DEFENSE 

INFRASTRUCTURE

Documentation Lacking to 

Fully Support How DOD 

Determined Specifications 

for the Landstuhl 

Replacement Medical 

Center

Report to the Subcommittee on Military 

Construction, Veterans Affairs, and 

Related Agencies, Committee on 

Appropriations, U.S. Senate

May 2012

GAO-12-622

United States Government Accountability Office

GAO
United States Government Accountability Office

Highlights of GAO-12-622, a report to the 

Subcommittee on Military Construction, 

Veterans Affairs, and Related Agencies, 

Committee on Appropriations, U.S. Senate

May 2012

DEFENSE INFRASTRUCTURE

Documentation Lacking to Fully Support How DOD 

Determined Specifications for the Landstuhl 

Replacement Medical Center

Why GAO Did This Study

Landstuhl Regional Medical Center 

(LRMC) is DOD’s only tertiary medical 

center in Europe that provides 

specialized care for servicemembers, 

retirees, and their dependents. 

Wounded servicemembers requiring 

critical care are medically evacuated 

from overseas operations to the 86th 

Medical Group clinic at Ramstein Air 

Base to receive stabilization care 

before being transported to LRMC for 

intensive care. According to DOD, both 

facilities were constructed in the 1950s 

and are undersized to meet current 

and projected workload requirements. 

DOD plans to consolidate both facilities 

into a single medical center at an 

estimated cost of $1.2 billion. In this 

report, GAO (1) describes how DOD 

considered changes in posture and the 

beneficiary population when 

developing facility requirements, 

(2) assesses DOD’s process for 

determining facility requirements, and 

(3) reviews DOD’s process to develop 

the facility’s cost estimate. GAO 

examined posture planning 

documentation, beneficiary 

demographic data, plans for the 

replacement medical center, and 

relevant DOD guidance, as well as 

interviewed relevant DOD officials.

What GAO Recommends

GAO recommends that DOD provide 

clear and thorough documentation of 

how it determined the facility’s size and 

cost estimate, correct any calculation 

errors, and update its cost estimate to 

reflect these corrections and recent 

posture changes. In commenting on a 

draft of this report, DOD concurred with 

GAO’s recommendations and stated 

that it has conducted a reassessment 

of the project that will be released once 

approved by the Secretary of Defense.

What GAO Found 

Department of Defense (DOD) officials considered current beneficiary population 

data, contingency operations, and most of the expected changes in troop 

strength when planning for the replacement medical center. However, recently 

announced posture changes in January 2012 have yet to be assessed for their 

impact on the facility. DOD estimates that the replacement medical center will 

provide health care for nearly 250,000 beneficiaries. A majority of those who are 

expected to receive health care from the center come from within a 55-mile 

radius of the facility. DOD officials told us that because the replacement medical 

center was designed for peacetime operations—with the capacity to expand to 

meet the needs of contingency operations—reductions in ongoing contingency 

operations in Afghanistan would not have an impact on facility requirements. At 

the time of this review, DOD officials said they were in the process of assessing 

proposed changes in posture to better understand their possible impact on the 

sizing of the replacement medical center.

DOD officials incorporated patient quality of care standards as well as 

environmentally friendly design elements in determining facility requirements for 

the replacement medical center. DOD also determined the size of the facility 

based on its projected patient workload. Internal control standards require the 

creation and maintenance of adequate documentation, which should be clear 

and readily available for examination to inform decision making. However, GAO’s 

review of the documentation DOD provided in support of its facility requirements 

showed (1) inconsistencies in how DOD applied projected patient workload data 

and planning criteria to determine the appropriate size for individual medical 

departments, (2) some areas where the documentation did not clearly 

demonstrate how planners applied criteria to generate requirements, and 

(3) calculation errors throughout. Without clear documentation of key analyses—

including information on how adjustments to facility requirements were made—

and without correct calculations, stakeholders and decision makers lack 

reasonable assurances that the replacement medical center will be appropriately 

sized to meet the needs of the expected beneficiary population in Europe.

DOD’s process for developing the approximately $1.2 billion cost estimate for the 

replacement medical center was substantially consistent with many cost

estimating best practices, such as cross-checking major cost elements to confirm 

similar results. However, DOD minimally documented the data sources, 

calculations, and estimating methodologies it used in developing the cost 

estimate. Additionally, DOD anticipates that the new facility will become the hub 

of a larger medical-services-related campus, for which neither cost estimates nor 

time frames have yet been developed. Without a cost estimate for the facility that 

includes detailed documentation, DOD cannot fully demonstrate that the 

proposed replacement medical center will provide adequate health care capacity 

at the current estimated cost. Further, DOD and Congress may not have the 

information they need to make fully informed decisions about the facility.

View GAO-11-622. For more information, 

contact James R. McTigue, Jr. at (202) 512-

7968 or mctiguej@gao.gov or Debra A. Draper 

at (202) 512-7114 or draperd@gao.gov. 
Page i GAO-12-622 Replacement Medical Center at Landstuhl

Letter 1 

Background 4

DOD Considered Beneficiary Data, Contingency Operations, and 

Posture Changes in Sizing Its Replacement Medical Center but 

Has Not Assessed More Recent Posture Changes 8

DOD Incorporated Quality Standards When Determining Facility 

Requirements, but Inadequate Documentation Makes It Unclear 

Whether DOD Adhered to Its Own Guidance 19

DOD’s Cost Estimate Was Not Well Documented, and Cost 

Elements for Associated Facilities Have Yet to Be Developed 28

Conclusions 37

Recommendations for Executive Action 38

Agency Comments and Our Evaluation 39

Appendix I Objectives, Scope, and Methodology 41

Appendix II Catchment Area Populations by Beneficiary Category, Fiscal Years 

2006 through 2011 44

Appendix III Detailed Information on Each of the Cost Estimating Characteristics 45

Appendix IV Comments from the Department of Defense 47

Appendix V GAO Contacts and Staff Acknowledgments 50

Tables

Table 1: Landstuhl Regional Medical Center (LRMC) Catchment 

Areas, by Beneficiary Category, as of March 2010 12

Table 2: Patient Migration Patterns for the Landstuhl Regional 

Medical Center (LRMC) and the 86th Medical Group 

(MDG) at Ramstein Air Base in Fiscal Year 2009 13

Table 3: Proposed Sizing Requirements for the Replacement 

Medical Center 23

Contents
Page ii GAO-12-622 Replacement Medical Center at Landstuhl

Table 4: Summary Assessment of the Results of DOD Cost 

Estimating Process for the Replacement Medical Center as 

Compared to Best Practices 30

Table 5: Characteristics of High-Quality and Reliable Cost 

Estimates 45

Figures

Figure 1: Overview of DOD Medical Treatment Facilities 

Requirements and Project Costs Process 7

Figure 2: Location of Four Catchment Areas Used to Define Patient 

Migration to Landstuhl Regional Medical Center 10

Figure 3: DOD Military Installations in Europe with Expected 

Posture Changes That May Affect Replacement Medical 

Center Facility Requirements 15

Abbreviations

DOD Department of Defense

EUCOM European Command

ICU intensive-care unit

LEED Leadership in Energy and Environmental Design

LRMC Landstuhl Regional Medical Center

MDG Medical Group

MHS Military Health System

OMB Office of Management and Budget

USAG U.S. Army Garrison 

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Page 1 GAO-12-622 Replacement Medical Center at Landstuhl

United States Government Accountability Office

Washington, DC 20548

May 25, 2012

The Honorable Tim Johnson

Chairman

The Honorable Mark Kirk

Ranking Member

Subcommittee on Military Construction, Veterans Affairs, 

and Related Agencies

Committee on Appropriations

United States Senate

The Army’s Landstuhl Regional Medical Center (LRMC), in Germany, is 

the Department of Defense’s (DOD) only tertiary care medical center in 

the European Command (EUCOM) area of responsibility. As a tertiary 

care center, LRMC provides specialized diagnostic and treatment 

services, such as cardiology and neurosurgery, which are not available at 

all medical facilities that provide acute inpatient care, for approximately 

248,000 beneficiaries, including servicemembers and their families as 

well as retirees and their families. Wounded servicemembers requiring 

critical care are medically evacuated from overseas operations—including 

Afghanistan—to Ramstein Air Base where the 86th Medical Group (MDG) 

provides them immediate stabilization care on the flight line and then 

transports them directly to LRMC for definitive care.

Both of these facilities were initially constructed in the 1950s and 

according to DOD are deficient in meeting the department’s life safety 

and force protection requirements, are out of compliance with many 

building codes, have limited room in which to expand or renovate, and are 

undersized to meet current and projected patient workload requirements. 

In 2008, DOD approved plans to renovate and reconstruct the two 

facilities at their existing locations. In 2009, the Senate Appropriations 

Committee directed the department to complete a site assessment and 

conduct a cost-benefit analysis on the proposed location for the 

replacement medical center.1

 

1

S. Rep. No. 111-40, at 20-21 (2009). The committee noted that Ramstein Air Base, 

adjacent to Landstuhl, is the transport hub for combat casualties and could potentially 

accommodate the new medical center, and directed DOD to conduct a cost-benefit 

analysis of locating the replacement medical center at its current location or on Ramstein 

Air Base.

The Office of the Deputy Under Secretary 

 
 

Page 2 GAO-12-622 Replacement Medical Center at Landstuhl

of Defense (Installations and Environment) conducted an analysis, which 

determined that consolidating the two facilities at one location, at a total 

estimated cost of $1.2 billion, would be more efficient and cost-effective 

than renovating both at their current locations. In January 2012, DOD 

completed the initial design phase of the replacement medical center. 

However, in December 2011, the Consolidated Appropriations Act, 2012, 

required that among other things, the Secretary of Defense recertify to the 

Appropriations Committees in writing that the replacement medical center 

was properly sized and scoped to meet current and projected health care 

requirements.2

DOD is also in the process of reassessing its force structure plans for 

Europe and is planning to reduce the number of brigade combat teams 

and the size of the military service component commands in Europe, 

among other things. Adjustments to DOD posture, in combination with the 

construction of a new medical center, have raised questions about the 

appropriate size for the replacement facility as well as the types of 

services it is to provide. Your subcommittee asked GAO to review DOD’s 

plans for the replacement medical center, including how DOD determined 

the appropriate size for the facility and the types of services it will need to 

provide. In response, this report (1) describes how DOD officials

considered potential changes to DOD’s posture in Europe—and their 

possible effect on the beneficiary population—when developing facility 

requirements for the replacement medical center, (2) assesses DOD’s 

process for determining facility requirements for the replacement medical 

center to determine to what extent it incorporated recently developed 

quality standards into the facility’s design and adhered to DOD guidance, 

and (3) reviews the process used to develop the cost estimate for the 

facility to determine to what extent DOD followed established best 

practices for developing its cost estimate. 

During the course of our review, DOD was in the process 

of conducting this recertification.

To describe how DOD officials considered potential changes to DOD’s 

posture in Europe—and their possible effect on the beneficiary 

population—when developing facility requirements for the replacement 

medical center, we obtained available posture planning documentation, 

including population estimates, and compared it with the beneficiary 

population data used in planning assumptions for the replacement 

 

2

Pub. L. No. 112-74, 125 Stat. 1138 (2011). 
 

