United States General Accounting Office

GAO Report to Congressional Committees

July 1998 MILITARY BASE

CLOSURES

Issues Related to the

Fiscal Year 1999

Budget Request

GAO/NSIAD-98-169

GAO United States

General Accounting Office

Washington, D.C. 20548

National Security and

International Affairs Division

B-279056 

July 30, 1998

Congressional Committees

Senate Report 105-52, dated July 22, 1997, on the 1998 Military

Construction Appropriations Bill requested the continuation of our annual

review of the Department of Defense’s (DOD) base closure accounts and its

budget request for base closure activities. Specifically, this report

discusses opportunities for offsetting the budget request for fiscal 

year 1999, including the validity of two proposed military construction

(MILCON) projects included in that request. Our scope and methodology are

described in appendix I.

Background In the late 1980s, DOD decided to close excess military bases because

changing national security requirements had resulted in a military base

structure that was larger than needed. Consequently, the Congress enacted

base realignment and closure (BRAC) legislation that instituted base closure

rounds in 1988, 1991, 1993, and 1995. For the 1991, 1993, and 1995 rounds,

the legislation required DOD to complete all closures and realignments

within 6 years from the date the President sent the BRAC Commission’s

recommendations and his approval to the Congress. Closure and

realignment actions for the 1988 and 1991 rounds were required to be

completed by September 30, 1995, and July 10, 1997, respectively. Actions

for the 1993 and 1995 rounds are to be completed by July 3, 1999, and

July 15, 2001, respectively.

The Congress established two base closure accounts to fund the closure

rounds. The first account, the DOD base closure account,1

 funded BRAC

activities for the 1988 round and the second account, the DOD base closure

account 1990,2

 funded BRAC activities for the 1991, 1993, and 1995 rounds.

DOD’s authority to obligate 1988 base closure account funds to close or

realign bases expired on September 30, 1995. After that date, funds in the

1988 account ceased to be available for new obligations3

 and may only be

1

The DOD base closure account (sometimes called the 1988 base closure account) was established by

section 207(a)(1) of the Defense Authorization Amendments and Base Closure and Realignment Act of

1988 (P.L. 100-526).

2

The 1990 base closure account was established by section 2906(a)(1) of the Defense Base Closure and

Realignment Act of 1990 (P.L. 101-510).

3

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.

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used to adjust and liquidate obligations already charged to the account.4

Unobligated funds in the account must remain there until the Congress

transfers them or the account is closed. According to DOD officials, the

account will be closed on September 30, 2000.5

 Appendix II discusses the

status of funds in the 1988 account.

A different set of rules applies, however, to the 1990 base closure account.

Funds in that account are available for an indefinite period.6

 New

obligations may be incurred and old obligations liquidated against the

account until the Secretary of the Defense closes it. As a consequence of

the 6-year implementation period for the 1991, 1993, and 1995 rounds, the

period provided to obligate appropriated funds differs by BRAC round. For

example, after July 10, 1997, unobligated funds7

 in the account were not

available to incur new obligations for BRAC 1991 closure or realignment

actions, except for (1) environmental restoration and mitigation, and

property management and disposal activities at BRAC 1991 sites and

(2) adjusting and liquidating obligations properly charged to the BRAC 1991

round.

The Congress, in appropriating funds to the 1990 base closure account,

gave DOD the flexibility to allocate funds by military service, budget

function, and BRAC installation.8

 The Congress recognized the complexities

of realigning and closing bases and of providing for environmental

restoration and mitigation. As a result, appropriations to the 1990 account

are structured in a manner that permits the Secretary of Defense to

redistribute unobligated balances as appropriate to avoid delays and

complete realignments and closures, along with environmental actions.

In March 1998, DOD requested more than $1.7 billion for the BRAC program

in fiscal year 1999.9

 As shown in table 1, the amount requested is getting

4

DOD Office of General Counsel’s memorandum, Aug. 30, 1995.

5

Unless otherwise specifically provided by law, an expired fixed appropriation account is generally

available for adjusting and liquidating obligations properly chargeable to that account for 5 years

following its period of availability for obligations. At the end of this 5-year expiration period, the

account is closed and all balances are permanently canceled. Any subsequent obligation adjustments

or payments incurred against canceled accounts are funded with current appropriations.

6

In the case of the 1990 base closure account, the unobligated balance and unliquidated obligations

were $1.8 billion and $2.7 billion, respectively, on Feb. 28, 1998. These amounts include $2.1 billion

appropriated in Sept. 1997 for fiscal year 1998.

7

DOD financial regulations define unobligated funds as balances of budgetary authority that remain

available for obligation.

8

DOD financial regulations define allocations as distributions of funds to an operating agency.

9

DOD base realignment and closure, revised budget request for fiscal year 1999, Mar. 1998.

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smaller each year as more implementation actions are completed. In

November 1997, the Office of the Under Secretary of Defense (OUSD)

Comptroller reported that approximately 97 percent of the $15.8 billion

made available for all four BRAC rounds was obligated.

Table 1: Comparison of DOD’s Fiscal

Year 1999 Budget Request With the

1997 and 1998 Appropriations

Dollars in thousands

BRAC rounds

1997

appropriations

1998

appropriations

1999 budget

request

1991 $352,800 $116,754

1993 971,925 768,702 $433,464

1995 1,182,749 1,175,398 1,297,240

Total $2,507,474 $2,060,854 $1,730,704

Results in Brief DOD and the military services have reduced the previous high unobligated

balances in the 1990 base closure account. However, there are

opportunities to offset the 1999 budget request. Our analysis of the 1990

account and the fiscal year 1999 BRAC budget request raises questions

about the need for $131.1 million included in the request. Specifically:

• From the 1990 base closure account, $35.7 million in proceeds generated

by BRAC activities that has not been reported to the Congress; $12.5 million

previously allocated but not needed for BRAC 1991 MILCON projects;

$7.8 million allocated but not needed for BRAC 1991 operation and

maintenance (O&M) activities; and $8.5 million previously allocated but not

needed for BRAC 1991 environmental projects.

