Report to the Subcommittee on 

Military Construction, Committee on 

Appropriations, U.S. Senate 

United States General Accounting Office 

GAO 

February 2004 DEFENSE 

INFRASTRUCTURE 

Long-term Challenges 

in Managing the 

Military Construction 

Program 

GAO-04-288 
www.gao.gov/cgi-bin/getrpt?GAO-04-288.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Barry W. 

Holman at (202) 512-8412 or 

holmanb@gao.gov. 

Highlights of GAO-04-288, a report to the 

Subcommittee on Military Construction, 

Senate Committee on Appropriations 

February 2004

DEFENSE INFRASTRUCTURE 

Long-term Challenges in Managing the 

Military Construction Program 

Recognizing the need to halt the degradation of defense facilities, OSD took 

a number of steps to enhance the management of the military construction 

program by providing guidance through a facilities strategic plan and by 

standardizing practices through selected management tools. However, some 

of these tools are not completed, and others have weaknesses that further 

hinder efforts to improve facilities. OSD’s strategic plan outlines long-term 

goals but lacks comprehensive information on the actions, time frames, 

responsibilities, and resources that are needed to meet DOD’s vision for 

facilities. OSD has also established key financial objectives for the services 

to improve the condition of their facilities. Given competing funding 

pressures and that the process of realigning and closing bases to reduce 

excess infrastructure will take several years to accomplish, improvements in 

facilities will likely require much longer than suggested by OSD’s objectives. 

DOD’s process of prioritizing and resourcing military construction projects 

provides an important means of improving whole categories of facilities but 

can repeatedly postpone addressing important projects outside of those 

categories. If left unchecked without periodic reassessments, the process 

can continually defer projects important to installations’ ability to 

accomplish their mission and improve servicemembers’ quality of life. As 

much as 77 percent of military construction funds appropriated in any one 

year are distributed among specific areas of emphasis, such as housing, 

leaving a significantly smaller portion that is insufficient to repair the 

remaining categories of facilities. Some projects are not submitted for 

funding consideration because they do not fall within the specific areas of 

emphasis and thus are perceived as being highly unlikely to receive funding. 

Also, some high-cost priority projects are postponed for future years’ 

funding because their addition would exceed the services’ funding level 

established for that year. Congress may add projects during the 

appropriations process, addressing what it has considered as inadequate 

requests for funding. These projects may require adjustments in DOD’s plans 

since they may not always align with DOD’s short-term priorities. 

Increasing current funding thresholds for unspecified minor military 

construction projects would give DOD installations more flexibility, but 

might need to be balanced against reducing congressional oversight. 

Construction costs have increased as much as 41 percent since the 

thresholds were last adjusted upward. As a result, fewer projects that are 

smaller in scope can now be completed using these types of funds. 

Additionally, installation officials often scale back the scope of a project in 

order to meet the current thresholds, compromising design characteristics in 

the process. However, if the thresholds were increased, Congress could lose 

oversight of the additional projects funded under these thresholds because 

such construction projects are not specifically identified in the President’s 

budget submissions. Yet, there are alternatives, such as coupling the 

increased thresholds with periodic reports on the usage of those funds. 

The Department of Defense’s 

(DOD) military construction 

program provides funding for 

construction projects in the United 

States and overseas, and funds 

most base realignment and closure 

costs. Recent Office of the 

Secretary of Defense (OSD) 

estimates indicate that it would 

cost as much as $164 billion to 

improve facilities to a level that 

would meet the department’s goals. 

GAO was asked to report on the 

(1) steps OSD has taken to enhance 

program management, (2) process 

of prioritizing and resourcing 

military construction projects, and 

(3) advantages and disadvantages 

of increasing the current funding 

thresholds for constructing and 

repairing facilities. 

GAO recommends that OSD 

(1) complete the management tools 

for standardizing construction 

practices and costs, (2) reevaluate 

the time frames for completing the 

key objectives, and (3) develop a 

mechanism for periodically 

reassessing military construction 

priorities for facility categories that 

fall outside DOD’s specific areas of 

emphasis. GAO also suggests that 

Congress may wish to consider the 

advantages and disadvantages of 

increasing the funding thresholds 

for minor construction projects. 

In commenting on a draft of this 

report, DOD agreed or partially 

agreed with the recommendations 

and indicated that some actions are 

being taken to address them. 
Page i GAO-04-288 Defense Infrastructure 

Letter 1

Results in Brief 4

Background 8

Strategic Plan and Management Tools Weaknesses Limit Efforts to 

Improve Facilities 13

Prioritizing and Resourcing Process Serves an Important Function 

but Has Limitations 23

Increasing the Current Funding Thresholds Gives DOD Additional 

Flexibility but Could Lessen Congressional Oversight 30

Conclusions 34

Recommendations for Executive Action 35

Matters for Congressional Consideration 36

Agency Comments and Our Evaluation 36

Appendix I Scope and Methodology 37 

Appendix II Section 2805 of Title 10, United States Code (2003) 41 

Appendix III DOD’s Prioritization and Resourcing Process for 

Military Construction Projects 43 

Appendix IV Services’ Plans to Meet OSD’s Three Key 

Investment Objectives 51 

Appendix V Comments from the Department of Defense 55 

Tables 

Table 1: Comparison of the Military Services’ Priorities for Military 

Construction Projects, Fiscal Year 2004 46

Table 2: Comparison of the Military Services’ Systems to Prioritize 

Military Construction Projects, Fiscal Year 2004 49

Contents 
Page ii GAO-04-288 Defense Infrastructure 

Table 3: Planned Status for Achieving OSD’s Objective of Fully 

Funding Sustainment by Military Service and DOD-wide, 

Fiscal Years 2004 through 2009 51

Table 4: Planned Status for Achieving OSD’s Objective of Attaining 

a 67-Year Recapitalization Rate by Military Service and 

DOD-wide, Fiscal Years 2004 through 2009 52

Figures 

Figure 1: Examples of Pre-World War II-Era Facilities 15

Figure 2: Examples of Undersized or Inadequate Facilities 16

Figure 3: Percent Distribution of Military Construction Funding by 

Specific Area of Emphasis in the Military Construction 

Appropriation Act for Fiscal Year 2004 24

Figure 4: Summary of the Military Construction Process, 

Fiscal Year 2005 44

Figure 5: Military Services’ Planned Annual Restoration and 

Modernization Funding, Fiscal Years 2004 through 2009 53

Abbreviations 

DOD Department of Defense 

OSD Office of the Secretary of Defense 

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Page 1 GAO-04-288 Defense Infrastructure 

February 24, 2004 

The Honorable Kay Bailey Hutchison 

Chairman 

The Honorable Dianne Feinstein 

Ranking Minority Member 

Subcommittee on Military Construction 

Committee on Appropriations 

United States Senate 

The Department of Defense’s (DOD) military construction program 

provides funding for construction projects in the United States and 

overseas, and funds most base realignment and closure costs. In recent 

years, military construction funding has averaged $8-10 billion per year, 

but recent estimates from the Office of the Secretary of Defense (OSD) 

indicate that it would cost between $62 billion and $164 billion in total to 

adequately improve facilities to a level that would meet the department’s 

facility condition goals. DOD attributes this high cost estimate to the fact 

that many DOD installations and facilities have not been sufficiently 

maintained or renovated for many years. Defense facilities include 

buildings such as barracks, administrative space, classrooms, hangars, 

warehouses, maintenance buildings, churches, and child development 

centers, as well as nonbuildings such as runways, roads, railroads, piers, 

and utility structures and systems. Including family housing, DOD’s 

facilities and structures number more than 600,000, with a replacement 

value of about $600 billion. In the absence of proper maintenance, referred 

to as “sustainment” by DOD, these facilities deteriorate prematurely.1

Without periodic recapitalization, facilities can become obsolete and can 

no longer be cost-effectively renovated and must be replaced with new 

construction.2 Consequently, DOD and active military service officials 

report that some facilities are in such a deteriorated condition that they 

adversely affect missions supported by such facilities and negatively affect 

the quality of life of military personnel and their families. DOD and 

 1

 Sustainment includes the recurring maintenance and repair activities necessary to keep 

an inventory of facilities in good working condition. 

2

 Recapitalization includes the major renovations or reconstruction activities (including 

facility replacement) needed to keep facilities modern and efficient in an environment of 

changing standards and missions. 

United States General Accounting Office

Washington, DC 20548 
Page 2 GAO-04-288 Defense Infrastructure 

Congress have recognized the need to fully fund the maintenance and 

recapitalization of facilities, as well as to reduce DOD’s inventory of 

facilities through an upcoming round of domestic base realignments and 

closures authorized for fiscal year 2005.3 DOD is also reexamining 

worldwide basing requirements, which could potentially lead to significant 

changes in facility requirements over a period of years. 

Military construction4

 funds may be used for the restoration and 

modernization5

 of existing facilities or to fund the construction of new 

buildings and other facilities, referred to by DOD as “new footprint” 

projects. Operation and maintenance funds can also be used to pay for 

restoration, modernization, and small construction projects. However, 

operation and maintenance funds are used primarily to support 

sustainment activities, which are designed to keep facilities in good 

working order. Sustainment covers expenses for all recurring maintenance 

costs and contracts, as well as for major repairs of nonstructural facility 

components (e.g., replacing a roof or repairing an air-conditioning system) 

that are expected to occur during a facility’s life. In 1982 Congress 

established maximum amounts of funds that could be applied to 

unspecified minor military construction projects and upwardly adjusted 

these amounts, or thresholds, through 1991 and 2001.6

 Currently, an 

unspecified minor military construction project is a military construction 

project that has an approved cost estimate equal to or less than 

$1.5 million, or equal to or less than $3 million if the project is intended 

 3

 As authorized by Congress in 2001—the National Defense Authorization Act for Fiscal 

Year 2002 (Pub. L. No. 107-107, sec. 3001 (Dec. 28, 2001)—DOD intends to reduce its 

inventory of facilities by closing some installations and by consolidating overlapping 

activities within and across the services through a round of base realignments and closures 

in fiscal year 2005. DOD officials have testified that the department has from 20 to 

25 percent excess capacity in its facilities. Accordingly, as a result of the round of base 

realignments and closures anticipated in fiscal year 2005, the military services and defense 

agencies will have to adjust their facility maintenance and recapitalization plans. 

4

 Military construction, as defined in 10 U.S.C. 2801 (2003) “includes any construction, 

development, conversion, or extension of any kind carried out with respect to a military 

installation.” Construction projects consist of all types of buildings, roads, airfield 

pavements, and utility systems costing $750,000 or more. 

5

 Restoration includes repair and replacement work to restore facilities damaged by 

inadequate sustainment, excessive age, natural disaster, fire, accident, or other causes. 

Modernization includes altering or modernizing facilities to meet new or higher standards, 

accommodate new functions, or replace structural components. 

6

 See section 2805 of Title 10, United States Code (2003), which is reproduced in 

appendix II. 
Page 3 GAO-04-288 Defense Infrastructure 

solely to correct a deficiency that threatens life, health, or safety. In 

addition to the use of military construction funds for unspecified minor 

construction projects, service Secretaries may use operation and 

maintenance funds for such projects with estimated costs of not more 

than $750,000 for any other unspecified minor military construction 

project or $1.5 million to correct deficiencies threatening life, health, or 

safety. 

In 2003 we issued two reports on the funding and planning to improve the 

condition of facilities for the active services and reserve components.7

 In 

those reports, we focused on issues associated with the sustainment of 

facilities and reported that the funding spent on facility sustainment had 

not been sufficient to halt the deterioration of facilities. In response to 

your request, this report discusses (1) the steps that OSD has taken to 

enhance the management of the military construction program, 

(2) whether the process by which military construction projects are 

prioritized and resourced ensures that all categories of facilities that affect 

the services’ ability to accomplish their mission and improve quality of life 

are reached, and (3) the advantages and disadvantages of increasing the 

current funding thresholds for constructing and repairing facilities. This 

report focuses on nonhousing issues concerning military construction 

inside the United States and generally does not address issues associated 

with military family housing and overseas construction programs.8

In conducting our review, we interviewed OSD and service officials to 

obtain information related to OSD’s roles, policies, directives, procedures, 

and practices for managing the military construction program and to 

assess the military construction prioritization and programming process. 

 7

 See U.S. General Accounting Office, Defense Infrastructure: Changes in Funding 

Priorities and Strategic Planning Needed to Improve the Condition of Military 

Facilities, GAO-03-274 (Washington, D.C.: Feb. 19, 2003) and U.S. General Accounting 

Office, Defense Infrastructure: Changes in Funding Priorities and Management 

Processes Needed to Improve Condition and Reduce Costs of Guard and Reserve 

Facilities, GAO-03-516 (Washington, D.C.: May 15, 2003). 

8

 The conference report (H.R. Conf. Rep. No. 108-342 [2003]), accompanying H.R. 2559, 

directed DOD to prepare detailed comprehensive master plans starting in 2006 for the 

changing infrastructure requirements for U.S. military facilities within each of its overseas 

regional commands. The Senate Report (S. Rep. No. 108-82 [2003] at p. 14) directed GAO to 

monitor the infrastructure master plans being developed and implemented for the overseas 

regional commands and to provide the congressional defense committees with a report by 

May 15 of each year giving an assessment of the status of the plans, associated costs, 

burden-sharing implications, and other relevant information involving property returns to 

host nations, restoration issues, and residual values. 
Page 4 GAO-04-288 Defense Infrastructure 

We also visited 20 military installations and eight major commands to 

observe the condition of the facilities, and to discuss their role in the 

military construction program, the impact of projects added by Congress 

during the appropriation process, and the impact of legislative threshold 

levels for funding military construction projects. We conducted our work 

from February through November 2003 in accordance with generally 

accepted government auditing standards. A more thorough description of 

our scope and methodology is presented in appendix I. 

