SPECTRUM 

MANAGEMENT

Federal Relocation 

Costs and Auction 

Revenues

Report to the Committee on Armed 

Services, U.S. Senate

May 2013

GAO-13-472

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-13-472, a report to the 

Committee on Armed Services, U.S. Senate 

May 2013

SPECTRUM MANAGEMENT 

Federal Relocation Costs and Auction Revenues

Why GAO Did This Study

Allocating radio-frequency spectrum is 

a challenging task because of

competing commercial and 

government demands. In 2006, FCC 

auctioned spectrum licenses in the 

1710-1755 MHz band that had 

previously been allocated for federal 

use. To meet the continued demand 

for commercial wireless services, NTIA 

assessed the viability of reallocating 

the 1755-1850 MHz band to 

commercial use; this band is currently 

assigned to more than 20 federal 

users, including DOD. In March 2012, 

NTIA reported that it would cost $18 

billion over 10 years to relocate most 

federal operations from the band, 

raising questions about whether 

relocating federal users is a 

sustainable approach. 

GAO was directed to review the costs 

to relocate federal spectrum users and 

revenues from spectrum auctions. 

This report addresses (1) estimated 

and actual relocation costs, and 

revenue from the previously auctioned 

1710-1755 MHz band; (2) the extent to 

which DOD followed best practices to 

prepare its preliminary cost estimate 

for vacating the 1755-1850 MHz band; 

and (3) existing government or industry 

forecasts for revenue from an auction 

of the 1755-1850 MHz band. GAO 

reviewed relevant reports; interviewed

DOD, FCC, NTIA, and OMB officials

and industry stakeholders; and 

analyzed the extent to which DOD’s

preliminary cost estimate met best 

practices as identified in GAO’s Cost

Estimating and Assessment Guide

(Cost Guide). FCC agreed with the 

report’s findings and DOD, FCC, and 

NTIA provided technical comments

that were incorporated as appropriate. 

What GAO Found

Some federal agencies underestimated the costs to relocate communication 

systems from the 1710-1755 megahertz (MHz) band, although auction revenues 

appear to exceed relocation costs by over $5 billion. As of March 2013, actual 

relocation costs have exceeded estimated costs by about $474 million, or 47 

percent. The National Telecommunications and Information Administration 

(NTIA) expects agencies to complete the relocation effort between 2013 and 

2017, with a final relocation cost of about $1.5 billion. Actual relocation costs 

have exceeded estimated costs for various reasons, including unforeseen 

challenges and some agencies not following NTIA’s guidance for developing cost 

estimates. However, the Department of Defense (DOD) expects to complete its 

relocation for about $71 million less than its estimate of about $355 million. NTIA 

and the Office of Management and Budget (OMB) are taking steps to ensure that 

agencies improve their cost estimates by, for example, preparing a cost 

estimation template and guidelines for reporting reimbursable costs. The auction 

of spectrum licenses in the 1710-1755 MHz band raised almost $6.9 billion.

DOD’s preliminary cost estimate for relocating systems out of the 1755-1850 

MHz band substantially or partially met GAO’s best practices for cost estimates, 

but changes in key assumptions may affect future costs. Adherence with GAO’s 

Cost Guide reduces the risk of cost overruns and missed deadlines. GAO found 

that DOD’s preliminary estimate of $12.6 billion substantially met the 

comprehensive and well-documented best practices. For instance, it included 

complete information about systems’ life cycles, and the baseline data were 

consistent with the estimate. However, GAO found that some information on the 

tasks required to relocate some systems was incomplete. GAO also determined 

that DOD’s estimate partially met the accurate and credible best practices. For 

example, DOD applied appropriate inflation rates and made no apparent 

calculation errors. However, DOD did not complete some sensitivity analyses 

and risk assessments at the program level, and not at all at the summary level.

DOD officials said that changes to key assumptions could substantially change 

relocation costs. Most importantly, decisions about which spectrum band DOD 

would relocate to are still unresolved, and relocation costs vary depending on the 

proximity to the 1755-1850 MHz band. Nevertheless, DOD’s preliminary cost 

estimate was consistent with its purpose—informing the decision-making process 

to make additional spectrum available for commercial wireless services. 

No government revenue forecast has been prepared for a potential auction of the 

1755-1850 MHz band, and a variety of factors could influence auction revenues. 

One private sector study in 2011 forecasted $19.4 billion in auction revenue for 

the band, assuming that federal users would be cleared and the nationwide 

spectrum price from a previous auction, adjusted for inflation, would apply to this 

spectrum. Like for all goods, the price of spectrum, and ultimately the auction 

revenue, is determined by supply and demand. The Federal Communications 

Commission (FCC) and NTIA jointly influence the amount of spectrum allocated 

to federal and nonfederal users (the supply). The potential profitability of a 

spectrum license influences its demand. Several factors would influence

profitability and demand, including whether the spectrum is cleared of federal 

users or must be shared. 

View GAO-13-472. For more information, 

contact Mark L. Goldstein at (202) 512-2834 

or goldsteinm@gao.gov. 
Page i GAO-13-472 Spectrum Management

Letter 1 

Background 5

Some Agencies Underestimated 1710-1755 MHz Band Relocation 

Costs, Although Auction Revenues Appear to Exceed Those 

Costs 11

DOD’s Preliminary Cost Estimate Substantially or Partially Met 

GAO’s Identified Best Practices, but Changes in Assumptions 

May Affect Future Costs 17

No Government Revenue Forecasts Exist for a Potential Auction of 

the 1755-1850 MHz Band, and a Variety of Factors Could 

Influence Auction Revenues 23

Agency Comments 27

Appendix I Objectives, Scope, and Methodology 29

Appendix II Comments from the Federal Communications Commission 32

Appendix III GAO Contact and Staff Acknowledgments 33

Tables

Table 1: Comparison of Estimated and Actual Relocation Costs for 

the 1710-1755 MHz Band (as of March 2013) 12

Table 2: Summary Assessment of DOD Spectrum Relocation Cost 

Estimate Compared to GAO-Identified Best Practices 19

Figure

Figure 1: Examples of Allocated Spectrum Uses and DOD Systems 

Using the 1755-1850 MHz Band 6

Contents 
Page ii GAO-13-472 Spectrum Management

Abbreviations 

AWS Advanced Wireless Services

AWS-1 Advanced Wireless Services-1 auction

CAPE Cost Assessment and Program Evaluation

CBO Congressional Budget Office

Cost Guide Cost Estimating and Assessment Guide

CSEA Commercial Spectrum Enhancement Act

DOD Department of Defense

FCC Federal Communications Commission

GHz gigahertz

ICE Immigration and Customs Enforcement

kHz kilohertz

MHz megahertz

MHz-pop megahertz-population

NTIA National Telecommunications and Information

 Administration

OMB Office of Management and Budget

Wi-Fi wireless fidelity

This is a work of the U.S. government and is not subject to copyright protection in the 

United States. The published product may be reproduced and distributed in its entirety 

without further permission from GAO. However, because this work may contain 

copyrighted images or other material, permission from the copyright holder may be 

necessary if you wish to reproduce this material separately.
Page 1 GAO-13-472 Spectrum Management

441 G St. N.W.

Washington, DC 20548

May 22, 2013

The Honorable Carl Levin

Chairman

The Honorable James M. Inhofe

Ranking Member

Committee on Armed Services

United States Senate

As the demand for and use of smart phones, tablets, and other wireless 

devices continues to grow and new mission needs unfold among federal 

government agencies, nearly all parties are becoming increasingly 

concerned about the availability of radio frequency spectrum to meet 

future commercial and federal needs.1

To address these challenges, current and past administrations and 

Congresses, the Federal Communications Commission (FCC), and other 

stakeholders have proposed various policy, economic, and technological 

solutions to address the availability and efficient use of spectrum. For 

example, in 2010, the Obama administration issued a presidential 

memorandum directing the National Telecommunications and Information 

Administration (NTIA) within the Department of Commerce to collaborate 

with FCC to develop a plan and a timetable to make 500 megahertz 

(MHz) of federally and nonfederally allocated spectrum available for 

Federal users require spectrum for

national defense, homeland security, and other vital mission activities. 

While the national interest may be served by a robust commercial 

wireless broadband system, the federal government also needs spectrum 

to support critical missions, including military operations, testing, and 

training at home and around the world. Thus, balancing competing 

industry and government demands for a limited amount of spectrum, 

today and in the future, is a challenging and complex task.

 

1

The radio frequency spectrum is the part of the natural spectrum of electromagnetic 

radiation lying between the frequency limits of 3 kilohertz (kHz) and 300 gigahertz (GHz). 

Radio frequencies are grouped into bands and are measured in units of Hertz, or cycles 

per second. The term kHz refers to thousands of Hertz, megahertz (MHz) to millions of 

Hertz, and GHz to billions of Hertz. The Hertz unit of measurement is used to refer to both 

the quantity of spectrum (such as 500 MHz of spectrum) and the frequency bands (such 

as the 1755-1850 MHz band). 

 
 

Page 2 GAO-13-472 Spectrum Management

wireless broadband use in the next 10 years.2 The majority of this freedup spectrum would likely be auctioned and licensed for mobile broadband 

and other high-value commercial uses.3 As part of this effort, NTIA led an 

8-month interagency evaluation process to determine whether it would be 

possible to repurpose 95 MHz in the 1755-1850 MHz band for 

commercial wireless services. The 1755-1850 MHz band is ideally suited 

for both commercial and federal users because its radio wave 

characteristics enable highly mobile, yet reliable communication links.4

In March 2012, NTIA reported that the preliminary cost estimate to 

relocate most federal operations from the 1755-1850 MHz band would be 

about $18 billion over 10 years.

