Command), Fayetteville, North Carolina, and Fort Belvoir (Military
        District of Washington), Alexandria, Virginia, to gain a better
        understanding of the ISR and the Army's RPM processes from
        personnel involved in RPM, as well as to see a diverse selection
        of Army property and facilities. Page 54
        GAO/NSIAD-99-100  Real Property Management Appendix I Army
        Strategy, Methods, and Criteria for Determining Real Property
        Maintenance Requirements Sites visited to pretest questionnaires
        Fort McPherson, (Forces Command), Atlanta, Georgia; Fort Hood,
        (Forces Command), Killeen, Texas; Fort Sam Houston, (Medical
        Command), San Antonio, Texas; U.S. Army Forces Command, Atlanta,
        Georgia; and U.S. Army Medical Command, San Antonio, Texas. Sites
        visited to validate survey responses Fort Sill (Training and
        Doctrine Command), Lawton, Oklahoma; Texas Army National Guard,
        Austin, Texas; and Rock Island Arsenal (Army Materiel Command),
        Rock Island, Illinois. Page 55
        GAO/NSIAD-99-100  Real Property Management Appendix II Air Force
        Strategy, Methods and Criteria for Determining Real Property
        Maintenance Requirements
        Appendix I I In this appendix, we discuss the Air Force's
        strategy, methods and criteria for real property maintenance
        (RPM), including the responses to the questionnaire on RPM-related
        issues that we sent to Air Force bases and major commands.1  In
        particular, we focus on the Air Force's Facility Investment Metric
        (FIM) system that is used to rate the urgency of repair projects
        funded from the operation and maintenance (O&M) RPM account.
        Background      As of fiscal year 1998, worldwide Air Force
        installations had over 105,000 buildings totaling just over 650
        million square feet.  Approximately 51,500 of the buildings were
        family housing units and were paid for from the military family
        housing account, meaning O&M RPM funds paid for the repair and
        maintenance of the other 54,000 buildings with 480 million square
        feet.2  The O&M RPM-funded facilities had an estimated plant
        replacement value (PRV)3 of $146.4 billion.  The Air Force's Real
        Property Maintenance Account Program/Programs and Analysis Branch
        administers O&M RPM-funded facilities and serves as the advocate
        for RPM funding within the Air Force.  According to the Air Force,
        RPM appropriations for fiscal year 1999 were $1.52 billion.  Of
        this total, $1.359 billion was for the active Air Force, $66
        million for the Air Force Reserve and $95 million for the Air
        National Guard. In the Air Force, O&M RPM funding consists of
        spending for (1) preventive maintenance level repairs (PML) and
        (2) repair and minor construction projects.4  To better determine
        repair and minor construction needs, the service implemented the
        Commander's Facility Assessment (CFA) in fiscal 1The survey, which
        asked about base facility inventory, RPM processes and funding,
        was sent to 202 Air Force bases (including Air Force reserve and
        Air National Guard); 200 returned the questionnaires, or 99
        percent.  See app. X for a copy of the survey. 2Air Force data
        provided to GAO. 3PRV is defined by the Office of the Secretary of
        Defense (OSD) as "the cost to replace the current physical plant
        (facilities and supporting infrastructures) using today's
        construction cost (labor and materials) and standards
        (methodologies and codes)." 4Preventive maintenance is defined as
        the planned, periodic inspection, adjustment, and minor repair of
        equipment and systems.  It is "the minimum level of maintenance
        required to sustain the day-to-day operation of the Air Force
        facilities and infrastructure between periodic repairs and
        replacement."  (Air Force: FIM Executive Overview, p. 5.)  Air
        staff said that repair and minor construction projects are those
        that the Air Force bases contract out for a number of reasons,
        such as the size or dollar amount of the project.  The service
        also allocates funds to support the civil engineering workforce at
        each base. This amount is based on historical amounts allocated
        for this purpose and base size factors, such as square feet and
        average age of the facility. Page 56
        GAO/NSIAD-99-100  Real Property Management Appendix II Air Force
        Strategy, Methods and Criteria for Determining Real Property
        Maintenance Requirements year 1993, which was then replaced in
        1998 with FIM, which the Air Force views as a more objective
        method to assess and present its RPM needs. CFA, used from fiscal
        year 1993 to 1997, required bases to gather condition assessment
        data on buildings and rank the impact of building conditions on
        their missions.  However, CFA had two major limitations, according
        to the Air Force.  The rating criteria were considered too
        subjective and the method used to summarize data was problematic.
        The Air Force felt that CFA criteria allowed commanders overly
        wide interpretation of CFA ratings.  CFA also grouped multiple
        requirements into one level, which placed lower-impact
        requirements in the same category as more critical requirements.
        Air Force RPM officials stated that these limitations reduced the
        credibility of the system with the Air Force senior leadership.
        According to the Air Force, the FIM's purpose is "to put a mission
        face on existing facility and infrastructure requirements in order
        to advocate for funds at the Air Force Corporate Structure."5  The
        FIM is used to rate only RPM O&M funded repair projects that are
        not PML work.  In contrast to the CFA, the Air Force states that
        the FIM measures specific requirements (rather than rating an
        entire facility or infrastructure system); has more objective
        ratings; and provides feedback to leaders.6  According to the FIM
        operational guide, it is intended to link RPM spending to the Air
        Force's "investment philosophy: to address the most urgent
        facility needs of the Air Force." The FIM guide appears to endorse
        the need for a comprehensive strategy, stating that the Air Force
        will use the data gathered under FIM "to develop a corporate
        investment strategy, measure adherence to this strategy, and
        ascertain the adequacy of long-term levels of investment to meet
        facility requirements."7  Given that FIM had only been used for 1
        year at the time of our review, it was not possible to determine
        the extent to which it had met these goals. 5"Air Force Facility
        Investment Metric: Implementation and Operations Guide," August
        1997, p. 1.  In this regard, it is very similar to the Army's
        Installation Status Report, which was also implemented as part of
        a strategy to advocate for RPM funding.   The Air Force corporate
        structure is, according to the Air Force, "the Secretariat and HQ
        USAF leadership structure, to include the Air Force council,
        Board, Panels, and integrated product teams." 6Air Force: FIM
        Executive Overview, August 1997, p. 4. 7Air Force: FIM Executive
        Overview, August 1997, p. 1. Page 57
        GAO/NSIAD-99-100  Real Property Management Appendix II Air Force
        Strategy, Methods and Criteria for Determining Real Property
        Maintenance Requirements Air Force RPM
        Using the FIM infrastructure rating system, Air Force bases
        identified Funding Strategy                           $355 million
        in critical-rated projects for fiscal year 1998.  However, the Air
        Force funding plan provides no funding for FIM-rated repair
        projects from fiscal year 1998 to fiscal year 2003, while funding
        the PML portion of RPM at 1 percent of the PRV of each
        installation. According to the Air Force Installations and
        Logistics office, repair projects are zeroed out until fiscal year
        2003 because "we must look at overall needs, and the need is
        [weapons] modernization." The Air Force's December 1997 Annual
        Planning and Programming Guidance states that bases should use the
        FIM "to identify and accommodate RPM projects that satisfy the
        most urgent needs of the Air Force."   The Air Force estimates
        that the planned FIM-based spending of $1.694 billion for fiscal
        years 2003-2005 is 40 percent of the $4.22 billion total of FIM-
        estimated needs for projects rated "critical" or "degraded." Table
        II.1 shows the Air Force spending plan through fiscal year 2005
        versus the estimated cost of projects rated critical or degraded
        using FIM criteria. Table II.1:  Air Force FIM Spending Plans
        Versus Needs Fiscal Years 1998-2005 Dollars in millions Fiscal
        year                            1998        1999          2000
        2001          2002          2003        2004      2005
        Total FIM funding  planned by Air Force         0              0
        0             0             0             246     666       782
        1,694 Need above funding level (for              aa 1,700
        800           800              800     120          0
        4,220 critical/degraded projects) aNo estimate provided for these
        2 years.  However, critical and degraded FIM projects for fiscal
        year 1998 alone totaled just over $4 billion (see table II.2).
        Source: Air Force. Table II.1 shows that the estimated cost of FIM
        critical and degraded level projects will increase until fiscal
        year 2004, when resumed funding for FIM begins to reduce the
        total.  However, due to the zeroing-out until fiscal year 2003,
        the total of backlogged repairs will be about $4.22 billion by
        fiscal year 2005.  Moreover, this funding is only for FIM projects
        rated critical or degraded-excluding those rated "minimal," which
        were estimated to cost $3.4 billion in fiscal year 1998 (see table
        II.2).  Using this funding strategy, therefore, the amount of
        critical and "degraded' repairs increases, while "minimal" ones
        remain unfunded. Page 58
        GAO/NSIAD-99-100  Real Property Management Appendix II Air Force
        Strategy, Methods and Criteria for Determining Real Property
        Maintenance Requirements An OSD official expressed skepticism
        about the wisdom and realism of the Air Force RPM funding
        strategy, noting that since the Air Force had only funded PML
        repairs, emergency repairs remain unfunded.  Therefore, in the
        view of the OSD official, when emergencies occur, PML funds would
        be used for them-providing even less for PML.  This, in turn,
        could increase the cost of repairs due to insufficient funds for
        PML. FIM Assessment     The Air Force's FIM requires active and
        reserve bases to identify and System             prioritize repair
        and minor construction projects based on the impact that
        deficiencies are having on the capability of units to carry out
        missions of different types, in four broad categories. Under FIM,
        repair projects (rather than individual buildings or facilities)
        are rated as "critical," "degraded," or "minimal," referring to
        the existing impact of conditions on mission, defined as follows:
    * A critical rating indicates a significant loss of installation
        mission capability and frequent mission interruptions; continuous
        work-arounds are needed. * A degraded rating indicates a limited
        loss of installation mission capability; work-arounds to prevent
        mission disruption and degradation are often required. * A minimal
        rating indicates marginal or no adverse impact to installation
        mission capability; work-arounds are seldom needed. Impact ratings
        are not further quantified, and, to some degree, reflect the
        judgment of those doing the ratings.  In contrast, the Marines use
        similar categories for impact on mission, but define most with
        specific quantified measures (e.g., critical impact is interfering
        with a mission specified percent of the time, in a year).  (See
        app. IV.)  FIM projects are funded from O&M and are for repair and
        minor construction.  They do not include military construction,
        PML (day-to-day repair and maintenance), or funds from other
        accounts, such as family housing. To determine FIM impact ratings,
        engineers may consult with the facility users and/or other
        engineering staff to determine how the project impacts the
        installation's mission.  For example, at Scott Air Force Base,
        several civil engineering staff met and collectively determined
        the ratings.  The base civil engineer then approved them and
        forwarded them to the base's major command. Page 59
        GAO/NSIAD-99-100  Real Property Management Appendix II Air Force
        Strategy, Methods and Criteria for Determining Real Property
        Maintenance Requirements Mission Categories    The impact ratings
        are used to rate the condition of four major mission categories-
        primary mission, mission support, base support, and community
        support-as follows: * Primary mission-facilities and
        infrastructure that directly accomplish or indirectly support the
        installation's primary mission.  Examples include airfield
        pavements, navigational aids, and missile alert facilities. *
        Mission support-facilities that support the installation's primary
        mission, some infrastructure, and primary emergency response
        facilities that provide immediate life support and rescue service.
        Examples include aircraft maintenance facilities, fire stations,
        and the base communication center. * Base support-facilities and
        some infrastructure that are not directly tied to the primary
        mission, but are necessary to keep the installation functioning
        properly (e.g., administrative facilities and chapels). *
        Community support-facilities that support the installation, such
        as lodging facilities and theaters. As noted, the FIM ranks
        projects in terms of the impact that the deficiencies they are
        intended to address are having on current mission readiness, as
        well as their estimated cost.   This is then rolled up into a
        "Mission Area Rating Matrix" (MARM), which also includes the PRV
        of RPM-funded facilities, and a facility investment index (FII)
        for each mission area, critical projects, and critical and
        degraded projects.  (The FII is the estimated cost of FIM projects
        divided by the PRV of the facilities in which they will be done.)
        The FIM data for the estimated cost of projects from the MARM for
        the entire Air Force for fiscal year 1998 is shown in table II.2.
        Table II.2:  Fiscal Year 1998 Air Force FIM Project Ratings and
        Cost Dollars in millions FIM Rating Mission category
        Critical     Degraded          Minimal      Estimated total cost
        Primary mission                      $178          $1,025
        $544                   $1,747 Mission support
        134           1,459          1,120                    2,713 Base
        support                             33          1,102
        1,444                    2,580 Community support
        10               94           290                      394 Total
        $355           $3,681         $3,398                  $7,434
        Source: Headquarters, Air Staff, Office of the Civil Engineer.
        Page 60                                            GAO/NSIAD-99-
        100  Real Property Management Appendix II Air Force Strategy,
        Methods and Criteria for Determining Real Property Maintenance
        Requirements According to the FIM operational guide, "the Air
        Staff must use the MARM to develop" its facility investment
        strategy-that is, to prioritize repair projects based on the
        criticality of the impact on mission.8 FIM Data On-line
        The data from FIM are available on-line in summary form to the Air
        Force Office of the Civil Engineer, Programs Divisions, permitting
        rapid comparisons of the needs of different installations rated
        under FIM.  Unlike the Army's ISR (see app. I), the FIM on-line
        data do not provide an overall condition rating for the base.
        Instead, the FIM on-line data show the ratings for individual
        repair projects (i.e., critical, degraded, or minimal) and the
        estimated cost of these repairs.  The system also shows the cost
        of all FIM projects in a given mission area at an installation.
        Moreover, the data can be easily "sliced and diced," permitting
        comparison and analysis of the repair projects at any number of
        chosen installations or major commands.  This makes it comparable
        to the way ISR data can be analyzed. Further, the data gathered by
        FIM show a 7-year estimate of all the projects at an installation
        identified with regard to their level of urgency, their estimated
        cost, and the year in which the money will be spent on them. Since
        the year assigned for doing a repair project is based in large
        part on the base's estimate of its urgency-including when a
        component or facility may fail-these timeline projections are a
        form of life-cycle analysis. Repair urgency is also based on what
        mission it affects and how important that mission is relative to
        other missions. After a FIM rating of a given installation is
        reviewed and approved by the Facility Board or equivalent, the
        data that go into the FIM are inputted from the installation to
        the FIM computerized system.  The data are administered by Gunter
        Air Station, Alabama, which maintains both the FIM and the Air
        Force's RPM inventory data.  The data are also simultaneously
        "released" to the installation"s major command for review.
        However, the data are not funneled through the major command.
        Once sent to the on-line system, the data are also available to
        the Programs and Analysis Branch. Major commands review the
        ratings and can change them.  Air Staff use the data to create an
        Air Force-wide MARM that they present to Air Force leaders to
        advocate for FIM funds.  For fiscal year 1998, the FIM raters 8FIM
        guide, August 1997, p. 5. Letter    Page 61
        GAO/NSIAD-99-100  Real Property Management Appendix II Air Force
        Strategy, Methods and Criteria for Determining Real Property
        Maintenance Requirements estimated that FIM projects would cost
        $7.4 billion, of which only 540 (2 percent of 27,000) were rated
        as critical, estimated to cost $355 million, or about 5 percent of
        total FIM-estimated repairs.  Forty percent of the projects were
        rated as "degraded," and 58 percent as minimal.  According to
        headquarters staff, the MARM can and should be used to prioritize
        RPM spending, so that funds are expended on critical and degraded
        categories. This, the staff told us, would also help reduce future
        repair costs for catastrophic failure. Criterion to Determine
        In addition to the rating and prioritizing of repair projects, the
        Air Force Preventive Maintenance      allocates funding for PML-a
        component of RPM-at 1 percent of the Needs
        estimated PRV of infrastructure at a base.  According to Air Force
        Civil Engineering staff, this level is adequate to satisfy PML
        requirements, given the recommendation of the 1989 DOD
        infrastructure study that recommended that the services annually
        budget a minimum of 1.75 percent of PRV for maintenance and
        repair, excluding any additional funds required to reduce existing
        backlog.9 While this 1-percent method for allocation provides a
        guaranteed minimum, it is based on a set percent of PRV rather
        than on a determination of physical deficiencies.  It is a
        shorthand way of assuring a given funding minimum, which may
        equal, exceed or fall below actual needs.  (See app. VII for more
        discussion.) Preventive Maintenance      Although the Air staff
        uses the same 1 percent of PRV to allocate to its May Not be Fully
        Funded     major commands, according to the Air Staff, the Air
        Force does not require major commands or bases to spend that
        allocated 1 percent of PRV for PML; commanders can use the funds
        in other areas.  An Air Mobility Command official told us that
        they try to allocate one percent of PRV to PML, but that other
        needs may have a higher priority. At Scott Air Force Base, a civil
        engineer estimated they actually receive only about a half percent
        of PRV for PML.  Further, of the PML money, most is not used for
        this purpose, but rather to replace and repair items that are
        broken due to prior insufficient PML.  For example, a 10-inch
        water main, now a $1-million critical FIM project, is being
        replaced because of inadequate PML. 9DOD, Renewing the Built
        Environment, March 1989, p. 28. Page 62
        GAO/NSIAD-99-100  Real Property Management Appendix II Air Force
        Strategy, Methods and Criteria for Determining Real Property
        Maintenance Requirements A base civil engineer from the Alabama
        National Guard said that they had replaced overhead doors that
        would not have been needed if adequate PML had been done to
        preserve the existing doors.  When PML is not done, the work will
        (eventually) show up as a FIM project and typically cost more than
        the amount of PML needed, according to the Alabama official.
        Another factor in Air Force RPM decision-making is the criterion
        for repair versus replacement.  The Air Force has a guideline that
        requires reconsideration of a project when the estimated cost of
        the project exceeds 70 percent of the PRV of a building.10  As in
        the other services, this is a guideline. Installation Views on FIM
        Some facilities management engineers at bases we visited expressed
        the view that the FIM ratings may be too restrictive, citing the
        fact that only 2 percent of the 27,000 Air Force-wide FIM projects
        were rated critical for fiscal year 1998; these represented about
        5 percent of the total estimated cost of repairs ($355 million of
        $7.4 billion).  However, headquarters Air Staff told us that the
        Air Force intentionally made the ratings more restrictive than
        under CFA and that FIM was to intended to reflect only the Air
        Force's most urgent needs.  In their view, CFA ratings were too
        subjective, resulting in many facilities rated as critical. Some
        base engineers told us that because FIM ratings were too
        restrictive, few projects would get a critical rating and a chance
        of being funded.  For example, at one base that we visited, of the
        total 103 projects, none were rated critical as of November 1997.
        Civil engineering staff at another Air Force Base said that they
        were concerned that few critical ratings might appear to make the
        Air Force look in better shape than it was.  At yet another base
        we visited, 6 of 88 projects were rated critical and engineering
        officials expressed concern that FIM would make their base look in
        better shape that it was.  They said that the FIM did not show
        that 132 roofs were leaking and were concerned that the system
        would not convey an accurate overall picture of conditions at the
        base. Using the FIM rating system, although total estimated Air
        Force repair backlog increased about 278 percent from fiscal year
        1997 to fiscal 10Air Force Instruction 32-1032, 11 May 1994,
        "Planning and Programming Real Property Maintenance Using
        Appropriated Funds," p. 6. Page 63
        GAO/NSIAD-99-100  Real Property Management Appendix II Air Force
        Strategy, Methods and Criteria for Determining Real Property
        Maintenance Requirements year 1998 ($2.667 billion to $7.434
        billion), only 5 percent in dollar value ($355 million) under FIM
        was rated critical. Engineering officials at three bases we
        visited said they were concerned the Air Force would only fund
        those projects with critical ratings in the primary mission
        category.  They expressed concern that other mission areas,
        especially community support, would not receive funds.  (As noted,
        for fiscal years 1998-2002, the Air Force has "zeroed out" all
        funding for repair projects.)  An official at headquarters stated
        that bases can spend more on repair projects if they choose,
        noting that the amount of funding received by bases through their
        major commands is not the maximum spending allowed.  He added that
        bases can move funds from other O&M accounts, if available. At one
        of the bases we visited, facilities officials said that in their
        view, many base support and community support projects could not
        get a critical rating because funding was being reserved only for
        critical projects, and base commanders wanted to reserve it for
        facilities connected to operations.  Further, because ratings were
        too restrictive, in their opinion, funding all critical projects
        in all mission areas still would not provide them with sufficient
        funds for repairs that they felt needed to be made. Air National
        Guard Bureau     Facilities held by the Air National Guard (ANG)
        represents about 5 percent Uses Additional Criteria      of the
        Air Force's total PRV.  However, the ANG accounts for about half
        of Air Forces bases (103 of 202 identified to us for the purpose
        of our questionnaire).  In the ANG, FIM projects and large PML
        projects are normally contracted out and are 100 percent federally
        funded.  Other activities, such as smaller PML-changing filters,
        adjusting equipment, etc.-are covered by the state/federal
        agreement for Facility Operation and Maintenance Activities
        (FOMA).  Under this agreement, the state and federal government
        share costs for a variety of items such as utilities, rental of
        equipment, state employees' salaries, and supplies and materials.