Recognizing the need to halt the degradation of defense facilities, OSD 

has taken a number of steps to enhance the management of the military 

construction program by providing guidance through a facilities strategic 

plan and by standardizing practices through selected management tools. 

However, some of these tools are not completed, and others have 

weaknesses that hinder DOD’s efforts to sustain and recapitalize facilities. 

In the 1990s the services did not allocate full funding for their facilities—

sustainment averaged about 75 percent of identified needs, and facilities 

recapitalization averaged about 35 percent of the services’ requirements—

resulting in too many deteriorated and obsolete facilities. Consequently, 

in recent years, OSD has sought to strengthen its role in guiding and 

overseeing facilities improvements. For example, OSD developed an 

installation readiness reporting system in 1999 to provide a top-level 

assessment of the condition of its facilities and to ascertain the effect that 

facility conditions have on readiness. However, the system does not 

provide consistent information between the services on the condition of 

facilities. Another OSD management tool, a defense facilities strategic 

plan,9

 outlines long-term strategic goals for installations and facilities. Yet, 

the plan, which is under revision, lacks comprehensive information on the 

specific actions, time frames, assigned responsibilities, and resources that 

are needed to meet DOD’s vision for facilities. OSD also developed an 

initial DOD-wide system to calculate the recapitalization rate associated 

with given amounts of military construction funding and to generate an 

annual funding requirement for recapitalization.10 DOD plans to upgrade 

 9

 See U.S. Department of Defense, Defense Installations 2001: The Framework for 

Readiness in the 21st Century (Washington, D.C.: August 2001). 

10 DOD defines the recapitalization rate as the number of years required to replace or 

renovate facilities at a given level of investment. The rate is computed by dividing 

recapitalizable plant replacement value by total restoration and modernization 

investments. The recapitalizable plant replacement value, as defined by DOD, is the 

cost of replacing an existing facility of the same size at the same location, using today’s 

building standards. 

Results in Brief 
Page 5 GAO-04-288 Defense Infrastructure 

and recalibrate this metric in the near future. Additionally, OSD 

established three key objectives for the services to sustain and improve 

the conditions of their facilities in its Defense Planning Guidance for 

fiscal year 2004.11 Currently, these objectives are to fully fund sustainment 

starting in fiscal year 2004, reach a 67-year average recapitalization rate by 

fiscal year 2008, and improve the condition of facilities so that deficiencies 

have only a limited effect on mission performance by fiscal year 2010.12

However, because of competing funding priorities and programs within 

the defense budget, the services do not plan to meet OSD’s facility 

objectives within the expected time frames and, in those instances where 

the services do indicate or intend to meet the objectives, their plans are 

based on future funding that requires unrealistically high rates of increase 

when compared with previous funding trends and when considered 

against other defense priorities. Given DOD’s competing funding pressures 

and given that (1) the process of realigning and closing bases to reduce 

DOD’s excess infrastructure from the 2005 round of closures and (2) a 

reexamination of worldwide basing requirements will take several years to 

accomplish, improvements in facilities will likely require much longer to 

accomplish than suggested by DOD’s three key objectives. 

DOD’s process of prioritizing and resourcing military construction projects 

provides an important means of improving whole categories of facilities 

but can repeatedly postpone addressing important projects outside of 

those categories. If left unchecked without periodic reassessments, the 

process can continually defer projects important to installations’ ability to 

accomplish their mission and improve servicemembers’ quality of life. As 

much as 77 percent of military construction funds appropriated in any one 

year are distributed among specific areas of emphasis, including housing, 

annual unspecified cost estimates, and the services’ major priorities. For 

example, OSD has made the quality of housing—including military family 

housing and barracks—one of the department’s highest priorities, 

amounting to approximately 54 percent of military construction funding 

appropriated in fiscal year 2004. In addition, funding for annual 

unspecified costs—which includes base realignment and closure activities, 

 11 The Secretary of Defense and his staff prepare the Defense Planning Guidance, issue 

policy, and articulate strategic objectives that reflect the national military strategy. The 

Defense Planning Guidance includes the Secretary’s force and resource guidance to the 

military departments, other combat support agencies, and the unified combatant 

commands. 

12 DOD has periodically revised the objectives for improving facilities on the basis of the 

services’ ability to meet them. 
Page 6 GAO-04-288 Defense Infrastructure 

the North Atlantic Treaty Organization facility contribution, and facility 

planning and design—was approximately 9 percent of the military 

construction budget in fiscal year 2004.13 Funding for the services’ major 

priorities, such as physical fitness facilities and aircraft hangars, was 

approximately 14 percent in fiscal year 2004. The remaining 23 percent of 

military construction funding for installations was insufficient to repair the 

remaining categories of facilities, including those affecting the services’ 

ability to accomplish their mission and improve servicemembers’ quality 

of life. For example, even though installation and major command officials 

have a large list of military construction projects in backlog, only a small 

fraction of these projects are submitted for consideration each year. In 

practice, installation officials often do not submit projects that do not 

fall into the specific areas of emphasis and sometimes are directed by the 

major commands to limit the number of projects that they can submit 

for consideration. Furthermore, annually, some high-priority, high-cost 

projects are postponed to future years because their addition to the 

current year’s military construction program causes an increase in 

the total funding that exceeds the services’ predetermined military 

construction funding level for that funding year. Often, officials would 

replace these high-cost projects with several lower-priority, lower-cost 

projects to come as close as possible to, but not exceed, this established 

funding level. In recent years, Congress has added various military 

construction projects during the annual appropriations process to address 

what it has considered as inadequate requests for military construction 

funding. Funding of these projects may require adjustments in DOD’s 

plans since they may not always align with DOD’s short-term priorities. 

Increasing current funding thresholds for using construction funds and 

operation and maintenance funds for unspecified minor military 

construction projects would give DOD more funding flexibility at the 

installation level but might need to be balanced against reducing 

congressional oversight of funding for the projects affected by these 

thresholds. Construction costs have increased 41 percent since the 

existing $1.5 million threshold for using unspecified minor construction 

funds and 7 percent since the existing $750,000 threshold for using 

operation and maintenance funds were last adjusted respectively upward 

in 1991 and 2001. As a result, fewer projects that are smaller in scope can 

now be completed using unspecified minor military construction funds or 

operation and maintenance funds. Additionally, some installation officials 

 13 Annual unspecified costs are not justified on the basis of specific projects. 
Page 7 GAO-04-288 Defense Infrastructure 

often scale back the scope of a project in order to meet the current 

thresholds. In doing so, however, they can compromise design 

characteristics with a facility that lacks capacity for future growth, making 

it potentially inadequate in future years. When projects are funded under 

the statutory thresholds, they can be completed during the same year as 

identified without seeking approval through the traditional, multiyear 

military construction prioritization and resourcing process. As a result, 

service and installation officials stated that the thresholds limit their 

ability to quickly respond to unanticipated, urgent construction 

requirements. If the thresholds were increased, Congress could lose 

oversight of the additional projects funded under these thresholds because 

such construction projects are not specifically identified in the President’s 

budget submissions. Yet, there are alternatives to preserve oversight, such 

as coupling the increased thresholds with periodic reports on the usage of 

those funds. 

We recognize that fully reversing DOD’s deteriorating infrastructure may 

take many years to be realized. A key step in the process is reducing 

excess infrastructure—as expected in the upcoming base realignment and 

closure round—which would permit a greater concentration of available 

resources on enduring facilities. Beyond that, improvements can be 

made in various management tools and processes for deciding military 

construction priorities. Accordingly, we are making recommendations to 

(1) complete the management tools, including the revision of the defense 

facilities strategic plan, for standardizing military construction and costs 

and improving facilities; (2) reevaluate the time frames for completing the 

three key objectives to reflect that there are competing funding priorities 

and that the process of realigning and closing domestic bases to reduce 

DOD’s excess infrastructure and realigning overseas facilities will take 

several years to accomplish and could affect meeting facilities’ investment 

goals; and (3) develop a mechanism for periodically reassessing military 

construction priorities for facility categories that fall outside the 

department’s specific areas of emphasis to ensure that the risk of delaying 

proposed military construction projects with potential operational and 

quality of life impacts is being given appropriate consideration. We are 

also suggesting that Congress may wish to consider the advantages and 

disadvantages of increasing the funding thresholds for unspecified minor 

construction projects. 

In comments on a draft of this report, DOD concurred or partly concurred 

with our recommendations. The department also provided technical 

clarifications, which we incorporated as appropriate. 
Page 8 GAO-04-288 Defense Infrastructure 

DOD manages the world’s largest dedicated infrastructure, covering 

more than 46,000 square miles of land and facilities worth more than 

$600 billion. To enhance and maintain this infrastructure, two separate 

defense appropriations are written annually: (1) military construction 

appropriations dedicated to military construction and (2) national defense 

appropriations, including operation and maintenance funding for facility 

sustainment and minor construction.14 There are also supplemental 

appropriations. The military construction appropriations fund 

construction projects and some of the facility sustainment, restoration, 

and modernization of the active Army, Navy and Marine Corps, Air Force, 

and their reserve components;15 additional defensewide construction; 

U.S. contributions to the North Atlantic Treaty Organization security 

investment program;16 and military family housing operation and 

construction. These military construction appropriations also provide 

funding for base realignment and closure activities, including the 

construction of new facilities for transferred personnel and functions, and 

environmental cleanup at closing sites. According to DOD, such costs are 

still being incurred from prior base closure rounds and are likely to be 

significant for the 2005 round if a large number of closures and 

realignments are approved. However, such costs may be viewed as a 

necessary upfront investment if significant reductions in excess facilities 

are to be made. Over the long term, such reductions could be key to 

rationalizing DOD’s facilities infrastructure and permitting a greater 

concentration of available facilities funding to enduring facilities. In 

addition, construction and sustainment of morale, welfare, and recreationrelated facilities are partially funded through proceeds of commissaries, 

recreation user fees, and other nonappropriated income. At installations 

located overseas, host-nation-funded construction programs are often a 

 14 The subcommittees of the House and Senate Appropriations Committees are Military 

Construction, which drafts legislation for the military construction appropriation, and 

Defense, which drafts legislation for the national defense appropriation. The Subcommittee 

on Readiness of the House Armed Services Committee and the Subcommittee on Readiness 

and Management Support of the Senate Armed Services Committee draft legislation to 

authorize military construction appropriations. 

15 The six military reserve components consist of the Army National Guard, Army Reserve, 

Naval Reserve, Marine Corps Reserve, Air National Guard, and Air Force Reserve. 

16 The security investment program is the U.S. contribution to alliance funds for the 

construction of facilities and the procurement of equipment essential to the wartime 

support of operational forces in the common defense of the North Atlantic Treaty 

Organization region. Facilities funded by this program include airfields, naval bases, 

communication facilities, pipelines, and radar and missile installations. 

Background 
Page 9 GAO-04-288 Defense Infrastructure 

part of the burden-sharing arrangement between the United States and the 

host country and represent a large source of major construction funds for 

these U.S. installations.17

Operation and maintenance funds are used mostly to support facility 

sustainment, which covers the day-to-day expenditures associated with 

routine maintenance such as repairing or replacing broken windows, 

doors, or restroom plumbing, as well as larger repair and maintenance 

projects such as installing a new roof or air-conditioning and heating 

systems. Both operation and maintenance funds and military construction 

funds can be used to finance facility restoration and modernization 

activities. Military construction and operation and maintenance funds 

designated for facility restoration are used to repair and replace items 

damaged by inadequate sustainment, excessive age, natural disaster, fire, 

accident, or other nonroutine causes. Funds designated for modernization 

are used to alter or modernize facilities to meet new or higher standards, 

accommodate new functions, or replace structural components. In 

addition, the construction of new facilities is mostly funded with the 

military construction appropriations. Conference reports accompanying 

military construction funding bills specify the amounts and the projects 

for which military construction appropriations are to be used. 

According to DOD, providing funds for full sustainment is the most 

cost-effective approach to managing facilities because it provides the 

most performance over the longest period for the least investment. 

Without adequate sustainment, the expected life of a facility is reduced 

and facilities must be recapitalized sooner, although, even with adequate 

sustainment, facilities eventually wear out or become obsolete over time. 

An obsolete facility is one that is irrelevant to present-day missions 

regardless of its condition; for example, a maintenance shop built in the 

1950s may be too narrow and small to accommodate large tanks and 

vehicles. Once a facility reaches the end of its expected service life, it must 

be recapitalized—that is, replaced, extensively renovated, or modernized. 

DOD estimates that an average recapitalization rate of 67 years allows 

fully sustained facilities to meet the department’s requirements. 

Recapitalization investments can also be made periodically throughout a 

 17 See U.S. General Accounting Office, Defense Infrastructure: Basing Uncertainties 

Necessitate Reevaluation of U.S. Construction Plans in South Korea, GAO-03-643

(Washington, D.C.: July 15, 2003). 

Sustainment, Restoration, 

and Modernization 
Page 10 GAO-04-288 Defense Infrastructure 

facility’s service life, which extends service life and delays the need for 

replacement. Moreover, even after recapitalization investments are made, 

facility performance can rapidly decline in the absence of adequate 

sustainment. 

The process for identifying construction needs, obtaining military 

construction funds, and completing a project typically lasts from 5 to 

8 years. During this period, OSD and the services review each construction 

project and request individual project funding approval from Congress. 

