United States General Accounting Office

GAO Report to Congressional Committees

December 1997 ENVIRONMENTAL

COMPLIANCE

Reporting on DOD

Military Construction

and Repair Projects

Can Be Improved

GAO/NSIAD-98-33

GAO United States

General Accounting Office

Washington, D.C. 20548

National Security and

International Affairs Division

B-277673 

December 8, 1997

The Honorable Conrad Burns

Chairman

The Honorable Patty Murray

Ranking Minority Member

Subcommittee on Military Construction

Committee on Appropriations

United States Senate

The Honorable James M. Inhofe

Chairman

The Honorable Charles S. Robb

Ranking Minority Member

Subcommittee on Readiness

Committee on Armed Services

United States Senate

The Department of Defense (DOD) budgeted over $700 million for

environmental compliance construction and repair projects to comply

with environmental laws during fiscal years 1996-97. Of the total,

$274 million was funded by military construction appropriations and most

of the remainder by operation and maintenance appropriations. The

Senate Report on the 1997 Military Construction Appropriation Act

(Report 104-287, June 20, 1996) required us to review and make

recommendations on DOD’s processes for programming environmental

compliance construction projects and estimating future funding

requirements and costs. As agreed with your offices, this report addresses

environmental compliance projects funded as construction or repair and

(1) identifies DOD’s criteria for determining which appropriation account is

used for programming funds, (2) describes the process for programming

funds, and (3) discusses reporting on future funding requirements.

Background DOD undertakes environmental compliance construction and repair

projects to meet the requirements of environmental laws and regulations

that protect water, air, and ground quality. Environmental compliance

projects include constructing and repairing facilities such as wastewater

treatment plants, underground storage tanks, and sanitary landfills.

Military installations use defense programming guidance and applicable

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laws and regulations to determine initially whether a project is

construction or repair and to identify the appropriate funding source.1

The activities that make up the programming process include identifying

operations, equipment, and facilities that are or will be out of compliance;

verifying environmental compliance requirements; prioritizing

requirements; and budgeting funds. As part of the programming process,

DOD installations are responsible for identifying, classifying, and

prioritizing projects and submitting budget requests to higher commands

for verification and approval. Environmental compliance construction and

repair projects compete with other projects for funding within the

applicable accounts.

Of the fiscal year 1998 estimate of $266.4 million for environmental

compliance construction and repair projects, DOD estimates that

$162.8 million would be funded from defense components’ operation and

maintenance accounts, and that $103.6 million would be funded from

military construction appropriations.2 DOD’s Environmental Quality Annual

Report to Congress is a principal source of information about the

proposed expenditures for compliance construction and repair projects.3

The report is to include status in carrying out environmental compliance

activities at defense installations and provide information on such things

as current and projected funding levels to comply with applicable

environmental laws.

We have previously reported on environmental compliance. We concluded

that DOD could not adequately determine its environmental compliance

construction needs and project priorities, and that reporting of compliance

activities could be improved.4

 We recommended that DOD develop

1

DOD’s directive on the planning, programming, and budgeting system (DOD Directive 7045.14) states

that, in the programming phase, defense components are to develop proposed programs that reflect

objectives to be achieved, methods for accomplishing them, and effective allocation of resources.

2

Funds for environmental compliance construction account for $103.6 million of the overall $9.2 billion

fiscal year 1998 military construction estimate. The $103.6 million for environmental construction does

not include funds for base realignment and closure activities.

3

According to DOD, this annual report to Congress on environmental compliance activities was

developed in response to the provisions of 10 U.S.C. 2706(b) and Executive Order 12856, Federal

Compliance with Right-to-Know Laws and Pollution Prevention Requirements. DOD environmental

budget exhibits provide additional information about proposed expenditures for compliance

construction projects.

4

Environmental Compliance: Guidance Needed in Programming Defense Construction Projects

(GAO/NSIAD-94-22, Nov. 26, 1993); Environmental Protection: Status of Defense Initiatives for

Cleanup, Technology, and Compliance (GAO/NSIAD-97-126, May 29, 1997); and Environmental

Compliance: Continued Need for Guidance in Programming Defense Construction Projects

(GAO/NSIAD-96-134, June 21, 1996).

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guidance to assist the defense components in consistently classifying

projects. Although DOD disagreed with our recommendation, it took action

to improve compliance reports. It subsequently made some minor

modifications to its classification system and issued other guidance. Our

current review focuses on DOD actions since those reports.

Results in Brief The basis for determining which funding source should be used for

funding environmental compliance construction and repair projects is set

forth in laws and regulations. The law requires military construction

appropriations to be used for all construction projects costing over

$500,000.5

 The law defines construction as the creation of complete and

usable new facilities or complete and usable improvements to existing

facilities on military installations. In general, operation and maintenance

appropriations are available to fund construction projects costing less

than $500,000 and repairs of any value. Other appropriations such as

research, development, test, and evaluation, may also be used in

appropriate circumstances.

