Military Bases: Review of DOD's 1998 Report on Base Realignment and
Closure (Letter Report, 11/13/98, GAO/NSIAD-99-17).

Pursuant to a legislative requirement, GAO reviewed the Department of
Defense's (DOD) report on the costs and savings attributable to the
rounds of base realignments and closures (BRAC), focusing on: (1) the
costs and savings of prior BRAC rounds and estimated costs and savings
of future BRAC rounds; (2) the impact of prior BRAC rounds on military
capabilities, excess capacity, base reuse and economic recovery of
communities affected by BRAC actions; and (3) processes DOD would use to
select bases for closure and realignments should further BRAC rounds be
authorized.

GAO noted that: (1) DOD's report to Congress provided most, but not all,
of the information required in section 2824 of the National Defense
Authorization Act for Fiscal Year 1998; (2) in selected instances,
usually because data were not available, DOD either did not provide the
information required or did not provide it in the level of specificity
required; (3) DOD's report concludes that the four prior BRAC rounds,
taken in aggregate, are saving DOD billions of dollars annually; (4)
GAO's prior work examining BRAC cost and savings and related issues
affirms that past BRAC recommendations will result in substantial
savings once implementation costs have been offset and net savings begin
to accrue; (5) however, because of data and records weaknesses, DOD's
report should be viewed as providing a rough approximation of costs and
savings rather than a precise accounting; (6) DOD's data systems do not
capture all savings associated with BRAC actions, nor has DOD
established a separate system to track BRAC savings; (7) DOD's estimates
of costs and savings for future BRAC rounds should also be viewed as
rough estimates because there is no assurance that the cost and savings
experiences from prior BRAC rounds will be precisely replicated in the
future; (8) because the methodology used to identify excess capacity has
a number of limitations, DOD's report gives only a rough indication that
excess capacity has increased relative to force structure since 1989;
(9) however, other DOD studies, statements by DOD officials, and GAO's
prior work support the report's general conclusion that DOD continues to
retain excess capacity; (10) GAO's work has shown this to be the case,
particularly in maintenance depots and in research, development, test,
and evaluation facilities; (11) DOD's analysis of operational and
readiness indicators have shown no long-term problems affecting military
capabilities that can be related to BRAC actions; (12) this general
conclusion is also consistent with GAO's prior work; (13) DOD's report
emphasizes that communities affected by prior BRAC actions appear to be
rebounding economically; (14) GAO also found this to be the case,
although its work also shows that some communities are faring better
than others; (15) DOD's report suggests that proposed BRAC rounds in
2001 and 2005 would be conducted like prior rounds; and (16) DOD's
legislative proposal requesting authority to conduct two additional BRAC
rounds provides a good starting point for considering future
legislation, should Congress decide to authorize additional rounds.

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

 REPORTNUM:  NSIAD-99-17
     TITLE:  Military Bases: Review of DOD's 1998 Report on Base 
             Realignment and Closure
      DATE:  11/13/98
   SUBJECT:  Base closures
             Military downsizing
             Reporting requirements
             Military cost control
             Military bases
             Base realignments
             Federal agency reorganization
             Obsolete facilities
             Economic analysis
             Cost effectiveness analysis
IDENTIFIER:  DOD Quadrennial Defense Review
             DOD Future Years Defense Program
             
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Cover
================================================================ COVER


Report to Congressional Committees

November 1998

MILITARY BASES - REVIEW OF DOD'S
1998 REPORT ON BASE REALIGNMENT
AND CLOSURE

GAO/NSIAD-99-17

Review of DOD's BRAC Report

(709325)


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

  BRAC - base realignment and closure
  CBO - Congressional Budget Office
  COBRA - Cost of Base Realignment Actions
  DOD - Department of Defense
  IG - Inspector General

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


B-279509

November 13, 1998

Congressional Committees

Section 2824 of the National Defense Authorization Act for Fiscal
Year 1998 (P.L.  105-85) required that the Secretary of Defense
prepare and submit to the congressional defense committees a report
on the costs and savings attributable to the rounds of base
realignments and closures (BRAC) conducted under special legislative
authorities between 1988 and 1995 and on the need, if any, for
additional BRAC rounds.  The legislation also required us to review
the Secretary's report. 

In completing our review, we made an overall assessment of the
Department of Defense's (DOD) responsiveness to the individual
section 2824 reporting requirements and assessed individual reporting
topics, including the costs and savings of prior BRAC rounds and
estimated costs and savings of future BRAC rounds, the impact of
prior BRAC rounds on military capabilities, excess capacity, base
reuse and economic recovery of communities affected by BRAC actions,
and processes DOD would use to select bases for closure or
realignment should further BRAC rounds be authorized. 


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

After four BRAC rounds between 1988 and 1995, the Secretary of
Defense and the Chairman, Joint Chiefs of Staff, stated that DOD
still retained excess facilities infrastructure.  Both cited the need
for future BRAC authority.  Subsequently, the 1997 Quadrennial
Defense Review and the 1997 report of the congressionally mandated
National Defense Panel addressed the problem of remaining excess
infrastructure within DOD and recommended that additional BRAC rounds
be conducted.  In DOD's May 19, 1997, report to the Congress on the
results of the Quadrennial Defense Review, the Secretary announced
that DOD would ask the Congress to authorize two additional BRAC
rounds. 

In considering the Secretary's request for additional BRAC round
authority in 1997, various Members of Congress questioned the need
for any future rounds.  As a result, the Congress enacted section
2824 of the National Defense Authorization Act for Fiscal Year 1998,
which required that the Secretary of Defense provide the Congress
with a comprehensive report on a range of BRAC issues and described
the manner in which the data were to be presented in the report. 
That legislation also required the Secretary to submit the report not
later than the date on which the President submitted to the Congress
the budget for fiscal year 2000 and prohibited DOD from spending
funds to plan for subsequent BRAC actions until the report was
delivered.  DOD submitted its report, The Report of the Department of
Defense on Base Realignment and Closure, on April 2, 1998. 

In submitting DOD's report to the Congress, the Secretary
reemphasized that DOD has substantial excess capacity in its base
infrastructure.  The Secretary stressed that DOD needs the money that
could be saved from closing unneeded infrastructure to sustain high
force readiness and a robust weapon systems modernization program. 
Accordingly, the Secretary requested two additional BRAC rounds in
2001 and 2005.  The Secretary also noted DOD's assistance in
facilitating economic growth and development for communities affected
by BRAC actions. 


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

DOD's report to the Congress provided most, but not all, of the
information required in section 2824 of the National Defense
Authorization Act for Fiscal Year 1998.  For example, while DOD
provided aggregate estimates of savings in support costs due to base
closures and realignments, it did not provide this information by
service, type of facility, and fiscal year.  In selected instances,
usually because data were not available, DOD either did not provide
the information required or did not provide it in the level of
specificity required.  For example, it provided estimated rather than
actual savings data because data on actual savings does not exist. 
For this reason, DOD's report did not provide much information that
had not been reported previously. 

DOD's report concludes that the four prior BRAC rounds, taken in
aggregate, are saving DOD billions of dollars annually.  Our prior
work examining BRAC cost and savings and related issues affirms that
past BRAC recommendations will result in substantial savings once
implementation costs have been offset and net savings begin to
accrue.\1 However, because of data and records weaknesses, DOD's
report should be viewed as providing a rough approximation of costs
and savings rather than a precise accounting.  DOD's data systems do
not capture all savings associated with BRAC actions, nor has DOD
established a separate system to track BRAC savings.  DOD's estimates
of costs and savings for future BRAC rounds should also be viewed as
rough estimates because there is no assurance that the cost and
savings experiences from prior BRAC rounds will be precisely
replicated in the future.  For example, in previous BRAC rounds, the
military services, in selecting bases to close among those ranking
low in military value, often chose those that were relatively less
expensive to close.  Therefore, costs for future rounds may be higher
than the average cost of previous rounds. 

Because the methodology used to identify excess capacity has a number
of limitations, DOD's report gives only a rough indication that
excess capacity has increased relative to force structure since 1989. 
For example, DOD did not try to determine to what extent excess
capacity may have existed in 1989.  However, other DOD studies,
statements by DOD officials, and our prior work support the report's
general conclusion that DOD continues to retain excess capacity.  Our
work has shown this to be the case, particularly in maintenance
depots and in research, development, test, and evaluation facilities. 

DOD's analysis of operational and readiness indicators have shown no
long-term problems affecting military capabilities that can be
related to BRAC actions.  This general conclusion is also consistent
with our prior work. 

DOD's report emphasizes that communities affected by prior BRAC
actions appear to be rebounding economically.  We have also found
this to be the case, although our work also shows that some
communities are faring better than others. 

DOD's report suggests that proposed BRAC rounds in 2001 and 2005
would be conducted like prior rounds.  DOD's legislative proposal
requesting authority to conduct two additional BRAC rounds provides a
good starting point for considering future legislation, should the
Congress decide to authorize additional rounds. 


--------------------
\1 Savings can begin to accrue even as costs are being incurred to
implement a BRAC decision.  One-time implementation costs may
increase or decrease from initial estimates during the implementation
period and can affect the point at which savings exceed
implementation costs and net savings begin to accrue on an annual
recurring basis. 


   DOD'S REPORT PROVIDES MOST OF
   THE REQUIRED INFORMATION
------------------------------------------------------------ Letter :3

Section 2824 required DOD to provide information on costs and savings
and other aspects of prior BRAC rounds.  Likewise, it required an
analysis of excess capacity and an assessment of the need for future
BRAC rounds and projections of costs and savings that could be
expected.  It also required a description of the process and
methodologies that would be used in future BRAC decision making. 
Further, the legislation prescribed how DOD's analysis should be
presented, requiring several levels of detail and comparative
analyses. 

DOD's report provides most, but not all, of the information required
in section 2824.  Data limitations and other factors\2 prevented DOD
from providing some required information.  In some instances, there
were limitations in the degree of coverage DOD provided in responding
to individual reporting requirements.  In a few instances, coverage
could have been more comprehensive had DOD involved the services, for
example, in updating savings estimates from prior BRAC rounds.  DOD's
assessment provided only a rough indication of excess capacity. 
Table 1 details the legislative and presentation requirements for
DOD's report, indicates the pages in DOD's report where the issues
are addressed, and provides our observations on the extent to which
DOD provided the information required by each subsection.  A more
thorough discussion of DOD's response to the legislative requirements
is provided in appendix I. 



