DEFENSE 

MANAGEMENT

Further Analysis 

Needed to Identify 

Guam's Public 

Infrastructure 

Requirements and 

Costs for DOD's 

Realignment Plan

Report to Congressional Committees

December 2013

GAO-14-82

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-14-82, a report to 

congressional committees

December 2013

DEFENSE MANAGEMENT

Further Analysis Needed to Identify Guam’s Public 

Infrastructure Requirements and Costs for DOD’s 

Realignment Plan

Why GAO Did This Study

In 2006, the United States and Japan 

planned to relocate 17,600 U.S. 

Marines and dependents from Japan to 

Guam. However, in 2012,

representatives from the countries 

developed a revised plan under which 

6,300 Marines and dependents would 

relocate to Guam. 

The Conference Report accompanying 

the National Defense Authorization Act 

for Fiscal Year 2013 mandated that 

GAO evaluate what Guam public 

infrastructure projects are needed to

support DOD’s plans. This report 

(1) describes Guam’s public 

infrastructure; (2) describes the types 

of assistance DOD generally provides 

and other funding sources that have 

been used to fund Guam projects; 

(3) assesses DOD’s efforts to 

revalidate Guam projects under the 

revised realignment plan; and 

(4) assesses the cost estimate for 

Guam’s public water and wastewater 

infrastructure improvements used to 

support DOD budget requests. To 

address these objectives, GAO 

reviewed policies, technical studies, 

and budget requests. GAO also 

interviewed DOD and other relevant 

federal officials as well as visited 

Guam and met with Guam officials.

What GAO Recommends

GAO recommends that DOD take 

actions to revalidate public 

infrastructure needs on Guam based 

on the revised realignment size and 

ensure best practices are used to 

develop future cost estimates. DOD 

partially concurred with GAO’s 

recommendations and identified future 

plans. However, GAO believes further 

opportunities exist as discussed in the 

report.

What GAO Found 

Some investments have been made to improve Guam’s public infrastructure in 

recent years, but many deficiencies and regulatory compliance issues continue to 

exist. The reliability, capacity, and age of much of the public infrastructure—

especially the island’s utilities—indicate a need for additional upgrades to be able 

to meet current and future demands related to the realignment. Further, some 

infrastructure sectors, such as water and wastewater, face issues complying with 

federal regulations. Other sectors, such as the fire and police departments, are 

experiencing staffing and other shortages that affect their ability to serve Guam’s 

current population. 

The majority of the Department of Defense’s (DOD) support to defense-affected 

communities has been historically to provide technical assistance and support 

community planning and coordination efforts. However, in a few instances DOD 

has provided public infrastructure funding to communities where proposed basing 

decisions would generate significant public infrastructure needs that the 

communities could not support. Generally, DOD’s position is that communities 

should be largely responsible for obtaining funding for public infrastructure 

requirements related to DOD basing decisions. This funding can come from other

federal programs or communities can raise the funds on their own. In the case of 

Guam, however, some challenges related to limited government revenues and 

debt capacity has been identified as affecting its ability to do so. 

Despite the reduction of Marines and dependents relocating to Guam, DOD has 

not yet revalidated the public infrastructure requirements based on the revised

realignment plan or differentiated between requirements needed to address longstanding conditions and those related to the realignment. This revalidation is not 

expected to be completed until 2015. Even so, DOD has requested over $400 

million for Guam public infrastructure projects in its budget requests since fiscal 

year 2012. It is unclear if all of these projects are necessary to the same extent 

given the reduction in forces. For example, if DOD decides to locate the Marines 

on the naval base that handles all of its own water/wastewater needs, public 

water/wastewater improvements would not be needed to support the Marines. 

Congress has placed limitations on the use of funding, in part until certain 

information is provided related to the realignment. Without revalidating and 

differentiating between requirements, DOD cannot clearly identify what Guam 

public infrastructure requirements are needed to directly support the realignment.

The $1.3 billion cost estimate for improvements to Guam’s water and wastewater 

systems that DOD has used to support budget requests for fiscal years 2013 and 

2014 is not reliable. GAO assessed that the estimate minimally met the best 

practice criteria for three of the four key characteristics—comprehensive, well 

documented, and accurate—for a reliable cost estimate as identified in the GAO 

Cost Estimating and Assessment Guide and did not satisfy best practice criteria 

for the fourth characteristic of being credible. GAO determined that officials 

adhered to some best practices for a reliable estimate but did not, for example, 

• include all relevant costs, 

• sufficiently explain why certain assumptions and adjustments were made,

• incorporate any actual costs or inflation adjustments, or

• adequately address risk and uncertainty.