The DOD prioritization and resourcing process for military construction 

projects flows from OSD’s and the services’ guidance. This guidance 

describes OSD’s objectives for improving facilities, identifies the services’ 

categories of facilities that would receive priority in funding military 

construction projects, and assigns organizational responsibilities for the 

process. On the basis of this guidance, each installation identifies needed 

construction projects and develops the description and justification for 

each project. Installation officials are supposed to prioritize their projects 

and submit their highest priorities to their respective major commands. 

Major commands verify the various installation submissions, review and 

validate the cost estimates, compile the installations’ lists into one 

command list, prioritize the command’s list, and submit that list to the 

service headquarters. In addition, a major command may add its own 

military construction projects to its list.18 Similarly, the service 

headquarters review and validate the cost estimates and compile the major 

commands’ lists into one service list. The service identifies projects on the 

list that must be funded in the immediate fiscal year and places those 

projects at the top of its priority list. Next, the service assigns a numerical 

rating to the remaining projects that reflects the projects’ mission and 

impact. The projects with the highest rating based on this scoring process 

are combined with the “must-fund” projects to form the service’s priority 

list of proposed military construction projects. A similar process is used 

for military construction projects planned for installations located 

overseas. 

 18 The guard and reserve commands, using a similar process, submit their military 

construction requirements separately from the active components. Nevertheless, the guard 

and reserve must compete with their active counterparts for the available military 

construction dollars available each year. 

Military Construction 

Prioritization and 

Resourcing Process 
Page 11 GAO-04-288 Defense Infrastructure 

OSD reviews each of the services’ submissions to ensure that the projects 

comply with financial requirements and the department’s objectives and 

guidance, such as the 67-year average recapitalization rate and the 

maximum, allowable military construction funding for the budget year. 

The Office of the Under Secretary of Defense (Comptroller),19 in 

conjunction with other OSD offices—such as the Office of the Under 

Secretary of Defense for Acquisition, Technology and Logistics20—reviews 

proposed construction projects to confirm and adjust requirements as 

necessary. The Comptroller issues program budget decisions to the 

services, which communicate his decision on projects. Once OSD has 

approved the projects, it submits a listing of approved projects to the 

Office of Management and Budget, which approves and submits the final 

construction project budgets to Congress as part of DOD’s overall annual 

budget submission. The budget request for military construction funding 

each fiscal year includes major construction, project planning and design, 

and unspecified minor construction. Congress annually specifies the 

amounts and the projects for which military construction appropriations 

are to be used. A more thorough description of the department’s 

prioritization and resourcing process for military construction projects is 

presented in appendix III. 

We have conducted a number of reviews that identified areas in which 

DOD and the services could improve their facilities management program. 

Since 1997 we have identified DOD infrastructure management as a highrisk area. In September 1999 we reported on the management of DOD’s 

facility maintenance and repair programs and recommended that the 

Secretary of Defense (1) develop a way to link the department’s needs 

assessment with both resource allocations and tracking systems that 

show whether high-priority needs are receiving funding, (2) establish 

standardized condition assessment criteria, and (3) have the services 

adopt a valid engineering-based assessment system for facilities 

 19 The Under Secretary of Defense (Comptroller) is the principal advisor to the Secretary of 

Defense for budgetary and fiscal matters, DOD program analysis and evaluation, and 

general management improvement programs. 

20 The Under Secretary of Defense for Acquisition, Technology and Logistics is the principal 

advisor to the Secretary of Defense for all matters relating to the DOD acquisition system; 

research and development; advanced technology; developmental test and evaluation; 

production; logistics; installation management; military construction; procurement; 

environment security; and nuclear, chemical, and biological matters. 

Prior GAO Reports on 

DOD’s Facilities 

Management Program 
Page 12 GAO-04-288 Defense Infrastructure 

maintenance.21 In 2001 we reported that DOD needed to develop a 

comprehensive long-range plan for its facilities infrastructure that 

addresses facility requirements, recapitalization, and maintenance and 

repair needs.22 In a June 2002 report, we examined the condition of 

barracks used to house military recruits in basic training and concluded 

that, to varying degrees, most barracks were in significant need of repair, 

although some were in better condition than others.23 In January 2003 we 

designated federal real property governmentwide as a new high-risk area.24

In February 2003 we reported that DOD’s three objectives for sustainment 

and improvement of facility conditions may not be achievable because 

services do not propose to fully fund them or have developed funding 

plans that have unrealistically high rates of increase in the out-years 

when compared with previous funding levels and against other defense 

priorities.25 We found that while deteriorated facilities are common 

on many installations, there is a lack of consistency in the services’ 

information on facility conditions, making it difficult for Congress, DOD, 

and the services to direct funds to facilities where they are most needed 

and to measure progress in improving facilities. In reviewing a draft of this 

report, officials clarified that mission impact, and not facility condition 

alone, drives the allocation of funds to where they are most needed.

We also found that while the services had originally planned to fund 

sustainment at no less than 78 percent of requirements in fiscal year 2002, 

officials determined that these levels of funding could not be achieved if 

needs such as civilian pay, emergency needs, and “must-pay” bills were 

to be funded. In May 2003 we reported that the reserve components 

are unlikely to meet DOD’s three objectives as well.26 Some officials 

acknowledged that even when their components have expressed intent to 

 21 See U.S. General Accounting Office, Military Infrastructure: Real Property 

Management Needs Improvement, GAO/NSIAD-99-100 (Washington, D.C.: Sept. 7, 1999). 

22 See U.S. General Accounting Office, High-Risk Series: An Update, GAO-01-263

(Washington, D.C.: January 2001). 

23 See U.S. General Accounting Office, Defense Infrastructure: Most Recruit Training 

Barracks Have Significant Deficiencies, GAO-02-786 (Washington, D.C.: June 13, 2002). 

24 See U.S. General Accounting Office, High-Risk Series: An Update, GAO-03-119

(Washington, D.C.: January 2003), and High-Risk Series: Federal Real Property, 

GAO-03-122 (Washington, D.C.: January 2003). 

25 See GAO-03-274. 

26 See GAO-03-516. 
Page 13 GAO-04-288 Defense Infrastructure 

meet DOD’s objectives, their funding plans included unrealistically high 

rates of increase during the out-years when compared to previous funding 

trends and against other defense priorities. We also concluded that the 

reserve components face challenges in implementing two potential 

cost-saving initiatives—joint construction projects and real property 

exchanges—and that OSD has not provided overall direction for the 

program, thus risking the exchange of property that may be needed by 

other DOD components. 

Recognizing the need to halt the degradation of defense facilities, OSD 

has taken a number of steps to enhance the management of the military 

construction program by providing guidance through a facilities strategic 

plan and by standardizing practices via a number of selected management 

tools. In the 1990s the services did not allocate full funding for their 

facilities, resulting in too many deteriorated and obsolete facilities. 

However, some of OSD’s tools are not completed and others have 

weaknesses that limit efforts to improve facilities. For example, the 

installation readiness reporting system does not have consistent 

information on the condition of facilities, the defense facilities strategic 

plan lacks comprehensive information and is being revised, and the 

recapitalization model to generate an annual recapitalization requirement 

is not yet completed. Furthermore, the services do not plan to meet 

OSD’s key objectives for improving facilities in the near future because of 

competing funding priorities and programs within the defense budget. In 

those instances where service officials have indicated their intent to meet 

the objectives in future years, their plans are based on future funding that 

requires unrealistically high rates of increase in appropriations when 

compared with previous funding trends and when considered against 

other defense priorities. 

DOD and service officials have said that past underfunding for 

sustainment and recapitalization has led to the deterioration and 

obsolescence of facilities used by the military services. In the 1990s the 

services did not allocate full funding for their facilities—sustainment 

averaged about 75 percent, and facilities recapitalization averaged about 

35 percent of the services’ requirements—resulting in too many 

deteriorated and obsolete facilities. For example, Army officials have 

testified that available sustainment funding since the early 1990s was 

approximately 60 percent of what was needed. Air Force officials also 

testified that facility sustainment funding shortfalls have hindered the 

service’s efforts to sustain and operate Air Force facilities and limited the 

Strategic Plan and 

Management Tools 

Weaknesses Limit 

Efforts to Improve 

Facilities 

Underfunding of 

Sustainment and 

Recapitalization Led to 

Facility Deterioration and 

Obsolescence 
Page 14 GAO-04-288 Defense Infrastructure 

Air Force to providing day-to-day maintenance for facilities. Navy and 

Marine Corps officials also testified that their services have consistently 

underfunded facility sustainment. As a result of this underfunding, the 

services’ repair backlogs increased significantly, from $8.9 billion to 

$14.6 billion during fiscal years 1992 through 1998. Also, 68 percent of 

DOD’s facility classes—which are groupings of like facilities, such as 

operations and training, mobility, and supply—were rated C-3 (significant 

facility deficiencies that prevent it from performing some missions) or C-4 

(major facility deficiencies that preclude satisfactory mission 

accomplishment) in fiscal year 2001—a slight improvement from the 

69 percent rate in 2000. 

After these years of neglect, some important missions remain in pre-World 

War II-era structures that were built for purposes other than their current 

use and require more frequent restoration and sustainment. (See fig. 1.) 

For example, the Army uses horse stables constructed in 1934 as a vehicle 

maintenance shop at Fort Benning, Georgia, and the Marine Corps uses 

deteriorated brick and steel hangars constructed in 1935 to house 

helicopters at Marine Corps Air Station Quantico, Virginia. 
Page 15 GAO-04-288 Defense Infrastructure 

Figure 1: Examples of Pre-World War II-Era Facilities 

During our visits to installations, we found that the services also 

sometimes work in maintenance facilities, training facilities, supply and 

storage facilities, airfields, and deployment facilities that are deteriorated 

and/or do not meet standards. Maintenance bays, runway aprons, and 

other facilities are often undersized or inadequate for the mission, as 

illustrated in figure 2. 
Page 16 GAO-04-288 Defense Infrastructure 

Figure 2: Examples of Undersized or Inadequate Facilities 

Military services officials attributed this consistent underfunding to 

constrained defense budgets and competing priorities. They also reflect 

insufficient efforts to reduce excess facilities and concentrate resources 

on enduring facilities. The services have also routinely traded off 

infrastructure and modernization funding to shore up other readiness 

activities. Past sustainment and military construction funding levels 

allowed the services to provide only minimal day-to-day critical 

maintenance of their facilities and infrastructure. While installations 

continue to operate, local personnel and service members are increasingly 
Page 17 GAO-04-288 Defense Infrastructure 

required to develop workarounds—or adjustments to normal operating 

procedures to compensate for deteriorated or inadequate facilities—which 

affected their operational efficiency. This underfunding was recognized in 

the 1997 Quadrennial Defense Review report,27 which noted that the 

department should “program more accurately for the costs of operating 

the defense establishment.” However, as discussed below, this 

underfunding continues today. 

Recognizing the need to halt the degradation of defense facilities, OSD 

took a number of steps—such as developing an installation readiness 

reporting system, a facilities strategic plan, and other management tools—

to help standardize the facility sustainment and recapitalization process 

and to plan military construction projects; however, some of these 

management tools are incomplete. Historically, each service had 

established its own criteria for assessing the condition of its properties 

and the urgency for repairs, prioritizing maintenance needs, and deciding 

how much to allocate for maintenance and military construction funding. 

At the same time, each service had different standards for sustaining and 

recapitalizing facilities. As a result, the services had created widely varying 

living and working conditions. 

In an attempt to provide Congress with a measure of facilities’ conditions 

and their ability to support military missions, DOD issued its first 

installations’ readiness report in 1999.28 DOD developed the report to fulfill 

its reporting requirement to Congress under section 117 of title 10 of the 

United States Code, which specifies that DOD measure the capability of 

defense installations and facilities to provide appropriate support to forces 

in the conduct of their wartime missions. Within the report, each military 

facility falls under one of nine facility classes, which are groupings of like 

facilities, such as operations and training, mobility, and supply. The 

services’ major commands assign condition ratings to each facility class 

using a scale of C-1 through C-4: C-1 facilities have only minor deficiencies 

with negligible impact on capability to perform missions; C-2 facilities 

have some deficiencies with limited impact on capability to perform 

missions; C-3 facilities have significant deficiencies that prevent 

performing some missions; and C-4 facilities have major deficiencies that 

 27 See Department of Defense, Report of the Quadrennial Defense Review 

(Washington, D.C.: May 1997). 

28 See Department of Defense, Installations’ Readiness Report (Washington, D.C.: 1999). 

OSD Took Steps to 

Provide a More Consistent 

Approach to Facilities, 

but Some Steps 

Remain Incomplete 
Page 18 GAO-04-288 Defense Infrastructure 

preclude satisfactory mission accomplishment. According to DOD’s 

guidance, the services were permitted to report readiness without 

modifying their existing assessment processes. As a result, all four 

services are using different systems and criteria to assess facility 

conditions and develop condition ratings. Consequently, in February 2003 

we reported that the services used different kinds of facility raters and 

procedures, assessment scopes and frequencies, appraisal scales, and 

validation procedures, all of which resulted in inconsistencies and a lack 

of comparability in their ratings.29 Without a consistent cross-service 

system for assessing facility conditions and developing ratings, DOD and 

the services cannot be assured that their funding decisions effectively 

target facilities in the greatest need and that the reported ratings 

accurately measured progress in facility condition improvements. This 

system is currently under review by the department. 