The programming process for environmental compliance construction or

repair activities varies according to the project funding source. Under the

process, the level of project justification detail that DOD provides to

Congress is greater for military construction projects than for projects

funded under other appropriations. In general, any military construction

project, including environmental compliance projects, is programmed,

reviewed, budgeted, and funded individually. Projects to be funded from

operation and maintenance appropriations are rolled up into a single

amount for budgeting and funding purposes. The law permits some

smaller value military construction projects to be carried out as

unspecified minor construction. These are budgeted as a single amount.

Since our prior reports, DOD has made some improvements to its annual

compliance reporting by identifying specific projects that will cost over

$300,000. Also, it has improved the detailed budget information provided

to Congress by identifying recurring and nonrecurring compliance costs by

appropriation. However, information provided to Congress in this report

does not identify proposed construction and repair projects costing over

$300,000 and their funding sources.

5

The requirements for military construction are set out in the Military Construction Codification Act

(10 U.S.C. 2801-2813).

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Justification for

Funding

The requirements for military construction are set out in the Military

Construction Codification Act (10 U.S.C. 2801-2813). The act defines

military construction as projects that result in the creation of complete

and usable new facilities or complete and usable improvements to existing

facilities on military installations. Military construction projects must be

specifically authorized by law. Specific authorization means that each

project is requested and justified individually to the authorization and

appropriation committees. When approved, the amounts authorized for

various locations are listed in the authorization act, and each project is

identified by name, location, and amount in the committee reports on the

military construction appropriations act.

The statute requires military construction projects costing over $500,000 to

be funded by the 5-year military construction appropriation. Projects

costing less than $500,000 may be funded from other appropriations, such

as operation and maintenance.6

 The statute also allows construction

costing less than $1.5 million to be carried out as unspecified minor

construction, which is funded as a single amount rather than by individual

project. Of the total $9.2 billion fiscal year 1998 budget proposal, DOD plans

to spend $26.1 million for unspecified minor construction. According to

officials in the Office of the Under Secretary of Defense (Comptroller),

DOD uses this authority only to execute projects that are not identified

early enough to have been specifically authorized. The dollar ceiling for

unspecified minor construction can go up to $3 million if the project is

needed to correct deficiencies that threaten life, health, or safety.

Environmental compliance projects also include facility repairs, which,

according to DOD, are to be done to maintain real property facilities,

systems, and components, or restore them to a usable condition.7

 Repairs

of any value may be properly funded from 1-year operation and

maintenance appropriations, but in the past some repairs have been

specifically authorized by law to be funded from military construction

appropriations. The law requires that operation and maintenance funded

repairs over $5 million be authorized in advance by the Secretary

concerned. The National Defense Authorization Act for Fiscal Year 1998

will also require DOD to notify Congress when repair projects costing over

$10 million are to be conducted. Table 1 shows appropriations that are

6

In addition, contractors that operate government-owned facilities use procurement funds for

environmental compliance construction and repair projects costing less than $500,000. Research,

development, test, and evaluation funds may also be used for construction costing less than $500,000

for environmental compliance projects required in connection with research activities.

7

These criteria are stated in a July 2, 1997, memorandum defining repair and maintenance projects by

the DOD Deputy Comptroller for Program and Budget.

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used to fund construction and repairs, including environmental

compliance projects.

Table 1: Appropriations by Project

Type Used to Fund Military

Construction and Repair Projects

Project Type

Appropriation

Construction

greater than

$500,000

Construction less

than $500,000

Repairs of any

value

Military construction xa,b x

Operation and

maintenance b x xc

Research, development,

test, and evaluation d xe

Procurement d xf

Family housing x x x

Working capital fund xg xg

aMilitary construction projects costing more than $500,000 must be funded with military

construction appropriations. Also, any construction costing less than $1.5 million can be carried

out as unspecified minor construction.

bProjects needed to correct deficiencies that threaten life, health, or safety may be funded in

alternative ways. Projects costing up to $3 million may be funded as unspecified minor

construction in a single amount by service, rather than by individual project. Alternatively, projects

costing up to $1 million may be funded with operation and maintenance appropriations.

cRepairs over $5 million must be authorized in advance by the service secretary concerned.

dEfforts to execute construction costing more than $500,000 with research, development, test,

and evaluation or procurement funds normally require congressional notification.

eResearch, development, test, and evaluation appropriations may be used to fund projects

costing less than $500,000 at government-owned installations that support research efforts, and

to fund construction that supports unique research-related items at facilities that are contractor

operated and maintained.

f

Procurement appropriations may be used to fund projects at government-owned,

contractor-operated facilities when located on a military installation, on government land other

than a military installation, or at an ammunition plant.

gThe working capital fund may be used for construction in support of environmental compliance

at arsenals, plants, and depots.