Within the United States, this band is currently allocated exclusively to the 

federal government, particularly for defense purposes, such as military 

tactical communications, air combat training, and space systems.

5

 

2

Memorandum for the Heads of Executive Departments and Agencies, Unleashing the 

Wireless Broadband Revolution (Presidential Memorandum), 75 Fed Reg. 38387 (June 

28, 2010). 

Approximately $12.6 billion of this 

estimate was attributed to relocating military systems. The report was 

largely based on inputs from the federal agencies using the band, 

including the Department of Defense (DOD). NTIA’s analysis showed that 

while there are significant challenges to overcome, it might be possible to 

free up all 95 MHz of spectrum in the 1755-1850 MHz band. The report 

describes the required conditions to ensure no loss of critical capabilities 

for the more than 20 federal agencies operating a variety of systems in 

3

To promote more efficient use of spectrum and meet future needs, FCC has increasingly 

adopted more market-oriented approaches to spectrum management in recent years, 

including using a competitive bidding process, or auctions, to assign spectrum licenses to 

commercial users. Since 1997, with certain limited exceptions, Congress has required 

FCC to assign licenses by auction in situations where it permits the filing of mutually 

exclusive applications. 47 U.S.C. § 309(j). From 1994, when FCC first implemented its 

auction authority, through January 2013, FCC held 81 auctions and generated nearly $52 

billion for the U.S. Treasury. 

4

The wavelength of a frequency is a key determinant of its best uses. Frequencies above 

about 3 GHz are not as conducive to mobile communications as are lower frequencies 

that require less energy to transmit signals over a given distance and are more capable of 

penetrating walls and buildings. See Coleman Bazelon, The Brattle Group, The Economic 

Basis of Spectrum Value: Pairing AWS-3 with the 1755 MHz Band is More Valuable than 

Pairing it with Frequencies from the 1690 MHz Band (Washington, D.C.: Apr. 11, 2011). 

5

See NTIA, An Assessment of the Viability of Accommodating Wireless Broadband in the 

1755-1850 MHz Band (Washington, D.C.: March 2012). 
 

Page 3 GAO-13-472 Spectrum Management

that band at any given time across the nation.6 Relocating to other parts 

of the radio frequency spectrum means that many of these existing 

systems would need to be redesigned. The high cost and lengthy time to 

implement this relocation has raised questions about whether an auction 

of spectrum licenses in the 1755-1850 MHz band would cover those 

expenses, as required by federal law,7

Because of the importance of this issue to private and public interests in 

the United States, the Senate Armed Services Committee directed us to 

review the historical differences between estimated federal relocation 

costs and actual auction revenue, and assess whether the cost of 

vacating or sharing subsets of the 1755-1850 MHz band is sufficiently 

captured in preliminary cost estimates.

and whether other approaches, 

such as sharing spectrum between commercial and federal users, would 

better achieve spectrum policy goals.

8

To examine the differences between federal relocation costs and revenue 

from the auction of the 1710-1755 MHz band, we reviewed recent NTIA 

To address these issues, we 

examined (1) the differences, if any, between estimated and actual 

federal relocation costs and revenue from the auction of the 1710-1755 

MHz band, (2) the extent to which DOD followed best practices to prepare 

its preliminary cost estimate for vacating the 1755-1850 MHz band and 

the limitations, if any, of its analysis, and (3) what government or industry 

revenue forecasts exist for an auction of the 1755-1850 MHz band, and 

what factors, if any, could influence the actual auction revenue. We 

provided a preliminary briefing to your offices on February 25, 2013; this 

report formally transmits our findings.

 

6

The federal agencies with operations in the 1755-1850 MHz band include, among others, 

the Departments of Commerce, Defense, Energy, Health and Human Services, Homeland 

Security, Housing and Urban Development, Interior, Justice, Treasury, and Veterans 

Affairs, and the Federal Aviation Administration, National Aeronautics and Space 

Administration, Office of Personnel Management, U.S. Agency of International 

Development, U.S. Capitol Police, and U.S. Postal Service. The Department of Defense 

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

7

The Communications Act, Act of June 19, 1934, ch. 652, Title I, §§ 8, 9 (the 

Communications Act), as amended by the Commercial Spectrum Enhancement Act 

(CSEA), Pub. L. No. 108-494, § 202, 118 Stat. 3986, (2004), codified at 47 U.S.C. 

§ 309(j)(3)(F), requires that auction proceeds must be equal to at least 110 percent of the 

total estimated relocation costs for FCC (the agency conducting the auction) to conclude 

the auction. 47 U.S.C. § 309(j)(16)(B).

8

S. Rept. 112-173 (2012).
 

Page 4 GAO-13-472 Spectrum Management

spectrum relocation reports, including NTIA’s annual progress reports for 

the 1710-1755 MHz transition; FCC spectrum auction data as of 

December 2012; and the Office of Management and Budget’s (OMB) 

2007 report to Congress on Agency Plans for Spectrum Relocation 

Funds. To assess the reliability of the relocation cost and auction revenue 

data, we reviewed documentation related to the data, compared the data 

to other sources, including government reports, and discussed the data 

with FCC and NTIA officials. We did not evaluate the accuracy of 

individual agencies’ relocation cost data, as this was outside the scope of 

our review. Based on this review, we determined that the FCC and NTIA 

data were sufficiently reliable for the purposes of our report. To determine 

the number of auctions involving the relocation of federal agencies to new 

spectrum frequencies, we reviewed FCC auction data and NTIA reports, 

and interviewed officials from FCC, NTIA, OMB, and the Congressional 

Budget Office (CBO); the Advanced Wireless Services-1 (AWS-1) auction 

involving the 1710-1755 MHz band was the only spectrum auction 

involving federal agencies with significant, known relocation costs.9

To assess whether the cost of vacating the 1755-1850 MHz band is 

sufficiently captured in DOD’s preliminary cost estimate, we compared 

DOD’s preliminary estimate against the best practices in GAO’s Cost 

Estimating and Assessment Guide (Cost Guide).10

 

9

There have been other auctions involving the relocation of federal government agencies. 

For example, the National Oceanic and Atmospheric Administration, the Air Force, and the 

National Science Foundation previously operated systems in the 1670-1675 MHz band. 

The estimated cost to relocate these systems was $35-55 million for the National Oceanic 

and Atmospheric Administration and $515,000 for the Air Force. See NTIA, Spectrum 

Reallocation Final Report: Response to Title VI – Omnibus Budget Reconciliation Act of 

1993 (Washington, D.C.: February 1995). FCC auctioned the band in April 2003, and the 

auction generated $12.6 million. Final relocation costs are unclear. 

The Cost Guide

identifies best practices that help ensure cost estimates are 

comprehensive, well-documented, accurate, and credible, and it has been 

used to evaluate cost estimates across the government. To identify any 

limitations affecting DOD’s estimate, we also interviewed DOD officials 

responsible for developing the department’s preliminary cost estimate. To 

identify any government or industry forecasts of revenue from a future 

auction of the 1755-1850 MHz band and any factors that would affect the 

value of spectrum licenses, we reviewed academic, government, and 

public policy literature, focusing on studies mentioning (1) spectrum 

10GAO, GAO Cost Estimating and Assessment Guide: Best Practices for Developing and 

Managing Capital Program Costs, GAO-09-3SP (Washington, D.C.: March 2009). 
 

Page 5 GAO-13-472 Spectrum Management

auctions involving the relocation of federal agencies, (2) spectrum 

valuation and revenues from the sale of spectrum licenses, and (3) 

relocation costs. We also interviewed officials from CBO and OMB, and 

stakeholders with knowledge of spectrum licensing issues, including 

industry and policy experts. For more details on our scope and 

methodology, see appendix I.

We conducted this performance audit from September 2012 to May 2013 

in accordance with generally accepted government auditing standards. 

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

sufficient, appropriate evidence to provide a reasonable basis for our 

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

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives.

The radio frequency spectrum is the resource that makes possible 

wireless communication and supports a vast array of commercial and 

government services. Federal, state, and local agencies use spectrum to 

fulfill a variety of government missions, such as national defense, airtraffic control, weather forecasting, and public safety. DOD uses spectrum 

to transmit and receive critical voice and data communications involving 

military tactical radio, air combat training, precision-guided munitions, 

unmanned aerial systems, and aeronautical telemetry and satellite 

control, among others. The military employs these systems for training, 

testing, and combat operations throughout the world. Commercial entities 

use spectrum to provide a variety of wireless services, including mobile 

voice and data, paging, broadcast television and radio, and satellite 

services.

In the United States, responsibility for spectrum management is divided 

between two agencies: FCC and NTIA. FCC manages spectrum for 

nonfederal users, including commercial, private, and state and local 

government users, under the Communications Act.11 NTIA manages 

spectrum for federal government users and acts for the President with 

respect to spectrum management issues as governed by the National 

Telecommunications and Information Administration Organization Act.12

 

1147 U.S.C. § 309. 

12Pub. L. No. 102-538, title I, 106 Stat. 3533, codified as amended at 47 U.S.C. ch. 8.