                                     Table 1
                     
                        GAO Assessment of Legislative and
                     Presentation Requirements for DOD's BRAC
                                 Report, by Topic

Section
2824                                         DOD        GAO assessment of
citation    Requirement                      report\a   information provided
----------  -------------------------------  ---------  ------------------------
            Costs and savings of prior BRAC
            rounds

(b)(1)      A statement, using data          Costs:     DOD provided budget
            consistent with budget data, of  pp. iv-    estimates along with
            actual costs and savings (to     v, 29-     obligational data
            the extent available for prior   43;        because actual savings
            fiscal years) and estimated      Detailed   data do not exist. DOD
            costs and savings (in the case   tables,    has not established a
            of future fiscal years)          Parts 2-   system to track and
            attributable to BRAC actions     3;         update savings.
                                             Savings:
                                             pp. iv-
                                             vi, 45-
                                             53\;
                                             Detailed
                                             tables,
                                             Part 1

(b)(2)      A comparison of actual costs     Detailed   DOD provided a partial
            and savings, by BRAC round, to   tables,    list of COBRA estimates,
            estimates of costs and savings   Part 1,    but because not all
            submitted to the BRAC            pp. 2-     relevant COBRA documents
            commissions as part of the base  3\; Part   were available, DOD
            closure process                  3, COBRA   could not provide a full
                                             cost       and meaningful
                                             estimates  comparison.
                                             , pp. 1-
                                             16

(c)(1)\b    Operation and maintenance        Detailed   DOD provided budget
            costs, including costs           tables,    estimates by type of
            associated with expanded         Parts 2    facility, service, and
            operations and support,          and 3      fiscal year for
            maintenance of property,                    operation and
            administrative support, and                 maintenance but was
            allowances for housing at                   unable to measure costs
            military installations to which             at bases to which
            functions are transferred, set              functions were
            forth by service, type of                   transferred.
            facility, and fiscal year

(c)(2)\b    Military construction costs,     Detailed   DOD provided budget
            including costs of               tables,    estimates by type of
            rehabilitating, expanding, and   Part 2     facility, service, and
            constructing facilities to                  fiscal year for military
            receive personnel and equipment             construction but was
            set forth by service, type of               unable to measure costs
            facility, and fiscal year                   at bases to which
                                                        functions were
                                                        transferred.

(c)(3)\b    Environmental cleanup costs,     p. v;      DOD provided aggregate
            including costs associated with  Detailed   estimated costs for
            assessments and restoration set  tables,    assessments and
            forth by service, type of        Parts 2    restoration.
            facility, and fiscal year        and 3

(c)(6)\b    Costs associated with military   pp. 41-    DOD did not provide the
            health care set forth by         43         required information
            service, type of facility, and              because data available
            fiscal year                                 did not allow health
                                                        care costs to be
                                                        isolated from other
                                                        costs.

(c)(7)\b    Savings attributable to changes  Not        DOD did not provide the
            in military force structure set  provided   required information
            forth by service, type of                   because, according to
            facility, and fiscal year                   DOD officials, no costs
                                                        and savings were
                                                        attributable to changes
                                                        in military force
                                                        structure in BRAC
                                                        accounts.

(c)(8)\b    Savings due to lower support     Not        DOD did not provide the
            costs resulting from closure or  provided   required information by
            realignment of installations                category, although lower
            set forth by service, type of               support costs are
            facility, and fiscal year                   included in overall
                                                        savings estimates.

(b)(3)      A comparison, set forth by BRAC  Detailed   DOD compared obligations
            round, of actual costs and       tables,    by BRAC round and fiscal
            savings to the annual estimates  Parts 1,   year with the initial
            of costs and savings previously  2, and 3   and most current
            submitted to Congress                       estimates. DOD did not
                                                        provide a similar
                                                        comparison of savings.

            Estimated costs and savings of
            future BRAC rounds

(b)(10)     An estimate of costs and         pp. iv,    DOD provided an estimate
            savings from future BRAC rounds  21-22,     for two future BRAC
            by service and year              117-121    rounds by year but not
                                                        by service.

(b)(11)     An assessment of whether costs   p. 22      The outyears of the
            and estimated savings from new              current Future Years
            BRAC actions are in the current             Defense Program (1999-
            Future Years Defense Program                2003) begin to reflect
                                                        the costs and savings
                                                        from an anticipated BRAC
                                                        round in 2001.

            Military capabilities

(b)(6)      An assessment of the effect of   pp. ii,    DOD provided the
            previous BRAC actions on         9, 99-     required assessment.
            military capabilities and the    108
            services' ability to fulfill
            the National Military Strategy

            Excess capacity

(b)(4)      A list of each military          pp. 135-   DOD provided the
            installation with 300 or more    144        required information.
            authorized civilian personnel,
            by service

(b)(5)      An estimate of current excess    pp. iii-   DOD provided an estimate
            capacity at all military         iv, 13-    of excess capacity as
            installations as a percentage    18, 109-   required by subsections
            of the total capacity of (A)     116        (A) and (B) but did not
            all the services' military                  provide the information
            installations, (B) each                     required in subsection
            service's military                          (C).
            installations, and (C) types of
            military installations

(b)(7)      A description of the types of    pp. 15-    DOD did not make any
            military installations that      17         distinction among the
            would be recommended for                    types of facilities that
            closure or realignment by                   would be recommended for
            service in the event of one or              closure or realignment.
            more additional BRAC rounds                 DOD said all bases would
                                                        be considered.

            Base reuse and economic
            recovery

(c)(4)      Economic assistance costs,       pp. 37-    DOD provided the
            including expenditures on DOD    39, 42-    required information in
            demonstration projects;          43         summary form by funding
            expenditures by the Office of               agency and fiscal year.
            Economic Adjustment; and to the
            extent available expenditures
            by the Economic Development
            Administration, the Federal
            Aviation Administration, and
            the Department of Labor, set
            forth by service, type of
            facility, and fiscal year

(c)(5)      To the extent information is     pp. 37-    DOD provided some
            available, unemployment          41, 129-   aggregate estimates, but
            compensation costs, early        132        data did not
            retirement benefits, and worker             specifically identify
            retraining expenses under the               beneficiaries who lost
            Priority Placement Program, the             their jobs as a result
            Job Training Partnership Act,               of BRAC actions as
            and any other federally funded              opposed to other
            job training program set forth              downsizing efforts.
            by service, type of facility,
            and fiscal year

            Processes DOD would use in
            future BRAC rounds

(b)(8)      The criteria the Secretary of    pp. iv,    DOD provided the
            Defense would use in evaluating  124        required information.
            installations for realignment
            or closure in future BRAC
            rounds

(b)(9)      The methodologies the Secretary  pp. iv,    DOD provided the
            of Defense would use in          23-27,     required information.
            evaluating installations for     65-97
            closure or realignment in
            future BRAC rounds
--------------------------------------------------------------------------------
\a Detailed tables were provided as appendixes to DOD's report. 

\b Requirement applies only to the statement and comparison required
by subsections (b)(1) and (b)(2). 


--------------------
\2 DOD's basic report was accompanied by three volumes of supporting
data to meet the reporting requirements.  The three volumes provide
detailed cost and savings data comparing BRAC cost estimates by
service and BRAC round; a comparison of budget estimates by budget
category (such as costs and savings from military construction and
operations and maintenance) sorted by service, BRAC round,
installation type, and budget category; and cost of base realignment
actions (COBRA) cost estimates sorted by service and BRAC round. 
This generally represents information drawn from DOD's prior budget
submissions to the Congress.  DOD derived initial BRAC costs and
savings estimates from the COBRA model during each BRAC round.  COBRA
analyses provided a means to compare alternative closure actions but
was not intended to produce the budget-quality data that was
developed after a BRAC decision became final. 


   SUBSTANTIAL SAVINGS FROM BRAC
   ARE LIKELY, BUT AMOUNTS ARE NOT
   PRECISE
------------------------------------------------------------ Letter :4

Data from DOD's most recent budget submission was incorporated in its
section 2824 report to indicate that the four previous BRAC rounds
will cost about $23 billion to implement from 1988 to 2001.  The data
also show that BRAC actions will net $14 billion in savings during
implementation and are expected to produce recurring savings of about
$5.7 billion or more each year thereafter.\3

DOD assessed its costs and savings data from several vantage points
to affirm its position that prior BRAC rounds are saving billions of
dollars in operating costs.  These included (1) analyzing data drawn
from DOD's annual budget submissions to the Congress; (2) completing
a new analysis that relied heavily on an analysis of personnel
reductions as a basis for estimating savings; (3) summarizing reviews
by external groups, such as the DOD Inspector General (IG) and Army
Audit Agency audits of selected BRAC rounds and BRAC actions; and (4)
citing reports by the Congressional Budget Office (CBO) and GAO. 

We and CBO have reported that BRAC reductions provide the basis for
recurring savings once implementation costs have been offset.\4 Our
assessment that substantial savings are expected is based on our
reviews of BRAC issues, which have included examining DOD data that
showed reductions in spending on base support programs and personnel. 
Many bases are aging, and base closures offer an opportunity to avoid
capital improvement costs in the future.  However, our analysis of
DOD's report and its supporting documentation and our previous work
on this issue also indicate that DOD's cost and savings data are not
precise.  The data exclude some costs and savings, which if included
would cause some increase in the time required for savings to exceed
implementation costs and for net savings to begin.  Reviews by the
DOD IG and the Army Audit Agency have also pointed out the
imprecision in DOD's estimates of costs and savings, though they
reinforced the view that BRAC actions result in net savings. 

While DOD has required the military services to update costs and
savings, the services seldom updated BRAC savings estimates.\5 In
addition, DOD's estimates may not capture all costs and
savings--including the avoidance of some costs associated with base
closures, such as the costs of long-term capitalization improvements
that will not have to be undertaken.  Additionally, in making its
estimates, DOD assumed that all BRAC recommendations would be
implemented and initial savings projections realized.  In selected
cases, bases recommended for closure or realignment have been
scheduled for privatization in place, or operation of the
installations will be turned over to private contractors.  As we have
reported, privatization does not always produce savings or reduce
excess capacity.\6

DOD supplemented its estimates of savings with a separate analysis
that focused primarily on calculating savings from personnel
reductions; it estimated an annual recurring savings of about $7
billion.  This analysis is not precise because (1) the personnel
costs used in the calculation were estimates and were not tied to the
actual salaries of positions eliminated and (2) while BRAC actions
have clearly produced significant personnel reductions and savings,
we cannot be sure of the extent to which all personnel reductions DOD
cited are fully attributable to BRAC actions, as opposed to other
force structure reductions during this period of downsizing.  See
appendix II for a more detailed analysis of DOD's reporting on cost
and savings from prior BRAC rounds. 