Programming Process

Varies Depending on

Project Funding

The programming process for any construction or repair project varies

according to the project funding source. Environmental compliance

projects are funded from the military construction or operation and

maintenance appropriations, depending on the project’s character

(construction or repair) and cost. Military installations use defense

programming guidance and applicable laws and regulations, to initially

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determine whether a project is construction or repair and identify the

appropriate funding source.

Projects Funded Under the

Military Construction

Appropriation Require

Detailed Justifications

The process for identifying construction needs and obtaining military

construction funds through project completion requires about 5 years.

Because the law requires military construction projects to be specifically

authorized, the services and DOD review each compliance construction

project to be funded with 5-year military construction appropriations and

request individual project funding approval from Congress.

Using defense programming guidance and applicable laws and regulations,

the services’ headquarters offices are to review all proposed military

construction projects through a dual-track process to confirm

requirements and assess technical feasibility. The offices review the

regulatory requirements to confirm their environmental purpose. At the

same time, support agencies with engineering expertise, such as the Air

Force Civil Engineer Support Agency, the Army Corps of Engineers, and

the Naval Facility Engineering Command review the technical aspects of

proposed projects to determine their feasibility. After the requirements

and technical reviews have been completed, the services prioritize the

proposed projects to determine which ones will be contained in the budget

request.

After the services have completed their review and prioritization

processes, they submit their compliance construction budgets to the

Office of the Deputy Under Secretary of Defense (Comptroller) for review.

This office, in conjunction with other Office of the Secretary of Defense

(OSD) offices such as the Office of the Under Secretary of Defense for

Environmental Security, reviews proposed construction projects to

confirm and adjust requirements as necessary. The Comptroller issues

program budget decisions to the services, transmitting the Deputy Defense

Secretary’s decision on each project. Once OSD has approved the projects,

it submits a listing of approved projects to the Office of Management and

Budget (OMB), which approves and submits the final construction project

budgets, including compliance projects, to Congress as part of DOD’s

overall budget request. Figure 1 illustrates the military construction

project approval and funding process, which each military service and

defense agency conducts separately.

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Figure 1: DOD Process for Programming and Funding Environmental Compliance Military Construction Projects

Installations

Identify construction requirements,

prioritize projects, and submit

prioritized projects to major commands.

Major commands/claimants

Review, validate, and prioritize

projects and submit prioritized

project lists to service 

headquarters.

Service headquarters

Review major commands' construction

requirements, set overall 

priorities, adjust and approve

service resources, and review

and approve biennial budgets.

OSD

Compiles, reviews, adjusts, and

approves project lists and 

submits a budget and draft 

authorization bill to OMB for 

approval.

Congress

Reviews individual project

budget submissions, holds

hearings, and enacts

authorization and appropriation

bills for construction projects.

OMB 

Reviews and approves the 

budget, including individual 

projects, and the draft 

authorization bill.

Note: Major commands include organizations such as the Army Training and Doctrine Command,

Air Force Air Combat Command, and Naval Air Systems Command. Navy claimants include

organizations such as the Naval Air Warfare Center. Major commands, claimants, service

headquarters, and OSD eliminate projects and adjust funding levels at the project level.

Source: Our analysis of service and DOD data.

For fiscal year 1998, DOD requested $103.6 million for the construction of

24 environmental compliance projects to be funded with military

construction appropriations. The Air Force requested funding for 

18 projects with military construction appropriations, whereas the Army

and the Navy requested funding for 2 and 3 environmental compliance

projects, respectively. The Defense Logistics Agency (DLA) requested

funding for four similar projects to be constructed at four separate

locations under one common authorization.

Table 2 shows the environmental compliance construction projects that

DOD requested for fiscal year 1998. Five of the 24 projects are wastewater

treatment/disposal facilities and sewer systems, 4 are corrosion control

projects, and 2 are vehicle wash facility projects. The remaining projects

include tank trail erosion mitigation, oily waste treatment, and small arms

range remediation.