OSD’s first defense facilities strategic plan, published in August 2001, 30

was the result of years of work with the services and defense agencies to 

standardize and develop terminology, concepts, and models, and to shape 

the information into an achievable long-range plan. The vision set forth in 

the plan is to have installations and facilities available when and where 

needed to effectively and efficiently support missions. To achieve this 

vision, the strategic plan outlines four long-term strategic goals. These 

strategic goals are to (1) locate, size, and configure defense installations 

and facilities to meet the requirements of today’s and tomorrow’s force 

structures; (2) acquire and sustain defense installations and facilities 

to provide mission-ready installations with quality living and work 

environments; (3) leverage resources—money, people, and equipment—to 

achieve the proper balance between requirements and available funding; 

and (4) improve facility management and planning by embracing best 

business practices and taking advantage of modern asset-management 

techniques and performance-assessment metrics. The plan is intended to 

provide a unifying framework for the department in achieving these 

strategic goals and identifies several key initiatives to achieve OSD’s vision 

of modern, cost-efficient installations and facilities supporting operational 

readiness. However, in February 2003 we reported that the plan lacked the 

comprehensive information that makes a strategic plan useful and that 

most strategic plans encompass.31 For example, it did not contain detailed 

 29 See GAO-03-274. 

30 See Defense Installations 2001: The Framework for Readiness in the 21st Century. 

31 See GAO-03-274. 
Page 19 GAO-04-288 Defense Infrastructure 

information on (1) the specific actions that are needed to achieve each of 

the four goals; (2) the methods or processes that would be used to achieve 

each goal; (3) the amount of funding or other resources needed to reach 

the goals; (4) the time frames and milestones; (5) the assignment of 

responsibilities (in other words, the entity accountable for completing 

each goal); and (6) the performance measurement tools to use to 

determine the progress being made toward each goal. At that time, 

we recommended that OSD revise its defense facilities strategic plan 

to include detailed information on specific actions, time frames, 

responsibilities, and funding levels. OSD officials said the plan is being 

revised and is expected to be completed in early 2004. 

In 2001 OSD began using its initial facilities recapitalization metric, which 

provides a uniform mechanism for tracking recapitalization investments 

through the military construction accounts, augmented in some cases with 

operation and maintenance funds or working capital funds. Before that 

time, no single tool was employed DOD-wide to calculate the 

recapitalization rate associated with programmed funding levels. Each 

military service used its own metrics and accounting constructs to 

perform these computations. Implementing the Secretary’s guidance 

required the development of a standard metric that would be relatively 

transparent within the programming and budgeting process. The metric 

considers the combined effect of construction and other investments on 

the physical plant. The metric is computed by dividing the recapitalizable 

plant replacement value by the total annual restoration and modernization 

investment.32 However, OSD officials plan to upgrade and recalibrate this 

metric and expect the upgrade to be completed in late 2004. Once 

completed, effective use of the tool will require a consistent level of 

funding each year to ensure that the projected recapitalization rate 

is realized. 

In addition to its strategic plan and newly developed management tools, 

OSD has taken other steps to improve the management of its facilities, 

 32 DOD defines “recapitalizable plant replacement value” as the cost of replacing an 

existing facility with a facility of the same size at the same location using today’s building 

standards, but it does not include facilities planned for demolition, disposal by transfer to 

other entities, and one-time use, as well as facilities recapitalized by appropriations other 

than regular military construction or operation and maintenance funds (such as military 

family housing), and facilities recapitalized by sources outside DOD (such as facilities 

in Japan). 
Page 20 GAO-04-288 Defense Infrastructure 

enhance accountability, and better measure and track performances, 

including the following: 

• Facilities assessment database. In 1997 OSD created an integrated 

facilities assessment database from the services’ real property database 

inventories. This database has transitioned into the source database 

for other DOD-wide databases and management tools, including the 

facilities sustainment model discussed below. It tracks key facility 

inventory and cost data, including the quantity, type, location, and 

status of buildings, structures, and all other military facility assets. 

Although the database provides an informative picture of the overall 

installation readiness levels organized by facility categories within the 

major commands and individual installations, it does not provide 

enough detail to determine the individual facility deficiencies that 

generate the readiness ratings. 

• Facilities pricing guide. In 1999 OSD issued its first defense facilities 

cost factors handbook, now combined with the DOD Facilities Pricing 

Guide.

33 The purpose of the pricing guide is to standardize the method 

by which the services determine the sustainment and military 

construction costs of their facilities. The cost factors are intended for 

macro-level analysis and planning, not for individual projects. Where 

possible, the pricing guide uses commercial benchmark costs to 

determine the annual cost per square foot (or similar unit of measure) 

to sustain and construct each facility type. However, the pricing guide 

does not take into account other factors affecting the cost of military 

construction, such as regional economic conditions that can affect 

construction cost significantly. 

• Facilities sustainment model. In 1999 OSD developed the facilities 

sustainment model, which estimates the annual sustainment cost 

requirement, adjusted for area costs, for each service and defense 

agency, on the basis of the number, type, location, and size of its 

total inventory of facilities. The model generates an annual funding 

requirement that would sustain DOD’s facilities throughout the budget 

year. As shown in appendix IV, however, the military services do not 

plan to fully fund their sustainment requirements before fiscal year 

2008. In addition, service officials expressed concern that the model 

does not provide accurate sustainment funding at the installation 

 33 See U.S. Department of Defense, DOD Facilities Pricing Guide, Version 5, March 2003. 
Page 21 GAO-04-288 Defense Infrastructure 

level—especially at installations with aging infrastructure that require a 

large amount of sustainment funds to maintain. 

• Unified facilities criteria. In 2001 OSD created a series of 

documents, referred to as the “unified facilities criteria,” to provide 

facility planning, design, construction, sustainment, restoration, and 

modernization criteria for DOD components. As of December 2003, 

only 71 of the required 161 documents had been issued on various 

construction standards, such as energy conservation, structural design, 

fire protection, and seismic design. The building and construction 

codes and guidance established in these documents are designed to 

standardize and streamline the process for developing, maintaining, 

and disseminating criteria in support of the military construction 

program. For example, as part of the unified facilities criteria, DOD 

Antiterrorism Standards, DOD Instruction Number 2000.16, requires 

DOD components to adopt and adhere to common criteria and 

minimum construction standards to mitigate antiterrorism 

vulnerabilities and terrorist threats. OSD plans to complete the unified 

facilities criteria in fiscal year 2009. 

• Improved budgeting methods. In 2002 OSD replaced the operation 

and maintenance-funded real property maintenance program with two 

distinct activities and accounting structures for (1) sustainment and 

(2) restoration and modernization, having already created a separate 

structure for demolition and disposal in fiscal year 1999. By tracking 

each element separately, it is now possible to link programs and 

budgets directly to program objectives and to better track performance 

relative to the objectives. 

OSD also developed and implemented the facilities demolition and 

disposal program, by which the military services and defense agencies 

have demolished more than 80 million square feet of excess and obsolete 

facilities during fiscal years 1998 through 2003. The defense drawdown 

had left many military bases with structures that the services no 

longer need, are in poor condition, or have no remaining value. While 

demolishing these structures entails up-front spending, it allows the 

services to avoid sustainment, restoration, and modernization costs for 

these facilities. Estimates by OSD suggest that demolition projects pay for 

themselves in as little as 5 years. Notwithstanding these efforts, OSD and 

service officials maintain that the department’s inventory of real property 

will still contain excess structures after the demolition program is 

completed. One previous estimate by the department in 1998 indicated 

that it might have 20 to 25 percent excess capacity in facilities. By closing 

some domestic installations and consolidating overlapping activities 
Page 22 GAO-04-288 Defense Infrastructure 

within and across the services, OSD also intends to gain efficiencies and 

further reduce its inventory of facilities through the upcoming round of 

base realignments and closures authorized to start in 2005 by Congress.34

The process of realigning and closing bases, however, will take some years 

to accomplish and, while it is expected to produce significant long-term 

savings, it has typically required considerable up-front expenses. In 

addition, OSD and the services are reexamining worldwide basing 

requirements, which could potentially lead to significant changes in 

facility requirements over the next several years. Over the long-term, the 

elimination of excess facilities should permit a greater concentration of 

resources on enduring facilities. 

Finally, OSD established three key objectives for the services to sustain 

and improve the conditions of their facilities in its Defense Planning 

Guidance for fiscal year 2004. Currently, these objectives are to fully fund 

sustainment starting in 2004, reach a 67-year average recapitalization 

rate by fiscal year 2008, and improve the condition of facilities so that 

deficiencies have only a limited effect on mission performance by fiscal 

year 2010. While OSD has periodically revised these investment objectives 

on the basis of the services’ ability to meet them, the military services do 

not plan to fund most objectives in the near future because of competition 

for funds from other defense programs and priorities. Also, even when 

service officials indicate an intent to meet the objectives in future years, 

their funding plans suggest that they are unlikely to do so, given their 

unrealistically high rates of increase in the future when compared with 

previous funding trends and when considered against other defense 

priorities and programs, including the Global War on Terrorism, Operation 

Enduring Freedom, and other ongoing efforts such as the Balkans, military 

readiness, weapons procurement, and research and development. In 

addition, earlier this year we reported that the reserve components were 

unlikely to achieve OSD’s investment objectives for improving facilities.35

At that time, reserve component officials were concerned that the 

components may not receive significant funding increases for facility 

recapitalization activities in the out-years because the reserve components 

are considered a low priority, from past experience. They also said that 

reserve components do not compete well with the active services and 

facilities generally do not compete well with other DOD programs and 

priorities during the budgeting process. Given DOD’s competing funding 

 34 Pub. L. No. 107-107, Sec. 3001, (Dec. 28, 2001). 

35 See GAO-03-516. 
Page 23 GAO-04-288 Defense Infrastructure 

pressures and given that the process of realigning and closing bases to 

reduce DOD’s infrastructure will take several years to accomplish, 

improvements in meeting facility investment goals will likely require much 

longer than suggested by OSD’s three key objectives. A more thorough 

description of the services’ plans relative to OSD’s three key investment 

objectives is presented in appendix IV. 

DOD’s process of prioritizing and resourcing military construction projects 

provides an important means of improving whole categories of facilities 

but can repeatedly postpone addressing important projects outside of 

those categories. If left unchecked without periodic reassessments, the 

process can continually defer projects important to installations’ ability to 

accomplish their mission and improve servicemembers’ quality of life. As 

much as 77 percent of military construction funds are distributed among 

specific areas of emphasis, leaving a significantly small portion for 

individual installation requirements that affect the services’ ability to 

accomplish their mission and improve servicemembers’ quality of life. 

In addition, installations and major commands do not submit many 

restoration and modernization projects for funding consideration because 

the projects do not fall within the specific areas of emphasis and thus are 

perceived as being highly unlikely to receive funding. Also, some high-cost 

priority projects are postponed for future years’ funding because their 

addition would exceed the services’ military construction funding level 

established for that budget year. Instead, they are replaced with multiple 

lower-cost projects whose total costs better fit the established funding 

level. Although Congress may add several projects during the 

appropriations process each year, addressing what it has considered as 

inadequate requests for military construction funding, the adds may not 

always reach the services’ and installations’ highest priorities. 

Most of the military construction funds appropriated in any one year are 

distributed among specific areas of emphasis, leaving a significantly 

smaller portion for other facility categories—some that affect mission 

operations and quality of life. OSD and the services have three specific 

areas of emphasis: housing, other annual unspecified costs, and the 

services’ major priorities. About $2.2 billion (23 percent) of the $9.3 billion 

appropriated in fiscal year 2004 remains to fund installations’ other 

military construction needs—including some that affect the services’ 

ability to accomplish their mission and improve servicemembers’ quality 

of life—after the three areas of emphasis are addressed. (See fig. 3.) 

Prioritizing and 

Resourcing Process 

Serves an Important 

Function but Has 

Limitations 

Specific Areas of Emphasis 

Leave Little Funding for 

Other Facility Needs 
Page 24 GAO-04-288 Defense Infrastructure 

Figure 3: Percent Distribution of Military Construction Funding by Specific Area of 

Emphasis in the Military Construction Appropriation Act for Fiscal Year 2004 

Overall funding for housing and barracks in the Military Construction 

Appropriations Act, 200436 was approximately $5 billion (54 percent of the 

total amount appropriated). In its 2001 defense facilities strategic plan, 

OSD made the quality of housing—military family housing and barracks—

one of the department’s highest priorities. At that time, DOD estimated 

that of the nearly 300,000 family housing units, two-thirds were in need 

of significant restoration, modernization, or outright replacement. 

DOD estimated that using traditional military construction to complete 

renovations and replacements would cost $20 billion and take 

approximately 30 years. Funding for family housing is $3.9 billion in fiscal 

year 2004—$1.1 billion for family housing construction and privatization 

and $2.8 billion for family housing operation and maintenance. Funding 

for barracks is $1.2 billion in fiscal year 2004. Barracks are a high DOD 

priority because the department plans to eliminate common bath and 

 36 Pub. L. No. 108-132 (Nov. 22, 2003). 
Page 25 GAO-04-288 Defense Infrastructure 

shower facilities, or gang latrines, in barracks by 2008.37 In order to 

accomplish this objective, the services are not only renovating existing 

barracks but building new ones as well. These efforts are intended to 

improve the quality of life for junior service members, which in turn may 

improve morale, retention, and operational readiness. 

Estimated funding for other annual unspecified costs—such as facility 

planning and design, base realignment and closure activities, and the 

North Atlantic Treaty Organization’s security investment program—in the 

Military Construction Appropriations Act, 2004,38 was approximately 

$833 million (9 percent of the total amount appropriated). These annual 

unspecified costs are not justified on the basis of specific projects. For 

example, planning and design funds can be used for future projects that 

have not yet been appropriated or for completing the planning and design 

phase of appropriated projects. Base realignment and closure funds in 

fiscal year 2004 are mainly to finance environmental cleanup, caretaker, 

and property disposal activity costs. Historically, these funds have 

supported a wide range of requirements, ranging from a high of $3.9 billion 

in fiscal year 1996 to a low of $370 million in fiscal year 2004. Minor 

military construction funds are used for projects that fall under specific 

thresholds and are approved internally by OSD and the services. Finally, 

funds for the North Atlantic Treaty Organization’s security investment 

program are for the collective defense of the North Atlantic Treaty area. 