DOD's report projects that additional BRAC rounds would also save
resources that it could use for higher priorities, such as weapon
systems modernization.  DOD estimated the net recurring savings after
implementing two future BRAC rounds to be $3.4 billion annually.  DOD
arrived at this estimate by averaging estimated costs and savings for
the most recent two rounds, in 1993 and 1995, and applying this
average to proposed BRAC rounds in 2001 and 2005.  DOD did not
present estimates of future costs and savings by service in its
report, as required. 

Also, the method of estimating cost and savings for future BRAC
rounds is limited, principally because it assumes that savings from
future base closures will be the same as savings from the 1993 and
1995 BRAC rounds, adjusted for inflation.  While DOD's estimate may
be appropriate for planning purposes, its precision is limited
because the costs of future BRAC rounds might not parallel the costs
from prior rounds.  For example, among facilities rated low in
military value, bases closed in prior rounds frequently were among
those least costly to implement and requiring the shortest time for
savings to offset implementation costs.  Generally, those costing
more to implement and requiring a longer time to recover savings were
not selected for closure.  Therefore, DOD's estimate represents only
a rough gauge of future savings.  More information on DOD's
methodology for estimating future costs is provided in appendix II. 

If future BRAC rounds were held as requested, DOD would begin to
incur implementation costs in 2002.  However, some questions have
been raised regarding whether DOD already is incorporating costs and
savings from future BRAC rounds into its Future Years Defense
Program.\7

DOD has incorporated net estimated costs in the last 2 years (2002
and 2003) of its 1999-2003 Future Years Defense Program.  The costs
represent a net amount, since DOD anticipates savings from the
avoidance of military construction and the cessation of some
operations and maintenance activities.  These planned costs are
presented in the aggregate at the DOD level. 


--------------------
\3 DOD reported the expected annual savings at $5.6 billion, but
because recurring savings estimates for the Navy were underreported
by $100 million in the fiscal year 1999 budget request, the savings
estimate should be $5.7 billion. 

\4 See Military Bases:  Closure and Realignment Savings Are
Significant, but Not Easily Quantified (GAO/NSIAD-96-67, Apr.  8,
1996) and Review of The Report of the Department of Defense on Base
Realignment and Closure, Congressional Budget Office, July 1, 1998. 

\5 We have previously reported on the need for DOD components to have
and follow a clear and consistent process for updating savings
estimates associated with prior BRAC decisions, and we recommended
that the Secretary of Defense provide guidance to ensure that
components follow that process.  The current situation affirms the
continuing need for DOD to take this action.  Such action would be
equally important in the future, should the Congress decide to
authorize additional BRAC rounds.  See Military Bases:  Lessons
Learned From Prior Base Closure Rounds (GAO/NSIAD-97-151, July 25,
1997). 

\6 See Navy Depot Maintenance:  Cost and Savings Issues Related to
Privatizing-in-Place at the Louisville, Kentucky, Depot
(GAO/NSIAD-96-202, Sept.  18, 1996) and Navy Depot Maintenance: 
Privatizing Louisville Operations in Place Is Not Cost-Effective
(GAO/NSIAD-97-52, July 31, 1997). 

\7 The Future Years Defense Program is an authoritative record of
current and projected force structure, costs, and personnel levels
that has been approved by the Secretary of Defense.  The program
displays resources and personnel levels by program and activities. 


   PRIOR BRAC ROUNDS DO NOT APPEAR
   TO HAVE LIMITED MILITARY
   CAPABILITIES
------------------------------------------------------------ Letter :5

The 1998 act required DOD to assess the impact of previous base
closures on military capabilities.  DOD's report concludes that
previous BRAC rounds had a positive effect on military capabilities. 
The commanders in chief of the combatant commands, the service
chiefs, and the Joint Chiefs of Staff concurred with the conclusion
that previous BRAC rounds have not harmed military capabilities and
have had a net positive impact on operations.  While readiness can be
temporarily affected as individual BRAC decisions are being
implemented, available data does not provide us with any basis to
disagree with DOD's conclusions concerning any long-term impact. 

DOD looked to a number of indicators and studies to determine whether
any operational and readiness problems could be linked to BRAC
actions.  DOD officials reviewed operational and readiness records
dating from 1991 to the time they completed their report, including
the joint monthly readiness reports, the joint uniform lessons
learned reports, commanders in chief integrated priority lists, and
the combat support agency review.\8 DOD concluded from its review
that BRAC actions had not adversely affected military capabilities. 

This view was supported by the results of monthly senior-level Office
of the Secretary of Defense and Joint Chiefs of Staff forums, during
which issues affecting military capabilities are considered under
varying operational scenarios.  These assessments incorporate input
from affected combatant commanders in chief, and any BRAC-related
problems might surface in these assessments.  According to a military
official associated with these forums, some temporary problems
associated with transitions during domestic BRAC closings have been
identified, but no long-term problems or deficiencies that related to
domestic BRAC activities have surfaced.\9 This conclusion is
consistent with statements from other senior military officials after
previous BRAC rounds.  For example, in a 1997 letter to the Chairman
of the Senate Committee on Armed Services, the Joint Chiefs of Staff
unanimously supported additional domestic base closures.  Our reviews
of readiness issues over the years have not identified any long-term
readiness problems that were related to domestic base realignments
and closures. 

DOD took several actions to minimize potential negative impacts to
military capability in previous BRAC rounds, including stressing
military value in deciding on bases to recommend for closure and
realignment.  In addition, the Joint Chiefs of Staff and combatant
commanders in chief reviewed the Secretary of Defense's closure and
realignment recommendations to prevent degradation of military
capability and endorsed the recommendations.  Using such an approach
in the future, should the Congress decide to authorize any future
BRAC rounds, may help to avoid long-term adverse effects on military
capabilities. 


--------------------
\8 These various reports, some of which are developed based on input
from operating levels, provide indications of unit performance and
problems that might have an impact on readiness levels and operating
capabilities. 

\9 Short-term problems identified included backlogs of maintenance. 
For a discussion of lessons learned in one workload transfer, see
Depot Maintenance:  Lessons Learned From Transferring Alameda Naval
Aviation Depot Engine Workloads (GAO/NSIAD-98-10BR, Mar.  25, 1998). 


   DOD'S ANALYSIS PROVIDES A ROUGH
   MEASURE OF EXCESS BASE CAPACITY
------------------------------------------------------------ Letter :6

DOD identified those installations (bases) with 300 or more
authorized civilians.  It also assessed excess capacity as required,
which involved many of the same bases.  DOD reported increased
capacity in 2003 relative to 1989 for DOD, for each service, and for
types of installations within each service and reported an overall
increase in excess capacity of 23 percent.  In using 1989 as a
baseline for its excess capacity analysis, DOD did not assess excess
capacity that might have existed in 1989.  Additionally, the analysis
did not take into account the possibilities of joint cross-servicing
and the potential impacts of management initiatives discussed in the
Secretary's report on defense reform initiatives\10 or by the BRAC
1995 joint cross-service group's report.  Such initiatives could
result in consolidation, reorganization, or regionalization of
activities and potentially reduce the amount of infrastructure
capacity required in the future. 

The services generally agreed with the magnitude of excess capacity
shown by the analysis.  Because of differences in the types of
installations among the services and in the way capacity was
measured, DOD did not report capacity as a percentage of the total
capacity by types of installations, such as the total capacity in all
depots.  Such an analysis of excess capacity would allow a comparison
among types of installations, which is what the legislation appears
to envision.  Further, DOD did not present a description of the types
of installations that would be recommended for closure or
realignment, by service, in one or more future BRAC rounds as
required.  Rather, DOD indicated that all bases would be considered
for closure or realignment in any future BRAC round. 
Appendix III provides additional details on DOD's methodology for
identifying bases that are authorized 300 or more civilian employees
and for computing excess capacity. 

DOD officials said that its analysis was not designed to identify
bases that would be closed in additional BRAC rounds.  According to
DOD officials, individual base-level data, such as that collected for
a BRAC round, would be required to specify the types of installations
that would be recommended for closure.  They also said that section
2824(f) of the 1998 act prohibited DOD from expending resources to
conduct such data-gathering efforts.  DOD's view has some merit;
however, it appears that DOD could have taken additional steps to
illustrate more clearly how much excess capacity existed within
categories of bases.  For example, while DOD's analysis shows no
increase in the excess capacity between 1989 and 2003 in the category
of Army depots, our previous work has shown--and DOD officials have
agreed--that depots have excess capacity.  Further, while a
definitive picture regarding actual numbers of bases to be closed in
any future BRAC round would not be known until the analysis
associated with a specific round occurred, we believe DOD could have
provided a clearer picture of the types and potential amount of
excess capacity it has within its basing infrastructure.  This could
be part of a broader strategic plan for the future, one which better
delineates future requirements, excess capacity, and plans for
revitalizing remaining infrastructures.  We have previously suggested
the need for such a plan and suggested that it be presented to the
Congress in much the same way DOD presented its plan for force
structure reduction in the Bottom-Up Review.\11


--------------------
\10 Defense Reform Initiative Report, Secretary of Defense, Nov. 
1997.  The report outlines plans for significant additional personnel
reductions, reengineering of existing business processes, expanded
use of the private sector for support services, and other actions
that could decrease facility infrastructure requirements. 

\11 High Risk Series:  Defense Infrastructure (GAO/HR-97-7, Feb. 
1997) and Defense Infrastructure:  Challenges Facing DOD in
Implementing Reform Initiatives (GAO/T-NSIAD-98-115, Mar.  18, 1998.)


   MANY COMMUNITIES ARE REBOUNDING
   ECONOMICALLY FROM BASE CLOSURES
------------------------------------------------------------ Letter :7

The 1998 act required DOD to report on the cost of economic
assistance provided to communities adversely affected by BRAC
actions--funding that has been provided outside of DOD's BRAC
implementation budgets or by other federal agencies.  DOD estimated
these costs to be $955.9 million between 1988 and 1997; these costs
are discussed in appendix II.  Additionally, while not specifically
required to do so, DOD's report expands on the subject of economic
assistance and credits public and private reinvestment in the
affected communities with facilitating base reuse and economic
recovery.  The report states that for bases closed more than
2 years, nearly 75 percent of the lost civilian jobs have been
replaced.  It also cites a number of examples in making the point
that most communities are rebounding. 

Our prior and ongoing work also found indications of economic
recovery in many communities, although some are faring better than
others.\12 We found that federal assistance provided to communities
affected by base closures has helped to cushion the negative economic
impact and supports DOD's contention that the redevelopment of base
property has successfully created thousands of jobs.  However, the
reuse of bases appears to be only one aspect of economic recovery for
most communities.  The strength of the national economy and the level
of economic diversity in the affected communities played a strong
role in determining how well they survived a base closure.  Without a
growing economy, some communities might not have been as successful
at attracting industries and jobs to redevelop base properties.  The
same would be true for communities affected by future BRAC rounds. 