View GAO-14-82. For more information, 

contact Johana Ayers at 202-512-5741 or 

ayersj@gao.gov.
Page i GAO-14-82 Defense Management

Letter 1

Background 6

Investments Have Been Made to Improve Guam’s Public 

Infrastructure, but Deficiencies and Regulatory Compliance 

Issues Persist 14

DOD Generally Provides Planning and Technical Assistance 

Support to Affected Communities While Public Infrastructure 

Projects Are Typically Funded by Other Federal Programs or the 

Communities 28

DOD Has Not Revalidated Its Guam Public Infrastructure 

Requirements or Differentiated Between Requirements to 

Address Long-Standing Conditions and Those Related to the 

Revised Realignment Plan 36

DOD’s Cost Estimate to Improve Guam’s Water and Wastewater 

Infrastructure Is Not Reliable 43

Conclusions 49

Recommendations for Executive Action 50

Agency and Third Party Comments and Our Evaluation 50

Appendix I Scope and Methodology 54

Appendix II Detailed Assessment of the Guam Water and Wastewater 

Cost Estimate 60

Appendix III Comments from the Department of Defense 71

Appendix IV GAO Contact and Staff Acknowledgments 74

Related GAO Products 75

Contents
Page ii GAO-14-82 Defense Management

Tables

Table 1: Examples of Non-DOD, Federal Programs that Funded 

Guam Public Infrastructure Projects 32

Table 2: Guam Public Infrastructure Projects Included in OEA’s 

Budget Requests, Fiscal Years 2012 through 2014 38

Table 3: Summary of GAO’s Assessment of the Guam Water and 

Wastewater Cost Estimate Based on Best Practices 

Criteria 47

Table 4: GAO’s Assessment of the Guam Water and Wastewater 

Cost Estimate Based on Best Practices Criteria 61

Figures

Figure 1: Selected DOD Facilities on Guam 7

Figure 2: Federal Organizations Assisting Guam 11

Figure 3: Harmon Annex Power Station 16

Figure 4: Northern District Wastewater Treatment Plant 19

Figure 5: Port of Guam 20

Abbreviations

BRAC Base Realignment and Closure

DOD Department of Defense

EIS Environmental Impact Statement

EPA Environmental Protection Agency

JGPO Joint Guam Program Office

OEA Office of Economic Adjustment

OMB Office of Management and Budget

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

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

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Page 1 GAO-14-82 Defense Management

441 G St. N.W.

Washington, DC 20548

December 17, 2013

Congressional Committees

Given its strategic location, Guam serves as an important staging base 

and operating location for mobilizing U.S. military forces and equipment 

within Asia and the western Pacific. In May 2006, the Security 

Consultative Committee issued the United States-Japan Roadmap for 

Realignment Implementation (2006 Roadmap) under which the U.S. 

government anticipated relocating some military forces and their 

dependents from Okinawa, Japan, to Guam by 2014.1 At that time, the 

plan was for approximately 8,600 Marines and 9,000 dependents to move 

to Guam. The Department of Defense (DOD) previously estimated that at 

least $1.3 billion was needed to improve Guam’s public infrastructure to 

accommodate this relocation. Guam’s public infrastructure includes the 

utilities, methods of transportation, equipment, or facilities under the 

control of a public entity, such as a power authority, or local government 

for use by the public to support the realignment of forces and 

dependents.2 However, after 6 years of unsuccessful attempts to 

implement the 2006 Roadmap, the Security Consultative Committee 

announced in a joint statement in April 2012 a revised realignment plan 

under which approximately 5,000 Marines and 1,300 dependents would 

be moved to Guam—approximately 64 percent less than the original 

plan.3

 1

The Security Consultative Committee includes the U.S. Secretaries of State and Defense 

and Japan’s Minister of Foreign Affairs and Minister of State for Defense. See United 

States-Japan Security Consultative Committee Document, U.S.-Japan Roadmap for 

Realignment Implementation (May 1, 2006). A 2009 agreement between the United States 

and Japan reaffirmed and implemented parts of the Roadmap. See Agreement 

Concerning the Implementation of the Relocation of III Marine Expeditionary Force 

Personnel and Their Dependents from Okinawa to Guam, U.S.-Japan, Feb. 17, 2009, 

Temp. State Dep’t No. 09-89.

This revised realignment plan has prompted DOD to review the 

2

The definition of public infrastructure used for this report is based on the definition 

contained in the National Defense Authorization Act for Fiscal Year 2013. Section 2832 of 

that Act defined “public infrastructure” as any utility, method of transportation, item of 

equipment, or facility under the control of a public entity or state or local government that 

is used by, or constructed for the benefit of, the general public. See Pub. L. No. 112-239, 

§ 2832(d)(2) (2013).