Funding for the services’ major priorities in the Military Construction 

Appropriations Act, 2004,39 was approximately $1.3 billion (14 percent of 

the total amount appropriated). Projects that fit within the services’ 

priorities are given a higher ranking and are more likely to receive funding. 

The services’ major priorities are unique to the objectives of the services. 

Recently, the Army identified five categories of priorities, which include 

training ranges, mobilization, transformation, antiterrorism and force 

protection, and the Army’s focus facility strategy to address Army National 

 37 In November 1995 DOD adopted a new barracks construction standard, referred to as 

the 1+1 design standard, for servicemembers permanently assigned to an installation. 

The standard, which does not apply to barracks for members in basic recruit or initial skill 

training, provides each junior enlisted member with a private sleeping room and with a 

kitchenette and bath shared by one other member. The Marine Corps has a permanent 

waiver from the Secretary of the Navy to use a different barracks design standard—one 

sleeping room and bath are shared by two junior Marines. 

38 Pub. L. No. 108-132 (Nov. 22, 2003). 

39 Pub. L. No. 108-132 (Nov. 22, 2003). 
Page 26 GAO-04-288 Defense Infrastructure 

Guard readiness centers, Army Reserve centers, physical fitness facilities, 

trainee barracks or complexes, general instruction classrooms, vehicle 

maintenance and hardstand facilities, and chapels. Funding for these 

projects was $741 million of the military construction funding 

appropriated for fiscal year 2004. Funding for the Navy’s major priorities, 

such as piers and hangars, was $266 million of the military construction 

funding appropriated for fiscal year 2004. Funding for the Air Force’s 

priorities—consisting of new mission requirements, environmental 

compliance, and fitness centers—was $304 million of the military 

construction funding appropriated for fiscal year 2004. The Marine Corps 

does not have stated priorities for facilities—it is small enough to review 

and prioritize all proposed military construction projects submitted by its 

installations and commands. 

While DOD’s process of prioritizing and resourcing military construction 

projects provides an important means of improving whole categories of 

facilities, it can repeatedly postpone addressing important projects outside 

of those categories. If left unchecked periodically, the process can 

continually defer projects important to installations’ ability to accomplish 

their mission and improve servicemembers’ quality of life. The following 

are examples: 

• Army officials told us that nearly all garrison projects at Aberdeen 

Proving Ground, Maryland, have not received funding because these 

projects are not considered a high enough priority. As a result, the 

installation rated three of its five facility categories as having 

significant deficiencies that limit it from performing some missions. 

For example, a centralized information science and supercomputing 

facility has been placed in the future years’ defense plan and has been 

delayed for 10 years. Currently, computers and personnel are dispersed 

in several buildings, which significantly impairs operations and 

lengthens completion timelines. Officials predict that with the growing 

need for classified computer systems owing to such missions as 

transformation and future combat system development, the current 

facilities will be inadequate. 

• A runway at Offutt Air Force Base, Nebraska, originally constructed 

in 1944, has not received funding since fiscal year 2001, even with 

Air Combat Command sponsorship, because it was not considered a 

high enough priority to be included in the budget request. In 1999 a 

recommendation was made to limit the runway to emergency use only. 

Annual maintenance costs amount to over a reported $400,000, and are 

rising. In addition, the Air Force’s structural analysis indicates that the 
Page 27 GAO-04-288 Defense Infrastructure 

Offut runway must be replaced in fiscal year 2005 or face a significant 

chance of experiencing catastrophic failure resulting in significant 

damage to aircraft and loss of personnel. 

• A bridge on Cheatam Annex, Yorktown Naval Weapons Station, 

Virginia, was found to be structurally unsound by the Navy and could 

not safely support munitions vehicles. The installation has submitted 

bridge replacement projects annually since 1996 but the project has 

not been prioritized high enough to secure funding. In the meantime, 

munitions trucks were required to detour 21 miles. By considering the 

bridge as part of the entire road system, the station received approval 

to finance the project with operation and maintenance funds in fiscal 

year 2003. 

• Aircraft parking aprons at Langley Air Force Base, Virginia, failed 

several inspections for safety in 1995, 1999, and 2002. Currently, its 

poor condition requires constant foreign object damage inspections 

and maintenance totaling 23,000 hours and at a reported $85,000 

annually to maintain its limited usability. While the installation has 

submitted projects annually to repair the aprons, these projects have 

not been funded because other projects were considered by the Air 

Force to be higher in priority. 

Every year, the number of military construction projects forwarded by 

installations and major commands to the next higher level for funding 

consideration is a small percentage of their identified requirements—

including those that affect the services’ ability to accomplish their mission 

and improve servicemembers’ quality of life. Also, even though installation 

officials have dozens of unfunded military construction projects in 

backlog, one as many as 10 years old, they submit only a small portion of 

these projects for funding consideration, knowing that only a limited 

number would get funded. For example, Marine Corps Camp Pendleton, 

California, submitted 5 projects for funding consideration in fiscal year 

2004 even though it had identified 30 projects for the installation. In some 

instances, the major commands directed installations to limit the number 

of projects submitted for funding consideration. For example, Army 

instructions for submitting unspecified minor military construction 

projects dictate that the installation management agency can submit only 

up to 14 projects. It also notes that because of limited funding, only the 

top-priority projects are likely to receive funding. Other requests to limit 

the number of projects submitted for funding consideration appear to be 

based on unwritten guidance, which assumes that there would be only a 

Installations and Major 

Commands Submit a Small 

Percentage of the 

Identified Military 

Construction Projects 

Each Year 
Page 28 GAO-04-288 Defense Infrastructure 

very limited amount of military construction funding available to 

fulfill requirements. 

Furthermore, after compiling and prioritizing the installations’ lists of 

projects, major commands submit a small percentage of the installations’ 

projects to the services. For example, the Air Force’s Air Combat 

Command submitted 10 projects for funding consideration in fiscal year 

2004 even though its subordinate installations had submitted 100 projects 

for funding consideration. Often, it uses a rule-of-thumb that about half of 

its submissions to the Air Force would be forwarded to OSD. In practice, 

DOD and the active services have come to rely on additional funding 

provided by Congress beyond the department’s budget request to meet 

reserve component requirements while requesting funding for other 

priorities within DOD’s budgetary constraints. Reserve component 

officials said they submit fewer military construction projects than their 

requirements, choosing to depend on the congressional adds. However, 

reserve component officials said many of their identified construction 

projects still go unfunded. 

Some high-cost, high-priority military construction projects are postponed 

to future years’ funding plans because the projects’ cost would push the 

cumulative amount of funding over the services’ military construction 

funding level established for that budget year. Often, officials would 

replace these high-cost projects with several lower-priority, lower-cost 

projects to come as close as possible to, but not exceed, the established 

funding level. For example, at Fort Leavenworth, Kansas, a high-priority 

project to renovate an instruction facility was delayed twice in the 2002 

and 2003 fiscal year budgets and moved to fiscal year 2005 because its 

estimated cost exceeded the Army’s military construction funding level 

established for the earlier fiscal years. By delaying the project, the 

estimated cost for the project increased from $75 million to $79 million 

during this period. At the Naval Submarine Base New London, 

Connecticut, the Navy delayed replacing a pier from fiscal year 2004 to 

fiscal year 2005 because of the project’s high cost. 

Congress may add various projects during the appropriations process, 

addressing what it has considered as inadequate requests for military 

construction funding. Funding of these projects generally address longterm service and installation needs but may require adjustments in DOD’s 

plans since they may not always align with DOD’s short-term priorities. 

High Cost Projects Are 

Postponed to Future Years 

Congressional Adds 

Address Long-term Service 

Needs but May Require 

Adjustments in DOD 

Planning 
Page 29 GAO-04-288 Defense Infrastructure 

For example, Congress added 123 and 120 projects in fiscal years 2003 and 

2004, respectively, that were in addition to the 366 and 280 projects that 

DOD requested during the same periods. According to DOD officials, while 

projects that are added by Congress during the appropriation process may 

match long-term military construction requirements they may not always 

address the services’ highest priorities for the affected appropriation year 

and require adjustments. The following examples illustrate this point: 

• In fiscal year 2003, Congress moved up and appropriated military 

construction funds for an Army National Guard readiness center 

originally programmed for fiscal year 2007. 

• In fiscal year 2003, Congress moved up and appropriated military 

construction funds for a Navy fire station originally planned for fiscal 

year 2007. 

• In fiscal year 2004, Congress moved up and appropriated military 

construction funds for a Marine Corps ground combat training range 

that was originally programmed for fiscal year 2009. This project was 

added ahead of some other Marine Corps projects already programmed 

for construction in earlier fiscal years. 

• In fiscal year 2002, Congress moved up and appropriated military 

construction funds for an Army maneuver area training equipment site 

that was not in the Army’s future years defense plan. 

• In fiscal year 2002, Congress added 21 Air Force projects that were not 

in the Air Force’s near-term integrated priority list. In addition, during 

fiscal year 2003, Congress added 25 projects that did not appear in the 

Air Force integrated priority list. However, Air Force officials indicated 

that many of the projects were in the Air Force’s long-term plan. 
Page 30 GAO-04-288 Defense Infrastructure 

Increasing current funding thresholds for using construction funds 

and operation and maintenance funds for unspecified minor military 

construction projects would give DOD installation officials more funding 

flexibility but might need to be balanced against reducing congressional 

oversight of projects affected by these thresholds. Construction costs have 

increased 41 percent since the $1.5 million threshold for using unspecified 

minor construction funds was last adjusted upward in 1991 and 7 percent 

since the $750,000 threshold for using operation and maintenance funds 

was last adjusted upward in 2001. As a result, fewer projects that are 

smaller in scope can now be completed using these funds. Additionally, 

installation officials sometimes scale back the scope of a project in 

order to meet the current thresholds. In doing so, however, they can 

compromise the design characteristics of a facility that lacks capacity for 

future growth, making the facility potentially inadequate in future years. 

When projects are funded under the statutory thresholds, they can be 

completed during the same year as identified without seeking approval 

through the traditional, multiyear military construction prioritization and 

resourcing process. As a result, service and installation officials stated 

that the thresholds limit their ability to quickly respond to unanticipated, 

urgent requirements. However, increasing these thresholds could reduce 

congressional oversight of the projects affected by these thresholds, 

unless offset by other means, such as coupling the increased thresholds 

with periodic reports on the usage of those funds. 

Congress established maximum amounts of funds applicable to 

unspecified minor military construction projects in 1982 and upwardly 

adjusted these amounts, or thresholds, through 2001. Currently, an 

unspecified minor military construction project is a military construction 

project that has an approved cost equal to or less than $1.5 million. Such a 

project can have an approved cost equal to or less than $3 million if the 

project is intended solely to correct a deficiency that threatens life, health, 

or safety. Generally, as long as the minor construction project’s cost 

estimates are below $750,000, no advance service Secretary’s approval and 

congressional notification are required. Otherwise, the project may then 

be carried out only after the end of a 21-day period after notification is 

received by Congress. In addition to the authorized use of military 

construction appropriations for unspecified minor projects, service 

Secretaries may use appropriated operation and maintenance funds for 

such projects estimated to cost not more than $1.5 million to correct 

deficiencies threatening life, health, or safety and $750,000 for any other 

unspecified minor military construction project. 

Increasing the 

Current Funding 

Thresholds Gives 

DOD Additional 

Flexibility but Could 

Lessen Congressional 

Oversight 
Page 31 GAO-04-288 Defense Infrastructure 

The existing $1.5 million and $3 million cost estimate thresholds for using 

unspecified minor construction funds limit the size and scope of facilities 

to be constructed. (See appendix II for section 2805(a)(1) of Title 10, 

United States Code.) When projects are funded with unspecified minor 

military construction funds under these thresholds, they can be completed 

during the same year as identified without seeking approval through the 

traditional, multiyear military construction prioritization and resourcing 

process. However, because of the 41 percent increase in construction 

costs since 1991, when the threshold was last changed, fewer projects can 

now use minor military construction funds. Moreover, the scope of the 

projects that can be funded in this way is smaller than in 1991. Increasing 

the thresholds for minor construction projects would allow DOD 

components to respond more quickly to urgent, unanticipated 

requirements without seeking approval through the traditional, multiyear 

military construction prioritization and resourcing process. Depending on 

the size of an increase in the thresholds, OSD officials state that about 20 

to 30 projects could be affected annually and would reduce the number 

of projects requiring approval through the traditional, multiyear military 

process. The number of projects eligible for funding would still be 

contingent upon the total amount of military construction funds 

appropriated by Congress for unspecified minor military construction, 

regardless of the threshold being increased. 