Background
 

Page 6 GAO-13-472 Spectrum Management

FCC and NTIA manage the spectrum through a system of frequency 

allocation and assignment.

• Allocation involves segmenting the radio spectrum into bands of 

frequencies that are designated for use by particular types of radio 

services or classes of users. (Fig. 1 illustrates examples of allocated

spectrum uses, including DOD systems using the 1755-1850 MHz 

band.) In addition, spectrum managers specify service rules, which 

include the technical and operating characteristics of equipment.

Figure 1: Examples of Allocated Spectrum Uses and DOD Systems Using the 1755-1850 MHz Band
 

Page 7 GAO-13-472 Spectrum Management

• Assignment, which occurs after spectrum has been allocated for 

particular types of services or classes of users, involves providing 

users, such as commercial entities or government agencies, with a 

license or authorization to use a specific portion of spectrum. FCC 

assigns licenses within frequency bands to commercial enterprises, 

state and local governments, and other entities. Since 1994, FCC has 

used competitive bidding, or auctions, to assign certain licenses to 

commercial entities for their use of spectrum.13

Congress has taken a number of steps to facilitate the deployment of 

innovative, new commercial wireless services to consumers, including 

requiring more federal spectrum to be reallocated for commercial use. 

Previously, reallocation of spectrum from federal to private-sector users 

was directed under the Omnibus Budget Reconciliation Act of 1993, 

which was later expanded by the Balanced Budget Act of 1997.

Auctions are a marketbased mechanism in which FCC assigns a license to the entity that 

submits the highest bids for specific bands of spectrum. NTIA 

authorizes spectrum use through frequency assignments to federal 

agencies. More than 60 federal agencies and departments combined 

have over 240,000 frequency assignments across all spectrum bands, 

although 9 departments, including DOD, hold 94 percent of all 

frequency assignments for federal use.

14

 

13As noted above, not all licenses are assigned via auctions. For example, auctions are 

precluded for public safety and noncommercial broadcast stations. 47 U.S.C. § 309(j)(2). 

FCC allocates some frequency bands for unlicensed use—that is, users do not need to 

obtain a license to use the spectrum. Rather, an unlimited number of unlicensed users 

share those frequencies. Thus, the assignment process does not apply to unlicensed 

spectrum. Similarly, auctions are not used where FCC relies on licensing processes that 

do not contemplate the filing of competing applications (e.g., first-come, first-served 

procedures or situations where commercial users can share spectrum).

Relocating federal communications systems to other spectrum bands to 

accommodate private sector activities can involve significant capital 

investment costs. The cost of relocating communications systems is 

affected by many variables related to the systems themselves as well as 

the relocation plans. Some fixed microwave systems, for example, can 

generally use off-the-shelf commercial technology or may just need to be 

re-tuned to accommodate a change in frequency. However, some 

systems may require significant modification if the characteristics of the 

new spectrum frequencies differ sufficiently from the original spectrum. 

Specialized systems, such as those used for surveillance and law 

14Pub. L. No. 103-66, § 6001,107 Stat. 312 (1993) (OBRA-93) amended by Pub. L. No. 

105-33, § 3002, 111 Stat. 251(1997) (BBA-97), codified as amended at 47 U.S.C. § 923.
 

Page 8 GAO-13-472 Spectrum Management

enforcement purposes, may not be compatible with commercial 

technology, and therefore agencies have to work with vendors to develop 

equipment that meets mission needs and operational requirements.

In 2004, the Commercial Spectrum Enhancement Act (CSEA) established 

a Spectrum Relocation Fund,15 funded from auction proceeds, to cover 

the costs incurred by federal entities that relocate to new frequency 

assignments or transition to alternative technologies.16 OMB administers 

the Spectrum Relocation Fund in consultation with NTIA. CSEA 

streamlined the process by which federal agencies are reimbursed for 

relocation costs and requires FCC to notify NTIA at least 18 months in 

advance of beginning an auction of new licenses of spectrum identified 

for reallocation from federal to nonfederal use. It also requires NTIA to 

provide estimated cost and transition timing data to FCC, Congress, and 

GAO at least 6 months prior to the auction, and requires that auctions 

recover at least 110 percent of these estimated costs. CSEA was 

amended by the Middle Class Tax Relief and Job Creation Act of 2012, 

further easing relocation by (1) allowing agencies to use some of the 

funding for advance planning and system upgrades, (2) extending the 

reimbursement scheme to sharing as well as relocation expenses, and (3) 

requiring agencies to submit transition plans for relocation (or sharing) for 

interagency management review of the costs and timelines associated 

with the relocation.17

The auction of spectrum licenses in the 1710-1755 MHz band was the 

first with relocation costs to take place under CSEA. CSEA designated 

1710-1755 MHz as “eligible frequencies” for which federal relocation 

costs could be paid from the Spectrum Relocation Fund, which is funded 

by the proceeds from the auction of the band.18

 

1547 U.S.C. § 928.

Twelve federal agencies 

previously operated communications systems in this band, including 

16Eligible relocation expenses are those costs incurred by a federal entity to achieve 

comparable capability of systems, regardless of whether that is achieved by relocating to 

a new frequency assignment or using an alternative technology. 47 U.S.C. § 923(g)(3).

17Pub. L. No. 112-96, § 6701(a)(1)(D), 126 Stat. 156, 246-247 (2012), codified at 47 

U.S.C. § 923(g)(3)(A), (B)(ii).

1847 U.S.C. § 923(g)(2).
 

Page 9 GAO-13-472 Spectrum Management

DOD.19 NTIA and FCC jointly reallocated the 1710-1755 MHz band for 

nonfederal use, and FCC designated the spectrum for Advanced Wireless 

Services (AWS).20 In September 2006, FCC concluded the AWS-1 

auction of licenses in the 1710-1755 MHz band.21 In accordance with 

CSEA,22

In addition to the 1710-1755 MHz band, the wireless industry has 

expressed interest in the 1755-1850 MHz band, largely because the band 

offers excellent radio wave propagation, enabling mobile communication 

links.

a portion of the auction proceeds associated with the 1710-1755 

MHz band is currently being used to pay spectrum relocation expenses.

23

 

19The 12 federal agencies with communications systems in the 1710-1755 MHz band 

were the Departments of Agriculture, Defense, Energy, Homeland Security, Housing and 

Urban Development, Interior, Justice, Transportation, Treasury, the National Aeronautics 

and Space Administration, the Tennessee Valley Authority, and the U.S. Postal Service. 

The federal government has studied the feasibility of relocating 

federal agencies from the 1755-1850 MHz band on several occasions. 

For example, in March 2001, NTIA issued a report examining the 

potential to accommodate mobile wireless services in the broader 1710-

1850 MHz band. The report was largely based on input from other federal 

agencies, including a DOD study. NTIA found that unrestricted sharing of 

the 1755-1850 MHz band was not feasible and that considerable 

coordination between industry and DOD would be required before any 

wireless systems could operate alongside federal systems in the band. In 

August 2001, we also found that more analysis was needed to support 

spectrum use decisions in the 1755-1850 MHz band, largely because 

major considerations either were not addressed or were not adequately 

20In the Matter of Amendment of Part 2 of the Commission’s Rules to Allocate Spectrum 

below 3 GHz for Mobile and Fixed Services, 17 FCC Rcd. 23193 (2002) states that AWS 

is the collective term used by FCC “for new and advanced wireless applications, such as 

voice, data, and broadband services provided over a variety of high-speed fixed and 

mobile networks.” 

21The AWS-1 auction included licenses in the 1710-1755 MHz and 2110-2155 MHz 

bands. In August 2008, FCC held a second auction of the AWS-1 licenses that were not

sold in the first auction.

2247 U.S.C. § 928(d)(1) appropriates from the Spectrum Relocation Fund such sums as 

may be required to pay authorized relocation or sharing costs. See also 47 U.S.C. §

928(c). 

23Industry stakeholders have also expressed interest in the 1755-1780 MHz portion of the 

1755-1850 MHz band. Some would like to see the 1755-1780 MHz band paired with the 

2155-2180 MHz band, which FCC must auction by February 22, 2015. 
 

Page 10 GAO-13-472 Spectrum Management

addressed in DOD’s study.24 These considerations included complete 

technical and operation analyses of anticipated spectrum interference; 

cost estimates supporting DOD reimbursement claims; spectrum 

requirements supporting future military operations; programmatic, 

budgeting, and schedule decisions needed to guide analyses of 

alternatives; and potential effects of U.S. reallocation decisions upon 

international agreements and operations. At the end, a decision was 

made to reallocate just the 1710-1755 MHz band to minimize the impact 

on federal capabilities. Activity surrounding the rest of the band (i.e., the 

1755-1850 MHz band) did not resurface until October 2010 when NTIA’s 

Fast Track study identified the band for possible reallocation.25

In June 2010, the administration issued a presidential memorandum titled 

“Unleashing the Wireless Broadband Revolution” directing NTIA to 

collaborate with FCC to make a total of 500 MHz of federal and 

nonfederal spectrum available for wireless broadband within 10 years. 