3

See United States-Japan Security Consultative Committee, Joint Statement of the 

Security Consultative Committee (Apr. 26, 2012).
Page 2 GAO-14-82 Defense Management

actions previously planned for Guam under the 2006 Roadmap and their 

effects on Guam, including those related to the island’s public 

infrastructure.

We have previously reported on the challenges associated with Guam’s 

public infrastructure and the realignment of U.S. forces. For example, we 

found in 2009 that Guam’s public infrastructure would likely be 

inadequate to meet the increased demand resulting from the original 

2006 Roadmap realignment plan and that Guam would need to 

significantly expand its existing public infrastructure for electric power 

generation, potable water production, wastewater collection and 

treatment, and solid waste collection and disposal to provide the needed 

additional utility capacity.4 In that we report, we recommended that DOD 

develop a comprehensive plan for DOD’s Guam utility development 

efforts to be included with DOD’s comprehensive Guam master plan. 

DOD concurred with the recommendation. As we found in May 2013, 

however, DOD continues to lack an integrated master plan for its current 

overall Asia posture realignment, including its current plans for Guam, 

and has not updated its list of utilities and other public infrastructure 

requirements for Guam.5

In addition, congressional committees have discussed the uncertainty 

surrounding cost and schedule information regarding the realignment of 

We, therefore, recommended that as the master 

planning process continues over the next several years, DOD should 

develop annual updates on the status of planning efforts for appropriate 

congressional committees until such time as the master plans are 

completed for each geographic segment of the realignment. These 

updates should include, but not be limited to, providing congressional 

committees with up-to-date information on the status of initiatives, 

identified requirements and time frames, and any updated cost 

information linked to specific facilities or projects. DOD concurred and 

stated that it will provide updates through the completion of the master 

planning process.

 4

GAO, Defense Infrastructure: Planning Challenges Could Increase Risks for DOD in 

Providing Utility Services When Needed to Support the Military Buildup on Guam, 

GAO-09-653 (Washington, D.C.: June 30, 2009). 

5

GAO, Defense Management: More Reliable Cost Estimates and Further Planning 

Needed to Inform the Marine Corps Realignment Initiatives in the Pacific, GAO-13-360

(Washington, D.C.: June 11, 2013).
Page 3 GAO-14-82 Defense Management

U.S. forces to Guam.6 With specific respect to Guam’s public 

infrastructure, the Senate Armed Services Committee noted in 2012 that, 

until provided with details to adequately assess the strategic impact, 

feasibility, and affordability of realignment initiatives, it was unwilling to 

authorize further obligations of funds for projects on Guam in support of 

the relocation, to include investments proposed for public facility and 

infrastructure requirements.7 In 2011 and 2013, Congress restricted the 

use of certain DOD funds to support the realignment of Marines until DOD 

provided to the congressional defense committees’ specified information 

related to its plans to move units to Guam and its overall posture in the 

Pacific.8 The restrictions also imposed limitations on the use of DOD 

funds for the development of public infrastructure.9

The Conference Report accompanying the National Defense 

Authorization Act for Fiscal Year 2013 mandated that we review the 

public infrastructure required to support the realignment of U.S. forces to 

Guam.10

 6 See, e.g., H.R. Rep. No. 112-705, at 867-68, 969-70 (2012) (Conference Report, 

accompanying the National Defense Authorization Act for Fiscal Year 2013); S. Rep. No. 

112-173, at 257, 258-59 (2012) (Senate Armed Services Committee report, accompanying 

a bill for the National Defense Authorization Act for Fiscal Year 2013); S. Rep. No. 112-29, 

at 8-11 (2011) (Senate Appropriations Committee report, accompanying the Military 

Construction and Veterans Affairs, and Related Agencies Appropriation Bill, 2012).

In this report, we (1) describe the existing condition of Guam’s 

public infrastructure; (2) describe the types of assistance DOD generally 

provides to defense-affected communities and what other funding 

sources have been used to fund Guam public infrastructure projects; (3) 

assess DOD’s efforts to revalidate DOD’s public infrastructure 

requirements under the revised realignment plan and differentiate 

7

See S. Rep. No. 112-173, at 259. The Committee noted in 2013 that it remained 

concerned about funds requested for certain Guam public infrastructure projects. See S. 

Rep. No. 113-44, at 82-83 (2013).