        The cost-share ratio depends on the mission of the unit, but
        according to the ANG Bureau (i.e., headquarters), the typical
        share is 75 percent federal and 25 percent state.11 11The federal
        share of FOMA is based on manpower standards, actual salary rates
        for the state, and historical/predicted costs for utilities,
        services, supplies, and materials. Page 64
        GAO/NSIAD-99-100  Real Property Management Appendix II Air Force
        Strategy, Methods and Criteria for Determining Real Property
        Maintenance Requirements For maintenance and repair that is 100-
        percent federally funded, such as FIM projects, the ANG Bureau
        uses a mix of factors as criteria to determine the annual amount
        each base receives-square footage and condition, pavement area and
        condition, area cost factors, and overall real property funds
        availability. Daily Repair and     In the Air Force, base civil
        engineers (BCE) and building users identify Maintenance
        repair and minor construction projects.  Building users report
        problems to civil engineering, and civil engineering staff,
        through their day-to-day work, report problems.  Among the 200 Air
        Force installations that responded to our survey, approximately
        12.4 percent of inspectors were reported to be engineers or
        skilled craftsmen, with the remainder being building users, and
        about a half percent being contractors. Typically, work orders for
        repairs are entered daily into a base's work order system, upon
        receipt of a request for repair.  When building users identify
        repairs, civil engineering staff determine whether the requested
        repair or minor construction is valid through personal knowledge
        of the facility or inspection.  For example, at a small base, the
        civil engineer would have personal knowledge of the age of
        systems, such as an air conditioning system in the command
        building.  If the system historically had not cooled the building
        adequately, the base engineer would know that a work order to
        repair the system to properly cool the building is a valid
        request.  At larger bases, civil engineers may have to visit the
        site to validate the request. Through a work order board that
        meets as needed, BCEs prioritize projects according to whether in-
        house engineering can handle or whether the projects need to be
        contracted out.  BCEs enter the estimated cost of the contract
        projects into the Air Force's Projects by Contract Management
        System (PCMS).12  (These data are also centralized at a Gunter Air
        Station facility that maintains the FIM database.) Civil engineers
        use PCMS and real property records to create the FIM database.13
        BCEs update PCMS projects to reflect FIM mission impact ratings,
        and real property records provide the specific mission category
        12PCMS was implemented around 1989 and is the Air Force civil
        engineering system that tracks contract work from design to
        completion.  All FIM projects are in PCMS. 13One FIM objective was
        to use existing databases and reduce the workload of gathering the
        information.  We did not verify data in PCMS or in real property
        records. Page 65
        GAO/NSIAD-99-100  Real Property Management Appendix II Air Force
        Strategy, Methods and Criteria for Determining Real Property
        Maintenance Requirements codes for each base.  In fiscal year
        1998, base engineers assigned initial FIM mission impact ratings
        to all projects in PCMS. Methods to Ensure Rating     FIM ratings
        are validated through a review and approval process.  After
        Validity                     base engineers assign an initial
        rating to all PCMS projects, the base commander reviews/approves
        the ratings.  Typically, each base in the Air Force has a facility
        board that consists of all the base's unit commanders. This board
        assists the base commander in making facility infrastructure
        decisions, including approval of FIM project ratings.  BCEs
        present the FIM ratings at a board meeting and resolve any
        differences in opinions.  The base engineer also obtains the
        commander's priorities for the projects and includes this ranking
        in the FIM database. Our survey results reflected the use of a FIM
        review and approval process. Installations reported a number of
        ways in which initial ratings are reviewed, with use of outside
        contractors ranking the lowest, at about 3 percent.   Table II.3
        summarizes base responses. Table II.3:  Steps to Ensure FIM
        Project Ratings Are Valid Percent of respondents Step to ensure
        validity
        citing method Rely on expertise of  assessor; no formal procedures
        used                                21 Selected worksheets are
        reviewed by facility management
        46 office staff Facility staff makes follow-up visits to verify
        reported problems                        25 on a sample of
        selected rating worksheets Outside contractors used
        3 Other validation methods
        34 Source: Responses to question 9, GAO survey. Methods to Ensure
        When asked about the steps taken to ensure ratings given by one
        rater Consistency in Ratings       would be, on average, the same
        reported by another rater, 51 percent of respondents said they had
        no formal procedures or mechanisms other than the expertise and/or
        training of their staff who do the ratings.  Forty-eight percent
        wrote in about other methods used to ensure consistency.   Table
        II.4 shows the responses. Page 66
        GAO/NSIAD-99-100  Real Property Management Appendix II Air Force
        Strategy, Methods and Criteria for Determining Real Property
        Maintenance Requirements Table II.4:  Steps to Ensure Consistency
        Percent of respondents Step to ensure consistency
        citing step No formal procedures used other than expertise of the
        raters                             51 Set number or percent of
        facilities are reinspected by different                          3
        assessors Random sample of facilities are reinspected by different
        7 assessors Outside contractors used
        1 Other method to ensure consistency
        48 Source: Responses to question 10, GAO survey. Installation
        Views on     Regarding the overall quality of the FIM process, 61
        percent reported the Constraints               primary factor
        affecting overall quality was the shortage of resources-
        insufficient time and/or budget to carry out assessments.   Table
        II.5 shows the responses. Table II.5:  Factors That Constrain
        Assessment Quality Percent that checked Constraining factor
        factor Shortage of personnel
        45 Shortage of trained personnel, that is, engineering or skilled
        42 craft background Shortage of resources (that is, insufficient
        time and/or budget                          61 to carry out
        assessments) Other
        9 Does not apply--no factors create a significant constraint on
        22 the quality of reviews of facility conditions Source: Responses
        to question 11, GAO survey. When asked how methods could be
        changed, 64 percent of the responding bases reported that the Air
        Force should place much more emphasis on long-range planning,
        while de-emphasizing annual assessments of facilities. Thirty-nine
        percent responded that buildings and facilities should be rated
        primarily according to engineering, life-safety and other factors,
        as shown in table II.6. Page 67
        GAO/NSIAD-99-100  Real Property Management Appendix II Air Force
        Strategy, Methods and Criteria for Determining Real Property
        Maintenance Requirements Table II.6:  How Bases Would Change
        Determining RPM Requirements Proposed change
        Percent agreeing Rate building/facilities primarily according to
        engineering and                               39 life-safety
        criteria, while decreasing the role of aesthetics Place much more
        emphasis on long-range maintenance
        64 planning while de-emphasizing annual assessments Other
        28 Source: Responses to question 13, GAO survey. Some Major
        Commands                        We found the Air Force allows
        major commands to use assessment tools in Supplement FIM With
        Other  addition to FIM to rate the condition of their facilities
        and prioritize RPM Assessment Tools
        spending.  Three major commands-the Air Force Materiel Command,
        the Air Combat Command, and the Air Force Academy-use non-FIM
        assessments.  Command officials told us these systems provide more
        detailed information about projects than FIM does and helps them
        make more informed decisions regarding project funding.  The Air
        Force Academy uses a system that includes life-cycle principles of
        property management. The systems used by Air Force Materiel
        Command and the Academy are based on engineering assessments as to
        whether facilities are working adequately.  In contrast, FIM
        prioritizes projects based on how deficiencies are impacting
        missions.  Air Staff stated that commands are allowed to use other
        tools if it helps them to better manage their facilities.  Table
        II.7 outlines the three systems' major features. Table II.7:
        Additional Assessment Tools That Supplement FIM Major command
        Name of  system                                   Principle
        characteristic Air Force Materiel Command       Infrastructure
        Condition System (ICS)             Provides engineering
        assessment/ratings on the physical condition of the system on a
        scale of 0 to 10. Air Combat Command               Civil
        Engineering Risk Matrix (CERM)              Rates projects impact
        on mission more extensively than FIM and provides a measure
        indicating probability of funding from low to high. Air Force
        Academy                Facility Investment Strategy
        Rates buildings not projects, updated each year by a contractor;
        buildings managed to extend maximum life of facility. Source: Air
        Force civil engineering officials at each of the cited commands.
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        100  Real Property Management Appendix II Air Force Strategy,
        Methods and Criteria for Determining Real Property Maintenance
        Requirements Inspection Condition System       The Air Force
        Materiel Command Inspection Condition System is a series of
        checklists that establish detailed rating criteria for evaluating
        the physical condition of the components and subcomponents of five
        designated infrastructure systems-building systems, utility
        systems, pavement and grounds, airfield systems, and water and
        wastewater system. Inspectors read physical condition descriptions
        and assign a rating scaled from 0 to 10 (0 is complete failure; 10
        is new condition) that best describes the subcomponents physical
        condition.  Each subcomponent is then assigned a weighting factor
        that best represents the importance of the subcomponent to the
        overall component system.  Component ratings are then used to
        determine project ratings.  The Air Force Materiel Command will
        continue to use its system along with FIM because, officials told
        us, it gives the command an engineering-based technical assessment
        of projects. An Air Force Materiel Command official said that FIM
        provides the impact on the mission and Inspection Condition System
        tells them technically how well the system, such as a heating and
        air conditioning system, is performing. Civil Engineering Risk
        Matrix     The Air Combat Command planned to require its bases to
        use its Civil System                            Engineering Risk
        Matrix System in addition to the FIM through fiscal year 1998,
        after which it would transition to FIM only.  The matrix system
        was similar to FIM in that it rates projects according to mission
        impact.  It has five mission areas and impact ratings, each with a
        numerical value. When combined, the values produce a funding
        probability from low to maximum. The five impact ratings are
        catastrophic, critical, essential, required, and desired.
        Catastrophic is valued at seven, whereas desired is valued at one.
        The Air Combat Command developed the matrix to provide it with a
        risk-based methodology to advocate for project funding. Facility
        Investment Strategy      In 1995, the Air Force Academy developed
        a Facility Investment Strategy that gave it an engineering
        analysis of facility and infrastructure conditions and that
        utilizes some elements of life-cycle planning.  In this system,
        buildings have an estimated lifespan, and maintenance is geared to
        maximizing the lifespan.  The system determines all work that
        needs to be done for buildings, regardless of the urgency.  In
        contrast, FIM determines projects that need to be done and
        prioritizes them by mission impact. With the information the
        system provides, the academy developed condition indices that
        monitor the effects of various levels of investment. The indices
        are also used to predict the anticipated condition of the asset
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        Real Property Management Appendix II Air Force Strategy, Methods
        and Criteria for Determining Real Property Maintenance
        Requirements based on the amount of investment made to renew the
        asset.14  According to the academy, they plan to continue to use
        their system along with FIM. They told us that their system gives
        them more detailed building information than does FIM and that
        they continue to add to the detail each year as they do annual
        updates.  Each year the academy pays a contractor about $25,000 to
        $30,000 to update and analyze the program data. Allocation of RPM
        The Air Force plans to allocate RPM resources based on two
        factors-the Resources                    1 percent of estimated
        installation PRV and the prioritization scheme created under FIM.
        However, through fiscal year 2002, no funding will be provided to
        FIM-rated repair projects; the only RPM funding will be for
        preventive maintenance level repairs.  According to FIM guidance,
        the Air Force will use the FIM Mission Area Matrix to establish
        investment targets for each mission area tied to an Air Force
        investment strategy. Headquarters will then allocate funding to
        the major commands based on their share of the targeted
        requirement.  According to headquarters, targets have not yet been
        established since FIM is still new. Almost Half of Air Force
        Since the Air Force allocates a very substantial portion of total
        RPM PRV Estimate Needs           spending on the basis of PRV (100
        percent through fiscal year 2002), it is "Correction"
        critical that installations calculate accurately.  However, this
        may not be the case, as noted in a contractor analysis of the Air
        Force's PRV model, which found that only 55 percent of the Air
        Force's estimated $204 billion (fiscal year 1996) PRV "has been
        determined . . . to be acceptable"; "the Air Staff has determined
        that the remaining 45 percent of the PRV data is in need of review
        and validation."15  "The most recent calculation of PRV . . .
        contains anomalies that required validation or correction."16  The
        Air force indicated that it is addressing this issue. In addition,
        the contractor's report notes that some PRV estimates are
        unreliable because the real property records "do not contain the
        level of 14This system and the use of condition indices influenced
        the development of FIM.  After being briefed on the academy's
        system, the Air Force Vice Chief of Staff directed the Air Force
        Office of the Civil Engineer to develop an index, similar to the
        one developed by the academy, for use by commanders to analyze
        future facility construction and repair requirements. 15USAF:
        "Short Term Analysis Report: Air Force PRV Model," October 1997,
        p. 2. 16Delta Research Division of BTG, Inc.: "Short Term Analysis
        Report: Air Force PRV Model," October 1997, p. 1. Page 70
        GAO/NSIAD-99-100  Real Property Management Appendix II Air Force
        Strategy, Methods and Criteria for Determining Real Property
        Maintenance Requirements detail required to accurately match an
        appropriate unit cost to the real property record quantity."17  As
        an example, the report cites the fact that water lines are only
        identified as a "generic type," but not the size or type of water
        line, which it notes can range in cost from $7 per linear foot to
        about $60 per linear foot for 24-inch cast iron pipe.  The report
        provides no estimate of the potential range of inaccuracy in the
        PRV estimates for Air Force facilities.  In sum, the PRV measure's
        estimate appears open to misinterpretation and, hence,
        miscalculation. RPM Needs Exceed     Air Force bases' responses to
        our survey reported that in fiscal year 1997, Requests
        they had $5.9 billion in repair needs, and had received 18.3
        percent of that total ($1.08 billion) in RPM funding.  In
        responses to the survey, as shown in table II.8, the lack of
        linkage between requirements and allocation of resources was one
        of the top five most frequently cited weaknesses in the Air
        Force's RPM management. Table II.8:  Top Five Frequently Cited
        Weaknesses Weakness
        Percent citing weakness Little or unclear linkage between RPM
        needs assessment and                                   39 resource
        allocation Rollup oversimplifies conditions
        37 Condition assessments/requirements determination are too
        34 subjective Ratings do not tell what is wrong within facility or
        mission                                 32 category Little/unclear
        linkage between condition determination and
        29 budget estimation Source: Response to question 12, GAO survey.
        Total exceeds 100 percent because more than one choice was
        possible. Air Staff uses FIM to advocate for resources. When we
        asked bases what they would change about the method used to
        allocate RPM resources, about 50 percent wrote that they would not
        change the system.  Of the other 50 percent, about half (48
        percent) recommended a variety of changes ranging from the receipt
        of a lump-sum amount at the beginning of the year to simply
        increasing the dollar amount they received. 17Delta Research
        Division of BTG, Inc., op. cit., p. 4. Page 71
        GAO/NSIAD-99-100  Real Property Management Appendix II Air Force
        Strategy, Methods and Criteria for Determining Real Property
        Maintenance Requirements When asked to suggest methods on how
        funding is allocated by their major commands, there appeared to be
        no clear consensus with regard to four proposed alternatives,
        other than a 60- to 40-percent opposition to decentralizing
        control of RPM funds downwards from the major commands.  Table
        II.9 shows the percent of bases' that agreed with four specified
        alternatives. Table II.9:  How Bases Would Change Funding
        Allocations Percent of  respondents Suggested change
        citing  change Funding for RPM should be based primarily on the
        physical                               56 deficiencies present in
        facilities Funding should not be based on a fixed increase above
        or                                51 below the previous year's
        level Funding be based on average age, total square footage and
        45 number of facilities RPM funding/allocation should not be
        centrally managed by                               40 major
        command Source:  Responses to question 22, GAO survey. Bases
        Visited    We visited Eglin Air Force Base, Fort Walton Beach,
        Florida; Pope Air Force Base, Fayetteville, North Carolina; and
        Air Combat Command, Langley Air Force Base, Langley, Virginia, to
        ask facilities management officials how RPM requirements are
        determined, how funds are allocated, and their views on the RPM
        process.  We asked similar questions at the following sites, where
        we also pretested our survey at some, and subsequently validated
        it at others, as indicated. Sites visited to pre-test the
        questionnaire Maxwell Air Force Base (Air Education and Training
        Command), Montgomery, Alabama; Seymour-Johnson Air Force Base (Air
        Combat Command), Goldsboro, North Carolina; Wright-Patterson Air
        Force Base (Air Materiel Command), Dayton, Ohio; and Air Force
        Materiel Command, Wright-Patterson Air Force Base, Dayton, Ohio.
        Page 72                                          GAO/NSIAD-99-100
        Real Property Management Appendix II Air Force Strategy, Methods
        and Criteria for Determining Real Property Maintenance
        Requirements Sites visited to validate questionnaire Alabama Air
        National Guard, Birmingham, Alabama; Scott Air Force Base (Air
        Mobility Command), Belleville, Illinois; Tinker Air Force Base
        (Air Force Materiel Command), Oklahoma City, Oklahoma; and Air
        Mobility Command, Scott Air Force Base, Belleville, Illinois. Page
        73                                          GAO/NSIAD-99-100  Real
        Property Management Appendix III Navy Strategy, Methods, and
        Criteria for Determining Real Property Maintenance Requirements
        Appendix II I In this appendix we discuss the Navy's strategy,
        methods and criteria for determining RPM requirements and
        allocating resources, including the responses to a questionnaire
        on RPM-related issues that we sent to Navy installations and major
        claimants.1  In particular, we examine the key components of the
        Navy's system for evaluating base infrastructure conditions and
        estimating RPM costs, its Annual Inspection Summary (AIS) and
        Shore Base Readiness Report (BASEREP). Background      At the end
        of fiscal year 1998, the Navy managed 31,040 buildings totaling
        almost 343 million square feet.  According to the Navy Budget
        Office, the Navy's operations and maintenance (O&M) fiscal year
        1999 appropriation for Navy and Navy Reserve RPM is $973.3
        million.  The Navy estimates that its backlog of critical-rated
        repairs will be just over $2.5 billion at the end of fiscal year
        1999.2  The Deputy Chief of Naval Operations (Logistics)
        Facilities and Engineering Division has oversight responsibility
        for RPM. According to the Navy, the plant replacement value (PRV)3
        of Navy facilities, as of fiscal year 1998, was estimated at about
        $103 billion.4 Navy RPM needs can be funded through six
        appropriations: O&M, Navy; O&M, Naval Reserve; Research,
        Development, Test and Evaluation, Navy; the Navy Working Capital
        Fund; Military Construction, Navy; and Naval Reserve.  Not all
        installations receive funds from all six appropriations. The
        working capital fund and Navy O&M also fund property inspections
        to identify and report backlogs.  While military construction
        funds are not intended for RPM, they may reduce RPM needs when
        used to replace or extensively renovate an existing facility. 1We
        sent the survey, which asked about installation facility
        inventory, RPM processes, and funding, to 132 Navy installations;
        126, or 95 percent, returned the questionnaires.  See app. X for a
        copy of the survey.  Major claimant is the Navy's equivalent term
        for major command in the Air Force and Army. These are the
        headquarters for a larger number of installations with similar
        functions. 2The Navy rates backlog as either critical or
        deferrable; only the critical backlog is officially reported to
        the Congress. 3PRV is defined by OSD as "the cost to replace the
        current physical plant (facilities and supporting infrastructures)
        using today's construction cost (labor and materials) and
        standards (methodologies and codes)." 4This includes family
        housing ($10 billion in PRV), but excludes facilities funded by
        working capital funds, which have an estimated PRV of $35 billion.