--------------------
\12 Based on a separate congressional request, we are conducting a
more in-depth assessment of selected issues associated with the
implementation of prior BRAC decisions.  That report will provide
more specific information on how local communities affected by base
closures have fared and will include data on unemployment rates and
per capita income. 


   ANY FUTURE BRAC ROUNDS COULD
   BUILD ON PROCESSES DEVELOPED
   FOR PRIOR BRAC ROUNDS
------------------------------------------------------------ Letter :8

The 1998 act required that DOD report on the criteria and
methodologies the Secretary would use to evaluate military
installations for future closures or realignments.  DOD's report
indicates that future BRAC procedures and methodologies would be
similar to those used in prior rounds.  DOD proposed legislation for
new BRAC authorities to the Congress in February 1998; that proposal
was also included in DOD's required report to the Congress. 

Congressional authority for two additional BRAC rounds modeled on
processes used in recent BRAC rounds is DOD's preferred alternative
for reducing its excess infrastructure.  DOD states that legislation
modeled on authorities provided to execute recent BRAC rounds is
superior to provisions contained in 10 U.S.C.  2687, which placed
many study and reporting requirements upon DOD in connection with
efforts to close military bases.  We previously reported that section
2687, enacted in the 1970s, greatly impeded efforts to close military
bases until special legislation authorizing recent BRAC rounds was
enacted.\13

We also reported that legislation enacted in 1990, which expired in
1995, was seen by many officials as a starting point for considering
new legislation should the Congress decide that it wants to authorize
future BRAC rounds.\14 Some individuals expressed concern over the
role of politics in the process.  We recognize that no public policy
process such as that used for base realignment and closure can be
completely removed from the U.S.  political system.  However, the
processes used between 1988 and 1995 had several checks and balances
to keep political influences to a minimum.  Ultimately, however, the
success of these processes requires the cooperation of all
participants. 

As DOD and previous BRAC commission officials have noted, key
elements of the 1990 BRAC legislation, as amended, contributed to the
success of prior rounds.  These elements included (1) the
establishment of an independent commission and nomination of
commissioners by the President, in consultation with the
congressional leadership; (2) the development of clearly articulated,
published criteria for decision making; (3) the use of data certified
as to its accuracy; (4) the requirement that the President and the
Congress accept or reject in their entirety the lists of closures
adopted by a BRAC commission; and (5) the creation of tight time
frames to force timely decisions.  The legislation also required that
we analyze DOD's BRAC decision-making process and recommendations. 
Additional audit coverage by the DOD IG and service audit agencies
associated with the process helped ensure the accuracy of data and
analyses associated with the decision-making process. 

DOD's legislative proposal contains, with minor exceptions,
essentially the same provisions as those contained in the Defense
Base Closure and Realignment Act of 1990 (P.L.  101-510, as amended)
for making decisions on which bases to close and realign.  One
exception is that it gave 2 months more than was available in BRAC
1995 for the Secretary of Defense to publish the proposed list of
bases to be closed.  The publication date would be May 1 rather than
March 1 of the year in which the BRAC round is conducted.  Other
decision points outlined in the legislation also shifted
2 months.  Another difference is that the proposed legislation would
reduce the amount of time available for us to review and report to
the Congress and the BRAC commission on the Secretary's proposals
from 45 days as in BRAC 1995 to 30 days. 


--------------------
\13 Military Bases:  Analysis of DOD's 1995 Process and
Recommendations for Closure and Realignment (GAO/NSIAD-95-133, Apr. 
14, 1995). 

\14 Military Bases (GAO/NSIAD-97-151, July 25, 1997). 


      ALTERNATIVES TO NEW BRAC
      AUTHORITY
---------------------------------------------------------- Letter :8.1

DOD's report notes that actions may be required to reduce base
capacity, such as demolishing buildings that are no longer needed and
conducting reorganizations and consolidations that do not require
BRAC actions or invoke provisions of section 2687.\15 We have
reported on a number of initiatives available to DOD to help it
reduce excess infrastructure costs and free up funds for other
priorities.\16 The Secretary also has noted the less desirable
alternative of deferring maintenance and upkeep of facilities as a
way of minimizing infrastructure costs.  Available data suggests that
DOD has taken such actions for several years as it made trade-offs in
funding priorities.\17 For example, we reported that over a 10-year
period, from fiscal year 1987 to 1996, DOD's total operations and
maintenance funding obligations for facilities maintenance and
repair, excluding family housing, declined by 38 percent on average
in real terms.\18 The Army had the steepest decline of all the
services, about 49 percent.  Available data also indicated that,
although servicewide maintenance and repair obligations had fallen
about 38 percent over a 10-year period, the reduction in square
footage of space owned and managed by the services was much
less--about 10 percent. 


--------------------
\15 Closures of installations with 300 or more civilian personnel
authorized to be employed and realignments with respect to any
military installation involving a reduction by more than 1,000 or by
more than 50 percent in the number of civilian personnel authorized
to be employed trigger the reporting requirements of 10 U.S.C.  2687. 

\16 See, for example, Defense Infrastructure:  Challenges Facing DOD
in Implementing Reform Initiatives (GAO/T-NSIAD-98-115, Mar.  18,
1998). 

\17 Deferred Maintenance Reporting:  Challenges to Implementation
(GAO/AIMD-98-42, Jan.  30, 1998). 

\18 Defense Infrastructure:  Demolition of Unneeded Buildings Can
Help Avoid Operating Costs (GAO/NSIAD-97-125, May 13, 1997).




   CONCLUSIONS
------------------------------------------------------------ Letter :9

DOD submitted the report required by the Congress and requested
legislative authority for additional BRAC rounds.  It stated that the
rounds would close unneeded bases and free up resources for higher
priorities.  DOD provided most, but not all, of the information the
Congress requested.  Some data were not readily available.  In other
cases, DOD decided not to collect the detailed data that would be
required to address specific sections of the act. 

DOD used budget data previously presented to the Congress and
subsequent obligational data to estimate costs and savings from prior
BRAC actions and applied these to future BRAC actions.  However,
these estimates are not precise because DOD does not update or track
savings estimates from BRAC rounds on a regular basis.  DOD collected
some new data for its excess capacity analysis, but the methodology
it used did not compare capacity to future requirements or lend
itself to identifying the types of installations that needed to be
closed.  Further, DOD's conclusion that military capability has not
suffered adverse long-term effects because of BRAC actions appears to
be reasonable.  Finally, DOD's proposal for using processes used in
prior BRAC rounds represents a good starting point for considering
future BRAC legislation. 


   AGENCY COMMENTS AND OUR
   EVALUATION
----------------------------------------------------------- Letter :10

In commenting on a draft of this report, DOD concurred with our
conclusions on savings from previous BRAC recommendations, remaining
excess capacity, the impact of previous BRAC actions on military
capability, and economic impact on local communities.  In addition,
DOD agreed that the process used to conduct prior BRAC rounds is a
good starting point for considering future BRAC legislation.  At the
same time, DOD expressed three principal areas of major concern. 
These related to (1) whether DOD's report had completely addressed
all reporting requirements, (2) the precision of savings estimates,
and (3) how well DOD had identified excess capacity. 

DOD disagreed with our assessment that it had not addressed all the
legislative requirements of section 2824.  According to DOD, in some
cases it was not possible to provide some information and its report
indicated the reasons that it did not provide the information.  Our
assessment of whether all information was provided is presented in
table 1.  This table shows several areas in which DOD's report did
not provide information as requested and additional areas where DOD
could have provided more information.  For example, DOD did not
report estimated savings from future BRAC rounds by service as the
legislation required. 

In stating that the savings data it cited are the best available, DOD
notes that the data are imprecise indicators of the actual savings. 
We have consistently recommended to DOD that it periodically update
its savings estimates.\19

However, absent additional efforts to update service savings
estimates, the data presented may be the best available.  If the
efforts to improve future savings reporting DOD cites in its comments
are successful, then DOD should be able to provide more accurate
estimates in the future. 

DOD took issue with our observation that it had not reported excess
capacity by type of military installation across all DOD components. 
DOD believes that such an analysis of excess capacity was not
required by the statute and, because of differences in types of
installations among the services, was not practical to conduct.  DOD
said that reporting on excess capacity across all DOD components
would have required an effort similar to a full BRAC analysis.  DOD
therefore reported on excess capacity by type of installation only
within each military service and the Defense Logistics Agency.  As
discussed previously in this report, having an estimate of
Department-wide excess capacity by type of military installation
across all DOD components would have permitted a fuller assessment of
excess capacity and would not have required a full BRAC analysis. 

DOD's written comments are reprinted in appendix IV along with our
additional observations on selected points.  Our objectives, scope,
and methodology are in appendix V. 

We conducted our review between January and July 1998 in accordance
with generally accepted government auditing standards. 


--------------------
\19 Military Bases (GAO/NSIAD-97-151, July 25, 1997). 


--------------------------------------------------------- Letter :10.1

We are sending copies of this report to the Senate Majority and
Minority Leaders; the House Minority Leader; the Secretaries of
Defense, the Army, the Navy, and the Air Force; the DOD Inspector
General; and the Director, Office of Management and Budget.  Copies
will also be made available to others upon request. 

This report was prepared under the direction of David R.  Warren,
Director, Defense Management Issues, who may be reached at (202)
512-8412 if you or your staff have any questions concerning this
report.  Major contributors to this report are listed in appendix VI. 

Henry L.  Hinton, Jr.
Assistant Comptroller General

List of Congressional Committees

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

The Honorable Strom Thurmond
Chairman
The Honorable Carl Levin
Ranking Minority Member
Committee on Armed Services
United States Senate

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

The Honorable Floyd D.  Spence
Chairman
The Honorable Ike Skelton
Ranking Minority Member
Committee on National Security
House of Representatives


SECTION 2824 LEGISLATIVE
REQUIREMENTS AND PRESENTATION OF
INFORMATION IN DOD'S REPORT
=========================================================== Appendix I

Section 2824 of the National Defense Authorization Act for Fiscal
Year 1998 (P.L.  105-85) set out required elements (subsection (b))
and methods of presentation (subsection (c)) for the Department of
Defense's (DOD) report on base realignment and closure (BRAC) issues. 
Table 1 (see
p.  4) summarizes the legislative reporting requirements for DOD's
report, indicates where DOD's report provides the required
information, and summarizes our assessment of the extent to which
DOD's report provides the required information.  This appendix
discusses limitations in the level of detail and method of
presentation in relation to the legislative requirements. 