• From the fiscal year 1998 BRAC appropriations, $26 million previously

withheld but ultimately was not needed for other higher priority programs.

• From the 1999 BRAC budget request, $40.6 million requested for two

separate MILCON projects may no longer be needed because the

requirements for one project have not been determined and the other has

already been funded.

Funding

Opportunities to

Offset the 1999 BRAC

Budget Request

Our analysis of the base closure account and the fiscal year 1999 BRAC

budget request raises questions about the need for $131.1 million included

in the request. Our questions center on (1) whether the budget request

could be offset by using unreported proceeds from BRAC actions, and funds

in the 1990 account are still needed for the BRAC 1991 round and (2) why

fiscal year 1998 appropriations were withheld from the BRAC program for

other purposes but never used. Further, the 1999 BRAC budget request

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contains funds for two MILCON projects that may no longer be needed in

fiscal year 1999.

Unreported Proceeds

From BRAC Activities

Could Be Used to Offset

the Request

The military services collected $35.7 million more in proceeds from land

sales and leases at closing or realigning bases than reported in the 1999

BRAC budget request (see table 2). Although estimated proceeds from land

sales and leases are usually used to offset budget requests,10 the

$35.7 million in unreported proceeds has not been used for the reasons

that are discussed below.

Table 2: Unreported Proceeds From

Land Sales and Leases by Military

Service Actual receipts

Dollars in thousands

Military

service Land sales Leases Total

Reported

proceedsa

Unreported

proceeds

Air Forceb $15,729 $5,262 $20,991 [$9,703]c $20,991

Army 111,463 542 112,005 108,080 3,925

Navy 9,617 4,140d 13,757 2,991 10,766

Total $136,809 $9,944 $146,753 $111,071 $35,682

Note: Cumulative figures.

aReported in the DOD base realignment and closure revised budget request for fiscal year 1999,

March 1998.

bAs of February 1998, only $9.6 million and $4.1 million from the Air Force’s BRAC land sales and

leases, respectively, had been deposited into the 1990 base closure account. The remaining

proceeds, of the $20,991, are being transferred from a suspense account to the 1990 account.

cAccording to Air Force officials, $9.7 million reported as proceeds in the 1999 BRAC budget

request was not proceeds from land sales or leases. The $9.7 million was collections from the city

of Chicago for costs resulting from the closure of the O’Hare International Airport Air Force

Reserve Station, Illinois. The city proposed the closure, and it is financing the full cost of

replacement facilities, moving, and related environmental analyses and cleanup activities.

dIncludes utility fees.

Statutes and DOD guidance state that proceeds from the transfer, lease, or

disposal of property due to the BRAC process shall be deposited into the

10Section 2906(a) of the 1990 Defense Base Closure and Realignment Act (P.L. 101-510) provides that

proceeds received from the lease, transfer or disposal of any property at a military installation closed

or realigned under the act shall be deposited into the 1990 base closure account. See also 

10 U.S.C 2667(D)(5). According to DOD officials, DOD Financial Management Regulation (vol. 12, ch.

13) Fiscal Policy for Base Closure and Realignment, requires these proceeds to be reported in the

annual DOD budget estimate request.

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base closure account.11 Proceeds deposited by a particular military service

will generally be allocated to that service’s BRAC program. However,

according to an official from the OUSD Comptroller, Defense Finance and

Accounting Service financial reports do not show that the $35.7 million in

unreported proceeds was deposited into the account by the responsible

military service.

Air Force Proceeds The $21 million in proceeds collected by the Air Force was not reported in

the 1999 budget request because procedures for fund use have only

recently been finalized and, as a result, program officials did not have

constructive receipts of those proceeds. Documents indicate that the

Defense Finance and Accounting Service started developing specific

disposition guidance in July 1992. While the guidance was being

developed, the proceeds were held in a suspense (temporary holding)

account. When the disposition guidance was finalized in 1998, Air Force

officials initiated actions to transfer the funds from the suspense account

to the 1990 base closure account. As of May 1998, only $9.6 million and

$4.1 million from the Air Force’s land sales and leases, respectively, had

been deposited into the 1990 account. Air Force officials plan to report

those proceeds in the budget submission for fiscal year 2000.

Further, Air Force officials said that they plan to use these proceeds to

partially offset unbudgeted costs (about $107.4 million in fiscal 

year 1998) related to the closure and realignment of McClellan Air Force

Base, California, and Kelly Air Force Base, Texas.12 Because the decisions

and plans for these BRAC actions were not finalized until November 1997

and not approved until February 1998, the Air Force did not budget for

them in the fiscal year 1998 BRAC budget submission. As a result, Air Force

officials told us that they will have a funding shortfall for its BRAC program

in fiscal year 1998.

Army Proceeds According to an Army official responsible for the BRAC program,

$3.9 million in unreported proceeds for the Army was collected after the

11Memorandum for the assistant secretaries of the military services, DOD base closure account, from

DOD Principal Deputy Comptroller, Jan. 3, 1990, and memorandum for the assistant secretaries of the

military services, financial management policy and procedures for base closure and realignment, from

the DOD Deputy Comptroller (Management Systems), Dec. 21, 1993.