Increasing the funding thresholds for using unspecified minor military 

construction funds would help installations quickly respond to a greater 

number of smaller military construction projects that could also address 

priority needs. For example, officials at Fort McPherson, Georgia—

intending to stay below the $3 million threshold for using unspecified 

minor military construction funds for projects involving life-, health-, or 

safety-threatening deficiencies—estimated the cost to construct an 

installation gate entrance at $2.85 million in fiscal year 2003. This project 

was identified as urgent because of force protection reasons, making the 

higher funding threshold of $3 million for unspecified minor military 

construction funds applicable. However, because contractor bids for 

constructing the project were in excess of $3 million, officials could 

not use unspecified minor construction funds. Instead, officials used 

emergency supplemental funds already allocated for another installation 

gate project. This resulted in deferring the other gate project to fiscal year 

2004. In another example, Naval Station Bremerton, Washington, officials 

modified part of a former coal storage facility to accommodate space 

suitable for housing computer equipment to respond quickly to 

unanticipated and urgent requirements. In an effort to remain under the 

$1.5 million threshold, they incorporated the minimum requirements for 

Existing $1.5 Million 

Unspecified Minor 

Construction Fund 

Threshold Limits the Size 

and Scope of Projects 
Page 32 GAO-04-288 Defense Infrastructure 

the building—such as replacing flooring, securing unneeded exterior 

access, and including mechanical and electrical utility service—at a cost of 

$1.49 million. While officials told us the facility meets the bare minimum 

requirements, they stated that had the threshold been higher or the budget 

process faster, the project would have included better flooring, better 

climate control, and better ventilation. As a result, the existing facility 

lacks capacity for future growth, making it potentially inadequate in future 

years. Similarly, at Scott Air Force Base, Illinois, officials reduced the 

scope for a medical supply warehouse project from $2 million to 

$1.5 million by reducing the overall facility’s square footage from 10,000 to 

8,600 feet to meet the current $1.5 million threshold for unspecified minor 

military construction. 

Unspecified minor military construction projects funded with military 

construction funds are included only in the department’s annual review 

process and are not individually submitted to Congress for review and 

funding. Congress provides a lump sum amount for each of the services 

to execute such unspecified minor military construction projects. If the 

thresholds were increased, Congress could lose some oversight of those 

additional projects funded with unspecified minor military construction 

funds. Nevertheless, there are alternative oversight measures in addition 

to the 21-day notification and waiting period that could be employed to 

minimize the loss of oversight, such as a requirement for DOD to 

periodically report on the status of such projects. 

The existing $750,000 and $1.5 million thresholds for using operation and 

maintenance funds limit the size and scope of facilities to be constructed 

with this type of fund. (See appendix II for section 2805(a)(1) of Title 10, 

United States Code.) When projects are funded with operation and 

maintenance funds under these thresholds, they can be completed during 

the same year as identified without seeking approval through the 

traditional, multiyear military construction prioritization and resourcing 

process. Military construction costs have increased 7 percent since these 

thresholds were last changed in 2001. According to installation officials, 

very few restoration and modernization projects can be completed for 

less than $750,000. Also, OSD reported that an increase in the existing 

thresholds would allow DOD components to respond to unforeseen 

requirements with more properly sized and scoped facilities, reducing the 

recapitalization rate faster by allowing more projects to be funded with 

operation and maintenance funds instead of using the traditional, 

multiyear military construction process. Still, since operation and 

maintenance funds are limited in terms of the amount allocated to each 

Existing $750,000 

Operation and 

Maintenance Fund 

Threshold Also Limits 

Project Size and Scope 
Page 33 GAO-04-288 Defense Infrastructure 

installation, service officials would have to weigh the alternatives of using 

the funds—either for minor construction projects, sustainment, or base 

operations support. 

Increasing the funding thresholds for using operation and maintenance 

funds for unspecified minor military construction projects would allow 

installations to respond more effectively to urgent and unforeseen 

minor projects. For example, at Fort Rucker, Alabama, operation and 

maintenance funds were used to build a storage facility to support the 

aviation museum in fiscal year 2002 because the project could not 

compete well with higher-priority operational projects during the annual 

budget process. To accommodate the $750,000 operation and maintenance 

fund threshold, officials downsized the facility from a 20,000-square-foot 

requirement to an 8,000-square-foot, bare-minimum storage facility with no 

heating or air conditioning, no finished space for offices or storage, no 

brick exterior, and limited phone service. Installation officials stated that 

the reduction in space requirements limits future storage needs but 

accommodates immediate requirements. In another example, Scott Air 

Force Base, Illinois, officials reduced the scope of a communications 

equipment warehouse project from a cost estimate of $1.1 million to 

$750,000 in order to use operation and maintenance funding in fiscal year 

2004. To achieve this reduction, officials eliminated a paved road to the 

facility, reduced the warehouse space by 12 percent from the initial 

5,350 square feet, and reduced office space by half. Also at Scott Air Force 

Base, officials reduced the estimated cost for an addition to the Airman 

Leadership School from $1.0 million to $750,000 in order to use operation 

and maintenance funds in fiscal year 2003. To achieve this reduction, 

officials reduced the finished area of the facility and eliminated showers 

in two bathrooms and landscaping. At Langley Air Force Base, Virginia, 

officials decided to reduce facility design requirements for an avionics 

building to stay below the $750,000 threshold for using operation and 

maintenance funds for minor construction. In doing so, according to one 

installation official, interior features were eliminated to the point that the 

structure will be little more than “a climate-controlled shell.” 

Unspecified minor military construction projects funded with operation 

and maintenance funds can be executed within the year that the project is 

identified without congressional notice or review. Congress established a 

$200,000 threshold for using operation and maintenance funding for 

unspecified minor military construction projects in 1986. It increased this 

threshold to $300,000 in 1991, to $500,000 in 1996, and to $750,000 in 

2001—the last time the thresholds were changed. If the thresholds were 

increased, Congress might lose some oversight of those projects funded 
Page 34 GAO-04-288 Defense Infrastructure 

with operation and maintenance funds falling under the increased 

thresholds because they are not specifically identified in the President’s 

budget submissions. Usually, major command and installation officials 

determine how to use operation and maintenance funds for unspecified 

minor military construction projects, which are not individually presented 

in the President’s budget submission. Again, however, Congress could 

restore some oversight by using other means of monitoring, such as annual 

reporting. 

While OSD has sought to adopt various management tools and objectives 

for standardizing military construction and costs and improving facilities, 

some are not completed and others have weaknesses, which if improved 

upon over time could help strengthen the management of DOD facilities. 

However, because of competing priorities, DOD is not likely to realize its 

investment objectives for facilities in the near term. More specifically, the 

services do not propose to fully fund all of OSD’s objectives for improving 

facilities or, in some instances, the services have developed funding plans 

that have unrealistically high rates of increase in the out-years compared 

with previous funding trends and other defense priorities. The base 

realignment and closure round authorized for fiscal year 2005, while it 

carries with it a significant up-front investment cost to implement 

realignment and closure decisions, offers an important opportunity to 

reduce excess facilities and achieve greater efficiencies in sustaining 

and recapitalizing the remaining facilities if sufficient funding levels 

are maintained into the future. Additionally, DOD is reexamining its 

worldwide basing requirements, which could potentially lead to significant 

changes in facility requirements over the next several years. As these 

decisions are implemented over the next several years, this should permit 

DOD and the services to increasingly concentrate future resources on 

enduring facilities. Because of DOD’s approach to assigning priority to 

proposed projects in special areas of emphasis and since certain 

categories of facilities continue to receive little or no military construction 

funding, it is not clear to what extent DOD has a mechanism for 

periodically reassessing military construction priorities to ensure that the 

risk of delaying proposed military construction projects that fall outside 

the specific areas of emphasis are being given appropriate consideration. 

Under the current process of prioritizing and resourcing military 

construction projects, those facilities—including both mission 

performance and quality of life facilities—not in the specific areas of 

emphasis may not always receive military construction funding for long 

periods of time even if their deterioration is significant. Unless DOD has a 

mechanism for periodically reassessing military construction priorities for 

Conclusions 
Page 35 GAO-04-288 Defense Infrastructure 

facility categories that fall outside the department’s specific areas 

of emphasis to ensure that the risk of delaying proposed military 

construction projects is being given appropriate consideration, certain 

categories of deteriorated and inadequate facilities will continue to receive 

no military construction funding year after year. Consequently, neglected 

facilities will continue to deteriorate over time, affecting the services’ 

ability to accomplish their mission and improve servicemembers’ quality 

of life. 

While there are several advantages to increasing the funding thresholds for 

selected minor construction projects, these actions would also have to be 

balanced against the potential for reducing congressional oversight of 

those projects affected by the thresholds. Yet, changing the thresholds 

would increase installations’ flexibility to address more of their facility 

problems quicker. The existing thresholds may not provide the funding 

levels needed on the basis of current construction costs. Lacking higher 

thresholds, installations will continue to use the multiyear prioritization 

and resourcing process for relatively inexpensive, minor military 

construction projects. Alternatives, such as a reporting requirement, could 

ensure some continued congressional oversight of those projects affected 

by easing the funding thresholds for unspecified minor construction 

projects. 

To help strengthen OSD’s management and improve the condition of DOD 

facilities, we recommend that the Secretary of Defense direct the Under 

Secretary of Defense for Acquisition, Technology, and Logistics to take the 

following three actions: 

• complete the department’s management tools, including the revision of 

defense facilities strategic plan, to provide a more consistent approach 

to managing facilities and planning construction projects and costs; 

• reevaluate the time frames for completing the three key objectives to 

reflect that there are competing funding priorities and that the process 

of realigning and closing domestic bases to reduce DOD’s excess 

infrastructure and realigning overseas facilities will take several years 

to accomplish and could affect meeting facilities’ investment goals; and 

• develop a mechanism for periodically reassessing military construction 

priorities for facility categories that fall outside the department’s 

specific areas of emphasis to ensure that the risk of delaying proposed 

Recommendations for 

Executive Action 
Page 36 GAO-04-288 Defense Infrastructure 

military construction projects with potential operational and quality of 

life impacts are being given appropriate consideration. 

Congress may wish to consider the advantages and disadvantages of 

increasing the military construction funding thresholds and operation and 

maintenance funding thresholds for unspecified minor military 

construction projects. 

In commenting on a draft of this report, the Principal Assistant Deputy 

Under Secretary of Defense (Installations and Environment) concurred or 

partially concurred with our recommendations and indicated some actions 

that are being taken to address them. DOD’s comments are included in this 

report in appendix V. DOD also provided technical changes, which we 

incorporated as appropriate, including adjustments in values associated 

with selected areas of emphasis in military construction. 

We are sending copies of this report to the appropriate congressional 

committees, as well as the Secretaries of Defense, the Army, the Navy, and 

the Air Force; the Commandant of the Marine Corps; and the Director, 

Office of Management and Budget. We will also make copies available to 

others upon request. In addition, the report will be available at no charge 

on GAO’s Web site at http://www.gao.gov. 

Please contact me at (202) 512-8412, or my Assistant Director, Mark Little, 

at (202) 512-4673 if you or your staff have any questions regarding this 

report. Robert B. Brown, Daniel Chen, J. Andrew Walker, R.K. Wild, and 

Jay Willer were major contributors to this report. 

Barry W. Holman, Director 

Defense Capabilities and Management 

Matters for 

Congressional 

Consideration 

Agency Comments 

and Our Evaluation 
Appendix I: Scope and Methodology 

Page 37 GAO-04-288 Defense Infrastructure 

To assess the steps that the Office of the Secretary of Defense (OSD) has 

taken to enhance the management of the military construction program, 

we met with officials of OSD, military services, National Guard and 

Reserves, the Defense Logistics Agency, Tricare Management Activity, 

Department of Defense Education Activity, Central Command, Special 

Operations Command, Naval Sea Systems Command, Naval Facilities 

Engineering Command, U.S. Army Corps of Engineers, and the U.S. Army 

Installation Management Agency. At each organization, we discussed 

OSD’s role in managing elements of the military construction program, 

OSD’s management tools to standardize military construction and costs, 

and OSD’s objectives for improving facilities. We also examined key 

documents related to OSD’s efforts to standardize military construction 

and costs: the defense facilities strategic plan, installation readiness 

reporting system, facilities assessment database, facilities pricing guide, 

facilities sustainment model, recapitalization rate process, unified facilities 

criteria, and improved budgeting methods. To view the condition of 

facilities and new military construction projects first hand, we visited and 

met with officials from 20 installations across the country: Aberdeen 

Proving Ground, Maryland; Fort Belvoir, Virginia; Fort Benning, Georgia; 

Fort Lewis, Washington; Fort Stewart, Georgia; Naval Air Station Whidbey 

Island, Washington; Naval Shipyard Puget Sound, Washington; Naval 

Station Coronado, California; Naval Station Everett, Washington; Naval 

Station Bremerton, Washington; Naval Station San Diego, California; Naval 

Station Norfolk, Virginia; Naval Submarine Base Bangor, Washington; 

Naval Weapons Station Yorktown, Virginia; Marine Corps Base Quantico, 

Virginia; Marine Corps Base Camp Pendleton, California; Andrews Air 

Force Base, Maryland; MacDill Air Force Base, Florida; Langley Air Force 

Base, Virginia; and McChord Air Force Base, Washington. We selected 

these installations because they represent a range of facility conditions, 

missions, major commands, and geographic locations. During our visits, 

we met with the facilities’ occupants and obtained pictures that document 

facility conditions. To assess the likelihood that the military services will 

meet OSD’s three objectives for improving facilities, we examined the 

services’ current and projected funding plans for sustaining, restoring, and 

modernizing facilities to determine whether these plans would allow them 

to meet OSD’s objectives by specified deadlines. We also compared the 

services’ prior obligations for sustainment, restoration, and modernization 

with their future funding projections designed to reach OSD’s objectives to 

determine whether the services’ plans to address these issues are credible 

and realistic. We did not validate the services’ reported sustainment or 

recapitalization requirements. 