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        100  Real Property Management Appendix III Navy Strategy, Methods,
        and Criteria for Determining Real Property Maintenance
        Requirements Navy RPM Funding     The Navy estimates that it would
        take annual funding equivalent to about Strategy             2.1
        percent of PRV to keep the conditions of its facilities stable,
        but was funding RPM at about 1.5 percent of PRV in 1998 for O&M-
        funded properties.  However, according to the Navy, it will
        increase RPM spending to 1.84 percent of PRV in fiscal year 2001,
        with the total gradually rising to 2.59 percent of PRV by fiscal
        year 2005.  The Navy estimates that this will result in holding
        increases in critical-rated backlog to no more than about 10
        percent over end of fiscal year 1998 levels by fiscal year 2005.5
        The spending planned for fiscal years 2001-2005 would cap the
        growth in critical backlog at about $2.75 billion.  The Navy has
        targeted some of the planned RPM spending to barracks, with the
        goal that critical-rated repairs for barracks will be "virtually
        eliminated" by fiscal year 2004, if the funding is provided as
        planned. While the Navy RPM funding strategy appears to be
        reasonably consistent with a stated Navy goal to prevent an
        increase in repairs rated "critical," it is not clear that
        noncritical rated backlog growth will be adequately addressed.
        The Navy stated that even with the increased funding for critical-
        rated repairs, most facilities' RPM would be funded at a level
        resulting in either a C2 or C3 readiness level.  C3 means that the
        facilities in the category (e.g., aviation, waterfront operations,
        training) have only marginally met the demands of the mission, but
        with major difficulty. For fiscal year 2001, RPM funding will keep
        4 of 11 facility categories at the C2 level, with the remainder at
        C3.6  The Navy told us that eventually some noncritical repair
        needs could become critical, as conditions worsen.  The Navy
        funding strategy for RPM is the result of balancing RPM needs
        against the other competing priorities of the Navy. 5Estimate is
        from a Navy November 1998 briefing and technical comments on draft
        of this report.  A June 1999 Navy graph shows total critical
        backlog increasing from just under $2.5 billion at the start of
        fiscal year 1999 to about $2.75 billion for fiscal years 2002-2003
        and declining slightly thereafter. 6According to the Navy, for the
        purpose of calculating these ratings, it reduced its facilities
        from 28 to 11 mission categories. These include barracks, aviation
        (runways and associated facilities) training, and utilities. Page
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        Real Property Management Appendix III Navy Strategy, Methods, and
        Criteria for Determining Real Property Maintenance Requirements
        Methods and Criteria to Determine Maintenance Needs Overview of
        Navy RPM     The Naval Facilities Engineering Command (NAVFAC) is
        responsible for the technical direction of the Navy's real
        property inventory.  The Command maintains a database of all Navy
        real property, including property of the Marine Corps.  The
        database contains various data elements, including the unit
        identification code of the plant property accounting unit, date
        acquired, government cost, current plant value (CPV), investment
        category, use, and size (square feet, statute miles). NAVFAC's
        objective is to make optimum use of available resources for RPM.
        Its goals include ensuring the most efficient use of resources,
        performing scheduled maintenance to avoid breakdowns, and
        performing routine maintenance to avoid having to perform major
        repairs.  These tasks involve inspecting facilities, setting work
        priorities, planning and estimating work, and reporting facility
        condition. The Navy has maintained two facility condition
        reporting systems since 1982: the Annual Inspection Summary (AIS)
        and the Shore Base Readiness Report  (BASEREP).  These systems
        serve different purposes, but overlap in that they both involve
        installations' reports on aspects of facilities' condition.  Both
        are based on engineering inspections of facilities.  AIS, the Navy
        told us, is based on a fence-to-fence inspection of facilities to
        rate deficiencies, rather than individual buildings.  Deficiencies
        are rated as either critical or deferrable; critical are those
        that must be funded within 12 months.  The purpose of the AIS is
        to develop realistic, long-term maintenance plans that will reduce
        the Navy's RPM backlog.  AIS is the summary of work and costs to
        correct deficiencies for each facility.  The BASEREP's purpose is
        to link installation resources with readiness and workload.
        BASEREP reports on facility quantity and condition, major
        equipment quantity and condition, and personnel.  BASEREP is the
        installation commander's assessment of the installation's ability
        to execute assigned missions; it includes explanations of remedial
        actions needed to Page 76
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        Strategy, Methods, and Criteria for Determining Real Property
        Maintenance Requirements correct deficiencies.  Ratings are by
        mission areas and include the status of all the facilities
        supporting the assigned missions.7 The Navy's AIS does not include
        Marine Corps activities, industrial and research plants owned and
        operated by private contractors, military assistance advisory
        groups and defense attache offices, petroleum reserves, Reserve
        Officer Training Corps units, family housing, fleet moorings, and
        property funded through the Naval Telecommunications Command and
        Naval Security Group Command activities. NAVFAC publishes guidance
        and handbooks on managing real property, including procedures and
        guidance for conducting and documenting facilities inspections.
        Navy instructions require installation commanding officers to
        accomplish missions assigned by their major claimant, including
        the management of related budgeting and obligation of funds.  They
        are responsible for efficiently and effectively managing
        installation facilities to ensure they are adequate to accomplish
        the missions. Navy RPM Definitions    The Navy has defined
        maintenance, repair, and construction as follows: * Maintenance:
        the recurring, day-to-day, periodic, or scheduled work required to
        preserve or return a real property facility to such a condition
        that it may be used for its designated purpose. * Repair:  the
        return of a real property facility to such condition that it may
        be effectively utilized for its designated purpose, by overhaul,
        reconstruction, or replacement of constituent parts or materials
        that are damaged or deteriorated to the point where they cannot be
        economically maintained. * Construction: the erection,
        installation, or assembly of a new real property facility; or the
        addition, expansion, extension, alteration, conversion, or
        replacement of an existing real property facility; or the
        relocation of a real property facility. The Navy has established
        criteria, including funding limits, for facilities projects to
        comply with laws and regulations.  Major claimants set the limits
        of funds obligation for each base.  A deficiency under the limits
        and within the Navy definitions for maintenance and  repair may be
        funded by 7Navy briefing, June 1998 and Navy email communication
        to GAO, September 1997. Page 77
        GAO/NSIAD-99-100  Real Property Management Appendix III Navy
        Strategy, Methods, and Criteria for Determining Real Property
        Maintenance Requirements the installation.  Projects over the
        limits must be approved and funded by the major claimant as a
        special project. BASEREP    The BASEREP is an annual report of
        each installation's ability to perform its missions and shows the
        level of mission readiness, listed by three categories, including
        the quantity and condition of facilities, personnel, and quantity
        and the condition of major equipment.  Its purpose is to link
        financial and personnel resources with readiness and workload.
        BASEREP criteria define 28 mission areas and major claimants
        assign mission areas to their installations.  Installation
        commanding officers rate their installations' abilities to perform
        the assigned missions according to C-ratings. The four C-ratings
        are * C1-has fully met all demands throughout the reporting
        period. * C2-has substantially met all demands, with only minor
        difficulty. * C3-has only marginally met the demands, but with
        major difficulty. * C4-has not met vital demands. The C-ratings
        apply to the installation's asset categories-(1) personnel, both
        military and civilian; (2) facilities' quantity and condition; and
        (3) major equipment quantity and condition.  In applying the
        ratings to facilities, quantity addresses the number and size
        regarding mission and condition addresses deficiencies that should
        be corrected to achieve mission requirements.  The commanding
        officers provide additional narrative assessments describing the
        problems and the proposed solutions for all missions rated C3 or
        C4. Because these ratings are not quantified and involve
        individual judgments by commanders, a Navy RPM official at one
        installation described the BASEREP as "a very subjective
        assessment." Three Navy sites we visited had some C4 mission
        ratings.  The Norfolk Naval Shipyard reported C4 in its port
        operations mission area; NAS Oceana reported C4 in its bachelor
        housing mission area; and Public Works Center San Diego reported
        C4 in its research, development, test, and evaluation (RDT&E) and
        administrative services missions. According to BASEREP criteria,
        AIS data should not drive the BASEREP assessment, but BASEREP
        deficiencies should be addressed in the AIS. Major claimants
        provide supplemental guidance to their installations on reporting
        criteria.  According to base officials, the Chief, Naval Education
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        Criteria for Determining Real Property Maintenance Requirements
        and Training (CNET) directed that only facilities' condition and
        quantity ratings be provided on its installations' September 30,
        1997, BASEREPs; the major claimant did not want the personnel or
        equipment ratings. AIS                         AIS is the Navy's
        means of identifying and reporting its cumulative backlog of real
        property maintenance and repair.  It is also the tool through
        which installation commanders identify and report RPM deficiencies
        and plan, budget, and fund their RPM.  AIS contains the critical
        and the total maintenance and repair backlog as of the fiscal
        year's end.  AIS also includes the names of the organizations that
        performed facility inspections, the percentage of inspections
        completed, and explanations of large increases in the backlog. The
        AIS divides all deficiencies into two types: critical and
        deferrable.  A deficiency is rated critical if it "must be
        corrected within 12 months" and "will impact mission, affects
        quality of life or has safety or environmental hazard potential"
        according to the Naval Facilities Engineering Command's Inspection
        of Shore Facilities  manual.8  The estimated cost of fixing the
        deficiencies that qualify as critical is reported to OSD as the
        backlog of maintenance and repair.  If a critical deficiency has
        not been addressed for 4 years, it is to be classified as
        deferrable. Inspections to Identify     The three volumes of the
        Inspection of Shore Facilities manual describe the Deficiencies
        criteria and procedures for performing the three types of
        facilities inspections-operator, preventive maintenance, and
        control.  The latter is the primary source for AIS and budget
        data. Navy inspection criteria require a thorough examination of
        each facility, evaluation of the operator, and preventive
        maintenance inspections, and identify related resource
        requirements as a basis for funding requirements. Inspections are
        expected to be planned, scheduled, and performed by qualified
        inspectors and are required for structural, mechanical,
        electrical, and roof repairs. According to Navy criteria,
        inspectors should (1) have a technical trade background; (2) be
        experienced in maintenance and repair operations, including
        maintenance standards, safety, health, and building codes; and
        8NAVFAC M0-322, vol. I, March 1993, p. 3-5. Letter     Page 79
        GAO/NSIAD-99-100  Real Property Management Appendix III Navy
        Strategy, Methods, and Criteria for Determining Real Property
        Maintenance Requirements (3) have the ability to write clear
        reports of facility conditions.  The criteria include requirements
        for a facility condition report and describe its three components:
        a facility condition detailed deficiency list, facility inspection
        checklists, and facility condition summary sheet.  These documents
        are to be used to identify packages of work for planning,
        estimating, and programming maintenance and repairs into the
        installation's work control system as well as identifying budget-
        oriented resource requirements.  They form the basis for AIS and
        BASEREP. Navy inspection criteria also cover the requirements for
        compliance with regulatory standards and safety codes; that is,
        national building codes for corrosion, electrical elevator,
        plumbing, track safety standards, Occupational Safety and Health
        Administration requirements, and environmental regulations.
        NAVFAC publishes other manuals containing inspection and
        maintenance guides for many facilities, including maintenance of
        railroads, building maintenance, structures, paints and protective
        coatings. The criteria for frequency of facility inspections are
        shown in table III.1. These are suggested frequencies and
        installations may deviate when resources are not available. Table
        III.1:  Type and Frequency of Inspection Type and frequency of
        inspection (in years) Facility's mission relationship
        Structural    Electrical Mechanical    Roof Direct mission support
        2            2           2        1 Indirect mission support
        3            3            3       1 Nonmission support
        4            4            4       2 Inactive or excess
        5            5            5       3 Source: Navy. Navy criteria
        call for inspectors to prepare for inspections by reviewing
        facility records,  including floor plans, the status of major
        alterations and maintenance projects, lists of related contracts
        and warranties, and lists of tenants and maintenance persons.  The
        six installations and the Public Works Center we visited used in-
        house staff or contractors to conduct their control inspections.
        Our review indicated that in-house inspectors scheduled their
        inspections, reviewed property records, and other files they
        maintained for each facility.  After conducting the inspections,
        they Page 80                                       GAO/NSIAD-99-
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        and Criteria for Determining Real Property Maintenance
        Requirements typically prepared the worksheets, preliminary cost
        estimates of the work they identified, and entered the data into
        the installation's work order system.  The Public Works Center
        submitted its inspection reports and prepared work orders for the
        deficiencies. Estimating Costs to Correct  Navy criteria call for
        inspectors to prepare preliminary cost estimates of Deficiencies
        the work identified and suggest four sources for estimating labor
        and material costs, including NAVFAC P-716, Unit Price Standards,
        R.S. Means Company, Inc., or Richardson Dodge (the latter two are
        private companies that research and publish cost estimates).
        Officials told us their inspector/estimators use the manuals to
        estimate costs of needed work. They determine the scope of the
        maintenance and repair work they identified and use the manuals to
        price the costs of the various types of crafts and materials.
        Projects that cost more than the installation commanding officer's
        approval limits are special projects and generally must be
        approved and funded by the installation's major claimant.
        Installation commanders submit their lists of needed special
        projects to their major claimant for review and funding.  Major
        claimants review the special projects, assign priorities, and fund
        those to the extent they have remaining funds.  Review boards
        evaluate the projects and recommend priorities. Relationship
        Between                Officials at one of the installations we
        visited said that BASEREP BASEREP and AIS
        objectives should support and be consistent with the AIS
        submission. However, because there are 28 mission areas in BASEREP
        but only 18 in AIS, with the latter encompassing the BASEREP's
        areas, it is clear the 2 do not match exactly.  AIS and BASEREP
        use the same data from inspections but rate different RPM-related
        elements.  According to the Navy, both AIS and BASEREP ratings are
        used "at all levels of the chain of command to allocate resources
        among competing projects."9 Validation of
        Navy criteria call for inspectors to have training and experience
        in the craft Inspection Results                  trades.  The
        staff inspectors at the locations we visited were engineering
        technicians who were experienced in the trades and in facilities
        inspection, 9Navy email communication to GAO, September 1997. Page
        81                                      GAO/NSIAD-99-100  Real
        Property Management Appendix III Navy Strategy, Methods, and
        Criteria for Determining Real Property Maintenance Requirements
        according to Navy officials.  At one installation that contracted
        for its inspections, officials told us the inspectors had
        equivalent experience. Responses to our questionnaire showed that
        the installations used different control inspection review and
        approval procedures.  About 53 percent reported that facility
        management staff reviewed selected worksheets and judged ratings
        based on personal knowledge.  About 20 percent said they used
        other methods such as facility boards and higher commands to
        validate inspection results.  Eleven percent said they used
        outside contractors.   Table III.2 shows the responses. Table
        III.2:  Steps to Ensure Inspections Are Valid Step to ensure
        validity                                                 Percent
        citing step Rely on the expertise of assessor; no formal
        procedures used                            23 Facility management
        staff review selected worksheets
        53 Facility staff make follow-up visits to verify reported
        problems                        19 on a sample of selected rating
        worksheets Outside contractors are used
        11 Other validation methods. Specify.
        20 Source: Responses to question 9, GAO survey. When asked about
        the steps taken to ensure ratings given by one staff would be, on
        average, the same reported by another staff, 60 percent said they
        had no formal procedures or mechanisms other than the expertise
        and/or training of the staff who did the ratings.  About 38
        percent wrote about other methods used to ensure consistency.
        Most described an inspection review process in which ratings are
        reviewed up the chain of command.  Table III.3 summarizes these
        answers. Table III.3:  Steps to Ensure Consistency Step to ensure
        consistency                                              Percent
        citing step No formal procedures used other than expertise of the
        assessor                          60 Different assessors reinspect
        facilities                                                 4
        Different assessors reinspect a random sample of facilities
        7 Outside contractors are used
        6 Other method used to ensure consistency
        38 Source: Responses to question 10, GAO survey. Page 82
        GAO/NSIAD-99-100  Real Property Management Appendix III Navy
        Strategy, Methods, and Criteria for Determining Real Property
        Maintenance Requirements Regarding the overall quality of the
        control inspection process, 71 percent of the respondents reported
        the primary factor affecting overall quality was the shortage of
        resources.   Table III.4 illustrates these responses. Table III.4:
        Factors That Constrain the Quality of Assessments Percent that
        checked Constraining factor
        factor as a constraint Shortage of personnel
        35 Shortage of trained personnel, that is, those with engineering
        28 or skilled craft backgrounds Shortage of resources (i.e.,
        insufficient time and/or budget to                           71
        carry out assessments) Other
        7 Does not apply.  No factors creating a significant constraint on
        21 the quality of reviews of facility conditions Source: Responses
        to question 11, GAO survey. When asked how methods could be
        improved, 76 percent of the respondents reported that they agreed
        with combining AIS and BASEREP, while 50 percent said long-range
        planning should get more emphasis.10 Allocation of RPM     The
        Navy Comptroller allocates obligation authority to various major
        Resources             claimants, which in turn allocate it to
        their installation commanders.  The Navy Facilities and
        Engineering Division told us that most commands withhold 4 to 4.5
        percent of total annual RPM spending for mid-year release.  After
        mid-year review of competing needs, they release the reserve
        funds; these may be used for either general RPM, or for special
        projects, or emergency repairs.  Special projects are
        construction, repair, maintenance, or equipment installation
        projects that exceed the funding authority of the installation
        commander but fall below the threshold for military construction.
        Navy guidelines restrict special project funding to no more than
        10 percent of total RPM annual spending. Six of the installations
        we visited received Navy O&M obligation authority from their major
        claimants.  They also received funds from tenants that paid for
        some services on a reimbursable basis.  RPM funds were managed
        10Responses to question 13, GAO survey. Page 83
        GAO/NSIAD-99-100  Real Property Management Appendix III Navy
        Strategy, Methods, and Criteria for Determining Real Property
        Maintenance Requirements by the installation's engineering officer
        (public works officer), base civil engineer, or staff civil
        engineer, who directed the application of resources. Officials at
        all the installations we visited told us their RPM funding has
        been insufficient to keep the RPM backlog from increasing over the
        last few years.  For example, officials at the Norfolk Naval
        Shipyard told us they implemented an aggressive demolition program
        to reduce future RPM needs, but even with that they could not keep
        up with RPM needs. Three of the seven sites we visited were funded
        through Navy Working Capital Fund (1) Norfolk Naval Shipyard, (2)
        Public Works Center San Diego, and (3) Naval Air Station Patuxent
        River.  These three were funded through revenue they generated by
        providing services to customers.  The Public Works Center prepared
        annual budgets based on rates and quantities of products and
        services they expected to sell to their customers, including
        facility control inspections.  The Center funding for its RPM was
        included in its utilities and overhead rates. The Norfolk Naval
        shipyard, like the Public Works Centers, funds most of its RPM
        through its overhead rates.  The shipyard also received some O&M
        funding for RPM on some other facilities, including bachelor
        housing (barracks).  It expected to receive military construction
        funding for some other maintenance projects. Naval Air Station
        Patuxent River was funded by four sources: Navy Working Capital
        Fund; Research, Development, Test and Evaluation, Navy; O&M; and
        Military Construction, Navy.  The capital fund was the largest
        source of RPM funds, collected through its overhead rates,
        according to public works personnel.  Research, Development, Test
        and Evaluation was provided to fund all the related base
        operations support functions, including RPM.  Its O&M funded RPM
        for other base operations support, including aviation operations,
        bachelor housing, training, administration, and community
        services. The other four bases performed the largest portion of
        their RPM with O&M funds.  At two, Dam Neck and Northwest,
        officials told us their funding allocations were stable, that is,
        they almost always got the funding they expected to receive before
        the fiscal year began, and they were able to execute RPM
        efficiently and economically.  Officials at those installations
        also said that their RPM backlog was increasing but they believed
        they were better off than fleet-funded installations because their
        funding was more stable.  Operational commitments at fleet-funded
        bases, they said, compete for the same O&M funds as RPM. Page 84
        GAO/NSIAD-99-100  Real Property Management Appendix III Navy
        Strategy, Methods, and Criteria for Determining Real Property
        Maintenance Requirements We asked bases to choose from a list of
        weaknesses that characterize their RPM system (or to write in
        their views).  The responses are shown in table III.5. Table
        III.5:  Top Weaknesses in RPM System Percent that  checked
        Weakness
        weakness Little or unclear linkage between  RPM needs assessment
        and                             41 allocation of resources Rollup
        oversimplifies conditions
        38 Condition assessments/requirements determination are too
        25 subjective Ratings do not tell what is wrong within facility or
        mission                            27 category Little or unclear
        linkage between condition assessment and
        30 budget estimation Source: Responses to question 12, GAO survey.