   ASSESSMENT OF LIMITATIONS IN
   DOD'S RESPONSE TO LEGISLATIVE
   REQUIREMENTS
--------------------------------------------------------- Appendix I:1

DOD's report provides most, but not all, of the information required
by section 2824.  In selected instances, certain information is
either not provided or not provided in the level of specificity
required.  The following are our summary observations, grouped by
topic, concerning information DOD provided in response to the
reporting requirements and its rationale for why it was unable to
provide required information in selected instances. 


      COSTS AND SAVINGS OF PRIOR
      BRAC ROUNDS
------------------------------------------------------- Appendix I:1.1

DOD responded to the requirement to provide costs and savings data in
four different categories:  (1) costs and savings of bases already
closed or realigned during the previous four BRAC rounds, (2) costs
and savings during the implementation periods for each of the four
previous BRAC rounds, (3) net savings on an annual recurring basis
after the BRAC implementation period, and (4) estimated costs and
savings from two future BRAC rounds.  While the legislation called
for DOD to provide actual cost data, only estimated data was
available. 

DOD provided budget estimates and obligational data rather than
actual outlay data in responding to provisions in subsection
2824(b)(1).\1 Also, DOD did not provide complete information in
response to provisions in subsection 2824(b)(2) because it said
complete information was not readily available to compare estimated
costs by fiscal year, spending category, and installation type, in
part because of the need to retrieve historical data and differences
in the ways the services develop budget data.  Similarly, DOD did not
provide precise information required by subsection 2824(b)(3) and did
not provide a similar comparison of savings.  As we have previously
noted, actual savings data do not exist (savings data are estimates),
and the services generally have not updated their savings estimates
regularly. 

To respond to subsections 2824(b)(2) and (b)(3), DOD submitted a
series of detailed tables on each base closure round, by service,
type of facility, and funding activity (such as operations and
maintenance, military construction, and the environment).  DOD used
the budget justification books it submitted to the Congress as the
source of the projected costs and savings information in the BRAC
accounts and for DOD costs outside of BRAC accounts.  DOD officials
indicated that data were not available on some indirect costs outside
the BRAC accounts.  What DOD termed actual costs are BRAC budget
account obligations provided by the military departments, defense
agencies, and the Defense Finance and Accounting Service.\2 We have
not independently verified this data.  DOD officials told us that
they were not able to present obligations for the Navy or DOD
agencies by type of installation because they develop their budgets
by function rather than by installation. 

In responding to subsection 2824(b)(2), DOD did not compare its
budgeted costs and savings to DOD submissions to the BRAC
commissions.  DOD reported it could not meet this requirement because
the estimates it submitted to the commissions were based on the
Secretary of Defense's recommendations and were not the commissions'
final, approved BRAC recommendations to the President and the
Congress.  According to DOD, differences in the Secretary's
recommendations and the commissions' final BRAC actions created
differences, sometimes significant, in costs and savings estimates. 
In addition, DOD's estimates of costs and savings submitted to the
commissions excluded the costs associated with environmental
restoration, since the BRAC criteria purposely excluded these costs
as closure and realignment recommendations were developed. 
Environmental restoration costs were added to budget estimates for
BRAC costs and savings after all BRAC actions became final. 

In general, DOD provided information on presentation requirements in
subsections 2824(c)(1) through (c)(8) where data were available, but
often the information is incomplete.  For example, DOD did not
display its savings data by service, BRAC round, type of facility,
fiscal year, and budget category as required because it had
difficulty locating specific cost of base realignment actions (COBRA)
analyses that were needed to develop complete comparisons.  DOD did
not have complete information available to compare costs by fiscal
year, spending category, and installation type as required by
subsections 2824(b) and (c).  This type of comparison would require
the specific COBRA analysis associated with each recommendation that
the Secretary of Defense sent to the commissions (and each final
COBRA analysis performed by the commissions). 

DOD officials told us they did not provide the information prescribed
in subsection 2824(c)(6) because data available did not allow health
costs to be isolated from other costs.  DOD also did not provide the
required information in subsection 2824(c)(7), which required it to
report savings attributable to changes in military force structure. 
According to a DOD official, BRAC accounts contained no costs or
savings attributable to military force structure reductions. 
Finally, DOD did not provide the required information in subsection
2824(c)(8), which required it to show, by service, fiscal year, and
type of facility, the savings due to lower support costs for military
installations that were closed or realigned.  DOD did, however,
include an aggregate estimate of lower support costs in its savings
estimates. 


--------------------
\1 DOD financial regulations define obligations as amounts of orders
placed, contracts awarded, services received, and similar
transactions during an accounting period that will require payment. 
They may be viewed as estimated rather than final costs pending
liquidation of all obligations. 

\2 Our prior work indicates that obligational data does not
necessarily reflect actual final costs. 


      ESTIMATED COSTS AND SAVINGS
      FROM FUTURE BRAC ROUNDS
------------------------------------------------------- Appendix I:1.2

DOD provided an estimate, by fiscal year, of costs and savings from
two future BRAC rounds in response to subsection 2824(b)(10), but it
did not report amounts by service.  DOD did not report the aggregate
estimate by service because, according to DOD officials, the costs
and savings for each service would depend on the specifics of each
individual base closure.  Because DOD cannot predict the BRAC actions
that would be approved for each service, DOD officials said they did
not have a reliable basis for allocating future costs and savings
among the services. 


      BASE USE AND ECONOMIC
      RECOVERY
------------------------------------------------------- Appendix I:1.3

Costs for worker retraining under the Job Training Partnership Act
are included in the report as required by subsection 2824(c)(5), but
DOD did not include any expenses for its Priority Placement Program,
which tracks job opportunities for civilians released for any reason
but does not provide any retraining. 


      EXCESS CAPACITY
------------------------------------------------------- Appendix I:1.4

DOD did not provide an estimate of excess capacity as a percentage of
types of military installations as required by subsection
2824(b)(5)(C).  DOD gathered data on multiple categories of
installations to determine the extent to which reductions in base
structure since 1989 have kept pace with reductions in the force and
its supporting services.  DOD stated it did not develop an estimate
of excess capacity across types of installations because the services
categorize activities differently, which limits the usefulness of
categories for analysis.  In addition, the services sometimes used
different measures of capacity on similar activities, so developing
an overall estimate would not be possible. 

DOD did not provide all the information required by subsection
2824(b)(7) to provide a description of the types of installations it
would recommend for closure in the event of any future BRAC rounds. 
DOD's analysis of excess capacity was not comprehensive, which would
make it difficult to identify specific bases that might be closed in
future BRAC rounds.  DOD stated it did not identify excess capacity
by individual installation or make any distinction among
installations that may be closed or realigned in any future BRAC
round because it did not want to identify potential closure and
realignment actions without benefit of a BRAC analysis.  In addition,
DOD officials told us that data collection associated with such an
analyses would be prohibited by subsection 2824(f).  DOD indicated
that all bases would be considered for closure or realignment in
future BRAC rounds. 


COSTS AND SAVINGS FROM BRAC ROUNDS
========================================================== Appendix II


   ESTIMATED COSTS AND SAVINGS DUE
   TO BRAC ACTIONS
-------------------------------------------------------- Appendix II:1

DOD's most recent budget submission indicates that the four previous
BRAC rounds will cost about $23 billion to implement from 1988 to
2001, will net about $14 billion in savings during the implementation
periods, and will produce annual recurring savings of about $5.7
billion each year thereafter.\1 DOD's report indicates that net
savings will be $3.7 billion in fiscal year 1999. 

DOD applies estimated savings to future annual budgets.  However,
DOD's method for including costs and savings in future budgets begins
with BRAC estimates, and the services' and defense agencies'
implementation budgets differ in important ways from the BRAC costs
and savings estimates.  For example, budget data are reported in
inflated dollars, while estimates were expressed in constant dollars. 
Although components update cost data during the budget process, their
budgets do not include environmental restoration costs after 2001 or
costs not funded by DOD.  Including these costs has the effect of
reducing net savings or delaying the accrual of net savings. 


--------------------
\1 For fiscal year 1993 and thereafter, the BRAC 1990 legislation
required that DOD submit annual budgets with estimates of costs and
savings of each closure or realignment as well as the period in which
savings were to be achieved. 


   DOD'S ESTIMATES OF PRIOR COSTS
   AND SAVINGS DATA
-------------------------------------------------------- Appendix II:2

For its report, DOD assessed its costs and savings data from several
vantage points to affirm its position that prior BRAC rounds are
saving billions of dollars in operating costs.  These included (1)
analyzing data drawn from DOD's annual budget submissions to the
Congress, (2) completing what it termed a new analysis that relied
heavily on an analysis of personnel reductions as a basis for
estimating savings, and (3) summarizing reviews by external groups
such as the DOD Inspector General (IG) and Army Audit Agency audits
of selected BRAC rounds and BRAC actions. 


      DOD'S ANALYSIS OF ITS BUDGET
      DATA
------------------------------------------------------ Appendix II:2.1

In the executive summary of its report, DOD used budget estimates and
obligational data to conclude that actual one-time implementation
costs for the prior BRAC rounds were close to or less than DOD's
initial budget estimates; that actual DOD-wide costs for BRAC 1988
and BRAC 1993 bases through fiscal year 1997 were substantially less
than DOD's original budget estimates; and that for BRAC 1991 and BRAC
1995 bases, actual costs were essentially equal to initial estimates. 

DOD drew these conclusions from its analysis of its BRAC budget
estimates and obligational data through fiscal year 1997.  However,
DOD's conclusions did not reflect the following key factors. 

DOD's implementation costs, especially for earlier BRAC rounds, have
been much greater than originally expected because revenue from land
sales has been substantially less than originally expected.  DOD's
report briefly noted the exclusion of revenues from land sales but
did not explain its impact on DOD's costs.  Likewise, our analysis
shows that cost estimates have changed over time.  For example, in
the fiscal year 1997 budget, DOD projected total 6-year
implementation costs for BRAC 1995 to be
$6.1 billion; in the current fiscal year 1999 budget, DOD projects
that those same 6-year costs will be $1 billion higher, or $7.1
billion.  Air Force officials recently told us that they have a
requirement for approximately $335.4 million in BRAC funding between
fiscal year 1998 and 2003 to implement closure and realignment
actions at Kelly Air Force Base, Texas, and McClellan Air Force Base,
California.  This funding has not been included in previous budget
requests. 

DOD's comparison of obligational data to budget estimates excluded
additional direct BRAC implementation costs that were not funded
through the BRAC budget accounts.  DOD's report notes elsewhere that
while such costs exist, they are a small percentage of BRAC costs. 
However, our analysis of DOD's fiscal year 1999 budget shows that
they total $936 million (4 percent) through fiscal year 2001.  These
costs, along with others noted below, cumulatively have an impact on
total implementation costs and the timing of the accrual of net
savings. 