Page 3 GAO-12-622 Replacement Medical Center at Landstuhl

medical center. We met with officials from the Offices of the Assistant 

Secretary of Defense (Health Affairs) and the Deputy Under Secretary of 

Defense (Installations and Environment), EUCOM, U.S. Army Europe, 

and U.S. Air Forces Europe to gain insight into possible scenarios that 

are being considered for posture changes in Europe. We also discussed 

with these officials the steps they had taken to ensure the reasonable 

accuracy of DOD beneficiary data and determined that the data 

specifically related to the proposed replacement medical center were 

sufficiently reliable for the purposes of this report. 

To assess DOD’s process for determining facility requirements for the 

replacement medical center to determine to what extent it incorporated 

quality standards into its design and adhered to DOD guidance, we 

obtained and reviewed documentation used to develop plans for the 

proposed replacement medical center, such as health care requirements 

analyses and facility designs. We also reviewed relevant 

documentation—including checklists—to determine whether DOD 

included quality and environmentally friendly standards. We also 

identified key assumptions used to determine facility requirements for the 

replacement medical center and obtained and reviewed applicable legal 

and departmental guidance, including DOD instructions and directives, 

and compared them with the documented assumptions and methods

used to develop the facility’s requirements. We also met with medical and 

construction planners at the Office of the Assistant Secretary of Defense 

(Health Affairs), the TRICARE Management Activity, U.S. Army Medical 

Command, LRMC, the Air Force Medical Support Agency, and the 86th

MDG to discuss how they determined the size of the replacement medical 

center. 

To review the process used to develop the cost estimate for the facility to 

determine to what extent DOD followed established best practices for 

developing its cost estimate, we obtained and reviewed available cost 

estimates for the proposed replacement medical center, as well as 

supporting documentation. We evaluated this information using GAO’s 

standardized methodology of cost estimating best practices.3

 

3

GAO, GAO Cost Estimating and Assessment Guide: Best Practices for Developing and 

Managing Capital Program Costs, 

We 

determined whether technical baseline documentation exists and is 

reflected in the estimate. We also discussed project costs with officials 

GAO-09-3SP (Washington, D.C.: March 2009).
 

Page 4 GAO-12-622 Replacement Medical Center at Landstuhl

from the Office of the Assistant Secretary of Defense (Health Affairs), the 

TRICARE Management Activity, and the U.S. Army Corps of Engineers, 

among others.

We conducted this performance audit from July 2011 through May 2012 

in accordance with generally accepted government auditing standards. 

Those standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that 

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives. Further details on our scope 

and methodology can be found in appendix I.

The Military Health System operated by DOD is large and complex and 

has a dual health care mission—readiness and benefits. The readiness 

mission provides medical services and support to the armed forces during 

contingency operations and involves deploying medical personnel and 

equipment, as needed, around the world to support military forces. The 

benefits mission provides medical services and support to members of 

the armed forces, their family members, and others eligible for DOD 

health care, such as retired servicemembers and their families.4

DOD’s delivery of health care services includes, among other things, 

inpatient and outpatient care. Inpatient care refers to care for a patient 

who is formally admitted to a hospital or an institution for treatment, or 

care. Outpatient care, also known as ambulatory care, refers to health

DOD’s 

health care mission is carried out directly through military medical

centers, hospitals, and clinics throughout the United States and overseas, 

commonly referred to as military treatment facilities, as well as by civilian 

health care providers through TRICARE. Military treatment facilities make 

up DOD’s direct care system for providing health care to beneficiaries. 

 

4

Eligible beneficiaries include active duty personnel and their dependents, medically 

eligible Reserve and National Guard personnel and their dependents, and retirees and 

their dependents and survivors. TRICARE is the health care program serving active duty 

servicemembers, National Guard and Reserve members, retirees, their families, survivors, 

and certain former spouses worldwide. As a major component of the Military Health 

System, TRICARE brings together the health care resources of the uniformed services 

and supplements them with networks of civilian health care professionals, institutions, 

pharmacies, and suppliers to provide access to health care services while also 

maintaining the capability to support military operations.

Background
 

Page 5 GAO-12-622 Replacement Medical Center at Landstuhl

care services for an actual or potential disease, injury, or lifestyle-related 

problem that does not require admission to a medical treatment facility for 

inpatient care. 

The Assistant Secretary of Defense (Health Affairs) is responsible for 

ensuring the effective execution of DOD’s health care mission and 

exercises authority, direction, and control over medical personnel 

authorizations and policy, facilities, funding, and other resources within 

DOD.

5

In 2008, the TRICARE Management Activity approved plans to renovate 

LRMC and the 86th MDG clinic at their existing locations. The initial 

LRMC plans included renovation of the inpatient tower; construction of an 

additional tower for emergency medicine, inpatient nursing units, and 

other clinical and support activities; and demolition of older facilities. The 

initial plans for the 86th MDG clinic included construction of a single 

building to consolidate health care services provided at separate facilities 

that currently make up the 86th MDG clinic. In 2009, the Office of the 

Deputy Under Secretary of Defense (Installations and Environment), 

together with Health Affairs, conducted a cost-benefit analysis that 

included consideration of alternative sites as well as consolidation of the 

two projects into a single medical center, and determined that 

consolidating the aging LRMC and 86th MDG clinic into one new facility 

that provides tertiary care in an area adjacent to Ramstein Air Base, 

known as the Weilerbach Storage Area, would be more efficient and costeffective than pursuing two separate renovation or reconstruction 

projects. The replacement medical center will be operated and 

maintained by the Army, with the Air Force to provide clinical services that 

are currently offered at the 86th MDG clinic.

The TRICARE Management Activity operates under the authority, 

direction, and control of Health Affairs.

The version of DOD’s guidance governing the planning and acquisition of 

military health facilities (DOD Instruction 6015.17) that was in effect when 

the facility requirements for the replacement medical center were 

determined in 2010 described the procedures to be used by the military 

 

5

For purposes of this report, the Office of the Assistant Secretary of Defense (Health 

Affairs) will be referred to as Health Affairs. 

Facility Requirements 

Process
 

Page 6 GAO-12-622 Replacement Medical Center at Landstuhl

departments to prepare project proposals for military treatment facilities.6

This instruction also identified the types of documentation needed to 

support a project proposal. The documentation includes, among other 

things, the current and projected beneficiary population served in a 

military treatment facility’s catchment area, as well as current and 

projected staffing and workload data.7 Army Medical Command, with 

input from the Air Force Medical Support Agency, developed a report that 

summarizes the projected health care requirements for Military Health 

System beneficiaries in the areas served by the proposed medical 

center.8 Generally, the combination of workload data and staffing 

requirements are key considerations for determining the size and 

configuration of military treatment facilities. These facility space 

requirements are identified in a Program for Design document, which lists 

square footage requirements per medical department and room. The 

estimated square footage is then used as the basis for developing overall 

project cost estimates as reflected on DD Form 1391 (Military 

Construction Project Data), the standard format used throughout DOD to 

support the planning and execution of military construction projects. 

Figure 1 provides an illustration of the process used in determining 

project costs for the replacement medical center.

 

6

DOD Instruction 6015.17, Planning and Acquisition of Military Health Facilities (Mar. 17, 

1983) (canceled by DOD Instruction 6015.17, Military Health System (MHS) Facility 

Portfolio Management (Jan. 13, 2012)). 

7

Catchment areas are geographic areas determined by the Assistant Secretary of 

Defense for Health Affairs that are usually within an approximately 40-mile radius of 

military treatment facilities with inpatient care. 

8

U.S. Army Medical Command, Updated (FY10) Health Care Requirements Analysis

(Washington, D.C.: December 2010). The health care requirements analysis report serves 

as the basis for the planning and programming of the replacement medical center.
 

Page 7 GAO-12-622 Replacement Medical Center at Landstuhl

Figure 1: Overview of DOD Medical Treatment Facilities Requirements and Project 

Costs Process
 

Page 8 GAO-12-622 Replacement Medical Center at Landstuhl

In planning for the proposed replacement medical center, DOD officials 

considered beneficiary population data, contingency operations, and 

changes or expected changes in troop strength known at the time. 

However, more recent posture changes, announced in January 2012, are 

currently being assessed by military medical officials for their impact on 

the replacement medical center. DOD used beneficiary population data 

as of March 2010 and data on historical patterns of patient migration to 

identify the areas served by the proposed replacement medical center. A 

majority of the beneficiaries expected to receive health care from the 

replacement medical center are located within a 55-mile radius of it. DOD 

officials told us that because the replacement medical center was 

designed for peacetime operations—with the capacity to expand to meet 

the needs of contingency operations—reductions in ongoing contingency 

operations in Afghanistan would not have an impact on facility 

requirements.

9 DOD posture in Europe has been reduced over the past 

few years, and DOD had previously announced that one of four brigade 

combat teams currently stationed in Europe would be removed by 2015. 

According to DOD officials, this posture change was not expected to have 

a significant impact on the size of the replacement medical center 

because DOD plans to continue to use the facilities at Baumholder, 

Germany, which will be vacated by the brigade combat team, for other 

DOD personnel. In January 2012, DOD announced its decision to remove

a second brigade combat team currently stationed in Europe, thereby 

reducing the remaining number of brigade combat teams in Europe to 

two—one stationed in Germany and the other in Italy. At the time of our 

review, DOD officials told us that they were in the process of assessing 

these proposed changes in posture to better understand their 

ramifications for DOD’s medical facility needs. 

The replacement medical center will serve as the only tertiary-level 

referral hospital for the EUCOM, Central Command, and Africa Command 

theaters of operation. Because of these unique aspects, according to 

medical planners they did not use typical DOD catchment area standards. 

Military treatment facilities are typically designed to offer sufficient health 

care for active duty beneficiaries and their dependents within a 40-mile 

radius of the military treatment facility. In the case of LRMC, medical 

 

9

The United States ended combat operations in Iraq in August 2010 and completed the 

removal of most of its troops in December 2011. 

DOD Considered 

Beneficiary Data, 

Contingency 

Operations, and 

Posture Changes in 

Sizing Its 

Replacement Medical 

Center but Has Not 

Assessed More 

Recent Posture

Changes 

Beneficiary Population 

Areas Are Defined Using 

Historical Patterns of 

Patient Migration
 

Page 9 GAO-12-622 Replacement Medical Center at Landstuhl

planners determined that the historical patterns of care indicated that this 

area should be a 55-mile radius. Medical planners in the Office of the 

Secretary of Defense, the Army, and the Air Force analyzed historical 

patterns of patient migration and contingency operations at LRMC and 

the 86th MDG to define four catchment areas.10

 

10Medical planners are from the TRICARE Management Activity, Portfolio Planning and 

Management Division; the Army Medical Command, Assistant Chief of Staff for Facilities, 

Programming and Planning Division; and the Air Force Health Facilities Division.

See figure 2 for the 

location of these four catchment areas.
 

Page 10 GAO-12-622 Replacement Medical Center at Landstuhl

Figure 2: Location of Four Catchment Areas Used to Define Patient Migration to 

Landstuhl Regional Medical Center 

Note: European Command also includes all of Russia, Greenland, and Iceland.
 

Page 11 GAO-12-622 Replacement Medical Center at Landstuhl

The four catchment areas, as defined by military medical planners, are 

based on populations of patients who are enrolled as beneficiaries or who 

are eligible to enroll for the following locations:

1. The Kaiserslautern Military Community catchment area includes all 

beneficiaries enrolled in LRMC, 86th MDG, and Kleber/Kaiserslautern 

military treatment facilities. This catchment area is approximately 55-

miles in radius surrounding the proposed facility’s site.