12On May 7, 1998, Air Force officials provided cost estimates that indicate the Air Force will need an

additional $263.8 million for fiscal years 1998 and 1999 or a total of $335.4 million for fiscal 

years 1998-2003 to fund recent changes in the closure and realignment of these two bases. The revised

closure and realignment plan accelerates the departure of employees and related costs, such as

severance and leave pay, civilian change of station costs, procurement of equipment and supplies,

transportation of things, and minor construction. Further, the total estimated cost of personnel and

realignment has increased as a result of additional information on locations and population dispersion.

We did not validate these revised requirements.

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fiscal year 1999 budget submission and no estimate was included in the

submission because of the uncertainties in collecting revenues from BRAC

land sales and leases. The Army had planned to use the $3.9 million to

offset the budget submission for fiscal year 2000.

Navy Proceeds According to Navy officials, $9.3 million of the $10.8 million in unreported

proceeds was received after the Navy’s 1999 budget request was submitted

to DOD in September 1997 and, as a result, that amount was not included in

the submission. Further, these officials are reluctant to include estimated

proceeds in the annual budget process because of the uncertainties in

collecting BRAC revenues. For example, in the budget request for fiscal 

year 1997, the Navy estimated $243.9 million in land sales for the BRAC 1993

round. However, due primarily to less emphasis on selling surplus land

and a greater emphasis on economic benefits of transferring the property

to nearby communities, there were no proceeds. As a result, Navy officials

had to restructure the Navy’s BRAC program to meet this shortfall. In

addition, the Navy does not routinely include lease revenues in its budget

submissions but budgets for these proceeds to pay for caretaking costs on

closing installations.

Funds Allocated for BRAC

1991 MILCON

Requirements Could Be

Used to Offset the Request

During March and April of 1998, the military services had $12.5 million of

unobligated and unliquidated funds that was no longer required to support

previously valid BRAC 1991 MILCON projects (see table 3). We found no

instances where these funds were initially allocated or obligated for

unsupported MILCON requirements. Program requirements tend to change,

and in some cases disappear, as base closure and realignment actions are

implemented. Although the services have reprogrammed some funds to

other BRAC requirements, the $12.5 million represents additional available

funding that was not anticipated at the time the fiscal year 1999 budget

request was submitted to the Congress.

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Table 3: Funding Available for

Withdrawal and Deobligation From

BRAC 1991 MILCON Projects Funds available for

Dollars in thousands

Military service/major command Withdrawal Deobligation Total

Air Force

Army Corps of Engineersa $197 $197

Air Combat Command 25 25

Air Education and Training

Command

93 $22 115

Air Force Reserve 25 20 45

Air National Guard 104 104

Naval Facilities Engineering

Command

48 48

Army

Army Corps of Engineersb 11,278 11,278

Navy

Naval Facilities Engineering

Command

693 693

Total $12,463 $42 $12,505

Note: Withdrawal, in this case and in the following tables, is the transfer of unobligated funds

between an agency’s accounts and subaccounts and deobligation is the cancellation or

downward adjustment of previously recorded obligations.

aThese funds were initially allocated to the Air Force for specific BRAC MILCON projects. The Air

Force BRAC Office reallocated the funds to Army Corps of Engineers to construct the specified

projects.

bThese funds were initially allocated to the Army for specific BRAC MILCON projects. The Army

BRAC Office reallocated the funds to the Army Corps of Engineers to construct the specified

projects.

Source: Interviews in March and April 1998 with officials from the major commands. The Air

Force’s figures, except for the Army Corps of Engineers, were generated by the Office for

Financial Management and Comptroller, Directorate of Budget Investments (Construction), during

its review of account balances with the intent of realigning available funds to offset the Air Force’s

unfunded BRAC requirements in fiscal year 1998.

According to the Office of Management and Budget Circular No. A-34,

Instructions on Budget Execution, recoveries of prior year obligations that

have been deobligated are available for new obligations if their period of

availability has not expired. An official from the OUSD Comptroller Office

said that the military services should periodically review their unobligated

balances and unliquidated obligations so that the funds can be used for

unfunded requirements. Although the DOD Financial Management

Regulation provides financial policy and procedures for base closure and

realignment actions, the regulation does not specify procedures for

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reviewing (1) unobligated balances and promptly obligating funds to valid

requirements when original requirements no longer exist and

(2) unliquidated obligations and promptly deobligating excess obligations

when final costs are known. Program officials from several major

commands said that validating the need for their unliquidated obligations

was not a priority until 1998.13

In February 1998, the Army initiated a review of its unliquidated balances

for the BRAC MILCON program.14 The Chief of the Army BRAC Office said that,

although BRAC execution significantly improved during fiscal year 1997,

poor execution in the first half of the fiscal year continued to be a

problem. A particular area of concern was the large carryover balance of

unobligated funds appropriated prior to fiscal year 1998. During the

review, program officials verified that execution of the 1998 program had

started.

Also in February 1998, the Air Force initiated a review of the unobligated

balances and unliquidated obligations for its BRAC program.15 During the

review, program officials verified the requirements for their unobligated

balances and unliquidated obligations. As a result, Air Force officials

identified funds that were no longer needed to support previously valid

program requirements. The Air Force intends to realign these available

funds, shown in tables 3, 4, and 5, to offset the 1998 funding shortfall

resulting from the closure and realignment of McClellan and Kelly Air

Force Bases.