        Needs Exceed Allocations    With regard to the allocation of RPM
        funds, Navy installations reported receiving RPM funding equal to
        14.2 percent of their identified RPM needs in fiscal year 1997.11
        The Navy Facilities and Engineering Division emphasized that "the
        amount requested and received by the base commander is only a part
        of the total equation," noting that "the major claimants hold a
        portion of the RPM budget for special" projects.12 Similarly,
        major claimants have a portion of their RPM budgets withheld by
        higher levels for the centralized demolition program. We asked
        Navy installations to indicate whether or not they agreed with
        four potential alternative changes to their RPM funding system.
        The responses are shown in table III.6. 11Responses to question
        15, GAO survey. 12Navy email communication to GAO, September 1997.
        Page 85                                          GAO/NSIAD-99-100
        Real Property Management Appendix III Navy Strategy, Methods, and
        Criteria for Determining Real Property Maintenance Requirements
        Table III.6:  Bases' Choices to Proposed Changes in Allocation
        Process Suggested change
        Percent citing change RPM funding should be based on physical
        deficiencies, with                                 48 "needier"
        bases receiving more funds Funding should not be based on a fixed
        increase above or                                   61 below the
        previous year's level Funding should be based on the average age,
        total square                                  32 footage, and
        number of facilities RPM funding/allocation should not be
        centrally managed by                                  30 major
        command Source: Responses to question 22, GAO survey.  Responses
        exceed 100 percent because more than option could be chosen. Bases
        Visited    We pretested and post-tested the survey at selected
        locations as part of our work to ensure the reliability of the
        survey.  We pretested the survey at six Navy sites: U. S. Atlantic
        Fleet, Norfolk, Virginia; Naval Air Station Pensacola (Chief,
        Naval Education and Training), Pensacola, Florida; Naval Air
        Station Oceana (U.S. Atlantic Fleet), Virginia Beach, Virginia;
        Naval Air Station North Island (U.S. Pacific Fleet), San Diego,
        California; Public Works Center San Diego (Naval Facilities and
        Engineering Command), San Diego, California; and Norfolk Naval
        Shipyard (Naval Sea Systems Command), Portsmouth, Virginia. We
        performed survey post-tests to validate survey responses at four
        locations: Naval Air Systems Command, Naval Air Station Patuxent
        River, Lexington Park, Maryland; Fleet Combat Training Center,
        Atlantic, Dam Neck, Virginia Beach Virginia; Naval Security Group
        Activity Northwest (Naval Security Group Command), Chesapeake,
        Virginia; and Naval Air Station Patuxent River (Naval Air Systems
        Command), Lexington Park, Maryland. During our pre- and post-
        tests, we visited facilities causing, or contributing to, a C3 or
        C4 mission area in the BASEREP, at seven sites: Page 86
        GAO/NSIAD-99-100  Real Property Management Appendix III Navy
        Strategy, Methods, and Criteria for Determining Real Property
        Maintenance Requirements Naval Air Station Oceana, Virginia Beach,
        Virginia; Naval Air Station North Island, San Diego, California;
        Public Works Center San Diego, San Diego, California; Norfolk
        Naval Shipyard, Portsmouth, Virginia; Fleet Combat Training
        Center, Atlantic, Dam Neck, Virginia Beach, Virginia; Naval
        Security Group Activity Northwest, Chesapeake, Virginia; and Naval
        Air Station Patuxent River, Patuxent River, Maryland. During these
        visits we also reviewed related property records, documented
        backlog information and the recorded deficiencies, and visited the
        facilities to observe the condition and deficiencies.  We
        interviewed installation engineering staff as they showed us the
        deficiencies and documented additional information when necessary.
        We observed and confirmed the deficiencies recorded at 17 of the
        18 facilities we visited through direct observation. We also
        visited three other sites where we interviewed relevant officials,
        observed facility conditions, and were briefed on RPM processes
        and issues.  The three were Naval Station Norfolk, Norfolk,
        Virginia; Naval Amphibious Base Little Creek, Norfolk, Virginia;
        and Public Works Center Norfolk, Norfolk, Virginia. Page 87
        GAO/NSIAD-99-100  Real Property Management Appendix IV Marine
        Corps' Strategy, Methods, and Criteria for Determining Real
        Property Maintenance Requirements
        Appendix IV In this appendix, we discuss the Marine Corps'
        strategy, methods, and criteria for determining RPM requirements
        and allocating resources to those needs. We examine the Marine
        Commanding Officer's Readiness Reporting System (CORRS), a key
        component of the Marines' system for evaluating base
        infrastructure conditions, including the responses to our
        questionnaire on RPM-related issues that we sent to Marine Corps
        bases and the Corps' single major claimant.1 Background
        As of 1998, Marine Corps installations worldwide managed about
        11,000 buildings totaling about 104 million square feet, with an
        estimated plant replacement value (PRV)2 of $28 billion (or about
        5.6 percent of the services' total PRV).  Although the Corps has
        its own bases and (one) major claimant, it is a part of the Navy
        and is therefore closely linked to the Navy in almost every
        regard, including the fact that the Naval Facilities Engineering
        Command (NAVFAC) maintains the real property inventory for the
        Corps.  The Corps headquarters Facilities Branch has overall
        responsibility for Marine Corps RPM programs.  According to the
        Navy Budget Office (which maintains the Marines' fiscal data), the
        Marine Corps fiscal year 1999 RPM appropriation was $351.2
        million, of which $6.9 million was for the Marine Reserve and
        $344.3 million was for its active forces. RPM Funding Strategy The
        Marine Corps' funding strategy through fiscal year 2005 is to
        underfund RPM compared to what it estimates is required to keep
        the amount of backlog repairs at current levels.  According to the
        Corps, estimated unfunded repair backlogs rise 60 percent during
        1998-2005, from $711 million to $1.1 billion.  According to the
        Corps headquarters Facilities Branch, about 80 percent of this
        amount is critical-rated repair; the remainder is deferrable
        repair. 1We sent the survey, which asked about base facility's
        inventory, RPM processes, and funding, to 16 Marine Corps bases;
        all returned the questionnaire.  See appendix X for a copy of the
        survey.  A claimant is the equivalent to a major command in the
        Army or Air Force. 2PRV is defined by the Office of the Secretary
        of Defense (OSD) as "the cost to replace the current physical
        plant (facilities and supporting infrastructures) using today's
        construction cost (labor and materials) and standards
        (methodologies and codes)." Page 88
        GAO/NSIAD-99-100  Real Property Management Appendix IV Marine
        Corps' Strategy, Methods, and Criteria for Determining Real
        Property Maintenance Requirements The Marine Corps compares its
        RPM spending level to the private sector to demonstrate that it
        requires more funds for RPM.3  The Corps noted that in fiscal year
        1998, it planned to spend the equivalent of 1.2 percent of PRV on
        RPM, comparing it to the 1.75 percent level recommended in a 1989
        DOD report,4 and a private industry level of 3.5 percent cited in
        the same report.5 It subsequently allocated about 1.4 percent of
        PRV to RPM, and plans to gradually increase this to about 1.8
        percent by fiscal year 2005.  However, this is not a sufficient
        funding level to constrain the growth of backlog.  The Corps
        states that "all bases are underfunded" with regard to RPM and
        that with "insufficient funds, backlog grows." RPM Assessment
        The Marine Corps uses two systems to assess its RPM needs-a
        version of System                         the Navy's Annual
        Inspection Summary (AIS) (see app. III), and CORRS. CORRS is
        modeled on the Navy's Shore Base Readiness Report (BASEREP).  It
        rates the ability of an installation, on a scale of one to four,
        to carry out its mission.  According to the Corps headquarters
        Facilities Branch staff, the Marine version of AIS is less
        detailed than the Navy's but is otherwise similar.  It uses
        inspections to generate an estimate cost for repairs. Critical-
        rated repairs that are not funded become the reported backlog.
        Unlike AIS, the data are not inserted into a servicewide database.
        Rather, each base reports its estimated backlog to Corps
        headquarters at a given point during the year. CORRS: A New System
        The Marine Corps' CORRS facilities assessment system was tested at
        various installations in 1996, and bases initially submitted data
        to the system in April 1997.  According to the Corps, CORRS was
        created to * link facility conditions directly to mission
        requirements; * rate Corps facilities at all installations against
        a uniform set of requirements; * make Marine Corps-wide investment
        decisions factoring in facilities' effect on readiness; and 3June
        1997 briefing to GAO. 4DOD, Renewing the Built Environment, 1989,
        p. 31 5DOD, Renewing the Built Environment, 1989, p. 16. Page 89
        GAO/NSIAD-99-100  Real Property Management Appendix IV Marine
        Corps' Strategy, Methods, and Criteria for Determining Real
        Property Maintenance Requirements * enable the Marines to compete
        with the Navy, the Army, and the Air Force for very limited
        resources.6 According to a memorandum issued by the Commandant of
        the Marine Corps, the advantages of CORRS are that it provides (1)
        comparability of requirements with other services and a detailed
        defense for budget submissions and (2) helps base commanders
        "identify problem areas and facility deficiencies that impact
        mission areas."  The memorandum also states that CORRS will
        provide headquarters facilities planning staff with the data
        needed to provide "an opportunity to make informed resource
        allocation decisions and identify deficiencies to higher
        headquarters." Further, it states that "the Planning, Programming,
        and Budget System (PPBS) fails if the consequences of inadequate
        funding cannot be clearly, logically and uniformly presented by an
        installation. With the implementation of CORRS, all Marine Corps
        installations will have identical classification formats." In
        CORRS, facilities are rated on their condition and quantity, and
        commanders assess the ability of their plant facilities to achieve
        mission requirements.  According to CORRS instructions, quantity
        ratings use a scale of one (best) to four (worst), and "should
        reflect the size and number of facilities required by the mission
        . . . compared to what actually exists." CORRS has a four-point
        scale to rate the impact of facility condition on readiness, with
        results placed in a mission area assessment matrix, which appears
        similar to the matrix used by the Air Force for its deficiency
        rating system, the facility investment metric (FIM).  The four
        levels are defined as follows: * Level 1: Full mission capability;
        no major facility deficiencies. * Level 2: Full mission
        capability; any existing facility deficiencies are minor and
        within the activities' capability to correct with available
        resources. * Level 3: Reduced mission capability with major
        facility deficiencies; the activity does not possess the resources
        to correct those failures. * Level 4: Not mission capable; there
        are major facility deficiencies that require external resource
        support to eliminate. 6The purpose of CORRS was virtually
        identical to the Army's rationale for its Installation Status
        Report, and the Air Force's rationale for its facility investment
        metric system, both implemented recently (1995 and 1998,
        respectively). Page 90
        GAO/NSIAD-99-100  Real Property Management Appendix IV Marine
        Corps' Strategy, Methods, and Criteria for Determining Real
        Property Maintenance Requirements CORRS rating worksheets show
        ratings on a 1 to 4 scale for individual facilities within a 24
        mission areas (versus 28 in the Navy's BASEREP). Individual
        facility ratings are then combined, following a formula, to
        produce an overall condition rating of 1 to 4 for mission areas at
        installations, and quantity ratings.  Although the mission-capable
        levels are stated in broad terms, the facility condition
        worksheets for each of the 26 mission areas quantify with
        considerable precision how the rater is to decide which of the
        four levels is correct in many cases and with somewhat less
        precision in those that involve a less readily quantifiable
        situation.  For example, for aircraft operations, CORRS shows how
        to calculate the rating level for each of seven specific
        operational dimensions.  The  instructions for the first and
        seventh dimensions are shown in table IV.I. Table IV.1:
        Dimensions and Ratings in CORRS Indicator (measure)
        Rating              CORRS level Percentage of days when required
        air operations          Less than 5%                   1 are
        restricted or curtailed due to condition of runways, taxiways,
        arresting gear, or aprons 510%                          2 10-20%
        3 Greater than 20%               4 Risk that mission will be
        curtailed over next year due  Almost none                     1 to
        document structural, safety, or environmental hazards Some risk
        2 Serious risk                   3 Almost certain
        4 Source: CORRS Facility Condition Readiness Worksheet. According
        to the CORRS instructions, the overall rating for the mission is
        calculated as "enter worst rating [of the seven dimensions in the
        mission] if that rating occurs more than once." "Otherwise, enter
        worst rating minus one."   Similar methods of calculation apply to
        the other mission areas. As shown, written rather than percentage
        estimates are used for some dimensions of mission areas; in some
        cases, the entire mission area uses written rather than percentage
        definitions.  For example, ratings of the three indicators for
        morale, welfare, and recreation are all written definitions:
        seldom; occasional; frequent; and continuous problem.  It is
        evident, therefore, that some rating levels can be calculated with
        greater Page 91                                         GAO/NSIAD-
        99-100  Real Property Management Appendix IV Marine Corps'
        Strategy, Methods, and Criteria for Determining Real Property
        Maintenance Requirements accuracy-assuming the operational records
        are available-than others, which require a  judgment about the
        dividing lines for the levels among the definitions of risk or
        unacceptability of conditions.  In addition, some of the
        indicators themselves require interpretation, such as "morale and
        welfare levels unacceptably low due to BOQ/BEQ  [bachelor
        officers' quarters/ bachelor enlisted quarters] conditions."  In
        this latter case, the term unacceptably is open to subjective
        judgment. Base Views on CORRS    On the surveys returned to us,
        officials at one Marine installation commented that, CORRS "is not
        flexible enough to reflect base-specific requirements."  Further,
        the "drop- down menu restricts detailed reporting."  Another base
        made these comments with regard to both detail and current
        utility: to date [early 1998] CORRS has not been used in the
        process of determining our maintenance real property requirements
        due to the general nature of the information was inputted.
        Currently, CORRS does not identify specific deficiencies and
        necessary repairs. CORRS has been a useful tool for validating
        planned repair and construction projects. At a Marine base we
        visited, the facilities staff expressed some reservations about
        the vagueness of the CORRS worksheets, noting that they were not
        rating physical condition but the impact of conditions on mission
        readiness.  They noted that under this rating system, a building
        could actually be in fine physical condition but rated as low or
        unacceptable under CORRS because it was housing an activity for
        which it was not well designed.  For example, a warehouse would be
        inappropriate as a library or as a day care center but could be
        fine as a warehouse.  They said that CORRS did not make clear
        whether they were to rate the facility in terms of the facility's
        original mission-for which it was designed-or in terms of the
        mission of the people now in it. Facilities officials further
        stated that they found CORRS ambiguous in some regards.  If they
        had 100 administrative buildings at the installation, they had the
        time to interview only a sample of the occupants to determine how
        well the buildings were meeting their needs.  They said that they
        had to figure out who the "top" administrative people were and
        that it was unclear how to rate an entire mission area if only 2
        of 77 buildings did not meet the mission.  They said it was hard
        to justify a rating of 3 or 4 (indicating poor conditions) when 75
        of 77 buildings were acceptable. (Because CORRS is a new system,
        the headquarters Facilities Branch stated that changes are being
        made to it as they get feedback from the field on what works and
        what does not.) Page 92
        GAO/NSIAD-99-100  Real Property Management Appendix IV Marine
        Corps' Strategy, Methods, and Criteria for Determining Real
        Property Maintenance Requirements Another installation expressed
        concern about whether base commanders would report accurately on
        the impact of facilities on readiness, stating that "No CO
        [commanding officer] will confess to being `not mission capable'."
        Survey                     A total of 16 Marine installations
        received questionnaires and all returned them.  Despite the high
        response rate, the relatively small total number of respondents
        introduces a cautionary note about generalizing from the results.
        When asked how methods could be improved, there appeared to be no
        strong consensus among Marine respondents.  Eight of the 16
        favored rating facilities primarily according to engineering-based
        criteria, but the other 8 did not.  Ten Marine installations
        favored more emphasis on long-term planning, but 6 did not.  Table
        IV.2 shows the Marine responses. Table IV.2:  How Installations
        Would Change Methods to Determine Requirements Percent approving
        Proposed change in method
        proposed change Rate building/facilities primarily according to
        engineering, life-safety,                   50 and health
        criteria, while decreasing the role of aesthetics Place much more
        emphasis on long-range maintenance planning,
        63 while deemphasizing annual assessments of facilities Other
        13 Source: Responses to question 13, GAO survey. RPM Needs Exceed
        Marine bases reported a large gap between the RPM dollars they
        asked for Requests Fivefold          from their major claimant and
        their unconstrained requirements.  The respondents reported that
        in fiscal year 1997, they received $174 million for RPM from
        headquarters (the sole major claimant), but that their
        unconstrained RPM requirement was $622 million.  Thus, they
        received about 28 percent of their identified needs; this was
        about double the ratios received by Army bases or Navy
        installations, and about 1.5 times more than was received, as a
        ratio, by Air Force bases. Bases Visited              We reviewed
        relevant policies and other service guidance and records, and
        interviewed responsible RPM-related staff at the Marine Corps
        Letter    Page 93
        GAO/NSIAD-99-100  Real Property Management Appendix IV Marine
        Corps' Strategy, Methods, and Criteria for Determining Real
        Property Maintenance Requirements headquarters, and the Marine
        Corps base Quantico, Virginia, where we also compared the data
        reported to us in the questionnaire with base records. Page 94
        GAO/NSIAD-99-100  Real Property Management Appendix V Summary
        Comparison of Service Methods and Criteria
        Appendi x V Each service uses different methods and criteria by
        which to rate the condition of its facilities, prioritize repairs,
        and allocate funds to those repairs.  The core systems for
        assessing and rating the condition of facilities and/or the
        urgency of repairs are: the Army's Installation Status Report
        (ISR), the Air Force's Facility Investment Metric (FIM), the
        Navy's Annual Inspection Summary (AIS) and Shore Base Readiness
        Report (BASEREP), and the Marine Corps' Commanding Officer's
        Readiness Reporting System (CORRS).  These generally combine
        assessments of the physical condition of facilities and those
        conditions' impact on mission. However, the Air Force's system
        rates repair deficiencies only in terms of estimated impact on
        mission rather than rating the condition of each facility.  Table
        V.1 compares some of  these systems' basic characteristics. Table
        V.1:  Basic Characteristics of Services' Condition Assessment
        Systems Service Characteristic of rating system
        Army                             Air Force
        Navy                         Marines Name(s) & date
        ISR, 1995                        FIM, 1998
        AIS; BASEREP,                CORRS,  1997 implemented
        1982 What is rated by the         Facilities and mission
        Deficiency impact in four  Repair projects and
        Facilities, equipment, and assessment system            areas
        mission areas                 mission areas
        personnel in terms of (based in part on work        (based on
        facility           capability to meet orders generated by
        inspections)                 designated mission facility users)
        Who inspects                 Building users and
        Users and                     Users and                    Users
        and facilities                   engineers/skilled
        engineers/skilled             engineers/skilled
        engineers/skilled craftsmen                        craftsmen
        craftsmen                    craftsmen Number of levels in rating
        Three-point scale for             Three-point scale for
        Four-point scale for         Four-point scale for each system
        facility condition; four         urgency of repairs/ impact
        mission areas; Two-point  rated category points for mission areas
        on mission                    scale for repair backlog urgency
        Source:  Service reports, manuals, and briefings. As table V.1
        shows, with the exception of the Navy, assessment systems
        currently used by the services have been recently implemented.  In
        general, these rating scales rank the severity of the condition of
        a facility or the urgency of a repair project.  However, because
        they use different criteria to arrive at the ratings, and because
        the scaling systems vary, the ratings they generate are not
        comparable from service to service. Page 95
        GAO/NSIAD-99-100  Real Property Management Appendix VI Criteria
        for Allocation of Funds
        Appendix VI In response to our survey on real property maintenance
        (RPM) issues that we sent to 530 service bases worldwide, bases
        ranked nine criteria to determine how RPM funds were allocated.