Appendix I: Scope and Methodology 
Appendix I: Scope and Methodology 

Page 38 GAO-04-288 Defense Infrastructure 

To determine whether the process by which military construction projects 

are prioritized and resourced ensures that all categories of facilities that 

affect the services’ ability to accomplish their mission and improve quality 

of life are reached, we spoke with officials of the military services’ 

headquarters, National Guard and Reserves headquarters, the Defense 

Logistics Agency, Tricare Management Activity, Department of Defense 

Education Activity, Central Command, Special Operations Command, 

Naval Sea Systems Command, Naval Facilities Engineering Command, 

Army Corps of Engineers, the U.S. Army Installation Management Agency, 

and Air Mobility Command, and visited Aberdeen Proving Ground, 

Maryland; Fort Belvoir, Virginia; Fort Benning, Georgia; Fort Lewis, 

Washington; Fort Stewart, Georgia; Naval Air Station Whidbey Island, 

Washington; Naval Shipyard Puget Sound, Washington; Naval Station 

Coronado, California; Naval Station Everett, Washington; Naval Station 

Bremerton, Washington; Naval Station San Diego, California; Naval Station 

Norfolk, Virginia; Naval Submarine Base Bangor, Washington; Marine 

Corps Base Quantico, Virginia; Marine Corps Base Camp Pendleton, 

California; Andrews Air Force Base, Maryland; MacDill Air Force Base, 

Florida; Langley Air Force Base, Virginia; and McChord Air Force Base, 

Washington. At each command or installation, we discussed the process 

by which military construction projects are prioritized and resourced and 

how significant facility needs are addressed during the process. Using 

budget data for fiscal years 1995 through 2004, we determined the impact 

of funding military family housing and barracks, annual unspecified cost 

estimates, and the services’ major priorities on the amount of military 

construction funds remaining for individual installation needs. To 

determine whether the services’ and installations’ priority projects receive 

funding, we compared installations’ and services’ project priority lists for 

fiscal years 2002 and 2003 with the (1) list of projects approved by each 

service, (2) list of projects that accompanied the President’s budget 

submission, and (3) list of projects that were approved and funded by 

Congress. During our visits to installations, we identified unfunded critical 

military construction projects, the reasons why they were not funded, and 

the effects of not funding these projects. Finally, we identified the number 

of military construction projects added during the annual appropriations 

process and compared these adds with the installations’ and services’ 

priorities for military construction. 

To assess the advantages and disadvantages of changing existing funding 

and approval thresholds for constructing and repairing facilities, we met 

with officials of OSD and the military services. At each organization, we 

discussed the appropriateness of existing funding thresholds for 

unspecified minor construction projects, the effectiveness of the 
Appendix I: Scope and Methodology 

Page 39 GAO-04-288 Defense Infrastructure 

requirement for initiating congressional notification for reprogramming 

military construction funds, and the department’s legislative proposals to 

increase the funding and approval thresholds and to change the 

notification requirement. We also reviewed the proposed legislative 

language and justification. To discuss the advantages and disadvantages of 

changing current funding and approval thresholds for constructing and 

repairing facilities at the installation level, we visited and met with officials 

from Aberdeen Proving Ground, Maryland; Fort Belvoir, Virginia; Fort 

Benning, Georgia; Fort Lewis, Washington; Fort Stewart, Georgia; Naval 

Air Station Whidbey Island, Washington; Naval Shipyard Puget Sound, 

Washington; Naval Station Coronado, California; Naval Station Everett, 

Washington; Naval Station Bremerton, Washington; Naval Station San 

Diego, California; Naval Station Norfolk, Virginia; Naval Submarine Base 

Bangor, Washington; Marine Corps Base Quantico, Virginia; Marine Corps 

Base Camp Pendleton, California; Andrews Air Force Base, Maryland; 

MacDill Air Force Base, Florida; Langley Air Force Base, Virginia; and 

McChord Air Force Base, Washington. In addition, we documented the 

increase in construction costs since fiscal year 1982 according to the 

national income and product account tables for military structures, 

Bureau of Economic Analysis, Department of Commerce, and through 

discussions with OSD, service headquarters, and installation officials, and 

determined the effect of this increase on the ability of local and regional 

facility managers to execute unspecified minor construction projects 

under existing thresholds. We also interviewed officials at OSD, the 

services’ headquarters, and installations to identify the impact of the 

waiting period and notification requirement for reprogramming military 

construction funds while facility managers wait for congressional 

approval. 

In addition, our review focused on nonhousing issues concerning military 

construction inside the United States and generally did not address issues 

associated with military family housing and overseas construction 

programs. These facilities ranged from administrative offices, airfields and 

terminals, and piers to classrooms and other training buildings, water 

treatment plants, warehouses, barracks, and child development centers. 

Our review covered only those facilities funded by operation and 

maintenance and military construction funds and not by other sources, 

such as revolving and management funds, military family housing and 

overseas facilities funds, and the defense health program (hospitals and 

medical clinics). 

In performing this review, we used the same accounting records and 

financial reports that the Department of Defense (DOD) and reserve 
Appendix I: Scope and Methodology 

Page 40 GAO-04-288 Defense Infrastructure 

components use to manage and justify budgets for their facilities. 

We did not independently determine the reliability of the reported 

financial information. We conducted our work from February through 

November 2003 in accordance with generally accepted government 

auditing standards. 
Appendix II: Section 2805 of Title 10, United 

States Code (2003) 

Page 41 GAO-04-288 Defense Infrastructure 

Section 2805 of Title 10, United States Code (unspecified minor 

construction), states: 

“(a)(1) Except as provided in paragraph (2), within an amount equal to 

125 percent of the amount authorized by law for such purpose, the 

Secretary concerned may carry out unspecified minor military 

construction projects not otherwise authorized by law. An unspecified 

minor military construction project is a military construction project that 

has an approved cost equal to or less than $1,500,000. However, if the 

military construction project is intended solely to correct a deficiency that 

is life-threatening, health-threatening, or safety-threatening, an unspecified 

minor military construction project may have an approved cost equal to or 

less than $3,000,000. 

(2) A Secretary may not use more than $5,000,000 for exercise-related 

unspecified minor military construction projects coordinated or directed 

by the Joint Chiefs of Staff outside the United States during any fiscal year. 

(b)(1) An unspecified minor military construction project costing more 

than $750,000 may not be carried out under this section unless approved in 

advance by the Secretary concerned. This paragraph shall apply even 

though the project is to be carried out using funds made available to 

enhance the deployment and mobility of military forces and supplies. 

(2) When a decision is made to carry out an unspecified minor military 

construction project to which paragraph (1) is applicable, the Secretary 

concerned shall notify in writing the appropriate committees of Congress 

of that decision, of the justification for the project, and of the estimated 

cost of the project. The project may then be carried out only after the end 

of the 21-day period beginning on the date the notification is received by 

the committees. 

(c)(1) Except as provided in paragraphs (2) and (3), the Secretary 

concerned may spend from appropriations available for operation and 

maintenance amounts necessary to carry out an unspecified minor military 

construction project costing not more than— 

(A) $1,500,000, in the case of an unspecified minor military construction 

project intended solely to correct a deficiency that is life-threatening, 

health-threatening, or safety-threatening; or 

(B) $750,000, in the case of any other unspecified minor military 

construction project. 

Appendix II: Section 2805 of Title 10, 

United States Code (2003) 
Appendix II: Section 2805 of Title 10, United 

States Code (2003) 

Page 42 GAO-04-288 Defense Infrastructure 

(2) The authority provided in paragraph (1) may not be used with 

respect to any exercise-related unspecified minor military construction 

project coordinated or directed by the Joint Chiefs of Staff outside the 

United States. 

(3) The limitations specified in paragraph (1) shall not apply to an 

unspecified minor military construction project if the project is to be 

carried out using funds made available to enhance the deployment and 

mobility of military forces and supplies. 

(d) Military family housing projects for construction of new housing units 

may not be carried out under the authority of this section.” 
Appendix III: DOD’s Prioritization and 

Resourcing Process for Military Construction 

Projects 

Page 43 GAO-04-288 Defense Infrastructure 

Military construction appropriations are one of several annual pieces of 

legislation that provide DOD with funding for national defense. Other 

major appropriations legislation includes the defense appropriations bill, 

which provides funds for all nonconstruction military activities of DOD 

and constitutes more than 90 percent of national-security-related 

spending, and the energy and water development appropriations bill, 

which provides funding for atomic energy defense activities of the 

Department of Energy and for civil projects carried out by the U.S. Army 

Corps of Engineers. Another source of military construction funding is 

supplemental appropriations. Military construction appropriations are the 

major, but not the sole, source of funds for facility investments by the 

military services and defense agencies. Defense appropriations provide 

some funds for facility sustainment in operation and maintenance and 

minor construction accounts. In addition, funds for construction and 

maintenance of morale, welfare, and recreation-related facilities are 

partially provided through proceeds of commissaries, recreation user fees, 

and other nonappropriated income. Because of the long-term nature of 

construction projects, military construction funds can generally be 

obligated for up to 5 fiscal years, reflecting the long-term nature of capital 

building programs. 

The DOD prioritization and resourcing process for military construction 

projects flows from OSD and service guidance. This guidance describes 

OSD’s objectives for improving facilities, identifies the services’ categories 

of facilities that will receive priority in funding military construction 

projects, and assigns organizational responsibilities for the process. The 

program also involves a sequence of reviews by installations, major 

commands, the office of the Secretary of the military services, OSD, the 

Office of Management and Budget, and Congress. (See fig. 4.) During even 

years, the services, DOD, and the President submit a 2-year military 

construction budget to Congress. Typically, Congress will authorize and 

appropriate funds for only the first year of that budget. To update and 

adjust the second year’s budget, as necessary, an amended budget review 

is conducted in the odd year. It is important to note that project 

identification, master planning, and programming activities are not to be 

paid for with military construction funds—these costs are normally met 

with operation and maintenance funds. 

Appendix III: DOD’s Prioritization and 

Resourcing Process for Military Construction 

Projects 
Appendix III: DOD’s Prioritization and 

Resourcing Process for Military Construction 

Projects 

Page 44 GAO-04-288 Defense Infrastructure 

Figure 4: Summary of the Military Construction Process, Fiscal Year 2005 

Note: While the figure indicates that the process takes 5 years, in practice it can typically last up to 

8 years or more. 
Appendix III: DOD’s Prioritization and 

Resourcing Process for Military Construction 

Projects 

Page 45 GAO-04-288 Defense Infrastructure 

Per the military service and major command instructions, an installation 

will first identify and document its construction needs. It will also develop 

the DD Form 1391 in support of all its projects, including tenant-sponsored 

and centrally managed program projects. DD Form 1391 contains 

four primary categories of information: (1) description of the project, 

(2) construction cost, (3) justification, and (4) back-up data. The 

document must be clear, concise, logical, and complete, and must 

effectively describe, justify, and price the project. This responsibility also 

includes those projects that may be developed through support from the 

U.S. Army Corps of Engineers, Naval Facilities Engineering Command, or 

architect-engineers. The installation will then prioritize its projects, and 

prepare and submit completed project documentation on designated 

projects forward through its major command. 

The major command (to include the Army’s Installation Management 

Agency and the Navy’s Commander Navy Installations) will ensure that 

all project documentation, including the DD Forms 1391, is complete and 

properly addresses the requirement. Complete documentation is usually 

a criterion for prioritizing at the service level, and incomplete 

documentation could result in a lower ranking of the project. The 

command will review the documentation of each project to ensure that the 

requirement is valid and conforms to current service objectives, policies, 

and procedures. It will also determine whether a survey of the site has 

been conducted, available records reviewed, and appropriate 

environmental analyses completed, and whether the site is free from 

pollutants, contaminants, and ordnance and explosive waste that would 

affect the start of construction. The command also considers whether 

force protection considerations have been addressed and documented 

properly. Furthermore, the command will certify that all planning and 

related coordination have been accomplished on all budget year projects 

and that there is sufficient information to begin concept or parametric 

design before submission to the service headquarters. In addition, a major 

command may add its own military construction projects to the list of 

projects. Finally, the command will prioritize its projects, and prepare and 

submit the completed documentation on designated projects forward 

through the service headquarters. 

The service headquarters will review all submissions for compliance with 

service priorities, policies, procedures, and environmental laws. As shown 

in table 1, priorities vary depending on a services’ mission. For example, 

the Army has made transformation a priority in order to support brigades 

that can mobilize in a minimal amount of time. In comparison, the Navy 

has made barracks, piers, and hangars its priorities and the Air Force has 
Appendix III: DOD’s Prioritization and 

Resourcing Process for Military Construction 

Projects 

Page 46 GAO-04-288 Defense Infrastructure 

made facilities that support new missions and weapons systems, such as 

the C-17, its top priority. The Marine Corps does not have specific 

categories but states that it will fund its most essential needs. 

Table 1: Comparison of the Military Services’ Priorities for Military Construction 

Projects, Fiscal Year 2004 

Army Navy Air Force 

Barracks Piers New mission 

• Facilities to support new 

mission requirements. 

Transformation 

• Facilities to support new 

missions, such as Stryker 

brigades. 

Hangars Fact of life 

• Compliance with federal 

and state environmental 

laws or regulations. 

Training ranges Barracks Corporate adjustments 

• Projects approved and 

planned by the Air Force 

Chief of Staff or Secretary 

of the Air Force. Examples 

include quality of life 

projects from the dormitory 

and fitness center master 

plans. 

Army power projection program 

Facilities to support mobilization 

 

Antiterrorism and force protection 

(considered in all facility 

construction) 

 

Focus facility strategy 

• Army National Guard readiness 

centers. 

• Army Reserve centers. 

• Physical fitness facilities. 

• Trainee barracks. 

• General instruction classrooms.

• Vehicle maintenance. 

• Chapels. 

 

Source: Military services. 

Note: The Marine Corps does not have specific priorities. 

The service identifies projects on the list that must be funded in the 

immediate fiscal year and places those projects at the top of its priority 

list. Next, each service headquarters rates the proposed projects in a 
Appendix III: DOD’s Prioritization and 

Resourcing Process for Military Construction 

Projects 

Page 47 GAO-04-288 Defense Infrastructure 

manner that reflects the projects’ mission and impact. The Army, Navy, 

and Air Force assign numerical ratings to the proposed projects that 

reflect the projects’ priority in terms of its impact on the services’ mission. 