Funds Allocated for BRAC

1991 O&M Activities Could

Be Used to Offset the

Request

During March and April 1998, the military services allocated $7.8 million

from the 1990 base closure account to fund BRAC 1991 O&M requirements

that no longer existed (see table 4). Similar to allocations for MILCON

projects, we found no instances where funds were initially allocated or

obligated for invalid O&M requirements. Although the services have

reprogrammed some funds to other BRAC requirements, the $7.8 million

13Our recent audit of the federal government’s fiscal year 1997 consolidated financial statements

identified billions of dollars in DOD unreconciled cash disbursement activity. As a result of these

accounting problems, DOD has not recorded all obligations and expenditures to specific budgetary

accounts. See Financial Audit: 1997 Consolidated Financial Statements of the United States

Government (GAO/AIMD-98-127, Mar. 31, 1998).

14Memorandum for Commander, U.S. Army Corps of Engineers, BRAC execution review; from the

Chief, Army BRAC Office; Feb. 13, 1998.

15Memorandum for distribution, BRAC unobligated balances and unliquidated obligations, from the

Deputy Assistant Secretary (Budget) and the Deputy Assistant Secretary of the Air Force (Installation),

Feb. 26, 1998.

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represents additional available funding that was not anticipated at the time

the fiscal year 1999 budget request was submitted to the Congress.

Table 4: Funding Available for

Withdrawal and Deobligation From

BRAC 1991 O&M Activities Funds available for

Dollars in thousands

Military service/major command Withdrawal Deobligation Total

Air Force

Air Force service organizations $691 $691

Air Combat Command 1,245 $3 1,248

Air Education and Training

Command

183 38 221

Air Force Reserve 31 25 56

Air Mobility Command 1 27 28

Air National Guard 2,149 2,149

Army

Army Materiel Command 6 1,706 1,712

Army Medical Command 255 255

Army Training and Doctrine

Command

557 557

U.S. Army Forces Command 134 134

Navy

Naval Facilities Engineering

Command

756 756

Total $6,008 $1,799 $7,807

Source: Interviews in March and April 1998 with officials from the major commands. The Air

Force’s figures were also generated by the Office for Financial Management and Comptroller,

Directorate of Budget Investments (Construction), during its review of account balances with the

intent of realigning available funds to offset the Air Force’s unfunded BRAC requirements in fiscal

year 1998.

The OUSD Comptroller Office has reduced unobligated O&M balances in the

1990 base closure acount. During the review of the services’ budget

requests for fiscal year 1999, the OUSD Comptroller Office deferred

$34.5 million (requested by the Army and the Air Force) to later years

because of poor execution of O&M funds in fiscal years 1995, 1996, and

1997.16 The Comptroller Office concluded that requesting more funds than

can be obligated during a year ties up valuable budget resources that could

be used more effectively.

16Based on unobligated O&M balances for fiscal years 1995-97, the reviewing official had initially

recommended that $17 million and $35.5 million requested by the Army and the Air Force,

respectively, be deferred from fiscal year 1999 to fiscal year 2000. Subsequently, the recommended

reduction for the Air Force was decreased to $17.5 million.

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Funds Allocated to BRAC

1991 Environmental

Projects Could Be Used to

Offset the Request

During March and April 1998, the military services allocated $8.5 million

from the 1990 base closure account for BRAC 1991 environmental

requirements that no longer existed (see table 5). Similar to allocations for

MILCON projects and O&M activities, we found no instances where these

funds were initially allocated or obligated for invalid requirements.

Although the services have reprogrammed some funds, this amount

represents additional available funding that was not anticipated at the time

the fiscal year 1999 budget request was submitted to the Congress.

Table 5: Funding Available for

Withdrawal and Deobligation From

BRAC 1991 Environmental Projects Funds available for

Dollars in thousands

Military service/major command Withdrawal Deobligation Total

Air Force

Air Force service organizations $1,440 $2,127 $3,567

Air Combat Command 3,390 3,390

Air Education and Training

Command

85 393 478

Army

Army Medical Command 149 149

U.S. Army Forces Command 374 374

Navy

Naval Air Systems Command 1 357 358

Naval Facilities Engineering

Command

174 174

Total $5,239 $3,251 $8,490

Source: Interviews in March and April 1998 with officials from the major commands. The Air

Force’s figures were generated by the Office for Financial Management and Comptroller,

Directorate of Budget Investments (Construction), during its review of account balances with the

intent of realigning available funds to offset the Air Force’s unfunded BRAC requirements in fiscal

year 1998.

The Air Force Audit Agency has issued the following two reports

expressing concern about the use of funds allocated to BRAC

environmental projects.

• In September 1995, the audit agency reported that BRAC funding did not

match requirements and obligation rates could be improved by

streamlining procedures for environmental contracting and providing

better guidance to the major commands.17

17Review of the Base Closure Account, Air Force Audit Agency (Project 94058022, Sept. 1, 1995).

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• In April 1997, the agency reported that the Air Force had $20.8 million in

excess to its BRAC environmental requirements.18 Neither the team leaders

nor funding management personnel could accurately account for

environmental restoration costs by project.

In October 1997, the Army Assistant Chief of Staff for Installation

Management expressed his concern about the poor financial performance

of the Army BRAC environmental program.19 Although the Army had

obligated over $1.1 billion for BRAC environmental restoration, over

$339 million remained unliquidated. According to the Assistant Chief of

Staff, the entire BRAC program was vulnerable to budget reductions and

reprogramming actions if the Army’s major commands did not act quickly

to reduce the unliquidated balance. He concluded that the balance should

be reduced to use idle environmental funds productively. As a result of

this effort, the Army reduced its unliquidated balance for its BRAC

environmental projects.