        (The text of the survey can be found in app. X.)  The rankings of
        one through nine were collapsed into three broad levels
        representing the respondents' assessment of the importance of each
        factor in allocating RPM funds-most important, moderately
        important, and least important.  Table VI.1 shows the percent of
        respondents, by service, that assigned these three levels to each
        of nine criteria. Table VI.1:  Ranking of Factors Affecting
        Allocation of Funds, by Service Percent of bases ranking factors'
        importance in allocation of funds Percent ranking factor
        Percent ranking factor as     Percent ranking factor Factor
        Service                   as most important        moderately
        important              as least important Mission priority and/or
        Air Force                                86
        14                             0 readiness Army
        59                            40                             1
        Navy                                    89
        11                             0 Marines
        93                             7                             0
        Facility appearance               Air Force
        4                           62                            34 Army
        4                           60                            36 Navy
        2                           53                            45
        Marines                                   0
        87                            13 Low repair cost
        Air Force                                 1
        48                            50 Army
        5                           63                            32 Navy
        4                           61                            35
        Marines                                   0
        64                            36 Physical condition of facility
        Air Force                               36
        63                              2 Army
        35                            59                             6
        Navy                                    36
        63                             1 Marines
        40                            60                             0
        Type of facility                  Air Force
        9                           84                             7 Army
        10                            82                             8
        Navy                                    12
        81                             7 Marines
        7                           87                             7
        (continued) Page 96                                   GAO/NSIAD-
        99-100  Real Property Management Appendix VI Criteria for
        Allocation of Funds Percent of bases ranking factors' importance
        in allocation of funds Percent ranking factor         Percent
        ranking factor as         Percent ranking factor Factor
        Service                 as most important              moderately
        important               as least important Type of deficiency
        Air Force                                  22
        75                                  3 Army
        31                                 65
        4 Navy                                       29
        70                                  1 Marines
        20                                 73
        7 Base commander's priorities     Air Force
        34                                 63
        3 Army                                       35
        60                                  5 Navy
        19                                 74
        6 Marines                                    40
        53                                  7 Service guidance
        Air Force                                    4
        61                             35 Army
        10                                 44
        45 Navy                                         6
        47                             47 Marines
        0                                46                             54
        DOD guidance                    Air Force
        7                                38                             55
        Army                                       11
        34                             55 Navy
        7                                46                             47
        Marines                                      0
        31                             69 Source: Responses to question
        19, GAO survey.  Totals may not add exactly to 100 due to
        rounding. These data suggest that importance of mission was the
        most important factor in allocating RPM funds for the Air Force,
        Marine Corps, and Navy respondents, with 86 to 93 percent ranking
        this as "most important."  No other factor came close to receiving
        this high a percentage of ranking as the most important in
        affecting funding allocation.  However, only 59 percent of Army
        bases, or about one-third less than the other services, assigned a
        comparably high ranking to mission impact. Compared to the 59 to
        93 percent assigned to mission impact across the services as a
        most important factor, there was a narrower spread for the
        importance assigned to the Department of Defense (DOD) guidance,
        with 31 to 46 percent of bases ranking this factor as one of
        moderate-level importance and 0 to 11 percent ranking it as the
        most important.  There was slightly more variation in the
        importance of service guidance, with 44 to 61 percent of bases
        ranking it as of moderate importance, and 0 to 10 percent ranking
        it as most important.  There was considerable similarity across
        the services in terms of the ranking assigned to physical
        condition as an allocation factor, with 35 to 40 percent of the
        bases rating it as the most important, and 59 to 63 percent in
        each ranking it as moderate.  There Page 97
        GAO/NSIAD-99-100  Real Property Management Appendix VI Criteria
        for Allocation of Funds was less consensus on the importance of a
        commander's priorities, with twice as many Marine bases citing it
        as of highest impact compared to Navy bases (40 vs. 19 percent),
        and 34 to 35 percent of Army and Air Force bases ranking it as
        most important. Within each service, consistency on the rankings
        of these criteria varied by the bases.  For example, 35 percent of
        Army bases cited physical conditions as most important, but 59
        percent rated these as moderately important. Similarly, almost
        twice as many Air Force bases assigned physical condition as a
        moderate rank as those citing it as the most important (63 vs. 36
        percent).  In the Navy, 19 percent of the bases ranked a
        commander's priority as the most important allocation criteria,
        while 74 percent said it was moderate.  In the Air Force, almost
        twice as many bases ranked commander priority as moderately
        important as those that assigned it the highest level rating  (63
        percent vs. 34 percent). On DOD guidance as a criterion, 11
        percent of Army bases rated it as most important while 55 percent
        rated it as least important.  Similarly, among Air Force bases,
        there was little agreement-7 percent ranked it as most important,
        38 percent as moderately important, and 55 percent at least
        important in allocating funds.  In the Navy, 46 percent ranked it
        as of moderate importance, and 7 percent ranked it as most
        important. Differences in the Marine Corps were somewhat less
        obvious on the rankings of almost every criterion. Page 98
        GAO/NSIAD-99-100  Real Property Management Appendix VII Percent of
        Value Measures for Estimating RPM Requirements
        Appendi x VII The percent of plant replacement value (PRV) or
        similar measures of facility value spent on real property
        maintenance (RPM) are commonly cited by the Department of Defense
        (DOD) and the services with regard to the adequacy of RPM funding
        levels in the services.  There is no fixed standard for defining
        PRV, although most definitions are similar.  The Office of the
        Secretary of Defense (OSD) defines PRV as "the cost to replace the
        current physical plant (facilities and supporting infrastructure)
        using today's construction cost (labor and materials) and
        standards (methodologies and codes)," and developed a standard
        formula to calculate it.1 Perhaps the most widely cited percentage
        spending guideline for RPM2 was recommended by the Building
        Research Board of the National Research Council in its 1990
        report, Committing to the Cost of Ownership- Maintenance and
        Repair of Public Buildings. An appropriate budget allocation for
        routine maintenance and repair for a substantial inventory of
        facilities will typically be in the range of two to four percent
        of the aggregate current replacement value of those facilities
        (excluding land and major associated infrastructure).  . . . Where
        neglect of maintenance has caused a backlog of needed repairs to
        accumulate, spending must exceed this minimum level until the
        backlog has been eliminated.3 1The OSD formula is: Scope  (size of
        a facility) x  Unit cost factor (cost per unit to construct) x
        Area cost factor  (locality adjustment) x  Inflation factor
        (adjustment to the year in question) x  1.2 (overhead factor)
        (standard inspection and overhead, design, contingency, supporting
        facilities) = plant replacement value. Source: OSD (Installations)
        Directorate of Analysis and Investment: "Plant Replacement Value,"
        July, 1997. 2Harvey H. Kaiser A Foundation to Uphold (Alexandria,
        Va.: APPA,) 1996, p. 46.  See also, Level of Investment Study
        Facilities and Infrastructure Maintenance and Repair, Civil
        Engineering Research Foundation, August 1996, pp. 6, 3-7, which
        notes that the Board's guideline of 2 to 4 percent of current
        plant replacement value is "a widely-used benchmark . . . often
        cited in the literature pertaining to building maintenance for
        public agencies, colleges, and universities." (pp. 3-6).
        3Committing to the Cost of Ownership: Maintenance and Repair of
        Public Buildings, Committee on Advanced Maintenance Concepts for
        Buildings, Building Research Board, Commission on Engineering and
        Technical Systems, National Research Council, (Washington, D.C.:
        National Academy Press, 1990) p. xii. Page 99
        GAO/NSIAD-99-100  Real Property Management Appendix VII Percent of
        Value Measures for Estimating RPM Requirements Current replacement
        value is defined by the Building Research Board as "the amount in
        current dollars it would cost to duplicate the facilities."4 This
        value was described to us by a Federal Facilities Council official
        as having the same meaning as PRV.5  The Council reported in 1996
        that federal agencies were using two different methods to
        calculate current replacement value.6 The Air Force uses a
        percentage guideline as a benchmark against which to determine the
        adequacy of its preventive maintenance spending, funding it at 1
        percent of PRV.  This was based on a 1989 DOD infrastructure
        report that compared military RPM spending as a percent of PRV to
        other governmental entities, major private corporations, and major
        universities.7 The Air National Guard budgets RPM with a baseline
        of 1 percent of PRV; that is, all installations receive no less
        than 1 percent of PRV for annual RPM.  The Navy has used a 2-
        percent current plant value benchmark8 based in part on an April
        1995 Center for Naval Analyses study that concluded that funding
        at 2 percent of current plant value was required to arrest the
        growth of backlog in Navy facilities, thereby sustaining them at
        current conditions.9  The Navy tracks both the current plant value
        as well as the plant replacement value of its inventory.10 DOD's
        1997 Quadrennial Defense Review explicitly cited the percentage of
        PRV spent by the services (1.16 percent) on RPM compared to that
        spent by 4Federal Facilities Council, Budgeting for Facilities
        Maintenance and Repair Activities (Washington, D.C.: National
        Academy Press, 1996), Report Number 131, p. 10. 5Similarly, the
        Civil Engineering Research Foundation stated that current
        replacement value is "equivalent to the term PRV" and used the
        terms interchangeably in its Level of Investment Study: Facilities
        and Infrastructure Maintenance and Repair (Washington, D.C.: CERF,
        Aug. 1996), pp. 3-6. 6Budgeting for Facilities Maintenance and
        Repair Activities (Washington, D.C.: National Academy Press,
        1996), Report Number 131, pp. 10-11. 7DOD, Renewing the Built
        Environment, March 1989, pp. 11, 15, 31. 8Current plant value is
        defined by the Navy as the cost of the facility's "original
        acquisition, plus major improvements, inflated to current dollars"
        (June 1998 briefing, p. 6).  Similarly, current plant value is
        defined by the Center for Naval Analyses as "the facility's
        original construction cost plus the cost of its capital
        improvements (e.g., a roof replacement)."  Glenn H. Ackerman, Jino
        Choi, and Ty D. Weis, The Backlog of Maintenance and Repair:
        Preventing Its Growth and Measuring Its Impact  (Alexandria, Va.:
        Center for Naval Analyses,) Apr. 1995, p. 9. 9The Backlog of
        Maintenance and Repair: Preventing Its Growth and Measuring Its
        Impact  (Alexandria, Va.: Center for Naval Analyses,) Apr. 1995,
        p. 1. 10Base Operating Support Shore Maintenance and Repair
        Trends, Navy, fiscal year 1996, p. 16 of 36, Inventory. Page 100
        GAO/NSIAD-99-100  Real Property Management Appendix VII Percent of
        Value Measures for Estimating RPM Requirements the private sector
        as evidence that service RPM spending was inadequate,11 noting
        that this level exceeds the nonmilitary sector in just one
        category- county jails.  Similarly, in a 1989 infrastructure
        report, DOD recommended that the services spend 1.75 percent of
        their PRV on maintenance and repair; this did not include
        additional spending that would have been required to eliminate
        repair backlogs.12 RPM experts, the National Aeronautics and Space
        Administration (NASA), and OSD have identified multiple problems
        with the concept of basing the level of RPM funding on a
        percentage of estimated PRV or other comparable percentage
        estimates of the value of facilities.  (As noted, PRV is also
        referred to as current replacement value or current plant value,
        both of which calculate the value of a facility differently but
        are comparable measures.) Percentage Measures Are     The decision
        to base RPM funding on a percentage of replacement value Not Based
        on Condition      (whether PRV or current plant value or an
        equivalent) has certain drawbacks.  For example, the NASA
        facilities maintenance guidebook explicitly cites the Building
        Research Board guideline, while cautioning that actual condition
        assessments may lead to a different funding level. NASA
        headquarters recognizes the annual funding level of 2 to 4 percent
        of current replacement value recommended by the Federal Facilities
        Council (formerly the Building Research Board), National Research
        Council, as a reasonable funding target necessary to maintain
        facilities in a steady-state condition at an adequate maintenance
        standard until an independent analysis of facilities condition
        assessment trends indicates otherwise.13 NASA's caveat is
        noteworthy, for it is clearly the case that budgeting for
        maintenance on the basis of a percentage of PRV is not based on
        the actual condition of the facilities in question; rather, it
        assumes that (1) some minimum amount-in this case, 2 to 4 percent
        of PRV-is required to maintain a large inventory of facilities
        annually and (2) the backlog is already so low that additional
        spending is not required to eliminate it (a caution noted by the
        Building Research Board in the original formulation). 11DOD,
        Quadrennial Defense Review, Infrastructure Panel, "Installation
        Support Task Force Final Report," February 24, 1997, Attachment 1,
        Issue Paper, p. 1-1. 12DOD, Renewing the Built Environment, March
        1989, p. 31. 13NASA: Facilities Maintenance and Energy Management
        Handbook, section 1.2.4, issued Oct. 1, 1994. Page 101
        GAO/NSIAD-99-100  Real Property Management Appendix VII Percent of
        Value Measures for Estimating RPM Requirements A 1996 analysis of
        the Board's 2- to 4- percent guideline by the Civil Engineering
        Research Foundation noted that the Board's report recognized that
        a percentage guideline cannot take into account factors relevant
        for determining the RPM funding level for a facility.  These were
    * size and complexity, * current age, * condition, * use, *
        historical or community value, * geographic location, * climate, *
        mechanical and electrical technologies needed, *
        telecommunications and security systems technologies needed, and *
        criticality of building role or function.14 The problematic nature
        of using a percentage of PRV (or other similar methods of
        estimating facility value) was also noted by Federal Facilities
        Council officials in an interview with us.  They stated that the
        Building Research Board's 1990 recommendation was based on a guess
        at best. They said that the Board had decided that 1 percent was
        too little and 5 percent was more than any (public) entity would
        be allocated, so it set the level at 2 to 4 percent.  However, in
        the case of facilities with estimated PRV in the hundreds of
        millions of dollars, 2 to 4 percent is a large range for annual
        maintenance spending.  Council officials said that as a result
        they were reconsidering the Board's recommendation in an effort to
        be more precise. OSD also identified a major drawback to
        determining maintenance funding on the basis of a percentage of
        PRV in a July 1997 analysis, noting that "as an allocation tool,
        PRV has so far demonstrated only marginal utility." "Having an
        accurate PRV sheds little light on the question of an appropriate
        budget level for facilities, nor does it provide much assurance
        about where specifically to spend facility dollars."15  Further,
        even if percent of facility value was an accurate measure of RPM
        needs-which it inherently is not- there is also the difficulty of
        ensuring that the value of like facilities, both within and across
        services, is calculated identically. 14Level of Investment Study:
        Facilities and Infrastructure Maintenance and Repair  (Washington,
        D.C: Civil Engineering Research Foundation, Aug. 1996), pp. 3-7.
        15"Plant Replacement Value," OSD (Installations) Directorate of
        Analysis and Investment, July 18, 1997. Page 102
        GAO/NSIAD-99-100  Real Property Management Appendix VII Percent of
        Value Measures for Estimating RPM Requirements Although OSD told
        us that each service had been told to use the exact same formula
        to calculate PRV,16 it is also the case that "in the weeds, they
        [the services] don't have standardized facility codes [to identify
        similar facilities], and, as a result, they can have different
        replacement costs for similar facilities."  This means that
        uniformity in such estimates is not ensured for similar types or
        classes of facilities (e.g., barracks) across the services,
        although the scope of variation is not known. OSD officials said
        that the PRV estimating process is analogous to creating a recipe
        for a cake, in which minor variations could occur from chef to
        chef.  However, an Army misunderstanding of OSD's PRV formula led
        to a 20-percent underestimate of the Army's overall PRV in fiscal
        year 1996; this was corrected (upwards) in fiscal year 1997.
        Further, although OSD's formula states that the overhead factor
        component of PRV should be a multiplier of 1.2, the Air Force
        instructions to a contractor on developing PRV calculations,
        provided to us in October 1997, state that "overhead markup was
        established by the Air Force as 25 percent (1.25 multiplier)."
        While the difference may not seem large, it is not consistent with
        the OSD policy that the services are to calculate PRV using the
        same formula and can result in significant differences in PRV
        estimates when PRV totals billions of dollars. We did not attempt
        to validate the accuracy of the PRV estimates of the services;
        this was beyond the scope of this report.  However, the Air
        Force's PRV instruction on calculation reported that only 55
        percent of the Air Force's estimated $204 billion (fiscal year
        1996) PRV was acceptable; and that the Air Staff had determined
        that the remaining 45 percent of the PRV data needed to be
        reviewed and validated.17  The Air Force is actively addressing
        the problem. In addition, the Air Force report notes that some PRV
        estimates are unreliable because the real property records "do not
        contain the level of detail required to accurately match an
        appropriate unit cost to the real property record quantity" (p.
        4).  As an example, the report cites the fact that water lines are
        only identified as a "generic type," but not the size or type of
        water line, which it notes can range in cost from $7 per linear
        foot to about $60 per linear foot for 24-inch cast iron pipe.  The
        report provides 16"Plant Replacement Value," OSD (Installations)
        Directorate of Analysis and Investment, July 18, 1997. 17"Short
        Term Analysis Report: Air Force PRV Model," Air Force, Oct. 1997,
        p. 2. Page 103                                          GAO/NSIAD-
        99-100  Real Property Management Appendix VII Percent of Value
        Measures for Estimating RPM Requirements no estimate of the
        potential range of inaccuracy in the PRV estimates for Air Force
        facilities. Similarly, the Navy noted that while estimates for
        many of its facilities are reasonable in some areas, such as
        utilities and specialized research and development (R&D)
        facilities, their accuracy is questionable.  In addition, for
        overseas installations in countries where the currency has
        depreciated, the Navy said that there could be significant
        reductions in PRV without any real reduction in facilities or the
        cost of maintaining those facilities.18  For example, the PRV of a
        Navy base in Japan dropped 25 percent from one year to the next
        year because of changes in currency exchange rates.  As a result,
        allocating RPM funding on the basis of a percentage of PRV could
        lead to large and unpredictable swings in allocating RPM at some
        locations. Two entities that we identified as having what are
        termed promising practices in facilities management (see app.
        VIII)-those that appear to offer improvements over current ones-do
        not use PRV or similar metrics as an RPM funding guideline.  For
        example, the Lawrence Livermore National Laboratory does not use
        PRV in this way because no one can agree on estimating it, even
        with specific guidelines.  The Capital Needs Analysis Center does
        not use it because it is not a measure of need. Further, basing
        RPM needs on PRV can create incentives to overestimate the value,
        since the larger the PRV, the greater the potential RPM funding.