Responding to the President’s initiative, in October 2010, NTIA published 

a plan and timetable to make available 500 MHz of spectrum for wireless 

broadband. This plan and timetable specified that candidate bands would 

be prioritized for detailed evaluation to determine the feasibility of 

vacating the bands to accommodate wireless services. In January 2011, 

NTIA selected the 1755-1850 MHz band as the priority band for detailed 

evaluation for relocation. DOD and other affected agencies provided NTIA 

their input on the spectrum feasibility study for the 1755-1850 MHz band, 

and NTIA subsequently issued its assessment of the viability for 

accommodating commercial wireless broadband in the band in March 

2012.26

 

24GAO, Defense Spectrum Management: More Analysis Needed to Support Spectrum 

Use Decisions for the 1755-1850 MHz Band,

Most recently, the President’s Council of Advisors on Science and 

Technology published a report in July 2012 recommending specific steps 

to ensure the successful implementation of the President’s 2010 

GAO-01-795 (Washington, D.C.: Aug. 20, 

2001).

25See NTIA, An Assessment of the Near-Term Viability of Accommodating Wireless 

Broadband Systems in the 1675-1710 MHz, 1755-1780 MHz, 3500-3650 MHz, and 4200-

4220 MHz, 4380-4400 MHz Band (Washington, D.C.: October 2010). 

26Most of these inputs are listed at http://www.ntia.doc.gov/report/2012/assessmentviability-accommodating-wireless-broadband-1755-1850-mhz-band. DOD’s inputs have 

not been approved for public release. 
 

Page 11 GAO-13-472 Spectrum Management

memorandum.27 The report found, for example, that clearing and vacating 

federal users from certain bands was not a sustainable basis for spectrum 

policy largely because of the high cost to relocate federal agencies and 

disruption to federal missions. The report recommended new policies to 

promote the sharing of federal spectrum. The sharing approach has been 

questioned by CTIA–The Wireless Association and its members,28 which 

argue that cleared spectrum and an exclusive-use approach to spectrum 

management has enabled the U.S. wireless industry to invest hundreds of 

billions of dollars to deploy mobile broadband networks resulting in 

economic benefits for consumers and businesses.

Actual costs to relocate communications systems for 12 federal agencies 

from the 1710-1755 MHz band have exceeded original estimates by 

about $474 million, or 47 percent, as of March 2013. Table 1 compares 

estimated relocation costs with the actual costs based on funds 

transferred to federal agencies in support of the 1710-1755 MHz band 

relocation effort. OMB and NTIA officials expect the final relocation cost to 

be about $1.5 billion compared with the original estimate of about 

 

27Executive Office of the President, President’s Council of Advisors on Science and 

Technology, Report to the President: Realizing the Full Potential of Government-Held 

Spectrum to Spur Economic Growth (Washington, D.C.: July 2012).

28CTIA-The Wireless Association is an international nonprofit membership organization 

that has represented the wireless communications industry since 1984. Membership in the 

association includes wireless carriers and their suppliers, as well as providers and 

manufacturers of wireless data services and products. 

Some Agencies 

Underestimated 1710-

1755 MHz Band 

Relocation Costs, 

Although Auction 

Revenues Appear to 

Exceed Those Costs

Some Federal Agencies 

Underestimated 

Relocation Costs
 

Page 12 GAO-13-472 Spectrum Management

$1 billion. In addition, NTIA expects agencies to complete the relocation 

effort between 2013 and 2017.29

Table 1: Comparison of Estimated and Actual Relocation Costs for the 1710-1755 

MHz Band (as of March 2013)

Department/agency

Estimated relocation 

costsa Current actual 

relocation costsb

Agriculture $21,578,486 $21,578,486

Defense 355,351,524 289,846,448

Energy 176,820,959 212,200,959

Homeland Security 89,994,832 282,239,840

Housing and Urban Development 21,115 21,115

Interior 25,411,949 31,936,326

Justice 262,821,000 556,424,000

Transportation 58,062,020 58,062,020

Treasury 5,301,000 5,301,000

National Aeronautics and Space 

Administration

740,000 740,000

Tennessee Valley Authority 10,687,857 15,751,057

United States Postal Service 1,761,760 8,333,760

Total 1,008,552,502 1,482,435,011

Source: NTIA, Relocation of Federal Radio Systems from the 1710-1755 MHz Spectrum Band: Sixth Annual Progress Report 

(Washington, D.C.: March 2013).

a

Estimated relocation costs are based on OMB’s 2007 report to Congress. See OMB, Commercial 

Spectrum Enhancement Act: Report to Congress on Agency Plans for Spectrum Relocation Funds 

(Washington, D.C.: Feb. 16, 2007). 

b

Current actual relocation costs are based on the total amount provided to the agencies from the 

Spectrum Relocation Fund. 

The original transfers from the Spectrum Relocation Fund to agency 

accounts were made in March 2007. Subsequently, some agencies 

requested additional monies from the Spectrum Relocation Fund to cover 

relocation expenses. Agencies requesting the largest amounts of 

subsequent transfers include the Department of Justice ($294 million), the 

Department of Homeland Security ($192 million), and the Department of 

 

29As of December 2012, all eligible systems have ceased operations in the 1710-1755 

MHz band. However, some agencies continue to spend Spectrum Relocation Fund 

monies to implement their new communications systems towards achieving comparable 

capability. 
 

Page 13 GAO-13-472 Spectrum Management

Energy ($35 million). Total actual costs for the 1710-1755 MHz transition 

exceeded estimated costs, as reported to Congress in 2007, for many 

reasons, including:

• Unforeseen challenges: Agencies encountered various unforeseen 

challenges when relocating systems out of the 1710-1755 MHz band. 

For example, according to NTIA officials, one agency needed to 

upgrade its radio towers to comply with new standards adopted after 

the towers were built. The agency requested additional monies from 

the Spectrum Relocation Fund to cover the cost of upgrading its 

towers, which had not been part of the agency’s original relocation 

estimate.

• Unique issues posed by specific equipment location: According to 

NTIA, some federal government communications systems are located 

in remote areas. One agency requested additional monies from the 

Spectrum Relocation Fund to use a helicopter to replace a fixed 

microwave system located on a mountain-top, which exceeded its 

original cost estimate.

• Administrative issues associated with transition time frame:

NTIA officials told us that some agencies experienced higher than 

expected labor costs during the transition period, partly to 

accommodate auction winners’ requests to vacate the spectrum as 

quickly as possible.

• Costs associated with achieving comparable capability: Some 

communications systems are unique to federal agencies, making 

them difficult to upgrade or relocate. In some instances, agencies 

were using analog radio systems throughout the 1710-1755 MHz 

band and the digital technology needed to achieve comparable 

capability was not available prior to vacating the band. When the 

technology did become available, some agencies found they needed 

additional funds to procure it, according to OMB officials. For 

example, we previously reported that the Department of Justice 

requested funds exceeding its estimate to develop new technology 

that would operate using the new spectrum and match its current 

capabilities.30

 

30GAO, Assessment of the Explanation That the Department of Justice Provided for Its 

Subsequent Transfer from the Spectrum Relocation Fund (Washington, D.C.: Apr. 23, 

2009). 
 

Page 14 GAO-13-472 Spectrum Management

• Some agencies might not have followed guidance: Some 

agencies may not have properly followed OMB and NTIA guidance in 

preparing their original cost estimates. For instance, Immigration and 

Customs Enforcement (ICE) did not detail its estimated costs by 

equipment, location, systems, or frequency as suggested by NTIA’s 

guidance. Instead, the agency provided a lump sum estimate for its 

spectrum relocation costs. We previously reported that ICE officials 

did not identify a significant number of relocation expenses in the 

agency’s original transfer request, including costs associated with 

additional equipment, offices, and systems, among other items.31

Moreover, according to OMB staff, the agency’s initial estimate was 

based on an inadequate inventory of deployed systems.32

Although 11 of the 12 agencies plan to spend the same amount or more 

than they estimated, DOD expects to complete the 1710-1755 MHz 

transition for about $284 million, or approximately $71 million less than 

the original estimated cost of about $355 million.33

 

31GAO, Assessment of the Explanation That Immigration and Customs Enforcement 

Provided for Its Subsequent Transfer from the Spectrum Relocation Fund, 

DOD officials told us 

that the relocation of systems from the 1710-1755 MHz band has been 

less expensive than originally estimated because it was possible to retune many federal systems to operate in the 1755-1850 MHz band and 

still meet federal mission requirements. DOD’s cost estimates, some 

made as early as 1995, changed over time as officials considered 

different relocation scenarios with differing key assumptions, and their 

thinking evolved about the federal systems that would be affected, 

according to DOD and NTIA officials. Cost estimates to relocate military 

systems from the late 1990s and early 2000s ranged from a low of $38 

million to as much as $1.6 billion, depending on the scenario. For 

example, the $38 million estimate included costs primarily to relocate and 

GAO-08-846R 

(Washington, D.C.: Sept. 8, 2008). 

32We recommended that OMB, in consultation with NTIA, establish written criteria for 

agencies to follow when submitting supplemental requests for spectrum relocation 

funding, communicate these criteria to each of the affected federal entities, and require 

that these criteria be followed before OMB approves subsequent requests. OMB 

implemented this recommendation by developing guidance applicable to agencies 

receiving funds from the Spectrum Relocation Fund. See GAO-08-846R. 

33To date, the Department of the Navy has initiated the process to return about $65 million 

to the Spectrum Relocation Fund, as its relocation costs may end up being less than 

expected. The Department of the Navy is still in the process of finalizing relocation of its 

systems, and the exact amount of any money that may be returned will not be known until 

the relocation is complete. 
 