Funds Appropriated and

Previously Withheld From

BRAC Activities in Fiscal

Year 1998 Could Be Used

to Offset the Request

DOD withheld $26 million appropriated in fiscal year 1998 from the BRAC

program that could be used to offset the fiscal year 1999 BRAC budget

request. In December 1997, based on the administration’s estimated

savings from a lower than expected inflation rate, the OUSD Comptroller

Office withheld these BRAC funds from the military services. Although the

$26 million was put in a holding account for potential reprogramming for

other higher priority programs, the money was never used for these

programs. An official in the OUSD Comptroller Office said that withholding

these funds did not adversely affect the BRAC program because the services

were able to carry out their programs as budgeted due to a lower inflation

rate. The OUSD Comptroller Office released the funds to the services for

BRAC activities on March 24, 1998. Thus, the $26 million represents

additional available funding that was not anticipated at the time the fiscal

year 1999 budget request was submitted to the Congress.

The 1999 Budget Request

Contains Funds for Two

MILCON Projects That Are

No Longer Required

The 1999 BRAC budget request contains $40.6 million for two MILCON

projects for which requirements have not been determined or have already

been funded. The two projects are an Army medical warehouse

18Environmental Cleanup at Bases Selected for Closure, Air Force Audit Agency (Project 96052039,

Apr. 7, 1997).

19Memorandum for distribution: BRAC Environmental Program Disbursements (Outlays), from the

Army Assistant Chief of Staff for Installation Management, Oct. 31, 1997.

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($31 million) and an Army headquarters building for the Military

Transportation Management Command (MTMC) ($9.6 million).

$31 Million Requested for a

Warehouse Before

Requirements Have Been

Determined

The Defense Logistics Agency (DLA) requested $31 million that requested

to build a Deployable Medical Systems warehouse for the Army, although

the requirements for the warehouse had not been determined. Recently,

DLA officials questioned the Army’s estimated requirements for the

warehouse.

In it’s June 1997 report, the DOD Inspector General recommended

withholding the $31 million requested until officials decided where the

warehouse should be located.20 Although DLA adequately justified the

requirements for the BRAC 1995 project, the Army had not decided whether

DLA should continue to provide the reimbursable support for the

Deployable Medical Systems, or where it wanted the workload performed.

In response to the DOD recommendation, DLA has agreed not to program

MILCON funds until it has a commitment from the Army on where to locate

the warehouse. Although the Army has decided that the warehouse and

related operations should be located at Hill Air Force Base, Utah, the size

of the warehouse still has not been determined.

In March 1998, DLA officials expressed reservations about maintaining the

full scope of the warehouse as requested in the 1999 BRAC budget request.21

According to Army planning documents provided to DLA, the $45.3 million

programmed for the project in fiscal year 1998 is estimated to decrease to

$6.1 million in fiscal year 2005. The two major causes for this decrease are

the projected reduction in the Army force structure and the potential

impact of a medical reengineering initiative. In addition, the Army has

decided not to move two programs (the Associated Support Items of

Equipment Repair Program and Reserve Component Hospital Decrement

Program) of the Deployable Medical Systems mission to Hill Air Force

Base as planned. Instead, these programs will be moved to the Sierra Army

Depot, California.

As of May 4, 1998, DLA officials were revalidating these requirements and

resizing the project. According to one agency estimate, a 50-percent

reduction in the Deployable Medical Systems mission equates to a

43-percent reduction in the project’s square footage. However, as of May 4,

20Defense Base Realignment and Closure Budget Data for the Relocation of Deployable Medical

Systems to Hill Air Force Base, Ogden, Utah; Office of the Inspector General, DOD; June 26, 1997.

21Memorandum for the Commander, Defense Distribution Center, from the Executive Director,

DLA-Resource, Planning & Performance, Mar. 30, 1998.

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1998, DLA officials were unable to provide a revised cost estimate that

could be included in the 1999 budget request for this project. Historically,

the OUSD Comptroller Office has withheld funds for MILCON projects when

requirements are undecided.

$9.6 Million Requested for

Headquarters Building Has

Already Been Funded

In the 1999 budget request, the Army requested $9.6 million for a MTMC

headquarters building that has already been funded. The Army needed the

funds to renovate one building and construct an addition at Fort Eustis,

Virginia, to support the relocation and consolidation of MTMC Oakland

Army Base and the Bayonne Military Ocean Terminal, New Jersey.

However, DOD and Army officials said that BRAC funds have already been

awarded for the project and the reprogramming action should be

completed by June 1998. As a result, it no longer needs the $9.6 million

included in the 1999 budget request for the MTMC headquarters building.

Conclusions DOD and the military services have reduced the previous high unobligated

balance in the 1990 base closure account. However, our analysis of the

1990 account and the fiscal year 1999 BRAC budget request raises questions

about the need for $131.1 million included in the request. Our questions

center on the potential (1) use of unreported proceeds from BRAC actions,

unused funds allocated to the BRAC 1991 round, and withheld BRAC

appropriations from fiscal year 1998 to offset equivalent amounts of

funding included in the 1999 budget request and (2) need for funding

requested for two MILCON projects, where the requirements for one project

have not been determined and the other has already been funded.

Matters for

Congressional

Consideration

As the Congress develops the budget authority for DOD’s base closure

activities in fiscal year 1999, it may wish to consider appropriating up to

$131.1 million less than DOD is requesting in its fiscal year 1999 BRAC budget

submission because prior year funds are available to meet these

requirements and the request to fund two MILCON projects could be

eliminated.