8

See Pub. L. No. 112-239, § 2832 (2013) and Pub. L. No. 112-81, § 2207 (2011). Section 

2832(e) of the National Defense Authorization Act for Fiscal Year 2013 superseded and 

repealed section 2207 of the National Defense Authorization Act for Fiscal Year 2012. In 

addition to the information to be provided by DOD, both provisions also required the 

submission to the congressional defense committees of a plan coordinated by all pertinent 

federal agencies, see § 2832(a)(4) and § 2207(a)(4), and contained certain exceptions to 

the restriction. See § 2832(c) and § 2207(c).

9

See § 2832(b) and § 2207(b).

10See H.R. Rep. No. 112-705, at 976.
Page 4 GAO-14-82 Defense Management

between requirements that address Guam’s current public infrastructure 

needs and those related to the realignment; and (4) assess the extent to 

which the cost estimate for Guam’s public water and wastewater 

infrastructure improvements used to support DOD budget requests was 

developed according to the characteristics of a reliable cost estimate.

For each of our objectives, we collected information by interviewing and 

communicating with officials from the relevant offices within DOD, the 

Department of the Interior, and other federal agencies that have been 

assisting Guam to prepare for the realignment. We also conducted a site 

visit in April 2013 to Guam, where we interviewed the Governor, Speaker 

of the Guam Legislature, other Guam legislators, Guam Auditor General, 

and various officials from 12 Government of Guam agencies and 

departments representing the various public infrastructure sectors on 

Guam likely to be affected by the realignment. The public infrastructure 

sectors covered by our review were chosen based on inclusion in (1) prior 

Government of Guam and DOD project lists developed for the 2006 

Roadmap realignment plan, (2) DOD budget requests, (3) prior GAO 

reports on the realignment of U.S. forces to Guam, and (4) federal agency 

inspector general reports, as well as those sectors identified by 

Government of Guam and DOD officials during our interviews. The 

following eight sectors are included in our review: electric power, water 

and wastewater, port, solid waste, public health, law enforcement, fire 

department, and education infrastructure. The highways and other roads 

sector is not included in our review because Government of Guam and 

DOD officials did not identify it as a sector likely to be adversely affected 

by the realignment since existing programs and agencies, such as the 

Defense Access Roads11

 11The Defense Access Roads program provides a method for DOD to pay a fair share for 

public highway improvements required as a result of sudden or unusual defensegenerated traffic impacts or unique defense public highway requirements. Projects may be 

eligible for funding under the following five criteria: (1) a new access road to an installation 

is needed to accommodate a defense action, (2) a defense action causes traffic to double, 

(3) urgent improvements are needed to accommodate a temporary surge in traffic to or 

from an installation due to a defense action, (4) a new or improved access road is needed 

to accommodate special military vehicles, such as heavy equipment transport vehicles, or 

(5) a road is needed to replace one closed for defense needs.

and the Department of Transportation’s Federal 

Highway Administration, are currently allocating funds for road and 

highway improvements on Guam.
Page 5 GAO-14-82 Defense Management

To describe the existing condition of Guam’s public infrastructure, we 

reviewed federal inspector general reports, technical studies and 

business case analyses, and questionnaires conducted by DOD for the 

revised realignment plan. To describe the types of assistance DOD 

generally has provided to defense-affected communities and the other

types of funding sources that have been used to fund Guam public 

infrastructure projects, we reviewed past congressional hearings records, 

DOD documents, and community impact analyses to determine previous 

instances of DOD providing public infrastructure funding to communities 

as well as Guam’s single audit report schedule of expenditures of federal 

grant awards to identify examples of non-DOD, federal grant programs 

from which the Government of Guam has received infrastructure funding. 

To assess DOD’s efforts to revalidate public infrastructure requirements 

under the revised realignment plan and differentiate between 

requirements that address Guam’s current public infrastructure needs and 

those related to the realignment, we reviewed information on DOD and

the Government of Guam’s planning activities related to public 

infrastructure improvements needed to support the revised realignment 

plan and compared this information to previous public infrastructure lists 

developed by the Government of Guam, DOD, and other federal entities 

to support the 2006 Roadmap realignment plan. To determine the extent 

to which the cost estimate for Guam’s public water and wastewater 

infrastructure improvements used by DOD to support its budget requests 

was developed according to the characteristics of a reliable cost estimate, 

we reviewed the cost estimating methodology and compared them to the 

cost estimating guidance in GAO’s Cost Estimating and Assessment 

Guide: Best Practices for Developing and Managing Capital Program 

Costs.