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Table 2: DOD’s Fiscal Year 1998 Budget Request for Environmental Compliance Military Construction Projects

Dollars in thousands

Project Component Base Cost

Central vehicle wash facility Army Fort A.P. Hill, VA $5,400

Tank trail erosion mitigation Army Fort Lewis, WA 2,000

Emergency spill control Navy Camp Pendleton, CA 2,800

Oily waste collection system Navy Portsmouth Naval Shipyard, VA 9,500

Oily waste collection treatment system Navy Pearl Harbor Naval Station, HI 25,000

Water treatment plant Air Force Lajes Field, Portugal 4,800

Remediate small arms range Air Force MacDill Air Force Base, FL 1,500

Wastewater disposal system Air Force Aviano Air Base, Italy 7,900

Wastewater treatment facilities Air Force Arnold Engineering Development Center, TN 10,800

Upgrade wastewater treatment plant Air Force Edwards Air Force Base, CA 1,500

Add/alter sewer liner Air Force Edwards Air Force Base, CA 1,400

Corrosion control facility Air Force Minneapolis/St Paul International Airport, MNa 1,600

Fire training facility Air Force Westover Air Force Base, MA 1,800

Alter fuel cell/corrosion control facility Air Force Charlotte Municipal Airport, NCa 2,500

Regional firemen training facility Air Force Gulfport International Airport, MSa 900

Vehicle refueling shop and paint bay Air Force Klamath Falls International Airport, ORa 500

Add/alter fuel cell and corrosion Air Force McEntire, SC 1,500

Vehicle wash facility Air Force Minneapolis/St. Paul International Airport, MNa 400

Add/alter corrosion control facility Air Force Quonset State Airport, RIa 300

Add/alter vehicle washing and corrosion

control facility

Air Force Salt Lake City International Airport, UTa

500

Fuel cell and corrosion control facility Air Force Schenectady Air National Guard, NY 5,700

Upgrade petroleum oil lubricant system Air Force Indian Mountain, AK 2,000

Fire training facility Air Force Kunsan Air Base, Korea 2,000

Conforming storage (for hazardous materials)b DLA c 11,300

Total $103,600

Source: Office of the Deputy Under Secretary of Defense for Environmental Security.

aAir Force Reserve and/or Air National Guard locations.

bConforming storage facilities are built to conform to legal standards for the storage of certain

hazardous materials.

cThe conforming storage project at DLA involves construction at the following locations:

Anchorage, Alaska ($5 million); Cherry Point, North Carolina ($2.1 million); Camp LeJeune, North

Carolina ($1.3 million); and Oklahoma City, Oklahoma ($2.9 million).

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The military construction budget requests for environmental compliance

construction projects do not directly compete with operation and

maintenance budget requests. However, service officials told us that the

increased competition for military construction funds in recent years and

reduced military construction budgets, have made it more difficult to fund

all the projects they would wish to. As a result, there is considerable

uncertainty whether a project will be approved. The availability of military

construction funds has decreased over the years, with a slight increase in

the fiscal year 1998 request. Table 3 shows the environmental compliance

portion of the military construction budget for the defense components’

environmental compliance requirements for fiscal years 1996-98.

Table 3: Defense Components’ Fiscal

Year 1996-98 Military Construction

Budgets for Environmental

Compliance

Dollars in thousands

Defense

components

Fiscal year 1996

budget

Fiscal year 1997

budget

Fiscal year 1998

budget request

Army $21,200 $2,000 $7,400

Navy 115,320 33,910 37,304

Air Force 92,776 53,291 47,566

DLA 0 0 11,275

Total $229,296 $89,201 $103,581

Projects Funded Under

Operation and

Maintenance

Appropriations

Service installation commanders have discretionary approval authority to

budget and obligate operation and maintenance funds. Thus, the review

and approval process for construction and repair projects funded with

operation and maintenance appropriations is often much faster than the

comparable 5-year military construction approval process. Projects funded

with the operation and maintenance appropriation can generally be

approved and funded in 1 to 2 years because many of the projects can be

approved at the installation or command level. Projects are individually

reviewed and approved by major commands without being subject to the

detailed headquarters review required for construction projects funded

with the military construction appropriations. However, projects costing

over $500,000 must be separately identified in budget exhibits and are

subject to OMB review.8

8

In commenting on a draft of this report, DOD stated that volume 2 of the Financial Management

Regulation, chapter 8, requires projects costing over $500,000, funded with operation and maintenance

appropriations, to be identified in Budget Exhibit OP27P. This exhibit, which is included with the

President’s Budget Submission, is required for all real property maintenance projects, including

environmental compliance projects.

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Service headquarters offices review only selected samples of projects to

confirm requirements. OSD reviews total requests to confirm and adjust

overall requirements within a specified funding range.9

 Congress reviews

and approves environmental compliance operation and maintenance

funding as part of its overall process for reviewing and approving the

defense components’ operation and maintenance request. Figure 2

illustrates the operation and maintenance review and approval process. In

that context, the only information that is reviewed above the major

command level is the (1) total dollar amount each component is requesting

for environmental compliance projects to be funded from the operation

and maintenance appropriation and (2) Environmental Quality Annual

Report to Congress list of projects over $300,000.