Agency Comments

and Our Evaluation

In commenting on a draft of this report, DOD did not concur that its request

should be reduced by $131.1 million. Specifically, DOD stated that

(1) $35.7 million in unreported proceeds generated by BRAC activities is

unavailable to offset fiscal year 1999 requirements because the proceeds

have been or will be reprogrammed to cover unfunded requirements,

Page 13 GAO/NSIAD-98-169 Military Base Closures
B-279056 

(2) $54.8 million in unobligated balances22 is unavailable as an offset since

it has already been earmarked for other unfunded requirements,

(3) $40.6 million for two separate MILCON projects is unavailable for offset

because previously approved actions that were deferred until 1999 still

need to be fully funded, and (4) reductions of this magnitude will eliminate

the management flexibility envisioned by the Congress and, adversely

impact DOD’s ability to close installations and speed the economic recovery

of affected communities.

We continue to believe the Congress may wish to consider appropriating

up to $131.1 million less than DOD requested in its fiscal year 1999 BRAC

budget because prior year funds are available to meet requirements and

the request to fund two MILCON projects can be eliminated. DOD’s fiscal 

year 1999 budget request did not reflect $35.7 million in proceeds that was

collected but not included in the request. Public law and DOD guidance

provide that proceeds generated from BRAC actions be reported in DOD’s

annual budget estimate request. Further, the military services have

reprogrammed some funds to other BRAC requirements; however,

$54.8 million in unobligated balances represents additional available

funding that was not anticipated at the time the fiscal year 1999 budget

request was submitted to the Congress. After the budget submission, the

major commands and the Army Corp of Engineers found that the

requirements for these funds no longer existed and could provide no

evidence where they would use the unobligated balances.

Also, the 1999 budget request contains $40.6 million for two MILCON

projects that are no longer needed. DLA officials continue to question the

Army’s $31 million in requirements for a medical warehouse and could not

provide a revised cost estimate for inclusion in the 1999 budget request. In

addition, DOD agreed that the $9.6 million requested for the MTMC

headquarters building has already been funded. While DOD said this

$40.6 million could be used to fund other actions that had been deferred,

we found no evidence of deferred actions that still needed to be fully

funded.

Finally, regarding DOD’s concern that reductions of the magnitude

suggested by our report would limit management flexibility envisioned by

the Congress and adversely impact the Department’s ability to close

installations, we agree that the Congress provided the Department with

flexibility to reprogram funds. At the same time, the Congress approves

22This $54.8 million includes $12.5 million for BRAC 1991 MILCON projects; $7.8 million for BRAC 1991

O&M activities; $8.5 million for BRAC 1991 environmental projects; and $26 million for fiscal year 1998

BRAC appropriations withheld but ultimately not needed for other higher priority programs.

Page 14 GAO/NSIAD-98-169 Military Base Closures
B-279056 

funding and the OUSD Comptroller Office makes funds available to the DOD

components based on their official, detailed budget justification and

financial plan. At the time we completed our review, only the Air Force,

indicated a specific need associated with the funds we identified as

available to offset DOD’s fiscal year 1999 budget request. The Air Force told

us they planned to use the funds to help reduce a shortfall in the money

needed to close two bases. However, the OUSD Comptroller Office has not

yet formally approved the reprogramming of these funds.

We are sending copies of this report to the Secretaries of Defense, the

Army, the Navy, and the Air Force; the Director, Office of Management and

Budget; and other interested parties. We will also make copies available to

others upon request.

Please contact me at (202) 512-8412 if you or your staff have any questions

concerning this report. Major contributors to this report are listed in

appendix IV.

David R. Warren, Director

Defense Management Issues

Page 15 GAO/NSIAD-98-169 Military Base Closures
B-279056 

List of Congressional Committees

The Honorable Conrad Burns

Chairman

The Honorable Patty Murray

Ranking Minority Member

Subcommittee on Military Construction

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 Ron Packard

Chairman

The Honorable Bill Hefner

Ranking Minority Member

Subcommittee on Military Construction

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

Page 16 GAO/NSIAD-98-169 Military Base Closures
Page 17 GAO/NSIAD-98-169 Military Base Closures
Contents

Letter 1

Appendix I 

Scope and

Methodology

20

Appendix II 

Status of Funds in the

1988 Base Closure

Account

23

Appendix III 

Comments From the

Department of

Defense

25

Appendix IV 

Major Contributors to

This Report

29

Related GAO Products 32

Tables Table 1: Comparison of DOD’s Fiscal Year 1999 Budget Request

with the 1997 and 1998 Appropriations

3

Table 2: Unreported Proceeds From Land Sales and Leases by

Military Service

4

Table 3: Funding Available for Withdrawal and Deobligation

From BRAC 1991 MILCON Projects

7

Table 4: Funding Available for Withdrawal and Deobligation

From BRAC 1991 O&M Activities

9

Table 5: Funding Available for Withdrawal and Deobligation

From BRAC 1991 Environmental Projects

10

Figure Figure II.1: Unobligated Balances in the 1988 Base Closure

Account Since September 30, 1996

23

Page 18 GAO/NSIAD-98-169 Military Base Closures
Contents

Abbreviations

BRAC base realignment and closure

DLA Defense Logistics Agency

DOD Department of Defense

MILCON military construction

MTMC Military Transportation Management Command

O&M operation and maintenance

OUSD Office of the Under Secretary of Defense

Page 19 GAO/NSIAD-98-169 Military Base Closures
Appendix I 

Scope and Methodology

During our review, we interviewed and obtained data from Department of

Defense (DOD) officials, including those from the Defense Logistics Agency

(DLA), Defense Finance and Accounting Service, the DOD Inspector

General, Air Force, Army, and Navy. Within the Air Force, we met with

officials of the Office of the Chief of Staff, the Office for Financial

Management and Comptroller, the Air Force Base Conversion Agency, the

Air Combat Command, the Air Education and Training Command, the Air

Mobility Command, and the 11th Wing. Army officials we met with were

the Assistant Chief of Staff for Installation Management, the Office of the

Comptroller, the Corps of Engineers, the U.S. Army Forces Command, the

Communications-Electronics Command, the Materiel Command, the

Medical Command, the Military Traffic Management Command (MTMC), the

Training and Doctrine Command, and the Army Military District of

Washington. Within the Navy, we met with officials of the Naval Facilities

Engineering Command, Office of the Comptroller, Naval Air Systems

Command, Naval Sea Systems Command, and Naval Audit Service.