Page 15 GAO-13-472 Spectrum Management

re-tune fixed microwave systems from the 1710-1755 MHz band into the 

adjacent 1755-1850 MHz band, and it assumed exclusion zones—

geographic areas where commercial licensees could not operate—around 

16 DOD sites to prevent interference from commercial users. DOD also 

estimated a cost of an additional $100 million if precision guided 

munitions operations needed to be relocated from the 1755-1850 MHz 

band.34 Subsequently, in 2001, NTIA reported additional cost estimates 

reflecting several other options under consideration.35

Both NTIA and OMB are taking steps to ensure that agencies improve 

their cost estimates for a future relocation from the 1755-1850 MHz band. 

For example, according to NTIA and OMB officials, the agencies 

prepared a cost estimation template and guidelines for reimbursable 

costs as part of the process to estimate relocation costs for the 1755-

1850 MHz band. The Middle Class Tax Relief and Job Creation Act of 

2012 expanded the types of costs for which federal agencies can receive 

payments from the Spectrum Relocation Fund. The act permits agencies 

to receive funds for costs associated with planning for FCC auctions and 

studies or analyses conducted in connection with relocation or sharing of 

spectrum, including coordination with auction winners.

One option, which 

was not evaluated by DOD, included a preliminary cost figure of $1.6 

billion. This estimate was based on eliminating some of the 16 exclusion 

zones around DOD sites and, therefore, relocating additional systems 

that were not included in the original estimate of $38-138 million, 

according to NTIA. In December 2006, NTIA reported that DOD’s 

estimate to relocate systems would be about $355.4 million. This estimate 

reflected a new set of assumptions, such as maintaining exclusion zones 

at 2 of the 16 DOD sites and relocating fixed microwave systems to the 

1755-1850 MHz portion of the band or to other federal bands.

36

 

34NTIA, Assessment of Electromagnetic Spectrum Reallocation: Response to Title X of 

the National Defense Authorization Act for Fiscal Year 2000, NTIA-01-44 (Washington, 

D.C.: January 2001).

In November 

2012, OMB issued guidance to federal agencies to clarify allowable preauction costs and other requirements that are eligible to receive 

35NTIA, The Potential for Accommodating Third Generation Mobile Systems in the 1710-

1850 MHz Band: Federal Operations, Relocation Costs, and Operation Impacts, NTIA-01-

46 (Washington, D.C.: March 2001). 

36Pub. L. No. 112-96, § 6701(a)(1)(D), 126 Stat. 156, 246-247 (2012), codified at 47 

U.S.C. § 923(g)(3)(A), (B)(ii).
 

Page 16 GAO-13-472 Spectrum Management

payments from the Spectrum Relocation Fund.37 NTIA and OMB officials 

stated that they are optimistic that by providing pre-auction planning funds 

to agencies, future cost estimates will improve.

The Advanced Wireless Services auction of the 1710-1755 MHz band 

raised almost $6.9 billion in gross winning bids from the sale of licenses 

to use these frequencies.38 Our analysis of auction revenue compared to 

actual relocation costs suggests that the auction of the 1710-1755 MHz 

band raised $5.4 billion for the U.S. Treasury. This number reflects the 

difference between the $6.9 billion auction revenue and the approximately 

$1.5 billion estimated final federal relocation cost. As mentioned above, 

NTIA reports that it expects agencies to complete the relocation effort 

between 2013 and 2017; therefore the final net revenue amount may 

change. For example, some agencies have returned or plan to return 

excess relocation funds to the Spectrum Relocation Fund.

 

37OMB, Guidance for Agencies on Transfers from the Spectrum Relocation Fund for 

Certain Pre-Auction Costs, M-13-01 (Washington, D.C.: Nov. 20, 2012).

38Although the AWS-1 auction of spectrum licenses raised $13.7 billion, the portion of the 

auction proceeds associated with the transferred government spectrum amounted to 

almost $6.9 billion and was deposited in the Spectrum Relocation Fund. 

Auction Revenues Appear 

to Exceed Agency 

Relocation Costs
 

Page 17 GAO-13-472 Spectrum Management

To prepare the preliminary cost estimate portion of its study to determine 

the feasibility of relocating DOD’s 11 major radio systems from the 1755-

1850 MHz band, DOD officials said the agency implemented the following 

methodology:

• DOD’s Cost Assessment and Program Evaluation (CAPE) group39

• Certified cost estimators at each of the services’ Cost Centers worked 

closely with the various program offices to collect the necessary 

technical and cost data. The cost estimators compiled and reviewed 

the program data, identified the appropriate program content affected 

by each system’s relocation, developed cost estimates under the 

given constraints and assumptions, and internally reviewed the 

estimates consistent with their standard practices before providing 

them to CAPE to include in the overall estimate.

led 

the effort and provided guidance to management at the respective 

military services regarding the data needed to support each system’s 

relocation cost estimate and how they should be gathered to maintain 

consistency across the services. The guidance used by CAPE was 

based on guidance and assumptions provided by NTIA.

• CAPE staff reviewed the services’ estimates to ensure they adhered 

to the provided guidelines for accuracy and consistency, and obtained 

DOD management approval on its practices and findings.

 

39The CAPE group is an internal cost-auditing department that provides cost guidance, 

methods, and tools to DOD employees for estimating costs. 

DOD’s Preliminary 

Cost Estimate 

Substantially or 

Partially Met GAO’s 

Identified Best 

Practices, but 

Changes in 

Assumptions May 

Affect Future Costs

DOD’s Preliminary Cost 

Estimate for Relocating 

from the 1755-1850 MHz 

Band Substantially or 

Partially Met GAO’s 

Identified Best Practices
 

Page 18 GAO-13-472 Spectrum Management

According to DOD officials, CAPE based this methodology on the cost 

estimation best practices it customarily employs, revising those practices 

to suit the study requirements as outlined by NTIA.

We reviewed DOD’s preliminary cost estimation methodology and 

evaluated it against GAO’s Cost Estimating and Assessment Guide (Cost 

Guide), which also identifies cost estimating best practices, including 

those used throughout the federal government and industry. The best 

practices identified in the Cost Guide help ensure that cost estimates are 

comprehensive, well-documented, accurate, and credible. These 

characteristics of cost estimates help minimize the risk of cost overruns, 

missed deadlines, and unmet performance targets:

• A comprehensive cost estimate ensures that costs are neither omitted 

nor double counted.

• A well-documented estimate is thoroughly documented, including 

source data and significance, clearly detailed calculations and results, 

and explanations for choosing a particular method or reference.

• An accurate cost estimate is unbiased, not overly conservative or 

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

• A credible estimate discusses any limitations of the analysis from 

uncertainty or biases surrounding data or assumptions.

When applying GAO’s identified best practices to DOD’s methodology, 

we took into account that DOD officials developed the preliminary cost 

estimate for relocation as a less rigorous, “rough order of magnitude” cost 

estimate,40

When we reviewed DOD’s preliminary cost estimation methodology and 

evaluated it against the Cost Guide’s best practices, we found that DOD’s 

methodology substantially met the comprehensive and well-documented 

not a budget-quality cost estimate. The nature of a roughorder-of-magnitude estimate means that it is not as robust as a detailed, 

budget quality life-cycle estimate and its results should not be considered 

or used with the same level of confidence. Because of this, we performed 

a high-level analysis of DOD’s preliminary cost estimate and 

methodology, and did not review all supporting data and analysis.

 

40The rough-order-of-magnitude estimate is typically developed to support “what-if” 

analyses and is helpful in examining differences in high-level variation alternatives to see 

which are most feasible. Because it is developed from limited data and in a short time, it 

should never be considered a budget-quality cost estimate. 
 

Page 19 GAO-13-472 Spectrum Management

characteristics of reliable cost estimates, and partially met the accurate 

and credible characteristics, as shown in table 2.

Table 2: Summary Assessment of DOD Spectrum Relocation Cost Estimate Compared to GAO-Identified Best Practices

Characteristic Best practices supporting the characteristic GAO’s assessmenta of DOD’s practices

Comprehensive

• Estimate includes all costs for the respective 

programs’ entire life cycles, completely 

defines the programs, and is technically 

reasonable.

• Listing of discrete tasks required to relocate 

systems (i.e., “work breakdown structure”) is 

product-oriented and at an appropriate level 

of detail to ensure cost elements are neither 

omitted nor double-counted.

• All cost-influencing ground rules and 

assumptions are documented.

Substantially met

• Estimates contributing to the report include all costs for 

the respective programs’ entire life cycles including 

development, production, and maintenance and 

disposal; define the programs; and are technically 

reasonable.

• Standardized, product-oriented work breakdown 

structures break out summary costs at an appropriate 

level of detail to ensure cost elements are neither 

omitted nor double-counted; however, not all of the 

programs included a documented work breakdown 

structure. 

• Overarching, cost-influencing assumptions that applied 

to all programs included the schedule for relocating, the 

bands to be vacated, and inflation rates used; however, 

not all the individual programs included in the study had 

evidence of cost-influencing ground rules and 

assumptions.

Well-documented 

• Documentation discusses the technical 

baseline description; the baseline data are 

consistent with the estimate.

• Documentation captures source data, their 

reliability, and how they were normalized.

• Documentation describes in sufficient detail 

the calculations performed and the estimating 

methodology used to derive element’s costs.

• Documentation describes how the estimate 

was developed so that a cost analyst

unfamiliar with the program could understand 

what was done and replicate the estimate.