The budget estimates from which DOD drew its conclusions did not
include an estimated $2.4 billion in environmental restoration costs
that DOD expects to incur beyond the 6-year implementation period
ending in 2001.\2 The federal government has also incurred over $1
billion in indirect costs for economic assistance to communities and
individuals affected by BRAC actions.  (This issue is addressed more
fully later in this appendix.)

These issues do not negate the fact that DOD can expect substantial
savings from BRAC, although they have had some effect on overall
savings and, if included in DOD's accounting, would cause some
increase in the time required for savings to fully offset costs. 


--------------------
\2 The current estimates of $2.4 billion represent a reduction from
the $3.3 billion in environmental costs beyond 2001 that DOD
projected in 1997.  Based on a congressional request, we are
preparing a separate report on BRAC implementation issues that will
include a more in-depth discussion of environmental restoration
issues. 


      DOD'S NEW ANALYSIS OF
      RECURRING SAVINGS STARTING
      IN 2001
------------------------------------------------------ Appendix II:2.2

DOD conducted what it termed a new analysis to evaluate the budget
estimate of annual recurring savings.  From this analysis, DOD
concluded that annual recurring savings from the four previous BRAC
rounds could reach $7 billion--$1.4 billion more than previously
indicated in its annual budget submission.  DOD based these savings
estimates on an analysis of military and civilian personnel
reductions and associated support costs.  In providing this new
analysis, DOD was, in large measure, using personnel data drawn from
its budget submissions and applying a standard cost factor to it to
derive a new estimate of savings.  While DOD's method is
straightforward, the data on the cost of personnel it used to make
the estimate are not precise.  The services' personnel and accounting
systems do not permit a complete tracking and validation of
reductions apart from reductions made for other purposes. 

DOD's analysis used personnel reduction figures of 70,969 civilians
and 39,800 military positions eliminated as reported in its budget. 
Military and civilian personnel reductions account for 83 percent
($5.8 billion) of the projected savings from DOD's new analysis. 

DOD estimated personnel costs of $48,000 in average annual pay and
benefits per position for military personnel\3 and $55,000 in average
annual pay and benefits per position for civilian personnel.\4
However, average military pay does not reflect actual positions
eliminated or the costs of all housing, education, commissary and
exchange benefits, and average military personnel costs and savings
could thus be understated.  On the other hand, the average civilian
cost was based on an average of all civilian employees wages and was
not developed from data on bases closed by BRAC actions.  Thus,
savings from BRAC actions could be overstated because civilian
personnel released in BRAC actions were low-wage employees, according
to Office of the Secretary of Defense (Comptroller) officials. 
Additionally, DOD's new analysis also ignored some of the costs of
civilian pensions and other personnel costs.  The net effect of these
factors is not clear. 

Concerning the total number of military and civilian personnel
reductions actually eliminated due to BRAC actions, the Army, the
Navy, and the Air Force were able to provide us with some, but not
complete, supporting documentation that military and civilian
positions eliminated as a result of BRAC actions were, in fact, fully
eliminated from the services' end strength.  Army BRAC and manpower
officials indicated that they cannot tie specific BRAC actions to end
strength reductions. 

The Navy's budget and personnel systems do not track specific
military personnel reductions at the installation level and the Navy,
therefore, cannot document that its end strength was reduced. 
However, the Navy's budget system does track specific civilian
personnel reductions at the base level. 

Of the services, the Air Force was the most successful in linking
military and civilian personnel reductions due to BRAC actions to its
budget.  The Air Force provided us with the most detailed
documentation of manpower changes that supports its budget
justification estimates.  Nonetheless, civilian end strength
reductions due to BRAC actions lose their visibility in the budget
process because civilian end strength figures are included in the Air
Force's operations and maintenance "base infrastructure changes"
budget category and are not identified separately. 


--------------------
\3 Military compensation includes basic pay, bonuses, retirement,
payroll taxes, unemployment insurance, and most
permanent-change-of-station costs (administration for these costs is
handled in a separate account).  Other military personnel
compensation costs include subsistence, medical, housing, education
benefits, training, and base commissary and exchange privileges. 

\4 Civilian compensation includes salary, locality adjustment, health
coverage, life insurance, bonuses, payroll taxes, unemployment
insurance, and pension contributions. 


      AUDITS OF COSTS AND SAVINGS
      ESTIMATES
------------------------------------------------------ Appendix II:2.3

DOD's report cited three audit reports that it said confirmed the
reasonableness of initial costs and savings estimates, two from the
IG and one from the Army Audit Agency.  The audits indicate that
savings estimates are not precise. 

The IG's report on bases closed during BRAC 1993\5 found that for the
implementation period, savings will overtake costs sooner than
expected.  DOD's original budget estimate indicated costs of $8.3
billion and annual recurring savings of $7.4 billion during the
implementation period for a net cost of $900 million.  The IG review
concluded that the costs potentially could be reduced to $6.8 billion
and that savings could reach $9.2 billion, which would result in up
to $2.4 billion in net savings during the implementation period.  The
IG's report indicated that the greater savings were due to factors
such as reduced obligations for one-time implementation costs (which
were never adjusted to reflect actual disbursements), canceled
military construction projects, and less of an increase in overhead
costs than originally projected at a base receiving work from a
closing base.\6

Additionally, some undefined portion of the savings included
personnel reductions.  IG officials told us that they could not
differentiate between force structure and BRAC reductions in
examining funding reductions for personnel.  Accordingly, we are
uncertain about the extent to which the IG's report captures
personnel savings attributed solely to BRAC actions. 

The IG's review of selected BRAC 1995\7 closures also showed great
variation between budget estimates and implementation experience. 
DOD's report cited the IG's review of 23 bases closed during BRAC
1995 and noted that savings during the implementation period were
overstated by 1.4 percent and costs were overstated by 4.3 percent of
initial budget estimates.  However, the IG's analysis excluded costs
and savings from the two activities that were privatized in place.\8

Our previous assessments of BRAC actions involving privatization in
place have raised questions about whether these actions were
cost-effective and whether they reduced excess capacity.\9 For
example, in our 1996 review of the Louisville privatization, we found
that the Navy's plan for privatizing the workloads in place at
Louisville would not reduce excess capacity in the remaining public
depots or the private sector and might prove more costly than
transferring the work to other depots. 

Finally, DOD's report references the Army Audit Agency's July 1997
report on BRAC costs and savings.\10 The Army Audit Agency concluded
that savings will be substantial after full implementation for the 10
BRAC 1995 sites it had examined but that estimates were not exact. 
For example, the Agency reported that annual recurring savings beyond
the implementation period, although substantial, were 16 percent less
than the major commands' estimates. 


--------------------
\5 Audit Report:  Cost and Savings for 1993 Defense Base Realignments
and Closures, Department of Defense Office of the Inspector General,
Report No.  98-130, May 6, 1998. 

\6 While the IG's report suggested unobligated balances could be
liquidated to increase savings, DOD officials have stated, and we
agree, that much of the funds may yet be required to implement BRAC
actions.  The Congress, in appropriating funds for base closure
implementation, has given DOD the flexibility to allocate, reprogram,
and redistribute unobligated funds, as appropriate, to complete BRAC
implementation actions. 

\7 Memorandum for Deputy Under Secretary of Defense (Industrial
Affairs and Installations) from Inspector General, Department of
Defense, March 20, 1998. 

\8 The two installations were the Naval Air Warfare Center Aircraft
Division, Indianapolis, Indiana, and the Naval Surface Warfare
Center, Crane Division Detachment, Louisville, Kentucky. 

\9 Air Force Depot Maintenance:  Privatization-in-Place Plans Are
Costly While Excess Capacity Exists (GAO/NSIAD-97-13, Dec.  31,
1996). 

\10 Base Realignment and Closure 1995 Savings Estimates, U.S.  Army
Audit Agency,
Audit Report AA 97-225, July 31, 1997. 


   SOME BRAC-RELATED COSTS NOT
   COUNTED IN SAVINGS CALCULATIONS
-------------------------------------------------------- Appendix II:3

DOD's report recognizes that some one-time costs, while not directly
funded from BRAC accounts, are related to BRAC actions.  These
include, but are not limited to, costs federal agencies incurred for
economic assistance to communities affected by BRAC actions and other
indirect assistance costs directed toward providing individuals with
unemployment compensation, early retirement and voluntary separation,
and military health care benefits.  To the extent that some of these
costs are not considered in BRAC cost and savings computations, there
is an overstatement of DOD-reported net savings attributable to BRAC
actions and an extension in the time required for BRAC savings to
outweigh costs. 

The largest single category of costs that is not considered as a BRAC
cost appears to be federal agency economic assistance to communities
affected by BRAC actions.  As noted in DOD's report, a number of
federal agencies--DOD's Office of Economic Adjustment, the Department
of Commerce's Economic Development Administration, the Department of
Labor, and the Federal Aviation Administration--provide financial
assistance to communities affected by BRAC actions.  This assistance
comes in numerous forms:  planning assistance to help communities
determine how best to develop base property, training grants to
provide the workforce with new skills, and grants to improve the
infrastructure on bases. 

These funds are provided by federal agencies and are not in the BRAC
accounts.  DOD does not consider them as costs when computing net
savings from BRAC actions.  DOD data show that about $955.9 million
was provided to communities through assistance programs between 1988
and 1997.  However, the amount of this assistance was about 10
percent higher than DOD reported, based on the data we reviewed. 

As DOD's report indicates, additional BRAC-related costs are
associated with unemployment compensation, early retirements and
voluntary separations, and military health care.  DOD's report
suggests that unemployment compensation costs are difficult to
measure and are expected to be relatively small for the four BRAC
rounds (about $90 million).  DOD further estimates that the cost of
early retirements at BRAC bases was $107 million from 1989 to 1997,
while voluntary separation costs are estimated at $333 million from
1993 to 1997.  For military health care, DOD recognized that the
impact assessment was complex and stated that it was unable to
provide the cost.  Our examination of this issue indicates that it is
difficult to separate BRAC-related costs from total defense costs for
this assistance. 