According to OSD and service officials, budgeting to fund projects from

operation and maintenance appropriations does not guarantee that

projects will be accomplished even if the request is approved and funds

are appropriated. This is because installation commanders have the

authority to use operation and maintenance funds to meet their day-to-day

requirements. Consequently, this is one reason that, in the past, military

construction funds were requested for large repair projects.

9

Although budget requests are not reviewed in detail, OSD and service officials told us that they

monitor obligation of operation and maintenance funds closely to ensure that funds requested for

environmental compliance projects are used for those purposes.

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Figure 2: Operation and Maintenance Programming and Funding Process

Installations

Identify and classify environmental 

requirements and submit projects to

major commands through a

compliance tracking database.

Major commands/claimants

Review and validate projects, 

and submit projects to service

headquarters.

Service headquarters

Review samples of projects to set

budgets, approve total budget 

requirements and budgets for major 

commands.

OSD

Compiles, reviews, adjusts, and

approves total operation and 

maintenance requirements, and 

submits a budget to OMB for 

approval.

Congress

Reviews total operation 

and maintenance request, and

authorizes and appropriates

funds.

OMB 

Reviews and approves the 

budget, but not individual 

projects.

Source: Our analysis of DOD data.

Requirements data are submitted and tracked through a separate

compliance tracking system used to prepare information for the

Environmental Protection Agency (EPA), which is responsible for

monitoring federal environmental protection programs, including

compliance. In commenting on a draft of this report, DOD noted that the

requirements data tracking system is not the DOD budget system through

which funding decisions are made. Program funding is tracked separately,

and budgets are submitted through the Office of the Comptroller. Major

commands, claimants, service headquarters, and OSD adjust requirements

within available funds.

Construction projects costing less than $500,000, or repairs of any value,

may be funded with operation and maintenance appropriations. For

purposes of developing budget requests, the project estimates are totaled

and shown as a single amount in the operation and maintenance request.10

Major commands may delegate approval authority to installation

10Operation and maintenance funding also may be used for construction projects costing up to

$1 million if the project is to correct a deficiency that threatens life, health, or safety.

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commanders to use operation and maintenance funds for environmental

compliance construction and repair projects. However, requests for repair

projects estimated to cost more than $5 million must be individually

approved in advance by the service secretary or, in the case of defense

agencies, the Secretary of Defense. Section 2802 of the National Defense

Authorization Act for fiscal year 1998 will require DOD to notify Congress

of repair projects costing over $10 million.11

Table 4 shows estimates of the services’ operation and maintenance

budgets for construction and repair projects for fiscal years 1996-98.

Table 4: Services’ Fiscal Year 1996-98

Operation and Maintenance Budgets

for Environmental Compliance

Construction and Repair

Dollars in thousands

Service

Fiscal year 1996

budget

Fiscal year 1997

budget

Fiscal year 1998

request

Army $81,778 $71,760 $45,764

Navy 134,101 94,329 59,763

Air Force 26,575 24,955 57,290

Total $242,454 $191,044 $162,817

Note: Most of DLA’s construction and repair projects are funded with military construction funds

or its working capital fund.

Source: Defense components.

The largest single project category among the services, according to funds

requested and budget justification material, is for sewer and wastewater

treatment projects. For fiscal years 1996 and 1997, on average, the Air

Force and the Navy planned to spend about 40 percent of their operation

and maintenance environmental compliance construction-related funds

for sewer and wastewater projects. The remaining funds were to be spent

on storage tank removal, repair and remediation, and on air quality and

other projects. The Army planned to spend about 18 percent of its

requested funds on sewer and wastewater treatment projects, with most of

its planned expenditures for storage tank removal, repair and remediation.

The remaining funds were to be spent on air quality and other projects.12

Officials from the Office of the Under Deputy Secretary of Defense

(Comptroller) recently advised us that, beginning with the fiscal year 1999

budget, all projects meeting the definition for repair will be funded from

operation and maintenance appropriations. In the past, the defense

11P.L. 105-85, section 2802.

12We did not confirm whether the funds were spent for their intended purpose.

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components sometimes requested specific authorization of military

construction appropriation funds for major repair projects such as landfill

closures and wastewater treatment facility upgrades. For example, for

fiscal year 1996, the Air Force requested and received specific

authorization for $7.5 million in military construction funding for landfill

closure projects at Beale Air Force Base, California. The Air Force plans to

spend $5.6 million in fiscal year 1998 operation and maintenance funds for

a landfill closure project at Holloman Air Force Base, New Mexico.

Figure 3 shows the landfill repair at Holloman Air Force Base.

Figure 3: Fiscal Year 1997

Environmental Compliance Landfill

Repair Project at Holloman Air Force

Base, New Mexico

Note: Construction debris is on top of the landfill.