        Further, as OSD explained regarding PRV, the formula contains many
        variables unrelated to size, for example, a shift in standard from
        barracks with common latrines to private rooms would increase PRV
        because replacement cost is computed at the new standard and
        higher unit cost.  In this case, facility PRV would increase even
        though its size did not change. OSD also found that in some cases
        DOD's real property databases are inadequate to precisely filter
        the PRV estimates for these kinds of analyses. Similarly, OSD
        stated that any DOD PRV is actually a blend of the PRV formula and
        the cost of acquisition plus inflation because one-third of DOD's
        physical plant is not covered by standard unit costs upon which a
        PRV estimate can be made from DOD's PRV cost model.19 18Navy email
        communication to GAO, July 10, 1998. 19"Plant Replacement Value,"
        OSD, (Installations) Directorate of Analysis and Investment, July
        1997, p. 2.  The facilities not covered are mainly utilities and
        service-unique facilities. Letter    Page 104
        GAO/NSIAD-99-100  Real Property Management Appendix VII Percent of
        Value Measures for Estimating RPM Requirements Because PRV
        measures structure value and is therefore not a measure of
        condition, using a percentage of PRV or variations of it (e.g.,
        current plant value) to estimate RPM spending would not determine
        whether the resulting funding level is under, over, or equal to
        the spending required to fix actual deficiencies.  As a result,
        using a percent of PRV or similar measures as a benchmark against
        which to evaluate the adequacy of RPM spending is just one tool in
        estimating RPM needs. In sum, in addition to the fact that PRV
        measures structure value, not condition, there are other grounds
        for caution in using a percentage of PRV to estimate RPM needs.
        First, there can be problems with the reliability of the data that
        go into the PRV estimate.  Second, in the military services, the
        lack of specificity in the property codes does not permit accurate
        estimates of the cost of certain types of infrastructure.  Third,
        there is no clearly agreed upon standard by which to estimate PRV;
        the Federal Facilities Council reported on two methods being used
        by federal agencies.  Despite OSD's directive specifying a PRV
        calculation formula, variations in calculating PRV could occur
        among hundreds of bases doing these calculations.  Fourth, as the
        Building Research Board stated, PRV does not take into account
        multiple factors potentially relevant to RPM needs.  Fifth, basing
        RPM allocations on PRV creates an incentive to overestimate it, as
        this would generate a calculated figure showing a need for higher
        funding. In sum, PRV percentages should not be the only method
        used to determine the funding level required to maintain
        facilities.  As the Navy noted, PRV and other comparable measures
        are tools, each having unique limitations, and as long as this is
        understood and are not viewed as a cure-all answer, they can be
        useful.20 20Navy email communication to GAO, July 10, 1998. Page
        105                                        GAO/NSIAD-99-100  Real
        Property Management Appendix VIII Promising Practices in
        Facilities Management Appendix VIII We identified promising
        practices in facilities management among nonmilitary entities that
        might be appropriate for use by the services.  In this appendix,
        we define promising practice; identify the sources of expertise
        used to find promising practices among nonmilitary organizations
        and other criteria used to identify potentially useful examples;
        and discuss two entities with practices that appear to be
        particularly worthy of consideration by the services for better
        facilities management. In a 1991 report, we defined promising
        practice as a practice that does not signify proven effectiveness
        but rather the appearance of promise.  The goal is not to judge
        outcomes but to locate and describe specific initiatives that are
        designed logically to work well and seem worthy of wider trial
        involving sound evaluation.1 In terms of real property maintenance
        (RPM), a promising practice would be one that makes it possible to
        manage property more cost-effectively.  In addressing the issue of
        cost-effective RPM, a February 1997 Department of Defense (DOD)
        paper on installations noted that ideally, DOD would like to
        determine the minimum cost of operating each installation without
        putting mission accomplishment at risk or sacrificing quality of
        life.2 Sources of Expertise             We identified entities
        that might be using promising practices from on Promising
        Practices * a review of the expert literature on facility
        management and condition assessment systems; * interviews of
        experts in facility management regarding what they considered
        promising practices as well as their knowledge of entities that
        have good reputations for such management or that were using or
        systems with demonstrated effectiveness; * contacting a variety of
        entities recommended by the experts and the literature to
        determine how they manage their property and/or what they know
        about practices that might be promising; 1Older Americans Act:
        Promising Practice in Information and Referral Services (GAO/PEMD-
        91-31 Aug. 1991), p. 2. 2DOD, "What Does the Future Hold for
        Defense Installations? A White Paper for DOD Commanders," February
        1997, p. 3. Page 106
        GAO/NSIAD-99-100  Real Property Management Appendix VIII Promising
        Practices in Facilities Management * knowledge gained from
        symposia sponsored by the National Research Council's Federal
        Facilities Council3 -widely regarded as a source of expertise on
        facilities management; and * criteria intended to meet the
        objective of finding promising practices that might be used by the
        military services. Criteria Used to Select  The criteria used to
        aid in selecting entities for interviews about potential Entities
        for Interviews promising practices included the following: *S i z
        e .  The entities we contacted were generally large, in terms of
        the number of buildings, square footage, and/or locations of
        buildings that they control. * Consistency.  We sought to find
        condition assessment systems used across all the facilities and/or
        sites of the same entity. * Duration.  We looked for systems that
        have been in place for 2 or more years so that there was a track
        record of performance that could be assessed. * Documentation.  We
        looked for well-documented systems. * Life/Safety.  We did not
        seek data from entities that had serious life-safety/environmental
        problems, such as structure collapses over 1997-99. Experts and
        Expert                 Among the experts and expert entities we
        consulted regarding promising Organizations
        practices and entities using such practices were the following:
        Consulted                          * Applied Management
        Engineering, Virginia Beach, Virginia; * Association of  Higher
        Education Facilities Officers,4 Alexandria, Virginia; * Civil
        Engineering Research Foundation, Washington, D.C.; * Richard
        Coullahan, Senior Vice President, Parsons Brinckerhoff  Energy
        Services, Herndon, Virginia; * Edward R. Damphousse, Manager,
        Consulting Services Group, R.S. Means Company, Inc., Kingston,
        Massachusetts; 3The Council's purpose is to promote continuing
        cooperation between federal and private entities of the building
        community to advance building science and technology.  It is a
        continuing activity of the Board on Infrastructure and the
        Constructed Environment of the National Research Council.
        4Formerly named the Association of Physical Plant Administrators
        of Universities and Colleges.  The Association changed its name
        but not its acronym. Page 107
        GAO/NSIAD-99-100  Real Property Management Appendix VIII Promising
        Practices in Facilities Management * Marc M. Fagan, President, and
        Thomas K. Davies, Executive Vice President, Vanderweil Facility
        Advisors, Boston, Massachusetts; * Federal Facilities Council of
        the National Research Council, Washington, D.C.; * Dr. Harvey H.
        Kaiser, HHK, Syracuse, New York; * Logistics Management Institute,
        McLean, Virginia; * Peter Lufkin, Principal, Economics, Whitestone
        Research, Santa Barbara, California; * Private Sector Council,
        Washington, D.C.; * Leif Steinert, Senior Consultant, WorkPlace: A
        Bentley Strategic Affiliate, Littleton, Massachusetts; and * Eric
        Teicholz, President, Graphic Systems, Inc., Cambridge,
        Massachusetts. Entities Contacted for  Taking the recommendations
        of the experts and expert organizations as Information on
        well as the expert literature, we contacted the following entities
        to discuss their facility management practices. Management
        Practices Universities George Washington University, Washington,
        D.C. Harvard University, Cambridge, Massachusetts Massachusetts
        Institute of Technology, Cambridge, Massachusetts University of
        California, Facilities Management and Construction, Oakland,
        California University of California, Berkeley, California
        University of California, San Diego, California University of
        North Carolina, Chapel Hill, North Carolina Corporations Hughes
        Electronics Corporation Lockheed Martin Corporation Mobil Business
        Resources Corporation The Boeing Company Trammel Crow Company
        (Washington, D.C.) Page 108
        GAO/NSIAD-99-100  Real Property Management Appendix VIII Promising
        Practices in Facilities Management Governmental Agencies and
        Entities Army Health Facility Planning Agency, Falls Church,
        Virginia Construction Engineering Research Laboratories,
        Champaign, Illinois (Army Corps of Engineers) Department of
        Energy, Washington, D.C. Facilities Management, Ronald Reagan
        Building and International Trade Center, Washington, D.C. General
        Services Administration, Washington, D.C. Lawrence Livermore
        National Laboratory (LLNL),5 Livermore, California NASA,
        Facilities Engineering Division, Washington, D.C. NASA, Goddard
        Space Flight Center, Greenbelt, Maryland National Institutes of
        Health, Division of Engineering Sciences, Rockville, Maryland City
        of San Jose, California, Department of Public Works Nonprofit
        Entities Capital Needs Analysis Center, Brigham Young University,
        Provo, Utah6 Of these entities, we visited three-Lawrence
        Livermore National Laboratory (LLNL); the Capital Needs Analysis
        Center, which manages the property of the Church of Latter-day
        Saints; and George Washington University. Fragmented
        The knowledge base of facility management practices was
        fragmented, Knowledge Base of      with each expert or entity most
        familiar with the practices of a limited number of institutions.
        The entities that experts were most familiar with Promising
        Practices    were generally their customers for developing
        facility management systems or those that had answered
        questionnaires in various surveys.  There was agreement that the
        field of facilities management is exploring a wide variety of ways
        in which to manage property. 5LLNL is a part of the University of
        California that operates under a 5-year contract to the Department
        of Energy.  Since it is clearly not a university as generally
        understood, we list it here with government entities. 6The Center
        manages the property of the Church of Latter-day Saints.  It is a
        part of Brigham Young University but also supervises the
        University's property management. Page 109
        GAO/NSIAD-99-100  Real Property Management Appendix VIII Promising
        Practices in Facilities Management In our review of the facility
        management literature we found no fixed standards for the methods,
        criteria or frequency with which condition assessments should be
        carried out.  Nor, as the Federal Facilities Council noted in an
        October 1998 study, is there a "single, agreed upon guideline to
        determine how much money, is, in fact necessary to maintain public
        buildings."7  (We also found no standard for nonpublic sector
        buildings.) Federal Facilities      We did find reasonably
        widespread agreement in the literature and among Council's
        Promising     experts regarding the basic types of information
        that should be gathered- such as interior square footage of
        buildings and cost-to effectively Practices               manage
        property.   In a 1998 study, the Council proposed four
        characteristics that are key components for a condition assessment
        and capital assets management program.  Based on our interviews
        with experts and the cited entities, we found that these four
        components were a good summary of promising practices for facility
        management.  They are * a standardized, documented inspection
        process that provides accurate, consistent, and repeatable
        results; * a detailed, ongoing inspection of real property assets
        that is validated at predetermined intervals; * standardized cost
        data based on an industry-accepted cost estimating system to
        determine repair and replacement costs; and * a user-friendly
        information management system or process that prioritizes current
        and anticipated maintenance and repair requirements to maximize
        the use of resources and minimize the cost of irreversible loss of
        service life.8 The Council's list appears promising for the
        military because, if fully implemented, such practices would
        address facility management deficiencies cited by DOD in 1997.
        These deficiencies include * unavailable data, * incomplete data,
        7National Research Council, Stewardship of Federal Facilities
        (Washington D.C.: National Academy Press, Oct. 1998), p. 2.  The
        study was supported by a contract between the National Academy of
        Sciences and the Department of State on behalf of the Federal
        Facilities Council (p. ii).  The National Research Council is
        shown on the cover as the author, but the Federal Facilities
        Council is the distributing agency. 8National Research Council,
        Stewardship of Federal Facilities (Washington D.C.: National
        Academy Press, Oct. 1998), p. 43. Page 110
        GAO/NSIAD-99-100  Real Property Management Appendix VIII Promising
        Practices in Facilities Management * nonstandard data, *
        inaccessible information, * lack of data integrity, and * lack of
        performance measures.9 In addition, the literature and experts
        agree that using the same criteria to assess facility conditions
        across all the facilities of an entity is required to produce
        meaningful comparisons from building to building or site to site.
        Life-Cycle Principles of  The last element of the Council's list
        describes life-cycle facility Facility Management
        management, which seeks to minimize the cost of irreversible loss
        of service life by estimating the future point in time at which a
        building component will likely fail and thereby scheduling
        maintenance or replacement in advance of that point.  It is a
        methodology aimed at maximizing cost-effectiveness: building
        "service life can be optimized through adequate and timely
        maintenance and repairs."10 DOD's early 1990s Condition Assessment
        Survey effort explicitly incorporated life-cycle principles, as
        described in an OSD report: The system also automatically
        determines whether a deficient assembly should be repaired or
        replaced based on return on investment, and when replacement is
        recommended, will identify which year the replacement should be
        accomplished . . .  The system automatically extrapolates the
        estimated repair costs for the facilities not inspected to produce
        a multi-year maintenance and repair plan, which is an eight-year
        plan to schedule repairs and replacements.11 With a life-cycle-
        based database, entities are able to project peaks and valleys of
        future maintenance spending and to budget at a level that will
        provide for facility renewal over a multidecade period.  Figure
        VIII.1 shows how life-cycle based costing can project a 50-year
        budget for a building: 9"What Does the Future Hold for Defense
        Installations? A White Paper for DOD Commanders," DOD, February
        1997, p. 11. 10National Research Council, Stewardship of Federal
        Facilities (Washington D.C.: National Academy Press, Oct. 1998),
        p. 12.  See also, Building Research Board, Pay Now or Pay Later:
        Controlling Cost of Ownership from Design Throughout the Service
        Life of Public Buildings (Washington, D.C.: National Academy
        Press, 1991). 11OSD (Installations) Directorate of Analysis and
        Investment, p. 6, undated but clearly written after April 1995.
        Letter          Page 111
        GAO/NSIAD-99-100  Real Property Management Appendix VIII Promising
        Practices in Facilities Management Figure VIII.1:  Life-Cycle
        Model for a Single Building $18.00 Cost/SF $16.00 $14.00 $12.00
        $10.00 $8.00 $6.00 $4.00 $2.00 $0.00    1    3    5    7    9
        11    13    15           17    19    21    23       25      27
        29    31    33        35    37    39    41    43    45    47    49
        Ye ar s Note: Vertical axis shows estimated costs per square foot
        in dollars;  horizontal axis shows years, 1 to 50. Source: Army
        Health Facility Planning Agency. Figure VIII.1 shows estimated
        maintenance costs per year per square foot for a 50-year period
        for the Army's Health Facility Planning Agency.  The costs
        portrayed are based on the life cycles of the components of the
        facility in question (such as heating-ventilation-air
        conditioning, roofing, or window frames).  A database is
        constructed using the known costs of how long a component lasts
        and how much it costs to replace it (both parts and labor). The
        Army Health Facility Planning Agency does not yet have a
        systemwide condition assessment of all facility components, and it
        does not have budget protection for its RPM funding.  For example,
        its fiscal year 1999 funding for preventive maintenance and
        repairs was cut almost two-thirds and shifted to other programs.
        Thus, it cannot meet its life-cycle based funding levels; the
        forced migration of RPM funds hinders its life-cycle based system.
        Page 112
        GAO/NSIAD-99-100  Real Property Management Appendix VIII Promising
        Practices in Facilities Management With regard to assessing
        facilities, the Army Health Facility Planning Agency is now
        extending life-cycle component assessments to all locations. It
        prioritizes repair spending on the basis of a combination of the
        physical deficiencies that need to be fixed and the mission impact
        to be addressed. Because its mission is to provide adequate health
        care facilities to a specific population, it can make decisions
        about repairs that benefit the greatest number of clients, and its
        takes into account the health services available in a geographic
        area from nonmilitary providers. Preventive
        The Capital Needs Analysis Center emphasized the importance of
        Maintenance and                  developing a database of
        component life cycles based on actual inspections; it found that
        almost all components last significantly longer Life-Cycle
        Management than manufacturers' specifications.  Through regular
        inspection and careful monitoring of buildings and their
        components, the Center can reasonably estimate when repairs should
        be made or components should be replaced. These life-cycle
        estimates can then be used to plan repair and maintenance budgets.
        This, in effect, constitutes the essence of life-cycle
        maintenance.12 These systems provide "an accurate prediction of
        total future M&R [maintenance and repair] needs . . . necessary to
        produce meaningful budgets.  Condition prediction allows managers
        to find out what, where and when facilities, systems and
        components will need M&R."13 Regular preventive maintenance is an
        essential component of life-cycle management.  Figure VIII.2 from
        the National Research Council's 1998 study illustrates how
        maintenance extends the service life of a building. 12For a more
        technical discussion, see Donald G. Iselin and Andrew C. Lemer,
        eds., The Fourth Dimension in Building: Strategies for Minimizing
        Obsolescence, Committee on Facility Design to Minimize Premature
        Obsolescence, National Research Council (Washington, D.C.:
        National Academy Press), pp. 14-25, and Eric Teicholz "Facility
        Condition Assessment Technology," (http://www.
        graphsys.com/articles), February 1999. 13Federal Facilities
        Council, Budgeting for Facilities Maintenance and Repair
        Activities, Report No. 131 (Washington D.C.: National Academy
        Press, 1996), p. 25.  Similarly, "The remaining life [of a
        component] identifies when the next funding will be needed.  The
        life cycle suggests how often that item needs to be replaced over
        a 40-year life cycle.  The costs are set at the current
        replacement cost . . . .the replacement cycle file  . . . allows
        use of a database to evaluate and project replacement needs."
        Douglas K. Christensen, "Integrating Capital Studies Within
        Physical Plant Operations," Capital Renewal and Deferred
        Maintenance, Critical Issues in Facilities Management, No. 4
        (Alexandria, Va.: 1989), p. 93. Page 113
        GAO/NSIAD-99-100  Real Property Management Appendix VIII Promising
        Practices in Facilities Management Figure VIII.2:  Effect of
        Adequate and Timely Maintenance and Repairs on the Service Life of
        a Building Optimum Performance Likely Aging (Without Renewal) With
        Normal Maintenance ormanceerf                     Likely Aging
        Minimum P                  Without
        Acceptable Normal Maintenance
        Performance Service Life Lost to Poor Maintenance irreversible
        Design Service Life Time (not to scale) Source:  Stewardship of
        Federal Facilities, p. 13. As figure VIII.2 shows, a building that
        is not adequately maintained will likely experience what amounts
        to premature deterioration, generating costly repairs that could
        have been avoided through timely maintenance. Among the entities
        that we contacted regarding facility maintenance practices, we
        identified elements from several that could be of use to the
        military services. Useful Examples    Two nonmilitary entities in
        particular have facility assessment and budgeting processes
        systems that appear to be particularly promising. These are the
        Capital Needs Analysis Center, located at Brigham Young
        University, Utah, which manages the facilities of the Church of
        Latter-day Page 114
        GAO/NSIAD-99-100  Real Property Management Appendix VIII Promising
        Practices in Facilities Management Saints (LDS) worldwide,14 and
        the University of California's Lawrence Livermore National
        Laboratory (LLNL), which uses a system based on one developed by
        the Department of Energy (DOE).  Both had all of the Federal
        Facilities Council's listed elements in their systems, and both
        used them across many of their facilities and locations.  In
        addition, as noted, the Army's Health Facility Planning Agency
        bases its facility management system on life-cycle principles.
        The Center has used life-cycle management since 1981 at its
        universities and religious centers, and extended the system to
        7,000 LDS chapels about 2 years ago. Online Databases
        Both the Center and LLNL have their data online and therefore
        accessible to managers.  These centrally controlled, online
        databases show the inventory of facilities and components,
        including physical condition.  The data can be "sliced and diced"
        using multiple criteria-such as building type, component type and
        age, and remaining life-cycle years.  This permits almost
        instantaneous generation of portraits of facility conditions and
        comparative costs of life facilities. Reserve Funds
        The Capital Needs Analysis Center is permitted by its management
        to allocate projected RPM spending over a 4-year period, based on
        its life- cycle cost projections, with any leftover funds from the
        current year applicable to the remaining 3 years.  This allows for
        flexibility and application of life-cycle budgeting, since the
        system is built on the concept that expenses will be higher in
        some years than in others.  Logically, therefore, expenditures can
        be anticipated, but since they do not necessarily occur in the
        forecast year, RPM monies that have been banked can then be used
        when needed.  The 4-year period is adjusted annually, based on
        condition assessments and revisions of forecast component life
        cycles and estimated future costs.  Although this feature is not
        available to government entities that operate on a single-year
        budget, both LLNL and the Army HFPA use life-cycle costing and
        budgeting for planning purposes. Common Rating System for
        Although the Center and LLNL have separate systems, both apply the
        Facilities                   principle of using engineering-based
        facility condition rating systems to their own facilities.  This
        principle provides for a level playing field for the evaluation of
        RPM needs and to allocation of monies among their facilities and
        sites.  The Center compares facilities of same or similar type and
        shifts 14The Center manages approximately $30 billion in property
        at more than 7,000 locations of chapels and a half dozen
        universities and religious centers, at diverse locations (Provo,
        Utah; London, England; Jerusalem, Israel; and Hawaii).  Temples
        were not included when we interviewed Center officials. Page 115
        GAO/NSIAD-99-100  Real Property Management Appendix VIII Promising
        Practices in Facilities Management RPM spending to those locations
        most in need.  Center officials told us that the idea was to
        maintain a common minimum standard; to do so, monies must be moved
        from relatively physically adequate facilities to those not as
        adequate. Center officials said that while there was initial
        resistance from some entities, the change in the culture of
        allocation had become widely accepted.  We observed a number of
        facilities at Brigham Young University, including the Missionary
        Training Center.  These facilities appeared to be in sound
        condition and none were notably better than the others.  Some,
        such as dormitories, were quite spartan in terms of amenities.