2. The Germany-wide catchment area includes all beneficiaries enrolled 

in the Kaiserslautern Military Community catchment area plus 

beneficiaries enrolled in the military treatment facilities in Germany. 

This catchment area definition was essential in determining the 

patterns of enrolled beneficiaries’ use of German health care.11

3. The Europe Regional Medical Command catchment area includes all 

beneficiaries in the Germany-wide catchment area plus beneficiaries 

enrolled in all military treatment facilities in Italy and Belgium. This 

catchment area reflects historical inpatient referral patterns at LRMC.

4. The EUCOM catchment area includes all enrolled beneficiaries and 

eligible beneficiaries in Europe, including all beneficiaries in the other 

three catchment areas.

Table 1 shows the beneficiary population, by catchment area and 

beneficiary category, as of March 2010. In appendix II we include 

catchment area populations by beneficiary category, for fiscal years 2006 

through 2011.

 

11Military beneficiaries are frequently sent to the German health care system because 

there is not sufficient capacity at LRMC to treat all requirements. This is especially true 

when there are surges from contingency operations.
 

Page 12 GAO-12-622 Replacement Medical Center at Landstuhl

Table 1: Landstuhl Regional Medical Center (LRMC) Catchment Areas, by 

Beneficiary Category, as of March 2010

Catchment area

Beneficiary population

Active 

duty

Active duty 

family 

members

Retirees and 

others

March 2010 

total a

Kaiserslautern Military 

Community (enrolled)

b

13,713 c 16,781 3,955 34,449

Germany-wide 

(enrolled) 54,460 59,649 11,366 125,475 

Europe Regional 

Medical Command 

(enrolled) 66,068 d 73,993 13,033 153,094

European Commande

(eligible) 107,818 f 96,746 43,603 248,167

Source: DOD. 

a

“Others” includes retiree family members.

b

Totals as of March 2010.

c

An enrolled beneficiary is defined as a TRICARE beneficiary who has elected to receive DOD’s 

managed care options (TRICARE Prime, TRICARE Prime Remote, and TRICARE Prime Remote for 

Active Duty Family Members, the US Family Health Plan, TRICARE Prime Overseas, or TRICARE 

Global Remote Overseas) by enrolling in a military treatment facility. 

d

Europe Regional Medical Command consists of beneficiaries enrolled in military treatment facilities 

located in Germany, Italy, and Belgium. According to DOD analysis, this catchment area reflects 

historical inpatient referral patterns at LRMC. 

e

The European Command catchment area consists of beneficiaries in TRICARE’s Region 13: 

“Europe.” This region includes beneficiaries in both European Command and Central Command.

f

Eligible beneficiaries include active duty personnel and their dependents, medically eligible Reserve 

and National Guard personnel and their dependents, and retirees and their dependents and 

survivors.

According to DOD officials, the flow of patients from theaters of operation, 

including contingency operations, minimally affects the volume of 

inpatient care at LRMC and outpatient care at both LRMC and 86th MDG. 

Table 2 shows that approximately half of all inpatient care at LRMC, a 

little more than 77 percent of outpatient care at LRMC, and almost 96 

percent of outpatient care at the 86th MDG is provided to beneficiaries 

located within the Kaiserslautern Military Community catchment area as 

well as the Germany-wide catchment area.
 

Page 13 GAO-12-622 Replacement Medical Center at Landstuhl

Table 2: Patient Migration Patterns for the Landstuhl Regional Medical Center (LRMC) and the 86th Medical Group (MDG) at 

Ramstein Air Base in Fiscal Year 2009

Percentages

Germany-wide 

catchment area

Europe Regional Medical 

Command and European 

Command catchment areas a Contingency operations b Total

LRMC inpatient days of care 49.9 39.6 10.5 100

LRMC outpatient encounters 77.3 14.0 8.7 100

86th MDG outpatient encounters 95.7 2.7 1.6 100

Source: DOD. 

a

The Germany-wide catchment area includes those beneficiaries in the Kaiserslautern Military 

Community catchment area.

b

Percentage of inpatient days of care and outpatient encounters for the European Command and 

Europe Regional Medical Command catchment areas do not include those days of care and 

encounters from the Germany-wide catchment area.

According to DOD officials, the replacement medical center is being sized 

for peacetime operations, not for contingency operations. However, these 

officials told us that the replacement medical center is being designed 

with the flexibility to expand capacity during surges to be able to handle 

casualties that result from contingency operations.12

DOD officials determined that the replacement medical center should be 

able to accommodate contingency operations’ medical needs similar to 

those experienced in Fallujah, Iraq, during November 2004, in which the 

United States sustained about 100 casualties and 600 wounded over a 2-

month period. For this reason, the new medical center is designed to be 

able to nearly double its medical/surgical bed capacity if needed to 

support contingency operations.

According to Army officials, to mitigate the increase in patient workload 

resulting from surges caused by contingency operations, the new medical 

center will follow the procedures currently in use at LRMC. These 

procedures require that priority be given to active duty servicemembers, 

and therefore, other beneficiaries normally treated at LRMC would be 

directed to German health care facilities during a time when surge 

 

12The replacement medical center is designed with 60 single-patient medical/surgical 

inpatient rooms, 50 of which have the flexibility to expand to accept two beds for surge 

capacity. We provide a more comprehensive discussion of the medical center’s sizing 

requirements in a later section. 

Replacement Medical 

Center Is Designed for 

Peacetime Operations, 

with Flexible Capacity to 

Accommodate 

Contingency Operations
 

Page 14 GAO-12-622 Replacement Medical Center at Landstuhl

capability is needed (and capacity is constrained) and then redirected 

back to LRMC when the workload from contingency operations lessens. 

DOD has been reducing its military posture in Europe since German 

reunification in 1990. At its peak, the United States had approximately 

350,000 active duty servicemembers stationed in EUCOM’s area of 

responsibility. The size of DOD’s military posture in EUCOM’s area of 

responsibility is currently estimated at about 78,000 active duty 

servicemembers. DOD has been reducing its medical treatment capacity 

over time to correspond to the reduction in the number of military 

servicemembers stationed in Europe. Today, LRMC is DOD’s only 

remaining tertiary care medical center in Europe. Furthermore, it is the 

only medical center in Europe, Asia, or Africa that serves beneficiaries 

from the EUCOM, Central Command, Africa Command, and Special 

Operations Command areas of responsibility. 

In 2004, DOD announced its plans for an overseas basing strategy that 

called for reducing the number of Army brigade combat teams stationed 

in Europe from four to two. However, in the February 2010 Quadrennial 

Defense Review, DOD decided that it would retain all four Army brigade 

combat teams in Europe, rather than returning two to the United States as

originally planned. Moreover, in April 2011, based on several factors, 

including consultations with allies and the findings of the North Atlantic 

Treaty Organization's new Strategic Concept, DOD announced that it 

planned to remove by 2015 only a single brigade combat team from 

Europe. According to DOD officials, the brigade they anticipated removing 

from Europe was stationed at U.S. Army Garrison (USAG) Baumholder, 

Germany, initially leaving brigades at USAG Grafenwoehr and USAG 

Vilseck, which are located close to one another in Germany and at USAG 

Vicenza, Italy. There are also elements of the Grafenwoehr brigade at 

USAG Schweinfurt, Germany. DOD also has plans to eventually close 

four Army locations in Germany—Heidelberg, Mannheim, Bamberg, and 

Schweinfurt. As a result of these closures, the elements of the 

Grafenwoehr brigade at Schweinfurt were expected to move to 

Grafenwoehr when Schweinfurt closed. As of the date of this report, the 

four brigade combat teams are still assigned at their original locations in 

EUCOM. The April 2011 announcement also included a DOD decision to 

station four Aegis Cruisers in Spain, a change that would increase the 

military beneficiary population in Europe. Figure 3 shows the locations of 

DOD military installations in Europe where posture changes are expected 

to take place that could affect the facility requirements for the 

replacement medical center.

Earlier Posture Reduction 

Decisions Not Expected to 

Affect Replacement 

Medical Center Size, but 

More Recent Posture 

Changes Have Yet to Be 

Evaluated 
 

Page 15 GAO-12-622 Replacement Medical Center at Landstuhl

Figure 3: DOD Military Installations in Europe with Expected Posture Changes That May Affect Replacement Medical Center 

Facility Requirements 

The brigade combat team currently located at Baumholder is within the 

Kaiserslautern Military Community catchment area and is expected to 
 

Page 16 GAO-12-622 Replacement Medical Center at Landstuhl

reduce the beneficiary population when it leaves.13 According to Army 

officials, the brigade consists of approximately 4,200 soldiers, who are 

accompanied by about 6,300 dependents.14 However, according to DOD 

officials, when this brigade leaves Baumholder other DOD personnel will 

be restationed there because Baumholder is considered an enduring 

installation with accessible joint military training facilities nearby.15

DOD officials told us that even though the beneficiary population at 

Baumholder will be reduced, they expect this change to have little impact 

on the workload and sizing requirements for the replacement medical 

center. In October 2009, DOD hired an independent contractor, Noblis, to 

perform a sensitivity analysis that would provide an order of magnitude 

estimate of potential changes to the beneficiary population that would 

need to occur to affect the size of the facility.

Army 

officials also told us that because some of the housing at Baumholder is 

substandard, they expect only 2,300 to 3,500 servicemembers to move to 

Baumholder. Using the Army ratio of 1.5 dependents to each military 

member indicates that as approximately 10,500 servicemembers and 

their dependents who are medical beneficiaries of LRMC leave the 

catchment area, they will be replaced by 5,750 to 8,750 new 

servicemembers and their dependents—an overall reduction in the 

Kaiserslautern Military Community catchment area of from 4,750 to 1,750 

beneficiaries.

16

 

13USAG Baumholder is approximately 17 miles north and west of LRMC, and falls within 

the Kaiserslautern Military Community catchment area that extends about 55 miles from 

the facility.

This sensitivity analysis 

was further refined and updated in 2010. It specifically assessed the type 

of population changes that would require the addition or subtraction of 

intensive-care unit (ICU) and medical/surgical beds, as well as specialty 

care exam rooms for outpatients. The analysis concluded that the 

planned capacities for the replacement medical center would be resilient 

to sizable changes in the population served.

14Army officials noted that the Army uses a ratio of 1.5 dependents to each military 

member to estimate the number of dependents that will be leaving the area.

15An enduring installation is one that is permanent and lasting.

16Noblis, Landstuhl Regional Medical Center (LRMC) Sensitivity Analysis (Oct.29, 2009; 

updated Aug. 12, 2010).
 

Page 17 GAO-12-622 Replacement Medical Center at Landstuhl

• A population change of up to 70,000 beneficiaries—a change in the 

total EUCOM beneficiary population of about 29 percent—would 

necessitate resizing of the requirements for ICU or medical/surgical 

beds by the addition or subtraction of a 20-bed module.17

• A population change of 25,000 to 31,000 beneficiaries—a change in 

the total EUCOM beneficiary population of between 10 percent and 13 

percent would necessitate re-sizing requirements for specialty care 

exam rooms by the addition or subtraction of an 8 to 10 exam room 

module.18

DOD officials told us that changes in the beneficiary population are 

expected to occur in the EUCOM catchment area through 2015. Although 

some of these changes will increase the population in certain locations, 

the overall change will be a reduction in the overall number of 

beneficiaries in EUCOM’s area of responsibility. The following beneficiary 

changes are expected:

• The Army expects a reduction in the Europe Regional Medical 

Command’s active duty servicemembers and their dependents’ 

population of about 21,000—a reduction in the total EUCOM 

beneficiary population by about 8 percent—by fiscal year 2015, 

according to the Updated (FY10) Health Care Requirements 

Analysis.