• Documentation provides evidence that the 

cost estimate was reviewed and accepted by 

management.

Substantially met

• Documentation discusses the technical baseline 

description; the baseline data are consistent with the 

estimate.

• Documentation captures varying levels of detail on 

source data consistent with the magnitude of each 

system’s relocation cost (i.e., systems with higher 

estimated relocation costs are supported with a greater 

level of detail).

• Documentation describes with varying levels of detail the 

calculations performed and the estimation methodology 

used; some documentation was not sufficient.

• Analysts at each of the service’s Cost Centers 

conducted sufficiency reviews of the cost estimates from 

the program offices. Documentation for the majority of 

programs was sufficient such that an analyst unfamiliar 

with the program could understand and replicate what 

was done, but some programs did not have detailed data 

and documentation of the program cost estimates.

• Relocation cost estimates were reviewed and accepted 

by management.
 

Page 20 GAO-13-472 Spectrum Management

Characteristic Best practices supporting the characteristic GAO’s assessmenta of DOD’s practices

Accurate 

• Estimate results are unbiased, not overly 

conservative or optimistic, and are based on 

an assessment of most likely costs.

• Estimate has been adjusted properly for 

inflation.

• Estimate contains few, if any, minor errors.

• Estimate is based on a historical record of 

cost estimating and actual experiences from 

other comparable programs.

Partially met

• No confidence level was specifically stated in DOD’s 

study to determine if the costs are the most likely costs.b

• The appropriate inflation rates (OSD 2012 rates) are 

applied properly. Estimate is properly adjusted and 

presented in then-year and base-year 2011 dollars.

• No calculation errors were apparent.

• Estimated costs agree with the historical relocation cost 

estimate for this band, which DOD compiled in 2001.c

Credible

• Estimate’s sensitivity analysis identifies a 

range of possible costs based on varying 

major assumptions, parameters, and data 

inputs.

• Risk and uncertainty analyses quantify 

imperfectly understood risks and identify the 

effects of changing cost-driver assumptions 

and factors.

• Major cost elements were crosschecked to 

see whether results are similar. 

Partially met

• A sensitivity analysis to identify the range of possible 

costs at the summary level was not performed by CAPE, 

although some individual programs completed sensitivity 

analyses on the range of possible costs.

• Risk assessments were completed for only a few of the 

programs, and not at all by CAPE at the summary level.d

Risk assessments are needed because the cost 

estimate is highly dependent on key assumptions, such 

as the primary band for each system’s relocation. 

However, due to time and resource constraints, no 

attempt was made to estimate costs to relocate to 

alternative bands.

• Major cost elements were crosschecked with similar 

results. 

Source: GAO Analysis of DOD feasibility study for the 1755-1850 MHz band relocation.

a

GAO’s Cost Guide includes five levels of compliance with its best practices. Not Met: Provided no 

evidence that satisfies any of the characteristic. Minimally Met: Provided evidence that satisfies a 

small portion of the characteristic. Partially Met: Provided evidence that satisfies about half of the 

characteristic. Substantially Met: Provided evidence that satisfies a large portion of the characteristic. 

Fully Met: Provided complete evidence that satisfies the entire characteristic. 

b

Showing that the costs are the most likely costs is required to fully or substantially meet this 

characteristic. 

c

CAPE compared the overall cost estimate using constant fiscal year 2011 dollars with DOD’s 2001 

cost estimate for relocating from the same band (Department of Defense, Investigation of the 

Feasibility of Accommodating the International Mobile Telecommunications (IMT) 2000 Within the 

1755-1850 MHz Band (February 9, 2001)), adjusting for changes in the types and quantities of 

systems, and demonstrated that the two estimates are within 5 percent of each other. 

d

Risk assessments and sensitivity analyses are required on all projects and at the summary level to 

fully meet this characteristic and on a majority of projects to substantially meet this characteristic. A 

risk assessment identifies the factors underlying an estimate that might be uncertain and the risks 

they pose to the estimate. A sensitivity analysis examines how changes to key assumptions and 

inputs affect the estimate. 

Overall, we found that DOD’s cost estimate was consistent with the 

purpose of the feasibility study, which was to inform the decision making 

process to reallocate 500 MHz of spectrum for commercial wireless 

broadband use. Additionally, we found that DOD’s preliminary cost-
 

Page 21 GAO-13-472 Spectrum Management

estimation methodology substantially met both the comprehensive and 

well-documented characteristics. As noted in the table above, we 

observed that DOD’s estimate included complete information about 

systems’ life cycles and was generally well-documented. However, these 

characteristics were not fully met because we found that information on 

the tasks required to relocate some systems was incomplete, and that 

documentation for some programs was not sufficient to support a roughorder-of-magnitude estimate. We also determined that DOD’s preliminary 

cost-estimation methodology partially met the accurate and credible 

characteristics. We found that DOD properly applied appropriate inflation 

rates and made no apparent calculation errors, and that the estimated 

costs agree with DOD’s prior relocation cost estimate for this band 

conducted in 2001. However, DOD did not fully or substantially meet the 

accurate and credible characteristics because it was not clear if the 

estimate considered the most likely costs and because some sensitivity 

analyses and risk assessments were only completed at the program level 

for some programs, and not at all at the summary level.

Even though DOD’s preliminary cost estimate substantially met some of 

our best practices, as the assumptions supporting the estimate change 

over time, costs may also change. According to DOD officials, any 

change to key assumptions about the bands to which systems would 

move and the relocation start date could substantially change relocation 

costs. Because decisions about the spectrum bands to which the various 

systems would be reassigned and the time frame for relocation have not 

been made yet, DOD based its current estimate on the most likely 

assumptions, provided by NTIA, some of which have already been proven 

inaccurate or are still undetermined. For example:

• Relocation bands: Decisions about which comparable or alternate 

spectrum bands federal agencies, including DOD, should relocate to 

are still unresolved. According to DOD officials, equipment relocation 

costs vary significantly depending on the relocation band’s proximity 

to the current band. Moving to bands further away than the assumed 

relocation bands could increase costs relative to moving to closer 

bands with similar technical characteristics. In addition, congestion, in 

both the 1755-1850 MHz band and some of the potential alternate 

spectrum bands to which federal systems might be moved, 

complicates relocation planning. According to DOD officials, many of 

the federal radio systems relocated from the 1710-1755 MHz band 

were simply re-tuned or compressed into the 1755-1850 MHz band, 

adding to the complexity of systems and equipment requiring 

As the Assumptions 

Supporting DOD’s Cost 

Estimate for Relocating 

from the 1755-1850 MHz 

Band Change, Costs May 

Also Change
 

Page 22 GAO-13-472 Spectrum Management

relocation from this band since 2001. Also, DOD officials said that 

some of the potential spectrum bands to which DOD’s systems could 

be relocated are themselves either already congested or the systems 

are incompatible unless other actions are also taken. For example, 

cost estimates for several of DOD’s systems assumed that these 

systems would be relocated into the 2025-2110 MHz band, and 

operate within this band on a primary basis. However, this band is 

currently allocated to commercial electronic news gathering systems 

and other commercial and federal systems, and while the band is not 

currently congested, it does not support compatible coexistence 

between DOD systems and commercial electronic news gathering 

systems. To accommodate military systems within this band, FCC 

would need to withdraw this spectrum from commercial use to allow 

NTIA to provide DOD primary status within this band, or FCC would 

have to otherwise ensure that commercial systems operate on a noninterference basis with military systems. FCC has not initiated a 

rulemaking procedure to begin such processes.

• Relocation start date: DOD’s cost estimate assumed relocation 

would begin in fiscal year 2013, but no auction has been approved, so 

relocation efforts have not begun. According to DOD officials, a 

change in the start date creates uncertainty in the cost estimate 

because new equipment and systems continue to be deployed in and 

designed for this band, and older systems are retired. This changes 

the overall profile of systems in the band, a change that can alter the 

costs of relocation. For example, a major driver of the cost increase 

between DOD’s 2001 and 2011 relocation estimates for the 1755-

1850 MHz band was the large increase in the use of the band, 

including unmanned aerial systems. DOD deployed these systems 

very little in 2001, but their numbers had increased substantially by 

2011. Conversely, equipment near the end of its life cycle when 

DOD’s 2011 relocation cost estimate was completed may be retired or 

replaced outside of relocation efforts, which could decrease relocation 

costs.

• Inflation: DOD appropriately used 2012 inflation figures in its 

estimate, assuming that relocation would begin in fiscal year 2013. As 

more time elapses before the auction occurs, the effect of inflation will 

increase the relocation costs each year.

According to DOD, the preliminary cost estimate is not as robust as a 

detailed, budget-quality lifecycle estimate. A budget-quality estimate is 

based on more fully formed assumptions for specific programs. DOD 

officials said that for a spectrum relocation effort, a detailed, budget-
 

Page 23 GAO-13-472 Spectrum Management

quality cost estimate would normally be done during the transitionplanning phase once a spectrum auction has been approved and would 

be based on the requirements for the specific auction and relocation 

decisions.