   COSTS AND SAVINGS ESTIMATES FOR
   FUTURE BRAC ROUNDS
-------------------------------------------------------- Appendix II:4

To estimate the costs of two future BRAC rounds, DOD averaged the
costs and savings from BRAC 1993 and BRAC 1995 and applied this
average to the future implementation periods and beyond.  DOD assumed
costs and savings of the proposed 2001 round would begin in fiscal
year 2002, and the proposed 2005 round would begin in fiscal year
2006.  Each round would have an initial implementation period of 6
years (as estimated for the two previous rounds) and would begin to
produce annual recurring net savings beginning in year 4.  The
estimated value of recurring net savings after year 6 is $1.7 billion
for each round, totaling $3.4 billion (in fiscal
year 1999 dollars) annually for years 2012 and beyond, when both
future rounds are projected to be complete.  DOD estimated future
savings based on the assumption that future costs and savings will be
similar to those of the BRAC 1993 and BRAC 1995 rounds. 

While DOD's estimate may be appropriate for initial planning
purposes, the precision of the estimate is limited by weaknesses in
data and assumptions.  First, DOD developed its projections using
prior costs and savings data that, as we have indicated, have some
limitations.  Second, the notional size and characteristics of bases
closed in previous BRAC rounds may not accurately depict future
rounds, as stated in the DOD report.  For example, the Quadrennial
Defense Review report states that future rounds must also include
laboratories and test ranges that support research, development,
test, and evaluation.  Third, DOD did not consider all costs
associated with BRAC implementation, such as non-DOD costs, or the
extent of environmental restoration and other costs that would be
incurred beyond the 6-year implementation period.  Finally, remaining
bases may be more costly to close than the previous bases closed.  In
previous BRAC rounds, the military services often chose to close or
realign bases being relatively less expensive to close and requiring
shorter time periods for savings to offset the closure and
realignment costs.  Therefore, costs for future closures may be
higher than the average cost of previous rounds. 


DOD'S METHODOLOGY FOR IDENTIFYING
EXCESS CAPACITY
========================================================= Appendix III

DOD measured increases in excess capacity in a number of categories
over time for a sample of bases.  We reviewed the sample selection
and capacity analysis methodology.  Our observations below indicate
that DOD's analysis provides only a rough indication of excess
capacity that continues to exist. 


   SAMPLE BASE SELECTION
------------------------------------------------------- Appendix III:1

DOD provided its fiscal year 1996 base structure report, which
details numbers and locations of major bases, as a starting point for
the military services to use in selecting bases for their excess
capacity analyses.  The report identifies 495 bases as DOD's domestic
base structure baseline as of September 1989 and indicates 398 bases
will remain after the four BRAC rounds have been completed in 2001. 
The services did not rely completely on the base structure report to
select bases for the capacity analysis because they did not agree
with the information as presented or opted to use more current
information. 


   DOD'S METHODOLOGY FOR ITS
   ANALYSIS OF EXCESS CAPACITY
------------------------------------------------------- Appendix III:2

The 1998 act required DOD to estimate the current excess capacity at
military installations as a percentage of the total capacity of all
military installations, each service, and types of installations. 
DOD addressed the first and second of these requirements by comparing
capacity relative to the force structure in 2003 with capacity
relative to the force structure in 1989 for DOD, for each service,
and for types of installations within each service.  The types of
installations included were not the same for each service.  Also,
capacity was often measured differently for each service.  For
example, the Air Force and the Army reported data for test and
evaluation facilities in terms of physical space (square feet), while
the Navy reported its capacity for test and evaluation facilities in
terms of workyears.  As a result of both these variances, DOD did not
report excess capacity as a percentage of the total capacity of types
of installations as required. 

To perform the capacity analysis, the services compared capacity in a
sample of 371 bases in 1989 to the capacity for 259 bases that will
remain in 2003 after all scheduled BRAC actions are implemented.  The
sample included most installations with over 300 authorized civilians
and a small number of additional bases considered significant because
of factors such as location or military function.  The services then
categorized the bases according to their primary missions and defined
indicators of capacity, or metrics, for each category.  Varied
metrics were used as surrogates for defining capacity.  For example,
metrics included maneuver acres per maneuver brigades for Army
training bases, square feet of parking apron space per aircraft for
Air Force bases, or capacity direct labor hours compared to budgeted
or programmed direct labor hours for Navy aviation depots.  For
several categories of bases, DOD used two metrics that established a
range of potential excess capacity based on the different indicators'
values.\1 DOD divided the metric by measures of force structure to
determine a ratio and calculated the extent to which the ratio of
capacity in 2003 exceeded the ratio in 1989.  DOD then weighted and
averaged each categories' excess capacity to create a range--minimum
and maximum--for each service.  The weighted totals were averaged to
give an overall increase in excess capacity of 23 percent. 

By using 1989 as a baseline, DOD did not take into account the excess
capacity that existed in that year (prior to closing bases in
previous BRAC rounds); as a result, the percentage of increased
excess capacity reported understated actual excess capacity by an
unknown amount for some categories and may have overstated excess
capacity for others.  For example, while DOD's analysis shows no
increase in the excess capacity between 1989 and 2003 in the category
of Army depots, our previous work has shown--and DOD officials have
agreed--that DOD has excess depot capacity.  At the same time, the
analysis could overstate actual excess capacity to the extent there
was a deficit of capacity in 1989.  For example, the analysis shows a
16-percent increase in excess capacity in Marine Corps bases.  As the
report explains, the Marine Corps acquired additional acreage during
the 1990s to meet shortfalls.  However, the methodology DOD used does
not recognize this increase in capacity as a valid requirement. 

DOD only computed increases as indicating excess capacity after force
structure reductions and BRAC closings.  Therefore, decreases in
capacity are termed "no increase." For example, DOD's analysis shows
that excess depot capacity decreased slightly, by 6.2 percent, but
this is labeled "no increase" rather than a decrease. 



(See figure in printed edition.)Appendix IV

--------------------
\1 Two metrics were used in cases where more than one resource was
identified as important in measuring capacity.  For example, the Air
Force used both classroom space and parking apron space as metrics
for its education and training category because each represents a
different capacity requirement. 


COMMENTS FROM THE DEPARTMENT OF
DEFENSE
========================================================= Appendix III



(See figure in printed edition.)



(See figure in printed edition.)



(See figure in printed edition.)



(See figure in printed edition.)



(See figure in printed edition.)



(See figure in printed edition.)



(See figure in printed edition.)


The following are GAO's comments on DOD's letter dated October 6,
1998. 

GAO COMMENTS

1.  We revised our report language to clarify our point that DOD did
not provide all of the information required by section 2824.  In some
cases, DOD explained why it could not provide such information, and
we noted these reasons in our report.  However, we pointed out other
cases in which required information was not provided without any
explanation from DOD.  In its comments, DOD maintained that it
addressed all requirements and provided explanations for why it did
not provide all of the required information.  Yet, in some other
instances DOD's report did not provide required information and was
silent on the reasons. 

2.  DOD could have allocated future costs and savings from future
BRAC rounds by fiscal year and by military service by applying the
same methodology it used to estimate the total costs of future
rounds, that is, using the costs and savings from previous rounds by
service and applying them to future rounds by service.  As noted in
our report, DOD's rationale for not allocating estimates of future
costs and savings by service was that it had no basis on which to
allocate these costs.  This rationale that past costs may not be like
future costs is applicable to the aggregate estimate as well. 
Allocating estimates by service could have been done and would have
met the legislative requirements, although how useful that
information would have been is unclear, given limitations we noted
with the aggregate estimate. 

3.  We clarified our report to indicate more clearly that the
military services have seldom updated cost and savings data, even
though DOD may have requested that the services conduct such updates. 

4.  While our report does not disagree with DOD that using historical
data as a basis for projecting future costs is a reasonable approach,
we point out weaknesses in the data and DOD's assumptions about
future BRAC rounds that make it unlikely that future costs will
mirror costs from previous BRAC rounds.  For example, during the last
BRAC round, relatively lower implementation costs and quicker offset
of closure costs were frequently factors in DOD's closure and
realignment decisions.  Our intent is to suggest that there are
reasons to expect greater costs to close bases during any future
implementation period than during previous BRAC rounds because many
bases with lower implementation costs and quicker offset of closure
costs have already been realigned or closed.  DOD agreed that costs
are likely to be higher than in previous BRAC rounds.  These costs
could reduce the net savings achieved during the implementation
period.  Nevertheless, we believe there still can be significant
savings from future BRAC rounds. 

5.  While we believe there can be significant savings from future
BRAC rounds, we point out in our report that the future costs DOD
estimated do not include costs that extend past the 6-year
implementation period.  DOD's comments offer a fuller explanation of
why it did not include such costs in its estimates. 

6.  DOD's comments provide a fuller explanation of DOD's experience
with revenue from land sales. 

7.  DOD took issue with our statement that it had not reported excess
capacity by type of military installation across all of the services,
as required.  DOD believes that such a breakdown of excess capacity
was not required by the statute and, because of differences in types
of installations among the services, was not practicable to include
in the report.  DOD therefore reported on excess capacity by type of
installation only within each military service.  The requirement in
section 2824(b)(5)(C) to report excess capacity by "type of military
installations" is not limited, however, to types of installations
within the services.  Rather, we believe that the section
contemplated a DOD-wide approach because it does not specify that the
information should be provided by service. 

8.  In its comments, DOD indicated that its analysis of excess
capacity provides the required information on the types of bases that
might be closed in future BRAC rounds by providing an indication of
areas where excess capacity continues to exist relative to 1989
levels.  DOD reiterated that it would need to use the detailed
analyses typical of a BRAC round to identify specific bases that
might be closed or realigned.  While we agree that more detailed
analyses would be required to identify individual bases to close or
realign, DOD could have been clearer about the types of bases that
might be closed or realigned if it had a strategic plan that
delineated future requirements, excess capacity, and plans for
revitalizing remaining infrastructure. 


OBJECTIVES, SCOPE, AND METHODOLOGY
=========================================================== Appendix V

To provide our analysis of DOD's report on base realignment and
closure, we made an overall assessment of DOD's responsiveness to the
individual section 2824 reporting requirements and assessed
individual reporting topics, including the costs and savings from
prior BRAC rounds and estimated costs and savings from future BRAC
rounds, the impact of prior BRAC rounds on military capabilities,
excess capacity, base reuse and economic recovery of communities
affected by BRAC actions, and processes DOD would use to select bases
for closure or realignment should further BRAC rounds be authorized. 

To assess DOD's estimates of the costs and savings associated with
previous BRAC rounds, we reviewed the methodology and original budget
justification estimates DOD provided to the Congress.  For BRAC 1988
and BRAC 1991 inputs, we interviewed representatives of the Logistics
Management Institute, which assisted DOD in developing its report and
new analysis, to obtain information on how they developed the new
analysis of costs and savings estimates.  For BRAC 1993 and BRAC 1995
inputs, we interviewed DOD IG officials and reviewed IG documents,
which were used to support DOD's estimates.  Also, we compared DOD's
conclusions with our previous work on BRAC costs and savings,
information previously reported for certain BRAC actions and
accounts, and the fiscal year 1999 Future Years Defense Program.  In
addition, we discussed the costs and savings estimates with DOD
program and financial officials. 