Reporting of Future

Requirements

Estimates

While DOD has made some improvements to its annual compliance

reporting in its annual report and supporting budget documents, the

information provided is still insufficient for oversight purposes. Recent

congressional committee reports have raised specific areas of concern

related to (1) expenditures for environmental compliance activities, the

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standardization of such data, and the tracking of funding and (2) DOD’s

definitions of compliance classes.

DOD Initiatives to Improve

Compliance Reporting

Our May 1997 report on cleanup, technology, and compliance addressed

DOD initiatives to improve compliance reporting and provide Congress with

more informative data. In 1995, DOD began an effort to achieve consistency

in compliance definitions, categories, and requirements. It planned to

identify goals, strategies, budget items, and measures of performance for

compliance and other environmental areas. Accordingly, for the fiscal 

year 1998 budget planning process, DOD’s Office of the Under Secretary of

Defense for Environmental Security established new policies and goals for

classifying compliance projects and obtaining needed compliance data.

For the fiscal year 1999 budget planning process, DOD officials added

explanatory footnotes to programming preparation instructions. DOD also

included, as part of its fiscal year 1998 budget submission, additional

information by appropriation on recurring and nonrecurring costs for the

environmental quality areas of compliance, pollution prevention, and

conservation. Actual costs, obligations, and future year estimates are

included as part of this backup budget documentation.

In its fiscal year 1995 Environmental Quality Annual Report to Congress,

DOD started including estimates of individual future compliance projects.

For projects estimated to cost over $300,000, DOD provided cost data on

planned compliance projects for defense component installations.

However, the report did not identify the funding source of these activities

or clearly indicate whether the project was for construction or repair.

Although officials indicated their intent to include more detail in future

reports, officials from the Office of the Deputy Under Secretary of Defense

for Environmental Security believed, as of May 1997, that they could not

include project detail on funding and environmental area such as

compliance or pollution prevention, because they believed the services’

data were not consistent and could not be standardized. Since that time,

officials stated that the data has improved and that they are working

toward reporting project funding sources and environmental area for all

defense components except the Navy, which had not provided DOD with

the environmental information it needs.

Additional Compliance

Data Available for

Reporting

The House National Security Committee report on the Defense

Authorization Act for Fiscal Year 1998 (Report 105-132, June 16,

1997) stated concerns about expenditures for environmental compliance

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activities and directed DOD to develop standardized data on such things as

contracts, projects, and installations to permit the tracking of compliance

funding from budget request to expenditure.

The defense components are already collecting data on some of the

information discussed in the House report. Although these data do not

include expenditures, they include other useful information, such as

funding source, classification priority, and estimated cost.13 Since 1978,

heads of federal agencies have been responsible for reporting on the status

of their efforts to prevent, control, and abate environmental pollution at

their facilities.14 The agencies report on these efforts to OMB through EPA.

DOD has required the services to provide standardized data for reporting to

EPA, and EPA has stated that it has provided formats for consistent

reporting to DOD and the services. In most cases, data already available

from service installations could be extracted from the information

required for EPA reporting and incorporated into DOD’s annual

environmental quality report. Table 5 illustrates that some of the needed

data have already been gathered by DOD and the services for EPA reporting.

However, these projects may not be included in the fiscal year 1997

President’s budget.

13Except for military construction-funded projects, DOD does not track individual project

expenditures.

14Executive Order 12088, October 1978.

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Table 5: Examples of Fiscal Year 1997 Service Data Prepared for EPA

Dollars in thousands

Service Appropriation Project

Law or

regulation Priority

Estimated

cost

Air Force O&M Removal/replacement of tanks RCRA 2 $2,000

Army RDT&E Removal/replacement of tanks RCRA 2 400

Navy DBOF Removal/replacement of tanks a a 750

Air Force MILCON Removal/replacement of tanks RCRA 2 3,940

Air Force MILCON Closure construction of landfill RCRA 1 6,735

Air Force O&M Closure/cleanup landfill RCRA 1 350

Army O&M Soil erosion program NATR 3 600

Note: O&M, operation and maintenance; RCRA, Resource Conservation and Recovery Act;

RDT&E, research, development, test, and evaluation; DBOF, Defense Business Operating Fund

(now the Working Capital Fund); MILCON, military construction; NATR, Natural Resources Laws.

aData were not provided.

Source: Service data prepared for EPA.

