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
    GAO/NSIAD-99-100  Real Property Management Appendix I Army
    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
    GAO/NSIAD-99-100  Real Property Management Appendix I Army
    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.
    Page 52                                          GAO/NSIAD-99-100
    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.
    Page 68                                            GAO/NSIAD-99-
    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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    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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    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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    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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    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).
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    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
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    Review Infrastructure Panel, "Installation Support Task Force
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    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
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    "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
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    Engineering Research Laboratories (CERL): "Facility Cost
    Simulation Models: A Basis for Replacement Policy," October 1988
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    Renewal Problem,  June 1987, Technical report P-87/11. * Water
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    Reports on Public Works Financing" (Ft. Belvoir, Va) August 1993.
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    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
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    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
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    written by Melvin, Eric and Throne, James D., APWA). Page 157
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    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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