We reviewed certain costs related to BRAC that are not contained in
the BRAC budget.  To assess federal agencies' economic assistance
provided to communities, we met with representatives of the Logistics
Management Institute to discuss data sources and reliability.  We
compared data DOD gathered from other agencies with our own analysis
of agency data on unemployment compensation, early retirements and
voluntary separations, and military health care. 

We verified that DOD's military and civilian personnel reduction
numbers generally matched those reported in DOD's budget
justification estimates and discussed with DOD and service officials
how personnel reductions are captured in budget documents.  We tested
the accuracy of savings estimates attributed to military and civilian
personnel reductions by asking each of the services to select one
example of a base closure from each of the four previous BRAC rounds
and provide supporting documentation, if available, that personnel
were, in fact, reduced from the services' end strengths as a result
of these BRAC actions.  Similarly, we asked the services to provide
the same information for each base closure in BRAC 1993, because that
BRAC round represented the most complete data.  (Data from 1988 and
1991 is incomplete, and BRAC 1995 is still being implemented.)
However, the services were unable to provide complete supporting
documentation to track these personnel reductions through the budget
process because they do not have adequate systems to fully separate
BRAC actions from other reductions.  Thus, the services were unable
to fully document the extent to which authorized end strengths of
military and civilian personnel were actually reduced as a result of
BRAC actions versus other actions. 

To analyze DOD's estimate of potential costs and savings from future
BRAC rounds, we examined DOD's methodology and assumptions.  We did
not verify the accuracy of the estimates of previous costs and
savings because, as DOD's report points out, data on actual savings
do not exist.  We traced the estimated net costs from DOD's analysis
of future costs and savings to its 1999-2003 Future Years Defense
Program. 

To assess DOD's conclusions about the impact of base closures on
military capabilities, we discussed the analysis with Joint Staff
officials and reviewed documentation on the analysis' methodology. 
We reviewed previously published studies and reports, which formed
the basis for the report's conclusions, including the Quadrennial
Defense Review, the Defense Reform Initiative, and our previous
reports.  We also discussed the report's conclusions with Joint Staff
officials and reviewed comments from the Commanders of the Special
Operations Command, the Pacific Command, and the Transportation
Command. 

To assess DOD's statements on base reuse and economic recovery, we
relied on the results of our prior and ongoing work.  We have been
requested to provide a separate report that includes an assessment of
the economic status of communities affected by BRAC actions and
address other BRAC issues. 

To assess DOD's estimates of excess capacity, we interviewed DOD and
service officials and reviewed documentation describing DOD's
methodology.  We verified DOD's calculations of increases in excess
capacity, but we did not independently verify the data reported by
the services.  To understand how DOD developed its sample of bases
for its analysis, we interviewed service officials and compared the
sample bases with previously reported base structure plans.  We
reviewed documentation pertaining to sample bases and the comparison
of the ratio of capacity to force structure in 1989 and 2003.  We
compared the conclusions of DOD's current analysis with previously
reported measures of excess capacity.  We discussed the analysis and
its conclusions with DOD and service officials. 


MAJOR CONTRIBUTORS TO THIS REPORT
========================================================== Appendix VI

NATIONAL SECURITY AND
INTERNATIONAL AFFAIRS DIVISION,
WASHINGTON, D.C. 

Barry W.  Holman, Associate Director
Mark A.  Pross, Evaluator-in-Charge
David F.  Combs, Senior Evaluator
Kay D.  Kuhlman, Senior Evaluator
Margaret G.  Morgan, Senior Evaluator
James R.  Reifsnyder, Senior Evaluator
Donald C.  Snyder, Economist

OFFICE OF THE GENERAL COUNSEL,
WASHINGTON, D.C. 

William T.  Woods, Assistant General Counsel

SAN FRANCISCO FIELD OFFICE

Julie M.  Hirshen, Senior Evaluator
Randolph D.  Jones, Senior Evaluator


RELATED GAO PRODUCTS
============================================================ Chapter 0

Future Years Defense Program:  Substantial Risks Remain in DOD's
1999-2003 Plan (GAO/NSIAD-98-204, July 31, 1998). 

Military Base Closures:  Issues Related to the Fiscal Year 1999
Budget Request (GAO/NSIAD-98-169, July 30, 1998). 

Defense Infrastructure:  Challenges Facing DOD in Implementing Reform
Initiatives (GAO/T-NSIAD-98-115, Mar.  18, 1998). 

Defense Management:  Challenges Facing DOD in Implementing Defense
Reform Initiatives (GAO/T-NSIAD/AIMD-98-122, Mar.  13, 1998). 

Air Force Bombers:  Moving More B-1s to the Reserves Could Save
Millions Without Reducing Mission Capability (GAO/NSIAD-98-64, Feb. 
26, 1998). 

Air Force Aircraft:  Reorganizing Mobility Aircraft Units Could
Reduce Costs (GAO/NSIAD-98-55, Jan.  21, 1998). 

Best Practices:  Elements Critical to Successfully Reducing Unneeded
RDT&E Infrastructure (GAO/NSIAD/RCED-98-23, Jan.  8, 1998). 

Air Force Privatization-in-Place:  Analysis of Aircraft and Missile
Guidance System Depot Repair Costs (GAO/NSIAD-98-35, Dec.  22, 1997). 

Military Sealift Command (GAO/NSIAD-98-40R, Oct.  9, 1997). 

Navy Depot Maintenance:  Privatizing Louisville Operations in Place
Is Not Cost-Effective (GAO/NSIAD-97-52, July 31, 1997). 

Military Bases:  Lessons Learned From Prior Base Closure Rounds
(GAO/NSIAD-97-151, July 25, 1997). 

Military Base Closures:  Detailed Budget Requests Could Improve
Visibility (GAO/NSIAD-97-170, July 14, 1997). 

Defense Infrastructure:  Demolition of Unneeded Buildings Can Help
Avoid Operating Costs (GAO/NSIAD-97-125, May 13, 1997). 

Army Aviation and Troop Command (GAO/NSIAD-97-142R, Apr.  22, 1997). 

Defense Depot Maintenance:  Uncertainties and Challenges DOD Faces in
Restructuring Its Depot Maintenance Program (GAO/T-NSIAD-97-111, Mar. 
18, 1997). 

High-Risk Series:  Defense Infrastructure (GAO/HR-97-7, Feb.  1997). 

Air Force Depot Maintenance:  Privatization-in-Place Plans Are Costly
While Excess Capacity Exists (GAO/NSIAD-97-13, Dec.  31, 1996). 

Navy Depot Maintenance:  Cost and Savings Issues Related to
Privatizing-in-Place at the Louisville, Kentucky, Depot
(GAO/NSIAD-96-202, Sept.  18, 1996). 

Army Depot Maintenance:  Privatization Without Further Downsizing
Increases Costly Excess Capacity (GAO/NSIAD-96-201, Sept.  18, 1996). 

Defense Acquisition Infrastructure:  Changes in RDT&E Laboratories
and Centers (GAO/NSIAD-96-221BR, Sept.  13, 1996). 

Military Base Closures:  Reducing High Costs of Environmental Cleanup
Requires Difficult Choices (GAO/NSIAD-96-172, Sept.  5, 1996). 

Military Bases:  Update on the Status of Bases Closed in 1988, 1991,
and 1993 (GAO/NSIAD-96-149, Aug.  6, 1996). 

Military Bases (GAO/NSIAD-96-216R, July 29, 1996). 

Military Bases:  Potential Reductions to the Fiscal Year 1997 Base
Closure Budget (GAO/NSIAD-96-158, July 15, 1996). 

DOD Infrastructure:  DOD Is Opening Unneeded Finance and Accounting
Offices (GAO/NSIAD-96-113, Apr.  16, 1996). 

Military Bases:  Closure and Realignment Savings Are Significant, but
Not Easily Quantified (GAO/NSIAD-96-67, Apr.  8, 1996). 

Army Aviation Testing:  Need to Reassess Consolidation Plan
(GAO/NSIAD-96-87, Mar.  15, 1996). 

DOD Infrastructure:  DOD's Planned Finance and Accounting Structure
Is Not Well Justified (GAO/NSIAD-95-127, Sept.  18, 1995). 

Military Bases (GAO/NSIAD-95-215R, Sept.  8, 1995). 

Military Bases:  Case Studies on Selected Bases Closed in 1988 and
1991 (GAO/NSIAD-95-139, Aug.  15, 1995). 

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

Military Bases:  Challenges in Identifying and Implementing Closure
Recommendations (GAO/T-NSIAD-95-107, Feb.  23, 1995). 

Military Bases:  Environmental Impact at Closing Installations
(GAO/NSIAD-95-70, Feb.  23, 1995). 

Aerospace Guidance/Metrology Center:  Cost Growth and Other Factors
Affect Closure and Privatization (GAO/NSIAD-95-60, Dec.  9, 1994). 

Military Bases:  Reuse Plans for Selected Bases Closed in 1988 and
1991 (GAO/NSIAD-95-3, Nov.  1, 1994). 

Navy Laboratories:  Concerns Regarding the Naval Undersea Warfare
Center's Suffolk Facility (GAO/NSIAD-94-143, June 22, 1994). 

Military Bases:  Analysis of DOD's Recommendations and Selection
Process for Closures and Realignments (GAO/NSIAD-93-173, Apr.  15,
1993). 

Military Bases:  Revised Cost and Saving Estimates for 1988 and 1991
Closures and Realignments (GAO/NSIAD-93-161, Mar.  31, 1993). 

Military Bases:  Transfer of Pease Air Force Base Slowed by
Environmental Concerns (GAO/NSIAD-93-111FS, Feb.  3, 1993). 

Military Bases:  Army Revised Cost Estimates for the Rock Island and
Other Realignments to Redstone (GAO/NSIAD-93-59FS, Nov.  23, 1992). 

Military Bases:  Varied Processes Used in Proposing Base Closures and
Realignments (GAO/NSIAD-91-133, Mar.  1, 1991). 

Military Bases:  Process Used by Services for January 1990 Base
Closure and Realignment Proposals (GAO/NSIAD-91-109, Jan.  7, 1991). 

Military Bases:  Response to Questions on the Realignment of Forts
Devens and Huachuca (GAO/NSIAD-90-235, Aug.  7, 1990). 

Military Bases:  An Analysis of the Commission's Realignment and
Closure Recommendations (GAO/NSIAD-90-42, Nov.  29, 1989). 

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