19

• The Air Force does not expect a change in its beneficiary population 

through fiscal year 2015.

However, it does not expect a significant change to the 

beneficiary population in the immediate Kaiserslautern Military 

Community catchment area.

• The Navy expects to gain about 1,200 sailors from the stationing of 

the Aegis Cruisers in Rota, Spain, along with about 1,300 additional 

dependents—for a total increase of about 2,500 beneficiaries, or a 1 

percent gain in the total EUCOM beneficiary population.

 

17According to the Noblis analysis, ICU and medical/surgical beds are typically designed 

in 20 to 30 bed increments.

18According to the Noblis sensitivity analysis, modern health care design calls for modules 

of 8 to 10 exam rooms.

19U.S. Army Medical Command, Updated (FY10) Health Care Requirements Analysis. 

The health care requirements analysis report states that the EUCOM beneficiary 

population will be reduced by about 10,300 active duty servicemembers and about 10,600 

family members.
 

Page 18 GAO-12-622 Replacement Medical Center at Landstuhl

Based on the results of DOD’s 2009 sensitivity analysis, the expected 

changes would not necessitate a change in the number of ICU beds, 

medical/surgical beds, or outpatient exam rooms.

In January 2012, however, DOD announced new posture decisions that 

will further reduce EUCOM’s troop strength. According to DOD, these 

posture decisions are part of a deficit reduction package based on the 

Budget Control Act of 201120 requirement to reduce the department’s 

future expenditures by approximately $487 billion21

According to the January 2012 DOD publication Defense Budget 

Priorities and Choices, DOD has updated its April 2011 plans for its 

European basing strategy and has stated that it intends to now remove 

two brigade combat teams from Europe.

over the next decade. 

EUCOM data indicate that by 2015 approximately 71,500 active duty 

military servicemembers will remain in Europe following the latest 

changes to DOD’s European posture. 

22

DOD’s decision to remove two brigades from Europe and how this shift in 

troop numbers will affect health care requirements in the EUCOM area of 

responsibility have yet to be fully determined. However, DOD officials 

noted that they did not believe the removal of a second brigade combat 

team would affect the beneficiary population of the replacement medical 

center because the second brigade is currently stationed outside the 

immediate Kaiserslautern Military Community catchment area. DOD 

officials told us that they have started a review to confirm that the shift in 

DOD posture will not affect the requirements for the proposed 

replacement medical center. They noted that recent troop reductions are 

being studied to determine what impact, if any, they will have on the 

proposed size of the replacement medical center. They also noted that 

they are developing a sensitivity analysis to accommodate the information 

and will include it as part of DOD’s statutorily required recertification of 

These two brigades are 

currently located at Baumholder and Grafenwoehr with elements of the 

brigade in Grafenwoehr located in Schweinfurt. As a result, the elements 

in Schweinfurt will not relocate to Grafenwoehr as previously planned.

 

20Pub. L. No. 112-25 (2011).

21This number reflects DOD’s reported approximation of the reductions required by the 

Budget Control Act of 2011.

22DOD, Defense Budget Priorities and Choices (Washington, D.C.: January 2012).
 

Page 19 GAO-12-622 Replacement Medical Center at Landstuhl

the facility. As of the date of this report, they had not completed the study 

because along with the recertification, DOD must also submit a plan for 

implementing GAO’s recommendations with respect to the LRMC facility. 

When developing facility requirements for the replacement medical 

center, DOD officials incorporated many patient quality of care and 

environmentally friendly design standards. However, our review of the 

documentation DOD provided in support of these facility requirements 

revealed gaps, inconsistencies, and calculation errors that required 

extensive explanation by DOD officials to understand the deviations and 

decisions made to develop the requirements. Without clear 

documentation that explains how the analyses were performed and any 

adjustments made, stakeholders and decision makers lack reasonable 

assurance that the proposed replacement medical center will be 

appropriately sized to meet the needs of the expected beneficiary 

population in Europe.

DOD Incorporated 

Quality Standards 

When Determining 

Facility 

Requirements, but 

Inadequate 

Documentation 

Makes It Unclear 

Whether DOD 

Adhered to Its Own 

Guidance 
 

Page 20 GAO-12-622 Replacement Medical Center at Landstuhl

DOD officials used checklists and discussions with external health care 

providers to incorporate updated patient quality of care standards into the 

facility requirements for the replacement medical center; they also 

incorporated environmentally friendly design standards. They used DOD’s 

military hospital construction checklists to ensure that they incorporated 

updated patient quality of care standards, such as evidence-based 

design23 and world-class standards,24

 

23Evidence-based design represents an emerging body of science that links elements of a 

facility’s design with patient, staff, and resource outcomes. The goal of evidence-based 

design is to create a healing environment—one that is safe and comfortable and that 

supports the patient, the patient’s family, and the staff. See Noblis, Evidence-Based 

Design: Application in the MHS (Washington, D.C.: Aug. 1, 2007).

when determining the size of the 

replacement medical center. For example, DOD officials told us they used 

the Evidence Based Design Checklist—which DOD created in August 

2007 and updated in 2009—to incorporate design concepts into health

care construction projects that have impacts on patient-centered care. 

Examples of evidence-based design include single-patient instead of 

multiple-patient rooms to better accommodate family involvement in the 

provision of care and to better control infections, and studying layouts and 

workspace ergonomics to maximize work pattern efficiency. Additionally, 

DOD officials and the architectural and engineering firm contracted for the 

design of the replacement medical center used DOD’s Military Health 

Service World-Class Checklist to ensure that world-class standards were 

integrated into the facility’s design. The checklist identifies areas for DOD 

officials to research to help ensure that world-class standards are 

systematically developed, validated, and communicated with project 

teams. The completed checklist described examples of how world-class 

standards—which encompass many of the evidence-based designs from 

the Evidence Based Design Checklist—were integrated into the facility’s 

design. Some of the world-class standards incorporated into the facility 

requirements were (1) optimizing the size and position of the patient 

windows to provide exterior views for the patient from the bed, 

(2) providing patient and family control over the environment in the patient 

24In May 2009, the National Capital Region Base Realignment and Closure Health 

Systems Advisory Subcommittee of the Defense Health Board defined characteristics of a 

“world-class medical facility” in their report Achieving World Class. For example, a worldclass facility, among other things, applies evidence-based health care principles and 

practices, along with the latest advances in the biomedical, informatics, and engineering 

sciences and organizes its clinical services so that they are integrated and seamless 

between and among services in the facility. These principles and practices are known as 

world-class standards.

DOD Incorporated Quality 

of Care and 

Environmentally Friendly 

Design Standards in 

Determining Facility 

Requirements
 

Page 21 GAO-12-622 Replacement Medical Center at Landstuhl

room (e.g., heating and cooling), and (3) providing full height walls with 

higher noise transmission ratings (a higher noise transmission rating 

blocks more noise from transmitting through a wall) in spaces where 

patients would be asked to disclose personal information. DOD officials 

told us they also met with officials from Department of Veterans Affairs’ 

hospitals, private sector hospitals, and German hospitals to obtain 

information on evidence-based practices for providing health care that 

could be applied to the replacement medical center’s design.

DOD has also incorporated additional environmental and efficiency 

features into the design of the replacement medical center and expects to 

exceed the U.S. Green Building Council’s Leadership in Energy and 

Environmental Design (LEED) green building standards, which have been 

adopted by several federal agencies.25 The LEED system awards points 

for meeting a variety of standards and certifies buildings as silver, gold, or 

platinum. The replacement medical center’s current design will likely 

qualify for a “silver” certification. However, the facility’s extensive energy 

efficiency and renewable energy features indicate that it may qualify for a 

“gold” certification once it has met the more stringent German design 

requirements. For example, the project will use low water plumbing 

fixtures and commercial kitchen equipment available in Germany to 

reduce water use and achieve higher efficiency.

DOD sized the replacement medical center based on projected patient 

workload data. However, our review of the planning documentation DOD 

provided in support of its facility requirements showed that there were 

(1) inconsistencies in how DOD projected patient workload and applied 

the planning criteria, (2) some areas where the planning documentation 

did not clearly show how DOD officials had applied the formulas provided 

in the criteria to generate requirements, and (3) calculation errors 

throughout. DOD guidance in effect when the facility was designed26

 

25LEED is a third-party certification program and the nationally accepted benchmark for 

the design, construction, and operation of high-performance green buildings, according to 

the nonprofit U.S. Green Building Council. 

provided that when designing medical facilities, planners should develop 

26DOD Instruction 6015.17, Planning and Acquisition of Military Health Facilities (Mar. 17, 

1983) (cancelled by DOD Instruction 6015.17, Military Health System (MHS) Facility 

Portfolio Management (Jan. 13, 2012)). 

Inconsistencies, Gaps, and 

Calculation Errors in 

Planning Documentation 

Make It Unclear Whether 

DOD Adhered to Its Own 

Guidance for Determining 

Facility Requirements 
 

Page 22 GAO-12-622 Replacement Medical Center at Landstuhl

patient workload factors27

The Updated (FY10) Health Care Requirements Analysis report for LRMC 

captures some of these data and steps DOD used to determine the sizing 

requirements for the replacement medical center (see table 3 for the 

sizing requirements that DOD developed, by medical center 

department).

—both current and projected—and use these 

factors to determine the sizing requirements for the facility. While DOD 

officials acknowledged that inconsistencies, gaps in documentation, and 

calculation errors existed in the requirements documentation, they did not 

think the identified issues alone would necessitate a revision of the facility 

requirements. However, because DOD has not yet determined the effects 

of the newly proposed posture changes on projected patient workload—

which in turn drives the requirement for the facility size—it is not known if 

the inconsistencies, gaps, and calculation errors coupled with the posture 

change will require DOD to revise its facility requirements. DOD officials 

plan to examine these concerns in their recertification process.

28

 

27Workload factors include the workload for inpatient and outpatient care. For example, 

the average daily census can be used to measure workload for inpatient care, and the 

number of outpatient encounters can be used to measure workload for outpatient care.

28The Updated (FY10) Health Care Requirements Analysis describes the analyses 

conducted to determine the requirements for the replacement medical center. 
 

Page 23 GAO-12-622 Replacement Medical Center at Landstuhl

Table 3: Proposed Sizing Requirements for the Replacement Medical Center

Department Number of beds Number of rooms

Inpatient beds

Intensive care unit 18

Newborn intensive care unit 8 

Medical/surgical 60a

Obstetrician-postpartum 14

Behavioral health 30

Total number of inpatient beds 130

Operating rooms 9 

Labor and delivery rooms 6 

Outpatient exam rooms 198

Sources: GAO (analysis); DOD (data).

a

Fifty of the 60 single-patient medical/surgical inpatient beds have the capability to become 

semiprivate patient rooms if needed for surge capacity, which would bring the total number of beds to 

180 if all 50 were placed in service. 