        Most of the observed facilities appeared to be both modest in
        appearance and functional in nature. Repair Force and Validation
        Another characteristic that both LLNL and the Center have in
        common is Reviews                         reliance on craft
        tradespersons or journeymen to perform daily maintenance and to
        report on the conditions of buildings in the role of inspectors.
        Both entities emphasized that using the expertise of their
        tradespersons had met the goal of getting buy-in for their RPM
        assessment systems from those that fix the buildings daily as well
        as utilizing their practical expertise in estimating the remaining
        life cycle of components. Further, both systems use multiple
        layers of review and validation of identified repair needs to
        ensure that conditions are rated consistently across multiple
        facilities. Nonfungible RPM Monies          At both LLNL and the
        Center, RPM funds are treated as nonfungible; that is, they may
        not be used for non-RPM purposes, and appeared to be fairly
        strictly limited to repairs as opposed to renovations or upgrades.
        Enhancements could be funded by individual schools at Brigham
        Young University, but only from departmental funds; in effect, the
        RPM allocation in a given year for special projects is set by the
        Center, and any changes must be paid for out of the subentity's
        own budget. Both LLNL and the Center have found that they can
        reduce subjectivity in maintenance decisions by requiring programs
        to pay for aesthetic fixes, while confining RPM spending to
        addressing physical deficiencies.  Thus, if a program wants new or
        higher quality carpeting in its building(s), it must use program,
        not maintenance funds, unless the existing carpeting is worn out.
        Page 116                              GAO/NSIAD-99-100  Real
        Property Management Appendix VIII Promising Practices in
        Facilities Management Maintenance Fee at LLNL    Beyond the common
        elements at LLNL and the Center, one factor at LLNL stood out as a
        potentially useful tool in managing facilities-an annual charge
        per square foot charge for maintenance, custodial, grounds care,
        and garbage disposal costs.  This charge was instituted in 1991;
        it began at $1 per square foot and has since increased to about $6
        per square foot.  We were told that, of the total, about $2.10 is
        for maintenance alone.  The square footage charges are assessed
        against program budgets; LLNL officials said that the charged cost
        compares favorably to other entities' costs determined through a
        1995 benchmarking study that compared 21 private and public
        research entities along numerous dimensions of facility management
        and cost.15  Similarly, LLNL meters utility use by programs and
        charges that to the programs.  According to LLNL facilities
        management, the charge has had the effect of focusing the
        attention of users on the maintenance cost of their facilities and
        has, as intended, constrained the use of space.  Through the
        square foot charge, LLNL can maintain facilities at existing
        levels; that is, it can prevent further increases in backlogged
        repairs as a result of unfunded maintenance needs.  LLNL stated
        that while it does not have the money to address all existing
        deficiencies, some are of low priority or are in buildings used by
        programs that are being terminated.  Therefore, it would not be a
        good business decision, they said, to fix all the deficiencies in
        every facility, given higher priority needs, or in buildings that
        will no longer be used in some cases, once current funding ends
        for certain programs. The LLNL practice of charging a fixed
        maintenance/custodial fee per square foot could be considered by
        the services.  This fee has several potentially useful effects: *
        it makes transparent the true costs of maintaining facilities; *
        it can be set high enough to address RPM needs, precluding growth
        of backlogged repairs; and * it creates an incentive to save, as
        programs are charged for the space used. In contrast, the practice
        of allocating on a basis of a percent of PRV or current
        replacement value is not based on actual facility conditions and
        15"Research Facilities Benchmarking Conference," sponsored by
        Eastman Kodak and IBM, October 1995.  No place of publication
        listed.  Provided to GAO by LLNL.  We did not validate the data
        reported in the study, which provides only a coded system of
        identification of participating entities. Page 117
        GAO/NSIAD-99-100  Real Property Management Appendix VIII Promising
        Practices in Facilities Management rewards entities that claim a
        high PRV.16  While some flexibility and ingenuity would be
        required to administer a fee per square foot at military
        installations, administering a maintenance fee would have the
        inherent advantage of assessing costs across the full range of
        facilities at a base while creating an incentive to use space
        frugally.  Assessment of such a charge, which is a form of
        overhead, would not be unusual, since the military services'
        working capital funds already incorporate such overhead charges as
        integral to their billing system. Summary: Identified     From our
        interviews with the Capital Needs Analysis Center, Lawrence
        Promising Practices     Livermore National Laboratory, the Army's
        Health Facility Planning Agency, the other entities cited above,
        the relevant literature, the Federal Facilities Council list, and
        our discussions with experts, we synthesized several principles
        and processes that appear to constitute promising practices for a
        cost-effective program of facility management.  These are * a
        detailed inventory of facilities and their components; * a
        centrally controlled, online computerized inventory and inspection
        database; * a common rating system applied to facilities with
        standardized, objective, repeatable, engineering-based criteria to
        evaluate physical conditions; * life-cycle principles of costing
        and budgeting for planning; * trained personnel for inspections,
        with multiple layers of review to ensure consistency and
        validation; * nonfungibility of RPM funds; * allocation of repair
        funds based on an identified need and prioritized according to
        severity/impact of deficiency, which can take mission impact into
        account; and * an annual space management fee based on square
        footage used that covers RPM costs. 16The Army Health Facility
        Planning Agency determined its life-cycle requirements prior to
        converting them to a percent of PRV over a 50-year facility
        replacement life cycle. Page 118
        GAO/NSIAD-99-100  Real Property Management Appendix IX Objectives,
        Scope, and Methodology
        Appendi x I X As requested by the Senate Subcommittee on
        Readiness, Committee on Armed Services, we examined (1) the
        methodologies and criteria used by the military services to
        determine the need for real property maintenance (RPM) of
        facilities and to allocate available resources within each service
        and (2) the methods and criteria used by other organizations that
        are promising practices in facilities management and that
        therefore may be appropriate for use by the services. Scope of the
        Study    We focused on the services' facilities around the world
        for which RPM is funded from the operation and maintenance (O&M)
        account.  These facilities include barracks, administrative
        offices, airfields and terminals, classrooms and other training
        buildings, libraries, child development centers and dependent
        schools.  They do not include facilities funded by non-O&M RPM
        accounts, such as revolving and management funds, the Defense
        Health Program (hospitals and medical clinics), or military family
        housing. Methodology           To address our first objective, we
        conducted analyses of DOD and service data.  We also * interviewed
        and were briefed by knowledgeable officials involved in real
        property management from all the services and * obtained and
        reviewed key RPM-related documents and RPM-related manuals for
        each service, guidance, and other relevant reports and documents.
        We also collected data for this objective through questionnaires
        based in part on surveys related to RPM performed by other
        professional organizations and information obtained from
        independent experts, DOD, and service officials.  Two versions
        were developed-one for bases (installations) and one for major
        commands in the Army and Air Force and the Navy-Marine Corps
        equivalent, major claimants.  During September-December 1997, we
        pretested the installation questionnaire at 11 bases, 3 bases in
        the Army and Air Force each, and 5 Navy bases.  We also pretested
        the command questionnaire at four major commands (2 Army, 1 Air
        Force, and 1 Navy) for clarity, length of time of Page 119
        GAO/NSIAD-99-100  Real Property Management Appendix IX Objectives,
        Scope, and Methodology administration, and acceptability to the
        respondents.1  Pretest versions were also submitted for review and
        comment to each service point of contact (POC) (including the
        Marines), and revisions were made based on the input from the POCs
        and from the pretests.  We wanted to ensure that the questions
        would allow us to address the objectives and would make sense to
        those we sent it to. The survey contained three groups of
        questions on methods and criteria used to (1) assess facility
        conditions, (2) estimate RPM budget and prioritization of needs,
        and (3) allocate resources to those needs.  The text of the survey
        that was sent to installations can be found in appendix X. Two
        questionnaires were sent; one to 530 military installations and
        one to 41 major commands/major claimants worldwide (Air Force,
        Army, Navy, and Marines) that are holders of RPM O&M funded
        facilities and that are "parent installations" (subinstallations
        are components of parent installations, and their property is
        included as part of the parent installations).  This was the
        universe of bases in the services that hold and evaluate O&M RPM-
        funded property, according to the service RPM headquarters
        offices.  Bases scheduled to be closed by the end of 1998 and
        scheduled for realignment or closure under the Base Realignment
        and Closure (BRAC) Act were excluded. Although we asked that the
        questionnaire be returned within 10 days of receipt, it actually
        required more than 6 months to achieve a return rate of over 80
        percent from each service.  Our service POCs helped by repeatedly
        contacting bases and commands.  The final tally of returned but
        not necessarily completely answered questionnaires is shown in
        table IX.1. 1Bases that were visited for pretests are listed at
        the end of the appendix on each service. Page 120
        GAO/NSIAD-99-100  Real Property Management Appendix IX Objectives,
        Scope, and Methodology Table IX.1:  Responses to GAO
        Questionnaires Total number of                 Total returned
        Returned as percent Service
        questionnaires mailed                              to GAO
        of those mailed Army bases
        180                                149                    83 Navy
        installations
        132                                126                    95
        Marine Corps installations
        16                                 16                   100 Air
        Force bases
        202                                200                    99 All
        services
        530                                491                    93 Major
        commands/major claimants of all services
        41                                 38                    93 Note:
        BRAC bases excluded from both mailed and returns. In addition to
        the questionnaire, to determine the methods and criteria of the
        services and their allocation of resources for RPM needs, we
        visited installations and major commands of all the services (with
        the exception of the Marine Corps, where we visited one base),
        across the continental United States between July 1997 and August
        1998.  During those visits we * reviewed related property records,
        documented backlog information, and the recorded deficiencies; *
        visited facilities to observe their condition and deficiencies to
        compare assessments to actual building conditions; * discussed the
        evaluation methods/condition assessment process with the
        raters/reviewers; and * interviewed installation engineering staff
        as they showed us the deficiencies and documented additional
        information when necessary. We also pretested and validated our
        questionnaires at a number of these installations and major
        commands/claimants. We visited the following offices, bases, major
        commands, and claimants: Office of the Secretary of
        Office of the Deputy Under Secretary of Defense (Installations)
        Directorate Defense                                       of
        Analysis Investment, Arlington, Virginia Office of the Secretary
        of Defense, Readiness Programming and Assessment Division,
        Washington, D.C. Department of the Army
        Office of the Assistant Chief of Staff for Installation
        Management, Washington, D.C. Page 121
        GAO/NSIAD-99-100  Real Property Management Appendix IX Objectives,
        Scope, and Methodology Department of Public Works, Alexandria,
        Virginia Installation Support Center, Alexandria, Virginia Bases
        Fort Belvoir, (Military District of Washington), Alexandria,
        Virginia Fort Bragg (Forces Command), Fayetteville, North Carolina
        Fort Hood (Forces Command), Killeen, Texas Fort McPherson (Forces
        Command), Atlanta, Georgia Fort Sam Houston (Medical Command), San
        Antonio, Texas Fort Sill (Training and Doctrine Command), Lawton,
        Oklahoma Rock Island Arsenal (Army Materiel Command), Rock Island,
        Illinois Texas Army National Guard, Austin, Texas Major Commands
        U.S. Army Forces Command, Fort McPherson, Atlanta, Georgia U.S.
        Army Medical Command, Fort Sam Houston, San Antonio, Texas
        Department of the Air Force Air Force Deputy Chief of Staff for
        Installations and Logistics, Office of the Civil Engineer,
        Programs Division, Crystal City, Virginia Air Force Deputy Chief
        of Staff for Installations and Logistics, Office of the Civil
        Engineer, Operations Division, Crystal City, Virginia Air Force
        Real Estate Agency, Bolling Air Force Base, Washington, D.C. Bases
        Alabama Air National Guard, Birmingham, Alabama Eglin Air Force
        Base (Air Force Materiel Command), Fort Walton Beach, Florida
        Maxwell Air Force Base (Air Education and Training Command),
        Montgomery, Alabama Pope Air Force Base (Air Mobility Command),
        Fayetteville, North Carolina Scott Air Force Base (Air Mobility
        Command), Belleville, Illinois Seymour Johnson Air Force Base (Air
        Combat Command), Goldsboro, North Carolina Tinker Air Force Base
        (Air Force Materiel Command) Oklahoma City, Oklahoma Wright-
        Patterson Air Force Base (Air Force Materiel Command), Dayton,
        Ohio Major Commands                      Air Combat Command,
        Langley Air Force Base, Langley, Virginia Air Force Materiel
        Command, Wright-Patterson Air Force Base, Dayton, Ohio Air
        Mobility Command, Scott Air Force Base, Belleville, Illinois Page
        122                              GAO/NSIAD-99-100  Real Property
        Management Appendix IX Objectives, Scope, and Methodology
        Department of the Navy                        Navy Budget Office,
        Washington, D.C. Deputy Chief of Naval Operations (Logistics),
        Facilities and Engineering Division, Crystal City, Virginia Bases
        Fleet Combat Training Center (Chief, Naval Education and
        Training), Atlantic, Dam Neck, Virginia Beach, Virginia California
        Naval Air Station North Island (U.S. Pacific Fleet), San Diego,
        California Naval Air Station Oceana (U.S. Atlantic Fleet),
        Virginia Beach, Virginia Naval Air Station, Patuxent River (Naval
        Air Systems Command), Lexington Park, Maryland Naval Air Station
        Pensacola (Chief, Naval Education and Training), Pensacola,
        Florida Norfolk Naval Shipyard (Naval Sea Systems Command),
        Portsmouth, Virginia Naval Security Group Activity Northwest
        (Naval Security Group Command), Chesapeake, Virginia Naval Station
        Norfolk (U.S. Atlantic Fleet), Norfolk, Virginia Norfolk Naval
        Shipyard (Naval Sea Systems Command), Portsmouth, Virginia Major
        Claimants                               U.S. Atlantic Fleet,
        Norfolk, Virginia Naval Air Systems Command, Patuxent River,
        Lexington Park, Maryland Other Navy2
        Public Works Center (Naval Facilities and Engineering Command),
        San Diego, California Public Works Center (Naval Facilities and
        Engineering Command), Norfolk, Virginia2 Commandant of the Marine
        Corps Base                                          Marine Corps
        Base, Quantico, Virginia 2Navy Public Works Centers are not
        installations; for this reason, they are here listed as "Other
        Navy." They perform RPM on a reimbursable basis to Navy and Marine
        Corps bases and major claimants. Page 123
        GAO/NSIAD-99-100  Real Property Management Appendix IX Objectives,
        Scope, and Methodology Nonmilitary Entities and     To identify
        promising practices in repair and maintenance of facilities that
        RPM Experts                  could be of potential use to the
        services, we contacted experts in the field of facilities
        management to help identify nonmilitary entities with reputations
        for high quality and innovation in facility management.  These
        experts were identified on the basis of their reputations in the
        field and their publications, especially those by facilities
        management expert organizations such as the Federal Facilities
        Council of the National Research Council, the Logistics Management
        Institute, and the Association of Higher Education Facilities
        Officers (formerly the Association of Physical Plant
        Administrators of Universities and Colleges).  We also contacted
        facility management experts at universities, private companies,
        and government agencies and surveyed relevant literature.  We
        focused on large entities, as requested, because they are more
        directly comparable to the military services, with thousands of
        facilities around the world, than are single-location institutions
        with just a few dozen buildings. Among the experts or expert
        entities with which we spoke to identify promising practices in
        facilities management, and/or from which we obtained reports, were
        the following: Applied Management Engineering, Virginia Beach,
        Virginia Association of Higher Education Facilities Officers,
        Alexandria, Virginia Army Health Facility Planning Agency, Falls
        Church, Virginia Building Owners and Managers Association
        International, Washington, D.C. Capital Needs Analysis Center,
        Brigham Young University, Provo, Utah Civil Engineering Research
        Foundation, Washington, D.C. Construction Engineering Research
        Laboratories, Champaign, Illinois Congressional Budget Office,
        Washington, D.C. Richard Coullahan, Senior Vice President, Parsons
        Brinckerhoff Energy Services, Inc., Herndon, Virginia Edward R.
        Damphousse, Manager, Consulting Services Group, R.S. Means
        Company, Inc.,  Kingston, Massachusetts Department of Energy,
        Washington, D.C. Federal Facilities Council, Washington, D.C. Mark
        M. Fagan, AIA, President, and Thomas K. Davies, AIA, Executive
        Vice President, Vanderweil Facility Advisors, Boston,
        Massachusetts General Services Administration, Washington, D.C.
        Harvey H. Kaiser, Ph.D., HHK, Syracuse, New York and Reston,
        Virginia International Facility Management Association, Houston,
        Texas Lawrence Livermore National Laboratory, Livermore,
        California Logistics Management Institute, McLean, Virginia Letter
        Page 124                               GAO/NSIAD-99-100  Real
        Property Management Appendix IX Objectives, Scope, and Methodology
        Peter Lufkin, Principal, Economics, Whitestone Research, Santa
        Barbara, California NASA, Facilities Engineering Division,
        Washington, D.C. NASA, Goddard Space Flight Center, Greenbelt,
        Maryland National Institutes of Health, Division of Engineering
        Sciences, Rockville, Maryland Private Sector Council, Washington,
        D.C. Ronald Reagan Building and International Trade Center,
        Washington, D.C City of San Jose, California, Department of Public
        Works Leif Steinert, Senior Consultant, WorkPlace: A Bentley
        Strategic Affiliate, Littleton, Massachusetts Eric Teicholz,
        President, Graphic Systems, Inc., Cambridge, Massachusetts We
        visited the Capital Needs Analysis Center, Brigham Young
        University, Provo, Utah; the Lawrence Livermore National
        Laboratory, Livermore, California; and George Washington
        University, Washington, D.C. We spoke to facility management
        officials from the following universities about their RPM
        practices: Harvard University, Cambridge, Massachusetts
        Massachusetts Institute of Technology, Cambridge, Massachusetts
        University of California, Facilities Management and Construction
        (Office of the President), Oakland, California University of
        California, Berkeley, California University of California, San
        Diego, California University of North Carolina, Chapel Hill, North
        Carolina We spoke to officials from the following corporations
        about their facilities management: Hughes Electronics Corporation
        Lockheed Martin Corporation Mobil Business Resources Corporation
        The Boeing Company Trammel Crow Company (Washington, D.C.) Other
        Literature and     In addition to the methods cited above to
        identify promising practices, we Internet Searches        attended
        relevant conferences sponsored by the Federal Facilities Council,
        and conducted an extensive review of the literature on facilities
        management, using libraries, database searches, and the Internet.