EPA established a system for reporting compliance classes to assist federal

agencies in establishing the relative importance of their projects and

activities. We also reported in May 1997 that DOD had expanded the

number of projects that qualify for funding under compliance class I

without distinguishing among different project types. Although EPA

explicitly limits class I to facilities currently out of compliance, as

documented by notices of violation or consent agreements, DOD’s

definition added projects to address requirements in facilities that will not

yet be out of compliance for 2 or more years. DOD’s descriptions also

indicated that items that EPA includes in class III (such as inventories,

surveys, studies, and assessments) could also be routinely funded as 

class I projects.

We recommended that DOD reconsider changes in compliance class

definitions so that the data permit better oversight and are more

consistent with governmentwide reporting to EPA. DOD made minor

adjustments to its classification system by expanding its class I standard

to include components that will be out of compliance if funds are not

provided during the year requested, but the changes are not sufficient to

address our concerns. There is still potential for overlap when defining the

different project types. For example, under EPA’s definition, a class I

project is currently out of compliance. Under DOD’s definition, a project

Page 16 GAO/NSIAD-98-33 Military Construction and Repair
B-277673 

could be classified as class I even if it is not out of compliance for 2 or

more years.

In commenting on a draft of this report, DOD noted that it may need to

make future minor adjustments to its class I and II definitions, but that

major changes are currently unnecessary. If such adjustments are similar

to those made previously, the changes will not be sufficient to address our

concerns. DOD stated that it believes the EPA classification system, upon

which DOD’s class definitions are based, is not sufficient to support budget

development or long-range financial planning. As we have stated in our

previously cited June 1996 and May 1997 reports, the focus of our concern

is on DOD’s ability to prioritize its requirements in a meaningful way. We

reported that classification categories could dilute the highest priority

category by increasing the number of highest priority projects, and thus

significantly reduce management oversight, and that we have been

monitoring DOD’s implementation of revised definitions for multiple

requesters.

The Senate Armed Services Committee report on the Defense

Authorization Act for Fiscal Year 1998 (Report 105-29, June 17,

1997) stated concerns regarding DOD’s definitions of environmental

compliance classes. The report noted that DOD’s class I and class II

definitions overlap and may lead to confusion regarding funding priorities.

The Committee directed DOD to clarify the class I and II definitions and to

eliminate the overlap. We also reported that data, such as those called for

by the Senate report are available because the services still distinguish

between compliance classes I, II, and III.

Conclusions and

Recommendation

DOD’s criteria for determining which appropriation account should be used

to fund construction and repair projects is set forth in laws and

regulations. The law requires military construction appropriations to be

used for all military construction projects costing over $500,000. Operation

and maintenance appropriations are available to fund construction

projects costing less than $500,000 and repairs of any value. The process

for programming funds for environmental compliance construction or

repair activities varies according to the project funding source. Under the

process, the level of project justification detail that DOD provides to

Congress is greater for military construction projects than for projects

funded under other appropriations. Military installations use defense

programming guidance and applicable laws and regulations, to initially

Page 17 GAO/NSIAD-98-33 Military Construction and Repair
B-277673 

determine whether a project is construction or repair and identify the

appropriate funding source.

DOD has taken some actions on our previous recommendations to provide

better oversight of environmental compliance construction and repair

projects by modifying its classification system and providing additional

summary data in budget support documents. However, both the House

and Senate reports of the fiscal year 1998 authorizing committees

expressed concerns about DOD environmental compliance data and

directed DOD action. Since the Senate Armed Services Committee has

directed DOD to clarify compliance class definitions, we are not making

recommendations regarding compliance classes at this time. However, we

will continue to monitor DOD’s actions in this area.

Although DOD disagreed with our prior recommendation to provide better

guidance for reporting costs in its annual report to Congress, it has made

minor improvements to guidance and taken initial steps to improve

reporting by obtaining data on compliance projects over $300,000.

However, we believe reporting could be further improved by identifying

projects as construction or repair and indicating the funding sources for

them. Thus, to improve the specificity of its reporting, we recommend that

the Secretary of Defense direct the Deputy Under Secretary of Defense for

Environmental Security to revise the DOD annual report to Congress to

(1) identify all proposed construction and repair projects over $300,000 for

all services and (2) include the funding sources for them.

Agency Comments

and Our Evaluation

DOD provided written comments on a draft of this report. DOD agreed with

our recommendation. It stated that its fiscal year 1996 annual report to

Congress will identify appropriation, environmental pillar (such as

compliance or pollution prevention), legal requirement, and environmental

class for each project estimated to cost over $300,000. DOD officials expect

this report to be published in December 1997.

DOD also provided technical comments, which we have incorporated

where appropriate. DOD’s comments are reprinted in their entirety in

appendix II, along with our comment on a specific point.