Inconsistencies in projecting workload and applying criteria. To 

project most inpatient and outpatient workload for the replacement 

medical center, DOD officials used fiscal year 2010 estimated patient 

workload data as a baseline.29

Once DOD officials determined what projected workload data to use in 

their calculations for the new facility, they were to use the criteria in DOD 

Space Planning Criteria for Health Facilities to calculate the facility’s 

requirements, for example, the appropriate number of inpatient beds and 

However, they used different baseline data 

in different parts of the analysis. For example, in determining the number 

of labor and delivery rooms, DOD officials did not use workload data from 

fiscal year 2010 as the baseline. According to DOD officials, the 

obstetrician workload has historically been relatively stable. Therefore, 

they used the labor and delivery room workload data from the Health 

Care Requirements Analysis, which had been conducted in fiscal year 

2008 to support the original plan for renovating and reconstructing LRMC 

and determined that the data were accurate enough for their purposes. 

 

29DOD developed the fiscal year 2010 baseline for both the inpatient and outpatient care 

workload by annualizing the actual workload from the first 6 months of fiscal year 2010—

the most recent available at the time.
 

Page 24 GAO-12-622 Replacement Medical Center at Landstuhl

outpatient exam rooms.

30 DOD officials generally used the formulas 

provided in this document, but they applied them inconsistently when 

determining the appropriate size for individual departments within the 

facility. For example, the space planning criteria direct DOD officials to 

divide an inpatient department’s projected workload—in this case, the 

average daily census—by a particular occupancy rate to determine the 

number of inpatient beds that would be required.31

However, in determining the number of inpatient behavioral health beds 

DOD officials deviated from these criteria. The projected average daily 

census for behavioral health was 24 patients. The space planning criteria 

specify a 70 percent occupancy rate for psychiatric (i.e., behavioral 

health) beds when the average daily census is fewer than 25 patients, 

instead of the 85 percent occupancy rate specified for nursing unit 

medical/surgical beds. Nevertheless, DOD officials used an 85 percent 

occupancy rate to calculate the requirement for behavioral health beds. 

This resulted in a requirement for 28.2 beds—rounded to 30 beds to 

conform to the modular grouping criteria. According to DOD officials, they 

chose to use a different occupancy rate factor because they reasoned 

that since space planning criteria had not been updated to reflect the shift 

to single occupancy rooms, the 70 percent rate would likely result in a 

requirement for a higher number of beds. Following the space planning 

criteria’s guidance would have produced a requirement for 34.3 beds, 

The criteria specify 

that certain inpatient beds should be designed in modules of 4, 6, or 8 

beds. DOD generally followed these criteria in calculating the number of 

nursing unit medical/surgical beds, a type of inpatient bed. The criteria 

specify an occupancy rate of 85 percent for inpatient medical/surgical 

beds. Following this formula, DOD officials divided the projected average 

daily census (48.7 patients) by 0.85. This calculation resulted in a 

requirement for 57.3 beds. To conform to the modular grouping criteria, 

DOD officials rounded to 60 beds. 

 

30The guidance shows that among other things, workload and staffing are used to size 

and configure facilities to help ensure appropriate facility space. Specifically, the guidance 

provides formulas for determining the appropriate size of patient care departments, such 

as the required number of medical/surgical beds or behavioral health beds, using the 

projected workload data for the facility.

31The average daily census identifies the “average” number of patients occupying beds at 

a specific hospital site as determined by the inpatient census at midnight but does not 

specify the actual number of beds to be planned to ensure that a bed is available on any 

given day. This requires the application of a planned occupancy rate. Occupancy rates are 

stated as a percentage (e.g., 80 percent or 0.80).
 

Page 25 GAO-12-622 Replacement Medical Center at Landstuhl

which would have been rounded to 36 beds to account for the modular 

grouping criteria. As a result, the need for behavioral health beds may 

actually be higher than DOD officials determined. The documentation did 

not clearly convey the reasons for the deviations or adjustments DOD 

officials made when applying the criteria, and as a result, decision makers 

may lack reasonable assurances that the number of beds required would 

be sufficient to meet the needs of the expected beneficiary population in 

Europe. Although these deviations or adjustments may not adversely 

affect the size of the replacement medical center, their effect when 

combined with the yet to be assessed posture changes remains 

unknown. 

Inadequate documentation of how facility requirements were 

estimated. DOD’s documentation of its processes for determining the 

replacement medical center’s sizing requirements did not always clearly 

indicate how DOD officials had generated these requirements and 

omitted details that would have helped demonstrate how DOD officials 

had determined the size of the replacement medical center. For example, 

DOD’s planning documentation reported contradictory methods for 

projecting patient workload. According to the Updated (FY10) Health Care 

Requirements Analysis, DOD used three different scenarios to project the 

facility’s workload, resulting in a low, a midrange, and a high projection; 

all three scenarios used estimated patient workload data from fiscal year 

2010 as the baseline:

• Scenario A excluded the workload attributable to the conflicts in Iraq 

and Afghanistan, and assumed that the change in patient workload 

would continue to follow the trend set over the previous 5 years.32

• Scenario B adjusted for potential future decreases in beneficiary 

population, and assumed that the change in patient workload would 

continue to follow the trend set over the previous 5 years.33

• Scenario C assumed that the change in patient workload would 

continue to follow the trend set over the previous 5 years and made 

no exclusions or adjustments.

 

32The health care requirements analysis report notes that approximately 10.5 percent of 

inpatient care and 8.7 percent of outpatient care provided at the current facilities was 

based on conflicts in Iraq and Afghanistan.

33In July 2010, the Army projected a decrease of approximately 21,000 beneficiaries, or 8 

percent of the population.
 

Page 26 GAO-12-622 Replacement Medical Center at Landstuhl

The Updated (FY10) Health Care Requirements Analysis first reported 

using Scenario B—the scenario that resulted in midrange projections—to 

project inpatient and outpatient workload for the replacement facility. 

However, later sections of the document report the use of different 

methods to project patient workload. DOD officials confirmed that they 

had used a combination of methods to project inpatient and outpatient 

workload, and that they had used Scenario B only to validate these 

projections after they had calculated them. These officials acknowledged 

that the Updated (FY10) Health Care Requirements Analysis could have 

better documented how these projections were developed. The lack of 

clear documentation makes it difficult to understand the processes used 

without extensive explanation by DOD officials.

In addition, the Updated (FY10) Health Care Requirements Analysis

omitted details on how DOD officials developed certain data. For 

example, the document does not show how DOD officials projected 

inpatient workload for behavioral health beds, only noting that the 

projected average daily census was 24 patients. Although the Updated 

(FY10) Health Care Requirements Analysis did not document how the 

average daily census was calculated, DOD officials told us that the 

historical data on inpatient behavioral health workload were not sufficient 

for projecting workload because LRMC’s behavioral health inpatient 

capacity was such that any beneficiaries other than active duty 

servicemembers were referred to the German economy for treatment. 

Therefore, the officials said they used another method (Scenario C) to 

project workload, so that the facility would have the inpatient behavioral 

health capacity to treat additional patients. The planning documentation 

also does not show how DOD officials projected the number of providers 

required for outpatient ambulatory departments.34

 

34Unlike inpatient bed requirements, which are based on projected patient workload data, 

outpatient exam room requirements are based on the number of providers needed to treat 

the projected outpatient workload.

The Updated (FY10) 

Health Care Requirements Analysis contains a table with the number of 

outpatient ambulatory providers but does not show how or whether 

projected outpatient workload data for the replacement medical center 

were used to determine the number of outpatient providers that would be 

required. These gaps in documentation make it unclear whether the size 

of the replacement medical center will be adequate to meet the needs of 

the beneficiary population, and when combined with potential posture 
 

Page 27 GAO-12-622 Replacement Medical Center at Landstuhl

changes and previously discussed deviations or adjustments, the extent 

to which they may affect the size of the facility is unknown. 

Calculation errors in the planning documentation. We also found 

several calculation errors within the Updated (FY10) Health Care 

Requirements Analysis report. One table in the report that shows 

historical (5-year average), baseline, and projected workload for inpatient 

and outpatient care had errors in the 5-year average column for inpatient 

dispositions35

 

35The number of inpatient dispositions, also known as inpatient encounters, is a 

measurement of inpatient workload.

and bed days of care. When we spoke with DOD officials, 

we pointed out these errors. DOD officials acknowledged the errors and 

noted that the correct numbers could be found in a separate table in the 

report’s appendix—although the appendix table was not listed as a 

reference to support the historical workload numbers. Additionally, a table 

in the report’s appendix, which illustrated the different projected inpatient 

and outpatient workload data, calculated using the three different 

scenarios, had many calculation errors in the projected outpatient 

workload columns. Specifically, in calculating projected workload using 

Scenarios A and B, DOD incorrectly used the 5-year average—instead of 

the fiscal year 2010 data—as a baseline, and when using Scenario C, 

DOD adjusted for potential decreases in the beneficiary population, 

although this scenario did not call for such an adjustment. As a result, 

outpatient workload data using Scenario B, for example, was calculated 

to be 288,534 encounters instead of 328,944 (a 14 percent difference). 

The projected data derived by incorrectly applying Scenario B were then 

used in another table in the report’s appendix to verify that the projected 

outpatient provider staffing would be sufficient to treat the projected 

number of outpatients. DOD officials acknowledged the error and 

provided us with correct data. According to DOD officials, even though 

there was a 14 percent difference in the projected outpatient workload 

data, the outpatient provider staffing levels would still be sufficient. 

Although these calculation errors may not adversely affect the size of the 

replacement medical center, it remains unknown to what extent this error 

will affect facility requirements when combined with the yet to be 

assessed posture changes, previously discussed deviations or 

adjustments, and gaps in documentation.
 

Page 28 GAO-12-622 Replacement Medical Center at Landstuhl

Standards for internal controls include, among other things, control 

activities.

36 Control activities include policies, procedures, techniques, and 

mechanisms that enforce management’s directives. They can include a 

wide range of activities—such as authorizations, verifications, and 

documentation—that should be readily available for examination. Detailed 

and appropriate documentation is a key component of internal controls. 

Without clear documentation of key analyses, and of how adjustments to 

facility requirements were made, stakeholders lack reasonable 

assurances that the proposed replacement medical center will be able to 

provide the appropriate health care capacity to meet the needs of the 

beneficiary population it is expected to serve. 

In developing the cost estimate for the replacement facility, DOD followed 

many of the best practices in developing estimates of capital projects, but 

DOD minimally documented the data sources, calculations, and 

estimating methodologies used in developing the cost estimate. Further, it 

is anticipated that the replacement medical center will become the hub of 

a larger medical-services-related campus, for which neither cost 

estimates nor time frames have yet been developed.

The GAO Cost Estimating and Assessment Guide contains cost 

estimating best practices that have been identified by GAO and cost 

experts within organizations throughout the federal government and 

industry.37

1. “Accurate” refers to being unbiased and ensuring that the cost 

estimating is not overly conservative or overly optimistic and is based 

on an assessment of most likely costs. 

These best practices can be grouped into four general 

characteristics of sound cost estimating: 

 

36GAO, Standards for Internal Control in the Federal Government, GAO/AIMD-00-21.3.1 

(Washington, D.C.: November 1999).

37GAO-09-3SP. The guide establishes a consistent methodology that is based on best 

practices and can be used across the federal government for developing, managing, and 

evaluating capital program cost estimates.