        We also Page 125                                 GAO/NSIAD-99-100
        Real Property Management Appendix IX Objectives, Scope, and
        Methodology obtained reports prepared by some private consulting
        firms.  A bibliography can be found at the end of this report.  We
        reviewed relevant legislation and legislative history with regard
        to RPM issues over the past 45 years. We conducted our work
        between May 1997 and March 1999, in accordance with generally
        accepted government auditing standards. Page 126
        GAO/NSIAD-99-100  Real Property Management Appendix X Our Survey
        on Real Property Maintenance for Installations
        Appendix X Page 127    GAO/NSIAD-99-100  Real Property Management
        Appendix X Our Survey on Real Property Maintenance for
        Installations Page 128
        GAO/NSIAD-99-100  Real Property Management Appendix X Our Survey
        on Real Property Maintenance for Installations Page 129
        GAO/NSIAD-99-100  Real Property Management Appendix X Our Survey
        on Real Property Maintenance for Installations Page 130
        GAO/NSIAD-99-100  Real Property Management Appendix X Our Survey
        on Real Property Maintenance for Installations Page 131
        GAO/NSIAD-99-100  Real Property Management Appendix X Our Survey
        on Real Property Maintenance for Installations Letter    Page 132
        GAO/NSIAD-99-100  Real Property Management Appendix X Our Survey
        on Real Property Maintenance for Installations Page 133
        GAO/NSIAD-99-100  Real Property Management Appendix X Our Survey
        on Real Property Maintenance for Installations Page 134
        GAO/NSIAD-99-100  Real Property Management Appendix X Our Survey
        on Real Property Maintenance for Installations Page 135
        GAO/NSIAD-99-100  Real Property Management Appendix XI Comments
        From the Department of Defense Appendix XI Note: GAO comments
        supplementing those in the report text appear at the end of this
        appendix. Page 136    GAO/NSIAD-99-100  Real Property Management
        Appendix XI Comments From the Department of Defense Page 137
        GAO/NSIAD-99-100  Real Property Management Appendix XI Comments
        From the Department of Defense See comment 1. Page 138
        GAO/NSIAD-99-100  Real Property Management Appendix XI Comments
        From the Department of Defense See comment 2. See comment 3. See
        comment 4. See comment 5. See comment 6. See comment 7. See
        comment 8. Page 139                                   GAO/NSIAD-
        99-100  Real Property Management Appendix XI Comments From the
        Department of Defense See comment 9. See comment 10. Page 140
        GAO/NSIAD-99-100  Real Property Management Appendix XI Comments
        From the Department of Defense See comment 11. See comment 11. See
        comment 12. See comment 13. Letter    Page 141
        GAO/NSIAD-99-100  Real Property Management Appendix XI Comments
        From the Department of Defense See comment 14. See comment 15.
        Page 142                                   GAO/NSIAD-99-100  Real
        Property Management Appendix XI Comments From the Department of
        Defense The following are GAO's responses to the Department of
        Defense's (DOD) comments, dated June 18, 1999. GAO Comments    1.
        While DOD partially concurs with our recommendation, we note that
        it has made no firm commitment to actually provide the funding to
        formulate a comprehensive plan.  We believe that DOD's original
        commitment to an overall plan was sound and that it should be
        funded as we recommended. 2.  We disagree that uniform standards
        are not feasible or desirable.  Many types of facilities across
        the services are essentially identical in function- barracks and
        family housing, administrative offices, runways, classrooms,
        commissaries, daycare centers, and so forth.  We noted that DOD
        has already demonstrated, in its $50 million development and field
        testing of a Condition Assessment Survey (CAS) in 1994-95, that it
        is feasible to develop a set of uniform standards to assess the
        condition of similar types of facilities across the services.
        Moreover, the Office of the Secretary of Defense (OSD) has
        developed a cost factors handbook that condenses almost all
        service facilities down to 400 category codes, making it possible
        to compare them across services.  If this can be done for cost
        factors, we believe it can also be done for assessments of
        physical conditions.  For example, based on the 1994-95 CAS, and
        the best RPM practices we identified, it appears feasible to apply
        the condition assessment system used by any one of the military
        services to all the other services for like facilities (e.g.,
        barracks).  Each service's system has strengths and weaknesses,
        but none is inherently inapplicable to the common facilities of
        the other services.  Since each service has diverse facilities-but
        many in common with the other services-it would not be difficult
        to use just one of the services' systems for all the services. 3.
        We note that each military service already defines "minimum
        condition" in its rating systems.  These definitions may draw upon
        safety standards, and they can be quite precisely detailed to
        eliminate confusion over the meaning of "minimum."  For example,
        exposed live wires in a building typically violates minimum safety
        standards.  The Army's Installation Status Report (ISR) system
        uses detailed graphical representations of deficiencies to rate
        virtually every type of facility; these are sufficiently specific
        to be readily understandable.  The Marines quantify condition and
        readiness by using percentage cutoffs (if a runway cannot be used
        a specified percentage of the time, it fails to meet the minimum
        required condition). While we recognize that subjectivity is a
        valid concern in administering Page 143
        GAO/NSIAD-99-100  Real Property Management Appendix XI Comments
        From the Department of Defense rating systems, the definitions can
        be set reasonably precisely, as currently demonstrated by each
        service's system. 4.  While DOD states that defined minimums often
        become maximums, this does not appear to be a sound ground on
        which to avoid setting minimum standards or goals.  If minimums
        becoming maximums is indeed a problem, then DOD can exercise the
        oversight to correct it. 5.  While we recognize DOD's concerns
        about "dictating" common standards, we believe that there is a
        compelling need to set common standards for assessing facility
        conditions, to permit the Congress to be able to evaluate requests
        for RPM funding across the services.  Since each service annually
        rates, in one way or another, the condition of thousands of
        facilities around the world, it is not clear why the like
        facilities of each service (e.g., barracks) should be rated by
        different systems that preclude meaningful comparisons of physical
        condition.  Specifically, the purpose of like facilities is
        essentially the same.  While impact on mission may vary in some
        regards, depending on location and other factors, this has no
        relevance to the actual condition of the buildings.  (It can be a
        factor in deciding how to prioritize RPM spending.)  Personnel
        need sound, decent facilities in which to live and work; the
        condition of these facilities should be known by DOD based on
        common criteria. 6.  The configuration of barracks space is more a
        quality of life than a repair and maintenance issue.  As DOD
        notes, changing configuration is part of efforts to improve
        retention; a barracks with a central latrine could be in excellent
        condition but would still be rated unacceptable given the standard
        of 1+1 (two rooms, one bathroom).  The services are permitted to
        use both RPM and military construction funds to pay for such
        changes in barracks space.  We note that according to current
        service estimates, no service will meet the 1+1 standard before
        2013 at the earliest.  The Marines will not meet the goal of
        providing its lower standard (2+0, or two persons per room, one
        bathroom) until the year 2035.  In contrast, the other services
        will meet the DOD 1+1 standard by 2020 (Army), 2013 (Navy), and
        2019 (Air Force). 7.  While DOD states that the standardized
        condition assessment system it developed was too expensive to
        implement, it never compared this system's costs to the costs of
        administering the four separate systems in the services.  Such a
        comparison is necessary to be able to conclude that a single
        system would be too costly compared to the four major systems
        currently used.  In addition, while DOD states that it needs a
        "more positive Page 144
        GAO/NSIAD-99-100  Real Property Management Appendix XI Comments
        From the Department of Defense approach" that "provides sufficient
        funding up-front to sustain facilities in good condition," it is
        also the case that a single set of standards would permit
        determining which facilities are in the worst condition and,
        therefore, are in greater need of limited funds than others.
        Without such cross-service standards, the Congress is unable to
        prioritize among the competing requests. 8.  We have noted the
        development of the cost factors handbook by the OSD
        (Installations) Directorate of Analysis and Investment, and we
        regard it as an important step in the standardization of RPM data.
        9.  We believe that a computerized on-line database accessible to
        both OSD and each service is essential to better and more
        effective RPM management by DOD.  Under current arrangements,
        "data calls" or requests are issued by OSD in order to gather
        basic inventory and budget data.  We found that the data held by
        OSD and the services on inventory and RPM spending often did not
        match or could not be readily compared.  Even the services'
        headquarters RPM offices reported problems with obtaining basic
        and reliable data from their components.  In contrast, at both
        Lawrence Livermore and Brigham Young University's Capital Needs
        Analysis Center (CNA), all RPM inventory and condition data were
        available immediately on-line to central management.   Similarly,
        the Army's ISR data are computerized and summary data are
        available to headquarters and other facility management personnel.
        These are management practices that clearly constitute a minimum
        requirement for effective RPM management across DOD.   A system
        with common facility codes-which OSD is attempting to implement-
        should be readily and inexpensively amenable to being kept on-
        line.  Comparisons of data are an essential component of RPM
        management.  Until such comparisons are made, DOD will not know
        where RPM dollars are truly needed, where they are being spent, or
        how much property it actually has. OSD has developed a system of
        common facility category codes (published in DOD Facilities Cost
        Factors Handbook, Version 1.0, Apr. 1999) that the services are
        now reviewing, but have not yet agreed to use.  The purpose of
        this system is to compare service RPM and construction spending on
        similar types of facilities (e.g., administrative space, classroom
        buildings, and barracks) to, as DOD states, industry standards.
        The data required to make these comparisons must be gathered and
        inputted into a computer database if the effort is to be
        manageable.  Further, if "meaningful" comparisons are to be made,
        it is essential that these cost and inventory data be computerized
        and put on-line. Page 145
        GAO/NSIAD-99-100  Real Property Management Appendix XI Comments
        From the Department of Defense 10.  Tracking how much each service
        is spending on RPM by type of facility and by square foot (or
        other common metric) will enable DOD to exercise effective
        oversight.  We note that OSD has published cost factors and is now
        using them to assess the adequacy of each service's RPM spending
        by facility type. We further note that meaningful evaluation of
        the comparative costs of maintaining the same types of facilities
        across services requires a high level of detail in order for major
        commands to be able to compare expenditures of their bases.
        Without consistent, comparable data for like facilities, no
        meaningful evaluations are possible.  With current databases and
        budget data, it is not possible to readily compare RPM spending
        per square foot for like facilities across services.  OSD's new
        facility category code system, including industry cost standards,
        will have no clear purpose unless these costs-which are per square
        foot-can be compared to what military installations spend.  The
        Army's Directorate of Public Works' inventory/cost per square foot
        databases permitted such comparisons and were on-line; these
        databases should be restored and expanded to include the other
        services. 11.  We appreciate the need for flexibility in funding
        decisions, but in some cases this can lead to insufficient repairs
        or cancellation of repair contracts.  Migration of RPM funds is at
        least partly responsible for the accumulation of $16 billion in
        repair backlogs.  This is an issue that DOD needs to address.
        Although restricting the migration of RPM funds may reduce
        flexibility, some of the organizations we reviewed found the
        practice yielded beneficial results.  Accordingly, we continue to
        believe that the Department ought to consider the feasibility of
        adopting some form of this promising practice.  We have modified
        our recommendation to that effect. 12.  We commend DOD-more
        specifically, OSD's (Installations) Directorate of Analysis and
        Investment office-for the cost factors handbook they published in
        April 1999.   They are also investigating methods to put this
        handbook on-line, which is essential to its effective use by
        military personnel worldwide.  However, given the costs per square
        foot identified, we believe that many will exceed the level of
        actual spending by the military services, rather than validate
        current spending levels.  For example, the Army spent $1.81 per
        square foot for RPM for administrative buildings in the United
        States and its territories according to the fiscal year 1997
        annual summary issued by the Army's Directorate of Public Works
        Page 146                                   GAO/NSIAD-99-100  Real
        Property Management Appendix XI Comments From the Department of
        Defense (the last year of publication available).1  In contrast,
        OSD's cost factors show RPM spending for such buildings nationwide
        at $2.46 per square foot, or 36 percent higher.  Even taking into
        account the (low) inflation over the past 2 or 3 years, this would
        not narrow the difference measurably. Therefore, we question
        whether OSD's cost factors will validate the levels of RPM
        spending by the services.  At the same time, it is exactly these
        kinds of comparisons that DOD should be undertaking as part of a
        more vigorous RPM oversight management program. 13.  DOD states
        that it has considered the "taxing" arrangement used by LLNL
        (which assesses facility costs to activities based on the square
        footage occupied, and total facility maintenance costs) and also
        states that working capital funds were deemed unsuitable as a
        funding mechanism for base operations.  However, the Navy has used
        working capital funds for many years at numerous locations and
        continues to do so.  At a minimum, DOD needs to reinvent the way
        in which facilities maintenance is carried out across the
        services, to ensure that repair spending is prioritized on the
        basis of which facilities are needed, and of those, which need
        repair the most.  The U.S. Army's Health Facility Planning Agency
        has developed metrics to prioritize such spending in line with its
        mission.  Its work might be taken as a potential model. 14.  We
        note that consistent training standards are common throughout the
        military for virtually every activity it undertakes.  Common
        training for RPM personnel will help ensure consistency in the
        assessment of facility conditions and RPM needs.  Responses to our
        questionnaire showed variations in training within the services.
        Since training is widely understood as essential to competent job
        performance and is generally treated as such for other activities
        in the military, it is not clear why DOD objects to common
        training for RPM.  The Navy noted in its technical comments that
        its guidance on RPM inspector qualifications "addresses such
        things as technical trade background, formal education in theory,
        experience in maintenance and repair operations, and skills in
        inspection techniques, planning and estimating, maintenance
        standards, and building codes."  This guidance could well serve as
        the model for a DOD-wide standard for all facility inspectors.
        1The average for worldwide spending was $1.96 per square foot, or
        about 8.2 percent more than for just the United States and
        territories.   See Department of the Army, Directorates of Public
        Works, Fiscal Year 1997 Annual Summary of Operations, vol. II, p.
        2 and p. 5. Page 147
        GAO/NSIAD-99-100  Real Property Management Appendix XI Comments
        From the Department of Defense 15.  In examining the documents
        associated with DOD's efforts in the mid 1990s to implement a
        Condition Assessment Survey (CAS), we found that no cost
        comparison had been made between the cost of the CAS and systems
        used by the services to evaluate the condition of their
        properties. Further, no evaluation was presented in the materials
        we were provided by DOD of the costs versus benefits of such a
        system.  We were told by a number of persons involved in the CAS
        effort that the services had no interest in a servicewide RPM
        needs assessment system that would require common standards. Page
        148                                   GAO/NSIAD-99-100  Real
        Property Management Appendix XII GAO Contacts and Staff
        Acknowledgments
        Appendix XII GAO Contacts       Kwai-Cheung Chan, (202) 512-3092
        Dr. Sushil K. Sharma, (202) 512-3460 Dr. Jonathan R. Tumin, (202)
        512-3595 Acknowledgments    In addition to those named above, Mary
        K. Quinlan, Lorelei St. James, Robert C. Mandigo Jr., Venkareddy
        Chenareddy, and  Raymond J. Wyrsch made key contributions to this
        report. Page 149                                GAO/NSIAD-99-100
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        (Washington, D.C.: 1985). * Guide to Maintenance Strategies for
        Capital Facilities (Washington, D.C.: 1985). * Guide to Setting
        Priorities for Capital Investment  (Washington, D.C.: 1985). *
        Guide to Benchmarks of Urban Capital Condition  (Washington, D.C.:
        1985). VW International, "Military Health Services System Facility
        Life-Cycle Maintenance: Investment Strategy and Maintenance Cost
        Model" (VWI, Alexandria, Virginia, 31 Dec. 1996), prepared for
        Office of the Assistant Secretary of Defense (Health Affairs).
        Page 155                             GAO/NSIAD-99-100  Real
        Property Management Bibliography Westerbeck, Gerald W., and
        Cassell, Jordan W., "Infrastructure Planning and Real Property
        Management: New Facility Category Coding"  (McLean, Virginia:
        Logistics Management Institute), March 1998. Armed Services
        Department of the Army: Plant Replacement Value Analysis for
        Fiscal Year Documents/Guidances/ 1996 (Army Center for Public
        Works) (13 August 1997). Reports                       DOD: *
        Renewing the Built Environment, March 1989 * Quadrennial Defense
        Review Infrastructure Panel, "Installation Support Task Force
        Final Report," dated February 24, 1997. * Annual Defense Report,
        1999. * "What Does the Future Hold for Defense Installations?: A
        White Paper for DOD Commanders," February 26, 1997, OSD,
        Directorate for Installations Management. OSD: "Report on Real
        Property Maintenance Migration of Funds,"  (April 7, 1997)
        (Office of the Deputy Under Secretary of Defense) (Logistics),
        Analysis and Investment Directorate. Air Force: * "The Air Force
        Plant Replacement Value: Short Term Analysis Report," Oct. 1997 *
        "Facility Investment Metric Program," Implementation and Operation
        Guide  (August 1997). "Validation of the Army's Fiscal Year 1989
        Reported Backlog of Maintenance and Repair," U.S. Army Audit
        Agency,  31 Jan. 1991. Data on Assessment procedures and/or
        guidelines from: Tennessee Air National Guard, HQ 134th Air
        Refueling Wing  (Oct. 1997). Air Combat Command HQ, dated 6 Aug.
        1997: "Real Property Maintenance by Contract (RPMC) Methodology"
        and "CERM Implementation" Seymour Johnson AFB, 1994-1997. Page 156
        GAO/NSIAD-99-100  Real Property Management Bibliography
        "Facilities Condition Assessment Program for Naval Station
        Mayport, Florida," prepared  by Navy Public Works Center, Norfolk,
        Virginia, Fiscal Year 1998. "Strategic Maintenance Execution Plan:
        1998-2000, Commander Fleet Activities Yokosuka Japan," prepared by
        PAE Facility Management Services, May 1997. Army Health Facility
        Planning Agency. U.S. Army Corps of Engineers * Construction
        Engineering Research Laboratories (CERL): "Facility Cost
        Simulation Models: A Basis for Replacement Policy," October 1988
        (technical report P-89/01). * CERL: An Analysis of the Building
        Renewal Problem,  June 1987, Technical report P-87/11. * Water
        Resources Support Center, Institute for Water Resources: "The
        Federal Role in Funding State and Local Infrastructure:  Two
        Reports on Public Works Financing" (Ft. Belvoir, Va) August 1993.
        The Federal Infrastructure Strategy Program series: * "Framing the
        Dialogue, Strategies, Issues and Opportunities," May 1993. *
        "Infrastructure in the 21st Century Economy:  A Review of the
        Issues and Outline of a Study of the Impacts of Federal
        Infrastructure Investments," July 1993. * "Challenges and
        Opportunities for Innovation in the Public Works Infrastructure-
        Vol. I,"  June 1993. * "Challenges and Opportunities for
        Innovation in the Public Works Infrastructure-Vol. II," June 1993.
    * "Federal Public Works Infrastructure R&D: A New Perspective,"
        July 1993. * "Consolidated Performance Report on the Nation's
        Public Works: An Update," December 1994. * "Public Works
        Management Practices-Vol. I: A Public Works Perspective of the
        Road Blocks and Opportunities to Improve Performance," August 1994
        (co-published with American Public Works Association--APWA--
        written by Melvin, Eric and Throne, James D., APWA). Page 157
        GAO/NSIAD-99-100  Real Property Management Bibliography * "Public
        Works Management Practices-Vol. II: Local Government Public Works
        Agencies:  The Effect of Federal Mandates on Their Activities and
        Improving Their Management Performance," August 1994. Page 158
        GAO/NSIAD-99-100  Real Property Management Page 159    GAO/NSIAD-
        99-100  Real Property Management Related GAO Products Deferred
        Maintenance Reporting: Challenges to Implementation (GAO/AIMD-98-
        42, Jan. 1998). Defense Infrastructure: Demolition of Unneeded
        Buildings Can Help Avoid Operating Costs (GAO/NSIAD-97-125, May
        1997). Financial Audit: 1997 Consolidated Financial Statements of
        the U.S. Government (GAO/AIMD-98-127, Mar. 1998). High-Risk
        Series: Defense Infrastructure (GAO/HR-97-7, Feb. 1997). Older
        Americans Act:  Promising Practice in Information and Referral
        Services (GAO/PEMD 91-31, Aug. 1991). (713021)    Letter    Page
        160                            GAO/NSIAD-99-100  Real Property
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