No official government revenue forecast has been prepared for a potential 

auction of 1755-1850 MHz band licenses, but some estimates might be 

prepared once there is a greater likelihood of an auction. Officials we 

spoke with at CBO, FCC, NTIA, and OMB confirmed that none of these 

agencies has produced a revenue forecast thus far. Officials at these 

agencies knowledgeable about estimating spectrum-license auction 

revenue said that because the value of licensed spectrum varies greatly 

over time and the information on factors that might influence the spectrum

auction revenues is not yet available, it is too early to produce meaningful 

forecasts for a potential auction of the 1755-1850 MHz band. Moreover, 

CBO only provides written estimates of potential receipts when a 

congressional committee reports legislation invoking FCC auctions. OMB 

would estimate receipts and relocation costs as part of the President’s 

Budget; OMB analysts would use relocation cost information from NTIA to 

complete OMB’s estimate of receipts. The potential for large differences 

between CBO and OMB forecasts exist, as well. For example, in the past, 

CBO and OMB have produced very different estimates of potential FCC 

auction receipts at approximately the same time with access to the same 

No Government 

Revenue Forecasts 

Exist for a Potential 

Auction of the 1755-

1850 MHz Band, and a 

Variety of Factors 

Could Influence 

Auction Revenues

Federal Agencies Have Not 

Produced a Revenue 

Forecast for the 1755-1850 

MHz Band
 

Page 24 GAO-13-472 Spectrum Management

data, underscoring how differing assumptions can lead to different 

results.41

Although no official government revenue forecast exists, an economist 

with the Brattle Group, an economic consulting firm, published a revenue 

forecast in 2011 for a potential auction of the 1755-1850 MHz band that 

forecasted revenues of $19.4 billion for the band.42 We did not evaluate 

the accuracy of this revenue estimate. Like all forecasts, the Brattle 

Group study was based on certain assumptions. For example, it assumed 

that the band would generally be cleared of federal users. It also 

assumed the AWS-1 average nationwide price of $1.03 per “MHz-pop” as 

a baseline price for spectrum allocated to wireless broadband services.43

• Increase in the quantity of spectrum using elasticity of demand. As the 

supply of spectrum for commercial wireless broadband services 

increases, the price and value of spectrum is expected to fall. The 

elasticity of demand is used to make adjustments for the increased 

supply of spectrum.

In addition, the study adjusts the price of spectrum based on the following 

considerations:

44

• Differences in capacity and quality of spectrum using value weights. 

The study assigns value weights to different bands of spectrum 

compared to the quality of the AWS-1 band. A lower value weight is 

given for spectrum that is not symmetrically paired, for example, 

 

41In 1997, OMB included in the President’s budget request for fiscal year 1998 an 

estimate that spectrum auctions, including proposals that were subject to policy changes, 

would raise $36.1 billion between 1998 and 2002. CBO estimated that the same basic 

policy proposals would raise roughly two-thirds as much, $24.3 billion, over the same 

period. CBO, Where Do We Go From Here? The FCC Auctions And The Future of Radio 

Spectrum Management (Washington, D.C.: April 1997). Actual winning bids for spectrum 

auctions between fiscal years 1998 and 2002 were $19.5 billion. 

42Coleman Bazelon, The Brattle Group, Inc., Expected Receipts From Proposed Spectrum 

Auctions (Washington, D.C.: July 28, 2011).

43The unit price of licensed spectrum is typically expressed in terms of dollars per “MHzpop,” where MHz-pop is the product of total MHz of a band and population covered by the 

region of a license. The $1.03 price represents the current price for AWS-1 spectrum 

based on the original AWS-1 auction price adjusted for inflation using the SpecEx 

Spectrum Index. 

44According to the study, wireless broadband spectrum is generally thought to have a 

price elasticity of around -1.2, which implies that a 1 percent increase in the base supply 

of spectrum should result in a 1.2 percent decrease in its price.
 

Page 25 GAO-13-472 Spectrum Management

because traditional, two-way communications, such as mobile phone 

services, are typically provided over paired bands of spectrum.45

The study also assumes that the 1755-1780 MHz portion of the band is 

paired with the 2155-2180 MHz band, which various industry 

stakeholders currently support. For spectrum services that require twoway communications, pairing bands allows them to be used more 

efficiently by diminishing interference from incompatible adjacent 

operations.

Similarly, a greater value weight is given to bands of spectrum with no 

restrictions on use, or encumbrances. Fewer restrictions would 

increase the capacity or the types of services for a given spectrum 

band.

46 In addition, the study assumed the 95 MHz of spectrum

between 1755 and 1850 MHz would be auctioned as part of a total of 470 

MHz of spectrum included in six auctions sequenced 18 months apart 

and spread over 9 years with total net receipts of $64 billion. Thus, the 

forecast also took into account when the spectrum would be reallocated 

for commercial services.

Like all goods, the price of licensed spectrum, and ultimately the auction 

revenue, is determined by supply and demand. This fundamental 

economic concept helps to explain how the price of licensed spectrum 

could change depending on how much spectrum is available now and in 

the future, and how much licensed spectrum is demanded by the wireless 

industry for broadband applications. Government agencies can influence 

the supply of spectrum available for licensing and the characteristics of 

those licenses, whereas expectations about profitability determine 

demand for spectrum in the marketplace.47

 

45With a paired spectrum band, a portion of the frequencies (usually half) are used to 

transmit from a base station to a mobile device, and the remainder of the band is used for 

mobile to base station transmissions. Newer technologies now allow for the use of 

unpaired spectrum for two-way communications. 

46See Bazelon, The Economic Basis of Spectrum Value.

47The value of a spectrum license and hence the future price of licensed spectrum at a 

given auction depends on many factors, ranging from the propagation characteristics of 

the particular spectrum to the general investment climate and the existence of applicable 

technology infrastructure. For the purposes of this discussion, we focus only on those 

supply and demand factors directly influenced by government decisions or wireless 

companies. 

A Variety of Factors 

Ultimately Influence 

Auction Revenue
 

Page 26 GAO-13-472 Spectrum Management

Supply. FCC and NTIA, with direction from Congress and the President, 

jointly influence the amount of spectrum allocated for federal and 

nonfederal users, including the amount to be shared by federal and 

nonfederal users. In 2010, the President directed NTIA to work with FCC 

to make 500 MHz of spectrum available for use by commercial broadband 

services within 10 years. This represents a significant increase in the 

supply of spectrum available for licensing in the marketplace. As with all 

economic goods, with all other things being equal, the price and value of 

spectrum licenses are expected to fall as additional supply is introduced. 

However, at this time, the answers to key questions about the reallocation 

of the 1755-1850 MHz band are unknown. Expectations about exactly 

how much spectrum is available for licensing now and how much will be 

available in the future would influence how much wireless companies 

would be willing to pay for spectrum licensed today.

Demand. The expected, potential profitability of a spectrum license 

influences the level of demand for it. As with all assets, companies base 

their capital investment decisions on the expected net return, or profit, 

over time of their use. The same holds true for spectrum. Currently, the 

demand for licensed spectrum is increasing, and a primary driver of this 

increased demand is the significant growth in the use of commercialwireless broadband services, including third and fourth generation 

technologies that are increasingly used for smart phones and tablet 

computers. Below are some of the factors that would influence the 

demand for licensed spectrum:

• Clearing versus Sharing: Spectrum is more valuable, and companies 

will pay more to license it, if it is entirely cleared of incumbent federal 

users, giving them sole use of licensed spectrum; spectrum licenses 

are less valuable if access must be shared. Sharing could potentially 

have a big impact on the price of spectrum licenses, especially if a 

sharing agreement does not guarantee service when the licensee 

would need it most. For example, knowing in advance that service 

would be unavailable once a month at 3 a.m. may not significantly 

influence price, but if the times when the service will be unavailable 

are unknown, the effect on price could be significant. In 2012, the 

President’s Council of Advisors on Science and Technology 

advocated that sharing between federal and commercial users 

become the new norm for spectrum management, especially given 

the high cost and lengthy time it takes to relocate federal users and 

the disruptions to agencies’ missions.
 

Page 27 GAO-13-472 Spectrum Management

• Certainty and Timing: Another factor that affects the value of licensed 

spectrum is the certainty about when it becomes available. Seven 

years after the auction of the 1710-1755 MHz band, federal agencies 

are still relocating systems. According to an economist with whom we 

met, one lesson from the 1710-1755 MHz relocation effort is that 

uncertainty about the time frame for availability reduces the value of 

the spectrum. Any increase in the probability that the spectrum would 

not be cleared on time would have a negative impact on the price 

companies are willing to pay to use it. As such, the estimated 10-year 

timeframe to clear federal users from the entire 1755-1850 MHz band, 

and potential uncertainty around that time frame, could negatively 

influence demand for the spectrum. The 2012 amendments to the 

CSEA include changes designed to reduce this uncertainty by 

requiring federal agencies that will be relocating (or sharing spectrum) 

to submit transition plans with timelines for specific geographic 

locations, with interagency review of those plans aimed at ensuring 

timely relocation (or sharing) arrangements.

• Available Wireless Services: Innovation in the wireless broadband 

market is expected to continue to drive demand for wireless services. 

For example, demand continues to increase for smart phones and 

tablets as new services are introduced in the marketplace. These 

devices can connect to the Internet through regular cellular service 

using commercial spectrum, or they can use publicly available 

(unlicensed) spectrum via Wi-Fi networks to access the Internet.48

We provided a draft of this report to the Department of Commerce 

(Commerce), DOD, FCC, and OMB for review and comment. FCC agreed 

with the report’s findings, and Commerce, DOD, and FCC provided 

technical comments that we incorporated as appropriate. FCC’s written 

comments appear in appendix II. OMB did not provide comments. 