Scope and

Methodology

To obtain information on DOD’s criteria for determining which

appropriation account is used for programming funds, we obtained,

reviewed, and analyzed applicable laws and regulations and held

Page 18 GAO/NSIAD-98-33 Military Construction and Repair
B-277673 

discussions with officials from the Office of the Comptroller, Office of the

Under Secretary of Defense for Environmental Security, and in

headquarters and field offices of the Army, the Navy, the Air Force, the

Marine Corps, and DLA.

To obtain information on DOD’s and the military services’ processes for

programming funds, we reviewed pertinent laws, regulations, policy

statements, and other documents. However, we did not assess the extent

to which projects complied with applicable laws and regulations. We

obtained additional information on the processes through discussions with

OSD and service officials. We used information that we previously reported

in November 1993 and June 1996. We selectively verified data for specific

projects, but did not verify overall database accuracy. However, we have

issued a series of reports over the past few years documenting deficiencies

in the Department’s ability to reliably account for and report on its

expenditures.15

To address reporting on future funding requirements, we reviewed and

analyzed DOD budget reports, submissions, and expenditure data for fiscal

years 1995 through 1998.

We documented examples of construction and repair projects costing over

$300,000 that were funded with military construction and operation and

maintenance funds to illustrate the difficulty of reporting and projecting

future requirements. We relied on the accuracy of DOD and service data in

conducting our analysis and selectively verified data in certain reports. We

drew upon information we reported in May and June 1997 on DOD’s

reporting of compliance projects. We held discussions with and obtained

information from officials in the Office of the Under Secretary of Defense

for Environmental Security and in headquarters and field offices of the

Army, the Navy, the Air Force, the Marine Corps, and DLA.

We visited and obtained information on DOD’s programming and

requirements reporting processes at the following military installations

and major commands: Commander in Chief, Pacific Forces, Hawaii;

Commander in Chief, Atlantic Fleet, Virginia; Commander in Chief, Pacific

Fleet, Hawaii; Naval Facilities Engineering Command, Atlantic Division,

Virginia; Naval Facilities Engineering Command, Pacific Division, Hawaii;

Marine Forces Pacific, Hawaii; Air Combat Command, Virginia; Pacific Air

Forces, Hawaii; Holloman Air Force Base, New Mexico; Marine Corps

15In DOD Problem Disbursements (GAO/AIMD-97-36R, Feb. 20, 1997), we identified significant errors

in DOD expenditure reports.

Page 19 GAO/NSIAD-98-33 Military Construction and Repair
B-277673 

Base, Camp Pendleton, California; Army National Training Center, Fort

Irwin, California; Army Training and Doctrine Command, Virginia; Army

Forces Command, Georgia; and Army Pacific Command, Hawaii. We

discussed environmental compliance issues with officials in EPA Region IX

and with officials of the State of Hawaii’s Environmental Management

Office.

We conducted our review between September 1996 and July 1997 in

accordance with generally accepted government auditing standards.

Unless you publicly announce its contents earlier, we plan no further

distribution of this report until 30 days from its issue date. At that time, we

will send copies to appropriate congressional committees; the Secretaries

of Defense, the Army, the Navy, and the Air Force; the Commandant,

Marine Corps; the Director, Defense Logistics Agency; the Environmental

Protection Agency; and the Director, Office of Management and Budget.

We will also make copies available to others on request.

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

contact me on (202) 512-8412. Major contributors to this report are listed

in appendix II.

David R. Warren, Director

Defense Management Issues

Page 20 GAO/NSIAD-98-33 Military Construction and Repair
Page 21 GAO/NSIAD-98-33 Military Construction and Repair
Appendix I 

Comments From the Department of Defense

Note: GAO’s comment

supplementing those in

the report text appear at

the end of this appendix.

Now on p. 18.

See comment 1.

Page 22 GAO/NSIAD-98-33 Military Construction and Repair
Appendix I 

Comments From the Department of Defense

Page 23 GAO/NSIAD-98-33 Military Construction and Repair
Appendix I 

Comments From the Department of Defense

The following is GAO’s comment on the Department of Defense’s (DOD)

letter dated October 31, 1997.

GAO Comment 1. As discussed on page 17 of this report, the focus of our concern is on

DOD’s ability to prioritize its requirements in a meaningful way and to

improve management oversight. We have been monitoring DOD’s

implementation of revised definitions for multiple requesters.

Page 24 GAO/NSIAD-98-33 Military Construction and Repair
Appendix II 

Major Contributors to This Report

National Security and

International Affairs

Division, Washington,

D.C.

Charles I. Patton, Jr.

Uldis Adamsons

Elizabeth G. Mead

Kansas City Field

Office

James Moores

Ben Douglas

Bob Hammons

Steve Pruitt

Virgil Schroeder

Office of the General

Counsel

Lynn Gibson

Margaret Armen

(709273) Page 25 GAO/NSIAD-98-33 Military Construction and Repair
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