(See table 2.) The Marine Corps also assigns priority ratings to its projects 

but does not utilize a category-driven prioritization process like the other 

services. As illustrated, the Army uses a 100-point system to prioritize its 

projects. A project receives up to 50 points, depending on where the 

project lies within the major command’s priority list (the number 1 priority 

automatically receives 50 points, and the remaining projects receive fewer 

points, depending on the facility’s replacement value and number of 

projects); up to 20 points, depending on the facility condition rating from 

the installation status report (projects that are poor in quality or quantity 

according to the installation status report’s rating receive more points); 

up to 20 points, depending on the major command’s presentation to the 

annual project review board; and up to 10 points if the project follows 

certain leadership criteria (4 points, depending on whether or not the 

demolition amount is equal to, greater than, or less then the facility scope; 

2 points if the project is a new or existing facility; 2 points for 

headquarters assessment for facilities not covered by the Army’s criteria; 

and 2 points for having a correct DD form 1391). Instead of a 100-point 

system, the Navy uses a more complex weighting system without a 

predetermined maximum number of points. A project receives up to 

700 points, depending on where the project lies within the major 

command’s priority (higher-priority projects receive more points); up to 

500 points, depending on what function a project fulfills (projects that fall 

in OSD and Navy priorities receive more points); and up to 200 points are 

given to a project, depending on the service headquarters’ assessment of 

the project’s priority. In addition, if a project relates to bachelor quarters, 

it can receive up to an additional 75 points, depending on the number of 

bachelor quarters at the installation, and receives the sum of points on the 

basis of factors—such as demolition, joint use, and political interest—that 

range from 100 to negative 200. For example, projects previously approved 

automatically receive 40 points, projects to reduce sustainment 

automatically receive 35 points, and projects to eliminate group latrines in 

barracks automatically receive 30 points. The Air Force uses a 100-point 

system for projects that do not fall within the services’ top priorities—

overseas projects receive automatically an additional 2 points. Projects 

that support the Air Force’s priorities listed in table 1 are not ranked in 

this system because they are automatically classified as the top priorities 

for funding considerations. A project receives up to 60 points, depending 

on where the project lies within the major command’s priority list (the 

number 1 priority automatically receives 60 points, and the remaining 

projects receive fewer points, depending on the total amount of 
Appendix III: DOD’s Prioritization and 

Resourcing Process for Military Construction 

Projects 

Page 48 GAO-04-288 Defense Infrastructure 

submissions from the major command); up to 35 points, depending on the 

facility’s mission (core modernization or force structure change, readiness 

and sustainability, people, and infrastructure and other) and how the 

facility deficiency affects the mission (critical, degraded, and 

enhancement); up to 2 points, depending on the Air Force corporate 

panel’s opinion on whether a project must, should, or could receive 

funding immediately (a project that must receive funding in the 

immediate year receives 2 points, a project that should receive funding 

receives 1 point, and a project that can be delayed receives no points); and 

up to 3 points for projects that address efficiencies (1.25 point), mission 

timing (1 point), demolition (0.75 point), and overseas presence (2 points). 

Marine Corps officials said that owing to its smaller size, the Marine Corps 

is able to review and prioritize all proposed military construction projects 

submitted by its installations and commands. A headquarters staff team 

personally reviews all the proposed projects within the Marine Corps 

before the first prioritization meeting of the facilities program evaluation 

group. The group, representing all major commands and warfare areas 

within the Marine Corps, prioritizes the proposed projects utilizing cost 

and benefit analysis, determining how the projects fulfill requirements 

necessary for the Marine Corps to accomplish its mission and assessing 

the overall impact that each project will have on the Marine Corps as a 

whole. 
Appendix III: DOD’s Prioritization and 

Resourcing Process for Military Construction 

Projects 

Page 49 GAO-04-288 Defense Infrastructure 

Table 2: Comparison of the Military Services’ Systems to Prioritize Military 

Construction Projects, Fiscal Year 2004 

Army Navy Air Force 

Major command priority 

(50 points) 

Installation management 

claimant priority 

(700 points) 

Major command priority 

(60 points) 

Installation status report score

(20 points) 

Programmatic categories 

(500 points) 

Matrix model score 

(35 points) 

Project review board score 

(20 points) 

Headquarters’ assessment 

(200 points) 

Panel points score 

(2 points) 

Leadership criteria 

(10 points) 

Barracks 

(75 points) 

Military construction 

issue process team 

(3 points) 

 Special considerations 

(The sum of factors that range 

from 100 to negative 200 

points) 

Overseas presence 

(2 points if applicable) 

Source: Military services. 

Note: The Marine Corps does not use a numerical weighting system in its prioritization process. 

After all the projects are identified and prioritized, the service 

headquarters forms its overall priority list to create the service’s military 

construction program. The service’s budget director, who also presents 

adjustments to the military construction program, then verifies the budget 

estimates on the basis of the priority list. Once the proposed adjustments 

and estimates are approved, the military construction program is then 

submitted to the service Secretary and chief of staff. Upon approval, the 

service Secretary will then submit the military construction program with 

completed project documentation forward to OSD. In addition, the 

service’s budget director will send a justification book to OSD, which 

contains a DD Form 1391 for each requirement in the military construction 

program. 

The Office of the Under Secretary of Defense (Comptroller), in 

conjunction with other OSD offices—such as the Office of the Under 

Secretary of Defense for Acquisition, Technology, and Logistics—reviews 

the services’ proposed construction projects to confirm and adjust 

requirements as necessary. Also, members of the defense resources board, 

the Assistant Secretary of Defense program managers, or commanders 

develop program review proposals—each proposal contains projects 

recommended for addition or deletion without changing the overall 
Appendix III: DOD’s Prioritization and 

Resourcing Process for Military Construction 

Projects 

Page 50 GAO-04-288 Defense Infrastructure 

amount of the services’ proposed military construction budget. In addition, 

officials of OSD and the Office of Management and Budget conduct a joint 

budget review of the services’ military construction program, focusing 

on proper pricing, reasonableness, ability to execute, and validity of 

requirements. Similar to the processes used in the services, every project 

submitted is reviewed, and a decision is issued on each. Through program 

budget decisions, the OSD and Office of Management and Budget can 

choose to approve, disapprove, ask that the project be revised, or defer the 

project to a future year. Before the Under Secretary of Defense signs a 

program budget decision, the service can challenge the program budget 

decision. OSD will then review the challenge and with senior-level 

negotiations, issue a final program budget decision on the project. Once 

signed by the Under Secretary of Defense, the program budget decisions 

are sent to the appropriate service official to be incorporated in the 

services’ military construction programs to be combined in the President’s 

budget submission to Congress. The budget request for military 

construction funding for each fiscal year includes major construction, 

project planning and design, and unspecified minor construction. 
Appendix IV: Services’ Plans to Meet OSD’s 

Three Key Investment Objectives 

Page 51 GAO-04-288 Defense Infrastructure 

While OSD has periodically revised its three key investment objectives on 

the basis of the services’ ability to meet them, the services still do not plan 

to meet most of them within the expected time frames and, in those 

instances where the service officials have indicated an intent to meet the 

objectives, their plans are based on future funding that requires 

unrealistically high rates of increase when compared with previous 

funding trends and when considered against other defense priorities. 

First, the military services do not plan to fully fund their sustainment 

requirements in fiscal year 2004—one of OSD’s key objectives for 

improving facilities. (See table 3.) We found that sustainment funding must 

compete with other traditional operation and maintenance funding 

priorities, such as base operations, organizational supplies and equipment, 

environmental concerns, training, and travel. Facility sustainment often 

rates a lower funding priority than other operation and maintenance 

functions because the services have been reluctant to fund facilities when 

they have other unfunded priorities and programs. Officials want to do 

more but are limited by competing demands within their respective 

service. In addition, sustainment fundseven when appropriately 

budgetedare often reallocated, with the end result that the programmed 

sustainment funding never fully reaches the intended installations. 

Table 3: Planned Status for Achieving OSD’s Objective of Fully Funding 

Sustainment by Military Service and DOD-wide, Fiscal Years 2004 through 2009 

Fiscal year 

Defense component 2004 2005 2006 2007 2008 2009 

Army No No No No Yes Yes 

Navy No No No No Yes Yes 

Air Force No No No No Yes Yes 

Marine Corps No No No No No No 

DOD-wide No No No No Yes Yes 

Source: DOD. 

Note: The Marine Corps fully funded sustainment in fiscal year 2003. 

Second, as shown in table 4, the military services plan to achieve the 

recapitalization objective beginning in fiscal year 2008, with the exception 

of the Army. According to Army officials, the Army will not meet this 

objective during fiscal years 2004 through 2009 because of competing 

funding priorities, especially force transformation. 

Appendix IV: Services’ Plans to Meet OSD’s 

Three Key Investment Objectives 
Appendix IV: Services’ Plans to Meet OSD’s 

Three Key Investment Objectives 

Page 52 GAO-04-288 Defense Infrastructure 

Table 4: Planned Status for Achieving OSD’s Objective of Attaining a 67-Year 

Recapitalization Rate by Military Service and DOD-wide, Fiscal Years 2004 through 

2009 

Fiscal year 

Defense component 2004 2005 2006 2007 2008 2009 

Army No No No No No No 

Navy No No No No Yes Yes 

Air Force No No No No Yes Yes 

Marine Corps No No No No Yes Yes 

DOD-wide No No No No Yes Yes 

Source: DOD. 

However, to achieve the 67-year recapitalization rate, all the services call 

for rapid increases in restoration and modernization funding from fiscal 

year 2004 through fiscal year 2009, but this growth appears unrealistic 

when compared with prior funding levels. As shown in figure 5, using 

constant fiscal year 2004 dollars, the Army proposes to increase its 

restoration and modernization funding 134 percent from $1.14 billion in 

fiscal year 2004 to $2.67 billion in fiscal year 2009. Under its funding 

proposal, the Navy plans to increase its funding 227 percent from 

$750 million to $2.45 billion during the same period. More than half of this 

increase is planned during 3 fiscal years, from fiscal year 2007 through 

fiscal year 2009, when the Navy proposes to increase its funding by 

87 percent to $2.45 billion from $1.31 billion. From a low of $710 million in 

fiscal year 2004, the Air Force proposes to increase its restoration and 

modernization funding 254 percent to $2.51 billion in fiscal year 2009. 

Most of this increase occurs from fiscal year 2005 through fiscal year 2006, 

when it plans to increase its funding $1.04 billion (106 percent). The 

Marine Corps plans a 317 percent increase in restoration and 

modernization funding, from a low of $118 million in fiscal year 2006 to 

$500 million in fiscal year 2009. 
Appendix IV: Services’ Plans to Meet OSD’s 

Three Key Investment Objectives 

Page 53 GAO-04-288 Defense Infrastructure 

Figure 5: Military Services’ Planned Annual Restoration and Modernization 

Funding, Fiscal Years 2004 through 2009 

The services’ rapid increases in restoration and modernization funding 

from fiscal year 2004 through fiscal year 2009 appear uncertain when 

compared with the need for funds for other defense priorities, such as 

the war on terrorism, weapon systems modernization, and force 

transformation. In practice, proposed funding for future years’ military 

construction programs are often reduced as the budget year approaches. 

As a result of the war on terrorism, DOD is seeking higher than previously 

planned funding during this period for a number of pressing priorities 

against which facilities restoration and modernization must compete, 

including the Global War on Terrorism, Operation Enduring Freedom, 

the Balkans, military readiness, weapons procurement, and research and 

development. Moreover, some of the services have specific funding 

priorities. For example, Army officials told us that funding for 

transformation is the service’s highest funding priority. At the Navy, 

officials said the fleet modernization program is the service’s highest 

funding priority. In the case of the Air Force, officials said new aircraft 
Appendix IV: Services’ Plans to Meet OSD’s 

Three Key Investment Objectives 

Page 54 GAO-04-288 Defense Infrastructure 

procurement and associated facilities are the Air Force’s funding 

priorities. The Marine Corps’ highest funding priority is power projection. 

Third, the military services are unlikely to achieve OSD’s objective to 

improve the quality of facilities from the current C-4 and C-3 ratings to C-2 

by the end of 2010. To improve the overall condition of facilities, DOD set 

an objective for the military services to concentrate funding in order to 

eliminate C-3 and C-4 facility ratings, bringing them up to a minimal C-2 

level by fiscal year 2010. However, at the time of our review, service 

officials said the Navy, the Air Force, and the Marine Corps were not 

planning to meet this objective owing to a lack of expected funding. Army 

officials stated that the Army could meet the objective if the required 

funding were provided. To achieve this objective, the Army would have 

to, at the very minimum, fund the rapid increase in restoration and 

modernization funding shown in figure 5. Even this minimum funding level 

appears unlikely when compared with previous funding levels and 

considering other future Army priorities and programs. DOD estimates 

that it would cost $62 billion (or $7 billion annually during fiscal years 

2002 through 2010) to achieve this objective departmentwide. DOD also 

estimates that it would cost more than $164 billion over the same time 

period to reach a C-1 level for all facilities. 
Appendix V: Comments from the Department 

of Defense 

Page 55 GAO-04-288 Defense Infrastructure 

Appendix V: Comments from the Department 

of Defense 
Appendix V: Comments from the Department 

of Defense 

Page 56 GAO-04-288 Defense Infrastructure 
Appendix V: Comments from the Department 

of Defense 

Page 57 GAO-04-288 Defense Infrastructure (350316) 
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