The value of the spectrum, therefore, is determined by continued 

strong development of and demand for wireless services and devices, 

and the profits that can be realized from them.

We are sending copies of this report to the Secretary of Commerce, the 

Secretary of Defense, the Chairman of the Federal Communications 

Commission, the Director of the Office of Management and Budget, and 

 

48Wi-Fi networks can permit multiple computing devices in each discrete location to share 

a single wired connection to the Internet, thus efficiently sharing spectrum. 

Agency Comments
 

Page 28 GAO-13-472 Spectrum Management

the appropriate congressional committees. In addition, the report will be 

available at no charge on GAO’s website at http://www.gao.gov. 

If you or members of your staff have any questions about this report, 

please contact me at (202) 512-2834 or goldsteinm@gao.gov. Contact 

points for our Offices of Congressional Relations and Public Affairs may 

be found on the last page of this report. Major contributors to this report 

are listed in appendix III.

Mark L. Goldstein

Director

Physical Infrastructure Issues
Appendix I: Objectives, Scope, and 

Methodology

Page 29 GAO-13-472 Spectrum Management

The objectives of this report were to examine (1) the differences, if any, 

between estimated and actual federal relocation costs and auction 

revenues from the 1710-1755 MHz band; (2) the extent to which the 

Department of Defense (DOD) followed best practices to prepare its 

preliminary cost estimate for vacating the 1755-1850 MHz band, and any 

limitations of its analysis; and (3) what government or industry revenue 

forecasts for the 1755-1850 MHz band auction exist, if any, and what 

factors, if any, could influence actual auction revenue.

To examine the differences, if any, between estimated and actual federal 

relocation costs and auction revenues from the 1710-1755 MHz band, we 

reviewed spectrum auction data published by the Federal 

Communications Commission (FCC) and federal relocation cost data 

from the National Telecommunication and Information Administration’s 

(NTIA) annual 1710-1755 MHz band relocation progress reports, 

published yearly since 2008.1 We narrowed our review of past spectrum 

auctions to the 1710-1755 MHz relocation after reviewing FCC auction 

data and NTIA reports describing other spectrum relocations and auctions 

involving federal agencies, and interviews with knowledgeable FCC, 

NTIA, Office of Management and Budget (OMB), and Congressional 

Budget Office (CBO) officials. The Advanced Wireless Services-1 (AWS1) auction involving the 1710-1755 MHz band is the only spectrum 

auction involving federal agencies with significant, known relocation 

costs.2

To determine the extent to which DOD followed best practices to prepare 

its preliminary cost estimate for vacating the 1755-1850 MHz band, we 

In addition, it is the only relocation involving DOD radio 

communication systems. To assess the reliability of FCC auction and 

NTIA relocation cost data, we reviewed documentation related to the 

data; compared it to other sources, including other government reports; 

and discussed the data with FCC and NTIA officials. We did not evaluate 

the accuracy of individual agencies’ relocation cost data, as this was 

outside the scope of our review. Based on this review, we determined that 

the FCC and NTIA data were sufficiently reliable for the purposes of our 

report.

 

1

See, for example, NTIA, Relocation of Federal Radio Systems from the 1710-1755 MHz 

Spectrum Band; Sixth Annual Progress Report (Washington, D.C.: March 2013). 

2

There have been other auctions of federally allocated spectrum involving the relocation of 

federal government agencies, as noted previously. 

Appendix I: Objectives, Scope, and 

Methodology 
Appendix I: Objectives, Scope, and 

Methodology

Page 30 GAO-13-472 Spectrum Management

assessed DOD’s preliminary cost estimate against the best practices in 

GAO’s Cost Estimating and Assessment Guide (Cost Guide), which has 

been used to evaluate cost estimates across the government.3

To identify any government or industry revenue forecasts from a future 

auction of licenses in the 1755-1850 MHz band, we reviewed 

government, industry, and public policy reports, and interviewed officials 

from CBO, FCC, NTIA, and OMB. We interviewed an economist at the 

Brattle Group, an economic-consulting firm, who published a paper 

describing expected receipts from a future auction of 1755-1850 MHz 

band licenses.

These 

best practices help ensure cost estimates compiled at different stages in 

the cost estimating process are comprehensive, well-documented 

accurate, and credible. To develop our assessment, we interviewed DOD 

officials, including in the agency’s Cost Assessment and Program 

Evaluation (CAPE) group that led the cost estimation effort, regarding 

their data collection and cost estimation methodologies and the findings 

reported in DOD’s feasibility study. We also reviewed electronic source 

documentation supporting the estimate with a CAPE official. After 

completing this review, a GAO cost analyst developed an assessment 

using our 5-point scale (not met, minimally met, partially met, substantially 

met, and met) and a second analyst verified the assessment. DOD’s 

preliminary cost estimate was a rough-order-of-magnitude estimate; 

consequently, it did not contain all the information expected of a 

complete, budget-quality cost estimate. Therefore, we performed a highlevel analysis to determine whether DOD’s reported estimated costs 

considered all the potential factors that could influence those relocation 

costs. To identify any limitations affecting DOD’s estimate, we interviewed 

DOD officials responsible for developing the department’s preliminary 

cost estimate. We also interviewed NTIA and OMB officials 

knowledgeable about the intended purpose of the estimate to discuss 

how the estimate should be used and any factors that would affect the 

reliability of the estimate.

4

 

3

To determine any factors that would affect the price of 

spectrum licenses, we analyzed academic, government, and public policy 

literature on spectrum valuation. We narrowed our search to those reports 

or papers specifically mentioning (1) spectrum auctions involving the 

relocation of federal agencies, (2) spectrum valuation and revenues from 

GAO-09-3SP. 

4

Bazelon, Expected Receipts From Proposed Spectrum Auctions (July 2011).
Appendix I: Objectives, Scope, and 

Methodology

Page 31 GAO-13-472 Spectrum Management

the sale of spectrum licenses, and (3) relocation costs. We discussed 

factors affecting spectrum auction revenue with CBO and OMB officials, 

industry and policy experts, and obtained input from CTIA—The Wireless 

Association, the association representing the wireless industry.

We conducted this performance audit from September 2012 to May 2013 

in accordance with generally accepted government auditing standards. 

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

sufficient appropriate evidence and provide a reasonable basis for our 

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

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives.
Appendix II: Comments from the Federal 

Communications Commission 

Page 32 GAO-13-472 Spectrum Management

Appendix II: Comments from the Federal 

Communications Commission
Appendix III: GAO Contact and Staff 

Acknowledgments

Page 33 GAO-13-472 Spectrum Management

Mark L. Goldstein, (202) 512-2834 or goldsteinm@gao.gov

In addition to the contact named above, Michael Clements, Assistant 

Director; Stephen Brown; Jonathan Carver; Leia Dickerson; Jennifer 

Echard; Emile Ettedgui; Colin Fallon; Bert Japikse; Elke Kolodinski; 

Joshua Ormond; Jay Tallon; and Elizabeth Wood made key contributions 

to this report.

Appendix III: GAO Contact and Staff 

Acknowledgments 

GAO Contact

Staff 

Acknowledgments

(543315)
The Government Accountability Office, the audit, evaluation, and 

investigative arm of Congress, exists to support Congress in meeting its 

constitutional responsibilities and to help improve the performance and 

accountability of the federal government for the American people. GAO 

examines the use of public funds; evaluates federal programs and 

policies; and provides analyses, recommendations, and other assistance 

to help Congress make informed oversight, policy, and funding decisions. 

GAO’s commitment to good government is reflected in its core values of 

accountability, integrity, and reliability.

The fastest and easiest way to obtain copies of GAO documents at no 

cost is through GAO’s website (http://www.gao.gov). Each weekday 

afternoon, GAO posts on its website newly released reports, testimony, 

and correspondence. To have GAO e-mail you a list of newly posted 

products, go to http://www.gao.gov and select “E-mail Updates.”

The price of each GAO publication reflects GAO’s actual cost of 

production and distribution and depends on the number of pages in the 

publication and whether the publication is printed in color or black and 

white. Pricing and ordering information is posted on GAO’s website, 

http://www.gao.gov/ordering.htm. 

Place orders by calling (202) 512-6000, toll free (866) 801-7077, or 

TDD (202) 512-2537. 

Orders may be paid for using American Express, Discover Card, 

MasterCard, Visa, check, or money order. Call for additional information.

Connect with GAO on Facebook, Flickr, Twitter, and YouTube. 

Subscribe to our RSS Feeds or E-mail Updates. Listen to our Podcasts. 

Visit GAO on the web at www.gao.gov. 

Contact:

Website: http://www.gao.gov/fraudnet/fraudnet.htm

E-mail: fraudnet@gao.gov

Automated answering system: (800) 424-5454 or (202) 512-7470

Katherine Siggerud, Managing Director, siggerudk@gao.gov, (202) 512-

4400, U.S. Government Accountability Office, 441 G Street NW, Room 

7125, Washington, DC 20548

Chuck Young, Managing Director, youngc1@gao.gov, (202) 512-4800

U.S. Government Accountability Office, 441 G Street NW, Room 7149 

Washington, DC 20548

GAO’s Mission

Obtaining Copies of 

GAO Reports and 

Testimony

Order by Phone

Connect with GAO

To Report Fraud, 

Waste, and Abuse in 

Federal Programs

Congressional 

Relations

Public Affairs

Please Print on Recycled Paper.