To identify funding opportunities for offsetting DOD’s budget request, we

focused on identifying prior year appropriations that had not been

obligated or liquidated and that may be available to fund base realignment

and closure (BRAC) activities during fiscal year 1999. Because BRAC actions

for the 1988 and 1991 rounds were required to be completed by 

September 30, 1995, and July 10, 1997, respectively, we questioned the

need for the unobligated funds and unliquidated obligations that were still

allocated for these rounds. We examined a variety of DOD and military

services budget and financial documents; analyzed implementation

legislation for the base closure accounts; examined budget execution data

for BRAC military construction (MILCON), operations and maintenance, and

environmental funds; compared execution data with the Office of

Management and Budget and DOD guidance and goals; assessed initiatives

to improve financial performance; and reviewed guidance on the use of

funds in the base closure accounts and recent audits that focused on

unobligated balances and unliquidated obligations in the accounts.

We discussed the need for the unobligated funds and unliquidated

obligations (in the 1988 base closure account) for the 1988 round with

officials from DOD, the military services, and several major commands to

determine their availability to fund other BRAC requirements. Additionally,

we discussed the need for the unobligated funds and unliquidated

obligations (in the 1990 base closure account) for the 1991 round with

officials from DOD, the military services, and several major commands to

identify funding that may be available during fiscal year 1999 that was not

Page 20 GAO/NSIAD-98-169 Military Base Closures
Appendix I 

Scope and Methodology

anticipated at the time the BRAC budget request was submitted to the

Congress. Our 1998 audit of the federal governments fiscal year 1997

consolidated financial statements identified billions of dollars in DOD

unreconciled cash disbursement activity. As a result of these accounting

problems, we reconciled the reported unliquidated obligations with the

major commands to verify that all transactions had been recorded for

those BRAC projects and activities with balances that could be deobligated.

We also compared data on proceeds from land sales and leases with those

reported in the 1999 budget request to identify BRAC revenues that had not

been reported to the Congress and not used to offset DOD’s budget requests

for fiscal year 1999 and prior years.

To validate DOD’s budget request for fiscal year 1999, including the MILCON

projects, we reviewed fiscal year 1999 and prior year budget requests and

supporting justifications for DOD, DLA, Defense Information Systems

Agency, and military services. We obtained and reviewed data on

requirements to support the budget request for selected bases and

subaccounts. We reviewed Office of Management and Budget and DOD

guidance on the preparation and justification of budget requests, policy

guidance and submission requirements for the fiscal year 1999 BRAC budget

request and prior budget requests, internal review procedures for

validating budget submissions from major commands, and DOD program

budget decision documents. We compared data on recently completed

BRAC actions with the 1999 budget request to verify that budgeted

requirements were still valid.

We also compared the amounts requested for operations and maintenance

activities and environmental projects at installations in the 1999 budget

request with their unobligated balances and unliquidated obligations. We

discussed the results of this comparison with officials from DOD, the

military services, and several major commands to verify that additional

appropriations were needed to fund 1999 requirements for these

installations. We reviewed recent audits that have focused on MILCON

projects in the 1999 budget request and prior requests to determine the

magnitude, scope, and results of the audits. To verify MILCON requirements

we compared the audit results with the MILCON projects included in the

1999 budget request to determine whether the results were reflected in the

budget request. We discussed our comparison with officials from DLA and

the military services to determine whether the MILCON projects and

requirements were still valid.

Page 21 GAO/NSIAD-98-169 Military Base Closures
Appendix I 

Scope and Methodology

In performing this review, we used the same accounting systems, reports,

and statistics the military services use to monitor their BRAC programs. We

did not independently determine the reliability of this information.

We conducted our review from December 1997 to May 1998 in accordance

with generally accepted government auditing standards.

Page 22 GAO/NSIAD-98-169 Military Base Closures
Appendix II 

Status of Funds in the 1988 Base Closure

Account

On February 28, 1998, the 1988 base closure account contained

$45.8 million in unobligated funds.1

 As shown in figure II.1, this funding is

up from $30.6 million in September 1996. According to program officials,

this increase occurred because the military services deobligated funds

from requirements that no longer exist. Program requirements tend to

change, and in some cases disappear, as BRAC actions are implemented. As

the services’ deobligation process continues, the unobligated balance in

the 1988 account will increase.

Figure II.1: Unobligated Balances in

the 1988 Base Closure Account Since

September 30, 1996

Dollars in millions

0

10.0

20.0

30.0

40.0

50.0

9/30/96 9/30/97 10/31/97 11/30/97 12/31/97 1/31/98 2/28/98

Air Force

Army

Navy

Unallocated

Source: Appropriation Status by Fiscal Year Program and Subaccounts, DDCOMP (M) 1002s, as

dated above.

1

On Feb. 28, 1998, unliquidated obligations in the account totaled $136.3 million.