DOD’s Cost Estimate 

Was Not Well

Documented and Cost 

Elements for 

Associated Facilities 

Have Yet to Be 

Developed 

DOD’s Cost Estimation

Methodology Substantially 

Met Best Practice Criteria 

but Was Not Well

Documented
 

Page 29 GAO-12-622 Replacement Medical Center at Landstuhl

2. “Credible” refers to discussing any limitations of the analysis because 

of uncertainty or bias surrounding data or assumptions used in the 

cost estimating process. 

3. “Comprehensive” refers to ensuring that cost elements are neither 

omitted nor double counted, and all cost-influencing ground rules and 

assumptions are detailed. 

4. “Well documented” refers to thoroughly documenting the process, 

including source data and significance, clearly detailed calculations 

and results, and explanations of why particular methods and 

references were chosen. 

See appendix III for detailed information on each of these cost estimating 

characteristics. 

In addition, Office of Management and Budget (OMB) best practices note 

that programs should maintain current and well-documented estimates of 

program costs, and that these estimates should encompass the full life 

cycle of the program.

38

The characteristics of sound cost estimating are divided into individual 

criteria, which we used to assess DOD’s process for developing its cost 

estimate. Our process for evaluating the cost estimate consisted of 

assigning an assessment rating for the various criteria evaluated on a 1 to 

5 scale: not met = 1, minimally met = 2, partially met = 3, substantially 

met = 4, and met = 5. Then, we took the average of the individual 

assessment ratings to determine an overall rating for each of the 

overarching characteristics: accurate, credible, comprehensive, and well 

documented. Criteria assessed as not applicable were not given a score 

and were not included in our calculation of the overall assessment. 

Furthermore, our review of DOD’s process for developing the cost 

estimate does not reflect an assessment of how facility requirements 

were developed or their quality, but only a determination of whether they 

are described in technical documentation and reflected in the estimate.

 

39

 

38OMB, Capital Programming Guide: Supplement to Circular A-11, Part 7, Preparation, 

Submission, and Execution of the Budget (Washington, D.C.: June 2006). 

However, as discussed previously in this report, during our assessment of 

39Technical documentation refers to documents used to define technical and 

programmatic requirements for the replacement medical center, such as beneficiary 

population estimates, health care demand, staffing requirements, and square footage 

requirements.
 

Page 30 GAO-12-622 Replacement Medical Center at Landstuhl

DOD’s process for determining facility requirements for the replacement 

medical center, we found some calculation errors in the facility 

requirements.

Table 4 provides a summary of our assessment of DOD’s cost estimating 

process.

Table 4: Summary Assessment of the Results of DOD Cost Estimating Process for the Replacement Medical Center as 

Compared to Best Practices

Characteristic

Overall 

assessment Best practice a

Individual 

assessment

Accurate Substantially met The cost estimate results are unbiased, not overly conservative or 

optimistic, and based on an assessment of the most likely costs.

Minimally met 

The estimate has been adjusted properly for inflation. Partially met

The estimate contains few, if any, minor mistakes.

The cost estimate is regularly updated to reflect significant 

changes in the program so that it always reflects current status.

Met

Variances between planned and actual costs are documented, 

explained, and reviewed. 

Met 

Not applicable

The estimate is based on a historical record of cost estimating and 

actual experiences from other comparable programs. 

Substantially met 

Credible Substantially met The cost estimate includes a sensitivity analysis that identifies a 

range of possible costs based on varying major assumptions, 

parameters, and data inputs.

A risk and uncertainty analysis has been conducted that quantified 

the imperfectly understood risks and identified the effects of 

changing key cost driver assumptions and factors.

Partially met 

Major cost elements have been cross-checked to see whether 

results were similar.

Partially met 

An independent cost estimate has been conducted by a group 

outside the acquiring organization to determine whether other 

estimating methods produce similar results.

Met 

Comprehensive

Met 

Substantially met The cost estimate includes all life cycle costs. Minimally met 

The cost estimate completely defines the program, reflects the 

current schedule, and is technically reasonable.

Substantially met 

The cost estimate work breakdown structure is product oriented, 

traceable to the statement of work/objective, and at an appropriate 

level of detail to ensure that cost elements are neither omitted nor 

double counted.

Met 

b

The estimate documents all cost-influencing ground rules and 

assumptions. 

Well documented The documentation captures the source data used, the reliability 

of the data, and how the data were normalized.

Minimally met Minimally met 
 

Page 31 GAO-12-622 Replacement Medical Center at Landstuhl

Characteristic

Overall 

assessment Best practice a

Individual 

assessment

The documentation describes in sufficient detail the calculations 

performed and the estimating methodology used to derive each 

element’s cost.

The documentation describes step-by-step how the estimate was 

developed, so that a cost analyst unfamiliar with the program 

would be able to understand what had been done and replicate it.

Minimally met

The documentation discusses the technical baseline description 

and the data in the baseline are consistent with the estimate.

Minimally met 

The documentation provides evidence that the cost estimate has 

been reviewed and accepted by management.

Minimally met 

Source: GAO analysis of DOD data.

Partially met 

a

Assessments are defined as follows: not met means that DOD provided no evidence that satisfies 

the criterion; minimally met means that DOD provided evidence that satisfies a small portion of the 

criterion, but overall, did not include sufficient support for stakeholders to reasonably conclude that 

the cost estimate is reliable; partially met means that DOD provided evidence that satisfies about half 

of the criterion; substantially met means that DOD provided evidence that satisfies a large portion of 

the criterion; and met means that DOD provided complete evidence that satisfies the entire criterion. 

b

A work breakdown defines in detail the work necessary to accomplish a program’s objectives. It 

deconstructs a program’s end product into successive levels with smaller specific elements until the 

work is subdivided to a level suitable for management control. It is also a valuable communication tool 

between management and stakeholders because it provides a clear picture of what needs to be 

accomplished and how the work will be done. In addition, it provides a consistent framework for 

planning and assigning responsibility for the work. Initially set up when the program is established, 

the work breakdown structure becomes more detailed over time, as more information becomes 

known about the program.

We determined that the cost estimate for the replacement medical center 

had been updated as project requirements were better defined. The 

overall cost estimate was broken down into costs per square foot, which 

were based on historical records of costs and actual experiences from 

other comparable programs. Although the DD Form 1391 does not 

include documentation regarding how inflation was factored into the 

estimated costs for the replacement medical center, DOD officials told us 

that costs on the DD Form 1391 have been adjusted for inflation using 

departmental guidance. 

We found no evidence indicating that the cost estimate is biased. 

However, it is not possible to fully assess the accuracy and reliability of a 

cost estimate without conducting a risk analysis that indicates the 

confidence level associated with the project’s estimated cost. Yet, the 

independent estimate and estimate validation that are further described 

below are sufficient to meet the requirements of this criterion.

DOD’s Cost Estimating 

Methodology for the 

Replacement Medical Center 

Substantially Met Best Practice 

Criteria for Accuracy
 

Page 32 GAO-12-622 Replacement Medical Center at Landstuhl

DOD hired an architecture and engineering firm to validate the cost 

estimate using a cross-check of major cost elements to determine 

whether alternative methods would have produced similar results.

40 The 

contractor concluded that the cost estimate was valid. It also developed 

an independent cost estimate and determined that the design of the 

facility was within 1 percent of the size listed on the DD Form 1391, and 

that the resulting cost was also within 1 percent of DOD’s cost estimate.41

DOD officials told us that they also hired a separate firm to develop 

sensitivity and risk analyses that were designed to meet GAO cost 

estimating standards as published in the Cost Estimating and 

Assessment Guide.

 

42 However, we found some limitations in these 

analyses. The only cost drivers evaluated were the exchange rate, 

German inflation, the cost of various raw materials, and a composite labor 

rate. The analyses did not evaluate the potential cost impact of variations 

in the beneficiary population, catchment area, level of care provided, or 

amount of battle-related injuries. Moreover, the analyses did not evaluate 

the cost impact of varying the square footage requirements documented 

in the Program for Design.43

 

40HOK, Kaiserslautern Military Community Medical Center Charrette Report (March 2011). 

To determine whether an estimate is 

credible, key cost elements should be tested for sensitivity, and other cost 

estimating techniques should be used to cross-check the reasonableness 

of the ground rules and assumptions. It is also important to determine 

how sensitive the final results are to changes in key assumptions and 

parameters.

41HOK, Kaiserslautern Military Community Medical Center Charrette Report. 

42United States Army Corps of Engineers Europe District and Booz Allen Hamilton, 

Sensitivity Analysis and Cost/Schedule Probability Report for Kaiserslautern Military 

Community Medical Center (January 2012). 

43The Program for Design is a document used by DOD when determining facility 

requirements for military treatment facilities that lists footage requirements per medical 

department and room.

DOD’s Cost Estimating 

Methodology for the 

Replacement Medical Center 

Substantially Met Best Practice 

Criteria for Credibility Overall, 

but Lacked Sensitivity and Risk 

Analyses of Some Key Cost 

Elements
 

Page 33 GAO-12-622 Replacement Medical Center at Landstuhl

DOD’s cost estimating methodology for the replacement medical center 

substantially met best practice criteria for overall comprehensiveness, but 

some costs and assumptions were not included in the individual criteria 

that make up the comprehensive cost estimating characteristic. The cost 

estimate generally includes categories of costs for the design, 

construction, and outfitting of the replacement medical center.

Additionally, DOD provided an appropriate work breakdown structure for 

the facility to help ensure that cost elements were neither omitted nor 

double counted. 

DOD also provided us with technical baseline documentation, including 

the Updated (FY10) Health Care Requirements Analysis report and the 

Program for Design, which defines the technical and programmatic 

requirements of the project. DOD officials told us that technical baseline 

documentation was developed by qualified personnel—including a 

multidisciplinary team of health care planners, architects, and 

engineers—and has been updated as the project has evolved. We found 

no instances in which any costs for design, construction, and outfitting of 

the replacement medical center were omitted. 

Although DOD provided us with some cost information as well as 

technical baseline documentation, additional recurring life cycle costs 

were, for the most part, not available, resulting in this subcategory 

criterion for comprehensiveness being rated as minimally met. The cost 

estimate does not include any facility sustainment costs, costs for 

supporting infrastructure, or any operation and maintenance costs for 

personnel or equipment required to operate the facility. In addition, the 

cost estimate does not include costs associated with the disposition or 

retirement of proposed medical center facilities at the end of their life 

cycles, such as demolition or renovation costs. In addition, DOD officials 

said costs associated with the disposition of the current LRMC or 86th

MDG are not included in the cost estimate. Army officials told us that the 

facilities that make up the current LRMC will remain under the auspices of 

the Army. These officials noted that following completion of the 

replacement medical center, ownership of the current LRMC facilities will 

transfer to Army Installation and Management Command. Under this 

arrangement, these facilities will no longer be classified as part of the 

Military Health System. Therefore, Army officials told us that any costs 

associated with their disposition should not be included in the overall 

estimate for the replacement medical center. The 86th MDG clinic 

consists of 13 separate buildings. The remaining components that make 

up the current 86th MDG clinic will be transferred to Ramstein Air Base. 