Page 23 GAO/NSIAD-98-169 Military Base Closures
Appendix II 

Status of Funds in the 1988 Base Closure

Account

Program officials stated, pursuant to a DOD Office of General Counsel’s

memorandum, the $45.8 million in unobligated funds in the 1988 account

will be used only to adjust and liquidate obligations that have already been

charged to the account. Although several officials believe this requirement

is likely not to be significant, there is no DOD criteria for determining the

amount to reserve in expired accounts for this potential requirement. An

official in the Office of the Under Secretary of Defense (Comptroller) said

that he would reserve $25.8 million in the 1988 account to make any future

adjustments and liquidations.

Page 24 GAO/NSIAD-98-169 Military Base Closures
Appendix III 

Comments From the Department of Defense

Note: GAO comments

supplementing those in the

report text appear at the

end of this appendix.

See comment 1.

See comment 2.

See comment 3.

Page 25 GAO/NSIAD-98-169 Military Base Closures
Appendix III 

Comments From the Department of Defense

Page 26 GAO/NSIAD-98-169 Military Base Closures
Appendix III 

Comments From the Department of Defense

The following are GAO’s comments on the letter from the Under Secretary

of Defense (OUSD) Comptroller, dated June 18, 1998.

GAO Comments 1. We continue to believe that the Congress may wish to consider

offsetting DOD’s 1999 budget request by $35.7 million in unreported

proceeds from land sales and leases that was not reflected in the DOD’s or

the military services’ 1999 budget request submissions. Public law and DOD

financial management regulations and guidance provide that proceeds

received from the transfer, lease, or disposal of property due to the BRAC

process shall be deposited into the 1990 base closure account and shall be

reported in the annual DOD budget estimate request. At the time we

completed our review, we found no evidence, nor had DOD provided

supporting documentation to show the $35.7 million had been or would be

reprogrammed to cover unanticipated fiscal year 1998 expenses or for the

requirement to transfer proceeds to a reserve account associated with the

transfer or disposal of a commissary or nonappropriated fund facility.

2. We agree that the military services have reprogrammed some funds to

other BRAC requirements. We also recognize that program requirements

tend to change, and in some cases disappear, as base closure and

realignment actions are implemented. However, the $54.8 million in

unobligated balances represents additional available funding that was not

anticipated at the time the fiscal year 1999 budget request was submitted

to the Congress in February 1998. The $54.8 million was identified during

interviews in March and April 1998 with officials from the services’ major

commands and the Army Corps of Engineers. As a result of reviews of

their unobligated balances and unliquidated obligations during February,

March, and April 1998, the major commands and the Army Corps of

Engineers found that the requirements for these funds no longer existed.

At the time of our review, DOD, the Army, and the Navy could not provide

supporting documentation that showed where they would use the

unobligated balances, nor did they identify plans to redesignate for other

BRAC needs those funds we identified as potentially available to offset

DOD’s fiscal year 1999 budget request. Only the Air Force, in May 1998 after

DOD submitted its budget estimate, identified a need to use some of these

funds to reduce a shortfall it identified for two closing bases.

3. We continue to believe that the 1999 BRAC budget request contains

$40.6 million for two separate military construction projects that are no

longer required. DOD requested $31 million for DLA to build a medical

warehouse for the Army, even though the requirements for the warehouse

Page 27 GAO/NSIAD-98-169 Military Base Closures
Appendix III 

Comments From the Department of Defense

have not been determined. As of May 4, 1998, DLA officials continued to

question the Army’s requirements for the warehouse and were unable to

provide a revised cost estimate for the project that could be included in

the 1999 budget request. It has been the OUSD Comptroller’s policy to not

fund MILCON projects where requirements are not determined. DOD agreed

that the Army’s MTMC headquarters building request for $9.6 million had

already been funded. DOD asserts that these funds are still needed to

refund previously approved actions where the funds were reprogrammed

to accommodate an accelerated construction schedule. However, at the

time of our review, we found no evidence of deferred actions that still

needed to be fully funded.

Page 28 GAO/NSIAD-98-169 Military Base Closures
Appendix IV 

Major Contributors to This Report

National Security and

International Affairs

Division, Washington,

D.C.

Barry W. Holman, Associate Director

Thomas J. Howard, Assistant Director

William W. Crocker III, Assistant Director

Mark A. Little, Evaluator-in-Charge

Claudia J. Dickey, Evaluator

Norfolk Field Office Tracy W. Banks, Evaluator

Page 29 GAO/NSIAD-98-169 Military Base Closures
Page 30 GAO/NSIAD-98-169 Military Base Closures
Page 31 GAO/NSIAD-98-169 Military Base Closures
Related GAO Products

Military Base Closures: Detailed Budget Requests Could Improve Visibility

(GAO/NSIAD-97-170, July 14, 1997).

Military Bases: Cost to Maintain Inactive Ammunition Plants and Closed

Bases Could Be Reduced (GAO/NSIAD-97-56, Feb. 20, 1997).

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: Potential Reductions to the Fiscal Year 1997 Base Closure

Budget (GAO/NSIAD-96-158, July 15, 1996).

Military Bases: Closure and Realignment Savings Are Significant, but Not

Easily Quantified (GAO/NSIAD-96-67, Apr. 8, 1996).

Closing Maintenance Depots: Savings, Workload, and Redistribution

Issues (GAO/NSIAD-96-29, Mar. 4, 1996).

Military Bases: Case Studies on Selected Bases Closed in 1988 and 1991

(GAO/NSIAD-95-139, Aug. 15, 1995).

Military Bases: Environmental Impact at Closing Installations

(GAO/NSIAD-95-70, Feb. 23, 1995).

Military Bases: Reuse Plans for Selected Bases Closed in 1988 and 1991

(GAO/NSIAD-95-3, Nov. 1, 1994).

(709306) Page 32 GAO/NSIAD-98-169 Military Base Closures
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