According to 86th MDG officials, some of these buildings will remain in 

DOD’s Cost Estimating 

Methodology for the 

Replacement Medical Center 

Substantially Met Best Practice 

Criteria for Comprehensiveness 

Overall, but Lacked Recurring 

Life Cycle Costs 
 

Page 34 GAO-12-622 Replacement Medical Center at Landstuhl

use following completion of the replacement medical center, while others 

will be demolished. However, it has not been decided how the remaining 

clinic buildings will be used; the officials said that this decision will be 

made by the installation commander at Ramstein Air Base. Since 

demolition or continued use of the remaining facilities will require DOD 

funding, these costs should be captured; they will help to show the full 

cost impact of the replacement medical center project. Further, the cost 

estimate contains minimal documentation of cost-influencing ground rules 

and assumptions. DOD officials noted that some of the ground rules and 

assumptions have been included in the technical baseline documentation. 

However, we could not find a documented reference or link in the 

technical baseline documentation we examined to specific cost elements 

in the DD Form 1391. We also found no evidence of documentation of the 

risks associated with assumptions, which should be traced to specific cost 

elements.

A life cycle cost estimate should encompass all past (or sunk), present, 

and future costs for every aspect of the program, regardless of funding 

source, including all government and contractor costs. Without a full 

accounting of life cycle costs, management will have difficulty 

successfully planning program resource requirements and making wise 

decisions about where to allocate resources. Cost estimates are typically 

based on limited information and therefore need to be bound by the 

constraints that make estimating possible. These constraints are usually 

defined by ground rules and assumptions. However, because such 

assumptions are best guesses, the risks associated with a change to any 

of these assumptions must be identified and assessed. Many

assumptions profoundly influence cost; the subsequent rejection of even 

a single assumption could invalidate many aspects of the cost estimate. 

Unless ground rules and assumptions are clearly documented, a cost 

estimate will not provide a basis for developing resolutions concerning 

areas of potential risk. Furthermore, it will not be possible to reconstruct 

the estimate when the original estimators are no longer available. 

A well-documented cost estimate is essential if an effective independent 

review is to ensure that it is valid. However, the documentation DOD 

provided in support of its cost estimate did not clearly demonstrate how 

facility requirements had been factored into cost elements. 

DOD’s cost estimate lacked documentation that described, in detail, the 

calculations performed and the estimating methodology used to derive 

the cost for each element of the replacement medical center. None of the 

documents provided to us included detailed documentation of how DOD 

DOD’s Cost Estimating 

Methodology for the 

Replacement Medical Center 

Minimally Met Best Practice 

Criteria for Well Documented
 

Page 35 GAO-12-622 Replacement Medical Center at Landstuhl

developed and refined the cost estimate. A complete documentation of 

source data would include, for each line item in the cost estimate, a 

reference to a specific data source or sources (including the document 

and page number) used as the basis for each square footage and unit 

cost amount. For example, the cost estimate contains line item estimates 

for electricity, water/sewer/gas, steam/chilled water distribution, and storm 

drainage. However, from the documentation provided, it is not possible to 

determine how these requirements were used to develop cost estimates. 

The technical baseline description and data in the technical baseline 

documentation are spread across several documents, including the 

Updated (FY10) Health Care Requirements Analysis report, Program for 

Design, and a Planning Charrette Discussion.44

Cost estimators should provide a briefing to management about how the 

estimate was constructed—including specific details about the program’s 

technical characteristics, assumptions, data, cost estimating 

methodologies, sensitivity, risk, and uncertainty—so management can 

gain confidence that the estimate is accurate, complete, and high in 

quality. However, we found no documentation of a detailed review and 

approval that included the estimate’s technical foundation, ground rules 

and assumptions, estimating methods, data sources, sensitivity analysis, 

However, only the 

Planning Charrette Discussion is referenced in the cost estimate on the 

DD Form 1391. Moreover, we found minor differences between the 

square footage requirements in the Program for Design and the cost 

estimate as described on the DD Form 1391. For example, the Program 

for Design reports a total gross square footage requirement of 1,293,409 

and the cost estimate reports a total requirement of 1,340,731 square 

feet. It was not possible to compare square footage amounts for various 

components of the facility because of the differing levels of detail in the 

Program for Design and the cost estimate. The difference in square 

footage numbers between the Program for Design and the DD Form 1391 

is not documented; therefore, the reasons for the difference are unclear. 

Since the technical baseline is intended to serve as the basis for 

developing a cost estimate, it should be discussed in the cost estimate 

documentation.

 

44The Planning Charrette Discussion is a document that summarizes information from a 

series of meetings that DOD planners held from May 10 through 12, 2010, to adjust 

preliminary programming and facility scoping for the replacement medical center in order 

to address the on-the-ground situation and any previously unforeseen issues.
 

Page 36 GAO-12-622 Replacement Medical Center at Landstuhl

risks and uncertainty, cost drivers, cost phasing, contingency reserves, or 

affordability.

DOD officials confirmed our conclusion that their cost estimating process 

was not fully documented. They told us that they had developed 

supporting facility costs using expert opinion and parametric models; 

however, these were not listed in the cost estimate.45

If the cost estimate for the replacement medical center does not include 

detailed documentation, stakeholders cannot reasonably conclude that it 

is reliable. In addition, DOD and Congress may not have the information 

they need to make fully informed decisions about the facility. If a cost 

estimate does not fully account for life cycle costs, management will have 

difficulty successfully planning program resource requirements and 

making wise decisions. Poorly documented cost estimates can cause a 

program’s credibility to suffer, because the documentation cannot explain 

the rationale of the methodology or the calculations underlying the cost 

elements. Further, without clear technical baseline documentation, the 

cost estimate will not be based on a comprehensive program description 

and will lack specific information regarding technical and program risks. 

Unless the cost estimate is fully documented, it cannot be reconciled with 

an independent cost estimate.

According to DOD 

officials, DOD guidance does not require detailed documentation as part 

of the DD Form 1391 cost estimate. Under DOD’s cost methodology, as 

the project design matures, so does the level of cost analysis. DOD 

officials asserted that the current cost estimate is appropriate for the 

current level of design. DOD officials acknowledged that better 

documentation would have provided more support and information to the 

various decision makers in the process and would be a good practice to 

follow.

 

45Parametric models typically consist of several interrelated cost estimates and are often 

computerized. They may involve extensive use of cost-to-noncost cost estimating 

relationships, multiple independent variables related to a single cost effect, or independent 

variables defined in terms of design characteristics rather than more discrete material 

requirements or production processes. Parametric models are always useful for crosschecking the reasonableness of a cost estimate that is derived by other means. As a 

primary estimating method, parametric models are most appropriate during the 

engineering concept phase when requirements are still somewhat unclear and no bill of 

materials exists.
 

Page 37 GAO-12-622 Replacement Medical Center at Landstuhl

DOD officials told us that the replacement medical center will be a fully 

functioning military treatment facility and not require any additional 

support facilities to fulfill its mission of providing inpatient and outpatient 

care. However, in the Strategic Concept of Operations section of the 

Updated (FY10) Health Care Requirements Analysis report for the 

replacement medical center, the center is described as being the hub of a 

medical-services-related campus at Weilerbach Storage Area.46

At this time, DOD has not determined the additional costs for these 

facilities, nor has it developed a time frame for their construction. 

However, Army officials told us that plans for the campus concept are still 

predecisional and that certain facilities would only be replicated at 

Weilerbach Storage Area following the expiration of their useful life. For 

instance, the child care center near the current LRMC will remain there 

until it requires renovation or reconstruction. At that point, a similar facility 

would be constructed at Weilerbach Storage Area to replace it, so that 

staff working at the replacement medical center would not have to leave 

the area for day care services for their children.

The 

medical campus is expected to be an integrated health care campus that 

would include hospital and ancillary components as well as outpatient, 

administrative, and educational components. The other facilities that DOD 

expects to develop for this campus under separate military projects 

include warrior transition unit facilities, medical transition detachment 

housing, and possibly medical troop barracks, among other facilities.

The need to replace the outdated LRMC and the 86th MDG clinic to 

ensure that military servicemembers and their families receive the care 

they deserve is widely recognized. A critical step toward meeting this goal 

is the development of a credible and comprehensive assessment of the 

facility requirements and the cost of the replacement medical center. 

DOD’s evolving posture in Europe will likely have an impact on the size of 

the beneficiary population served by the replacement medical center. 

However, DOD’s current needs assessment contains inconsistencies and 

errors in how it used patient workload and staffing data to determine 

facility requirements, such as facility size. In several situations, DOD 

officials adjusted the criteria being used but failed to document their 

rationale or need for taking these steps. Moreover, the documentation 

 

46U.S. Army Medical Command, Updated (FY10) Health Care Requirements Analysis. 

Replacement Medical 

Center Expected to Be 

Part of Medical Campus, 

but Additional Cost 

Elements Have Yet to Be 

Determined

Conclusions 
 

Page 38 GAO-12-622 Replacement Medical Center at Landstuhl

used to support the determination of the facility requirements does not 

clearly describe the methodology or calculations used to develop the 

requirements, and these requirements provided the basis for the cost 

estimate. DOD officials have indicated that the issues GAO has identified 

may not have a substantial impact on the size of the replacement medical 

center, but they have not yet taken specific action to determine what the 

individual or cumulative effects would be. DOD’s cost estimating 

methodology substantially met many best practices criteria but was only 

minimally documented. Congress has required the Secretary of Defense 

recertify to the Appropriations Committees in writing that the replacement 

medical center is properly sized and scoped to meet current and 

projected health care requirements. With this recertification, DOD has an 

opportunity to determine the impact the proposed posture changes will 

have on the proposed facility requirements and revise its documentation 

to provide clear support for how it developed its facility requirements. 

Without clear documentation of how key requirements were developed 

and how they factored into the development of facility requirements and 

cost, DOD cannot fully demonstrate that the proposed replacement 

medical center will provide adequate health care capacity at the current 

estimated cost.

To ensure that the replacement medical center is appropriately sized to 

meet the health care needs of beneficiaries in a cost-effective manner, we 

recommend that as part of the facility’s recertification process, the 

Secretary of Defense direct the Assistant Secretary of Defense (Health 

Affairs) to take the following two actions: 

• provide sufficient and clear documentation on how medical planners 

applied DOD criteria to determine the facility’s requirements, including 

how and why medical planners made adjustments to the criteria, and

• correct any calculation errors and show what impact, if any, these 

errors had on the sizing of the facility.

Furthermore, in light of recently announced posture changes and 

potential adjustments that may need to be made in facility requirements 

based on correcting identified calculation errors in the original 

documentation, we recommend that the Secretary of Defense direct the 

Assistant Secretary of Defense (Health Affairs) to revise the cost estimate 

for the center, incorporating the best practices outlined in the GAO Cost 

Estimating and Assessment Guide to 

• reflect these potential posture changes, 

Recommendations for 

Executive Action
 

Page 39 GAO-12-622 Replacement Medical Center at Landstuhl

• update it with the revised calculations as part of the recertification 

process, and

• more thoroughly document the data, assumptions, calculations, and 

methodology used to develop specific cost elements.

In written comments to a draft of this report, DOD agreed with our 

conclusions and each of our recommendations. DOD stated that it 

recently conducted a reassessment of the original $1.2 billion project 

submitted in the Fiscal Year 2012 President’s Budget request that 

responds to GAO’s recommendations by utilizing the most current data, 

including recently announced force structure changes, and providing a 

documented audit trail of how the size, scope, and cost of the alternatives 

were developed. Although we are encouraged that DOD has performed a 

reassessment, DOD did not make it available for our review. DOD’s 

comments noted that the reassessment will be provided once approved 

by the Secretary of Defense. As a result, we are unable to confirm at this 

time that these actions have been taken. Therefore, we believe our 

recommendations are still appropriate until the reassessment is released

and documentation made available.

DOD also provided technical and clarifying comments, which we 

incorporated as appropriate into this report. DOD’s comments are 

reprinted in their entirety in appendix IV.

We are sending copies of this report to the interested congressional 

committees, Secretary of Defense; the Secretaries of the Army and the 

Air Force; and the Director of the Office of Management and Budget. In 

addition, the report is available at no charge on the GAO website at 

http://www.gao.gov. 

Agency Comments 

and Our Evaluation
 

Page 40 GAO-12-622 Replacement Medical Center at Landstuhl

If you or your staff have any questions about this report, please contact 

us at (202) 512-7968 or mctiguej@gao.gov or (202) 512-7114 or

draperd@gao.gov. Contact points for our Offices of Congressional 

Relations and Public Affairs may be found on the last page of this report. 

GAO staff who made key contributions to this report are listed in 

appendix V. 

James R. McTigue, Jr.

Director, Defense Capabilities and 

Management

Debra A. Draper

Director, Health Care
Appendix I: Objectives, Scope, and 

Methodology

Page 41 GAO-12-622 Replacement Medical Center at Landstuhl

To describe how DOD officials considered potential changes to DOD’s 

posture in Europe—and their possible effect on the beneficiary 

population—when developing facility requirements for the replacement 

medical center, we obtained available posture planning documentation, 

including population estimates, and compared it with the beneficiary 

population data used in planning assumptions for the replacement 

medical center. We also obtained and reviewed Health Care 

Requirements Analysis documentation containing beneficiary population 

information and requested and reviewed more recent updates of this 

information. We met with officials from the Offices of the Assistant 

Secretary of Defense (Health Affairs) and the Deputy Under Secretary of 

Defense (Installations and Environment), U.S. European Command, U.S. 

Army Europe, and U.S. Air Forces Europe to gain insight into possible 

scenarios that are being considered for posture changes in Europe. In 

addition we talked with some of the above individuals and met with 

officials with the U.S. Army Corps of Engineers Europe and with the U.S. 

Army Installation Command Europe to discuss how the location for the 

replacement medical center was selected. We also discussed with some 

of the officials above the steps they had taken to ensure reasonable 

accuracy of DOD beneficiary data and determined that the data 

specifically related to the proposed replacement medical center were 

sufficiently reliable for the purposes of this report. 

To assess DOD’s process for determining facility requirements for the 

replacement medical center to determine to what extent it incorporated 

quality standards into its design and adhered to DOD guidance, we 

obtained and reviewed documents detailing the process and any data 

used in the development of the requirements for the replacement facility. 

Specifically, we obtained and reviewed documentation used to develop 

plans for the proposed replacement medical center, such as health care 

requirements analyses and facility designs. We also reviewed relevant 

documentation—including checklists—to determine whether DOD 

included quality and environmentally friendly standards, such as worldclass standards and Leadership in Energy and Environmental Design 

(LEED) green building standards.1

 

1 LEED is a third-party certification program and the nationally accepted benchmark for 

the design, construction, and operation of high-performance green buildings, according to 

the nonprofit U.S. Green Building Council.

We also identified key assumptions 

used to determine facility requirements for the replacement medical 

center and obtained and reviewed applicable legal and departmental 

Appendix I: Objectives, Scope, and 

Methodology 
Appendix I: Objectives, Scope, and 

Methodology

Page 42 GAO-12-622 Replacement Medical Center at Landstuhl

guidance, including DOD instructions and directives, and compared them 

with the documented assumptions and methods used to develop the 

facility’s requirements. Additionally, we reviewed their facility 

requirements documentation for calculation errors and attempted to 

duplicate their results. We also met with medical and construction 

planners with the Office of the Assistant Secretary of Defense (Health 

Affairs), the TRICARE Management Activity, U.S. Army Medical 

Command, the Landstuhl Regional Medical Center (LRMC), the Air Force 

Medical Support Agency, and the 86th Medical Group (MDG) to discuss 

how they determined the size of the replacement medical center.

To review the process used to develop the cost estimate for the facility to 

determine to what extent DOD followed established best practices for 

developing its cost estimate, we obtained and reviewed available cost 

estimates for the proposed replacement medical center as well as 

supporting documentation that was used to determine overall costs. We 

evaluated this information using GAO’s standardized methodology of cost 

estimating best practices. For our reporting needs, we collapsed these 

best practices into four general characteristics for sound cost estimating: 

accurate, credible, comprehensive, and well documented. We determined 

the overall assessment by rating whether DOD followed best practices 

that make up each of the four characteristics. We assigned a number to 

our ratings: not met = 1, minimally met = 2, partially met =3, substantially 

met = 4, and met = 5. We took the average of the individual assessment 

ratings to determine the overall rating for each of the four characteristics. 

Criteria assessed as not applicable were not given a score and not 

included in the overall assessment calculation. We met with officials from 

the Office of the Assistant Secretary of Defense (Health Affairs), the

TRICARE Management Activity, Army Medical Command, the Air Force 

Medical Support Agency, and the U.S. Army Corps of Engineers prior to 

our evaluation to explain our approach for reviewing DOD’s cost 

estimating process and to discuss project costs. We also met with these 

officials to discuss the results of our evaluation. To determine the overall 

costs of the replacement medical center, we obtained and reviewed 

planning documents. We also met with officials from LRMC and 86th

MDG to discuss what the future plans are for the current facilities 

following construction of the replacement medical center.

We conducted this performance audit from July 2011 through May 2012 

in accordance with generally accepted government auditing standards. 

Those standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that 
Appendix I: Objectives, Scope, and 

Methodology

Page 43 GAO-12-622 Replacement Medical Center at Landstuhl

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives.
Appendix II: Catchment Area Populations by 

Beneficiary Category, Fiscal Years 2006 

through 2011

Page 44 GAO-12-622 Replacement Medical Center at Landstuhl

Appendix II: Catchment Area Populations by 

Beneficiary Category, Fiscal Years 2006 

through 2011 
Appendix III: Detailed Information on Each of 

the Cost Estimating Characteristics

Page 45 GAO-12-622 Replacement Medical Center at Landstuhl

The GAO Cost Estimating and Assessment Guide contains cost 

estimating best practices that have been identified by GAO and cost 

experts within organizations throughout the federal government and 

industry.

1

Table 5: Characteristics of High-Quality and Reliable Cost Estimates

For our reporting needs, we collapsed these best practices into 

four general characteristics of sound cost estimating: accuracy, credibility, 

comprehensiveness, and well documented. Table 5 provides detailed 

information on each of these cost estimating characteristics. 

Characteristic Description

Accurate The cost estimate should provide for results that are unbiased, and it should not be overly conservative or 

optimistic. An estimate is accurate when it is based on an assessment of most likely costs, adjusted properly 

for inflation, and contains few, if any, minor mistakes. In addition, a cost estimate should be updated regularly 

to reflect significant changes in the program, such as when schedules or other assumptions change, and 

actual costs, so that it is always reflecting current status. During the update process, variances between 

planned and actual costs should be documented, explained, and reviewed. Among other things, the estimate 

should be grounded in a historical record of cost estimating and actual experiences on other comparable 

programs.

Credible The cost estimate should discuss any limitations of the analysis because of uncertainty or biases surrounding 

data or assumptions. Major assumptions should be varied, and other outcomes recomputed to determine how 

sensitive they are to changes in the assumptions. Risk and uncertainty analysis should be performed to 

determine the level of risk associated with the estimate. Further, the estimate’s cost drivers should be crosschecked, and an independent cost estimate conducted by a group outside the acquiring organization should 

be developed to determine whether other estimating methods produce similar results.

Comprehensive The cost estimate should include both government and contractor costs of the program over its full life cycle, 

from inception of the program through design, development, deployment, and operation and maintenance to 

retirement of the program. The cost estimate should also completely define the program, reflect the current 

schedule, and be technically reasonable. Comprehensive cost estimates should be structured in sufficient 

detail to ensure that cost elements are neither omitted nor double counted. Specifically, the cost estimate 

should be based on a product-oriented work breakdown structure that allows a program to track cost and 

schedule by defined deliverables, such as hardware or software components.a

 

1

Finally, where information is 

limited and judgments must be made, the cost estimate should document all cost-influencing ground rules 

and assumptions.

GAO-09-3SP. The guide establishes a consistent methodology that is based on best 

practices and can be used across the federal government for developing, managing, and 

evaluating capital program cost estimates.

Appendix III: Detailed Information on Each 

of the Cost Estimating Characteristics
Appendix III: Detailed Information on Each of 

the Cost Estimating Characteristics

Page 46 GAO-12-622 Replacement Medical Center at Landstuhl

Characteristic Description

Well documented A good cost estimate, while taking the form of a single number, is supported by detailed documentation that 

describes how it was derived and how the expected funding will be spent in order to achieve a given 

objective. Therefore, the documentation should capture in writing such things as the source data used, the 

calculations performed and their results, and the estimating methodology used to derive each work 

breakdown structure element’s cost. Moreover, this information should be captured in such a way that the 

data used to derive the estimate can be traced back to and verified against their sources so that the estimate 

can be easily replicated and updated. The documentation should also discuss the program requirements and 

scope and how the data were normalized. Finally, the documentation should include evidence that the cost 

estimate was reviewed and accepted by management.

Source: GAO. 

a A work breakdown defines in detail the work necessary to accomplish a program’s objectives. It 

deconstructs a program’s end product into successive levels with smaller specific elements until the 

work is subdivided to a level suitable for management control. It is also a valuable communication tool 

between management and stakeholders because it provides a clear picture of what needs to be 

accomplished and how the work will be done. In addition, it provides a consistent framework for 

planning and assigning responsibility for the work. Initially set up when the program is established, 

the work breakdown structure becomes more detailed over time, as more information becomes 

known about the program.
Appendix IV: Comments from the Department 

of Defense

Page 47 GAO-12-622 Replacement Medical Center at Landstuhl

Appendix IV: Comments from the 

Department of Defense 
Appendix IV: Comments from the Department 

of Defense

Page 48 GAO-12-622 Replacement Medical Center at Landstuhl
Appendix IV: Comments from the Department 

of Defense

Page 49 GAO-12-622 Replacement Medical Center at Landstuhl
Appendix V: GAO Contacts and Staff 

Acknowledgments

Page 50 GAO-12-622 Replacement Medical Center at Landstuhl

James R. McTigue, Jr., (202) 512-7968 or mctiguej@gao.gov 

Debra A. Draper, (202) 512-7114 or draperd@gao.gov 

In addition to the contacts named above, Laura Durland, Assistant 

Director; Marcia Mann, Assistant Director; Josh Margraf; Jeff Mayhew; 

and Richard Meeks made key contributions to this report. Joanne 

Landesman assisted in the message and report development, Amie 

Steele assisted in developing the report’s tables and graphics, Jennifer 

Echard and Dave Brown provided methodological support, and Michael 

Willems provided legal support.

Appendix V: GAO Contacts and Staff 

Acknowledgments 

GAO Contacts 

Staff 

Acknowledgments 

(351630)
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