12 To determine the reliability of the numerical data provided to us 

by DOD organizations for all of our objectives, we collected information 

on how the data was collected, managed, and used through interviews of 

relevant DOD and federal agency officials. By assessing this information 

against GAO data quality standards,13

 12GAO, Cost Estimating and Assessment Guide: Best Practices for Developing and 

Managing Capital Program Costs, 

we determined that the data 

presented in our findings were sufficiently reliable for the purposes of this 

GAO-09-3SP (Washington, D.C.: Mar. 2, 2009). This 

guide is a compilation of best practices that federal cost estimating organizations and 

industry use to develop and maintain reliable cost estimates throughout the life of a 

government acquisition program.

13GAO, Assessing the Reliability of Computer-Processed Data, GAO-09-680G

(Washington, D.C.: July 1, 2009).
Page 6 GAO-14-82 Defense Management

report. Appendix I provides a more detailed description of our scope and 

methodology.

We conducted this performance audit from February 2013 through 

December 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 the evidence obtained provides a reasonable basis for our 

findings and conclusions based on our audit objectives.

Since Guam became a territory in 1898, the United States has long 

maintained a significant military presence on the island to support and 

defend U.S. interests in the western Pacific Ocean region. Guam has 

been the home to many different military units over the past 60 years and 

was especially active during the Vietnam War as a way-station for U.S. 

bombers. DOD currently controls about 27 percent of the island. 

According to the 2010 U.S. Census, Guam had a population of 159,358, 

an increase of 2.9 percent from the 2000 Census population of 154,805. 

DOD estimates that there are at least 16,400 military members and their 

dependents stationed on Guam. Most of the military members and 

dependents are attached to one of the two major military installations on 

the island: U.S. Naval Base Guam, located on the southwestern side of 

the island at Apra Harbor, and Andersen Air Force Base in the north (see 

figure 1).

Background

DOD’s Guam 

Realignment Plans
Page 7 GAO-14-82 Defense Management

Figure 1: Selected DOD Facilities on Guam 
Page 8 GAO-14-82 Defense Management

In 2004, the U.S. Secretaries of State and Defense and the Japanese 

Ministers of Foreign Affairs and Defense began a series of sustained 

security consultations aimed at strengthening the U.S.-Japan security 

alliance and better addressing the rapidly changing global security 

environment. The resulting U.S.-Japan Defense Policy Review Initiative 

established a framework for the future of the U.S. force structure in Japan 

and facilitated a continuing presence for U.S. forces in the Pacific theater, 

including the relocation of military units to Guam. The major realignment 

initiatives of the Defense Policy Review Initiative were ultimately outlined 

in May 2006 in a Security Consultative Committee document, the United 

States-Japan Roadmap for Realignment Implementation (2006 

Roadmap)—under which the United States anticipated relocating 

approximately 8,000 Marines and their estimated 9,000 dependents from 

Okinawa, Japan, to Guam by 2014.14 The 2006 Roadmap was 

subsequently modified by the Security Consultative Committee in April 

201215 and DOD’s current plan is to relocate approximately 5,000 

personnel (mostly rotational) and 1,300 dependents to Guam as soon as 

appropriate facilities are available to receive them.16 DOD is in the 

process of determining what military and public infrastructure facilities and 

live-fire training ranges are necessary to support the proposed reduced 

realignment plan on Guam, as well as Tinian and Pagan—islands that are 

part of the Commonwealth of the Northern Mariana Islands.17

 14Although the 2006 Roadmap referred to approximately 8,000 personnel, the Record of 

Decision for the Guam and Commonwealth of Northern Mariana Islands Military 

Relocation referred to approximately 8,600 Marines. See Department of the Army and 

Department of the Navy, Record of Decision for the Guam and Commonwealth of the 

Northern Mariana Islands Military Relocation (September 2010).

15See United States-Japan Security Consultative Committee, Joint Statement of the 

Security Consultative Committee (Apr. 26, 2012).

16Rotational refers to Marine Corps units that are deployed for periods of approximately 6 

months to any given location.

17The Commonwealth of the Northern Mariana Islands consists of 14 islands in the 

western Pacific Ocean, just north of Guam and 5,500 miles from the U.S. mainland. A 

1976 covenant between the Commonwealth of the Northern Mariana Islands and the 

United States provided for the islands’ status as a self-governing commonwealth in 

political union with the United States. See Covenant to Establish a Commonwealth of the 

Northern Mariana Islands in Political Union with the United States of America, Pub. L. No. 

94-241, § 101, (1976) (48 U.S.C. § 1801 note). While some provisions of the covenant 

went into effect in 1976 and 1978, the full covenant became effective in November 1986. 

See Proclamation No. 5564, 51 Fed. Reg. 40,399 (Nov. 3, 1986).
Page 9 GAO-14-82 Defense Management

Before any Marines can relocate to Guam, DOD must examine the 

environmental effects of its proposed actions, pursuant to the National 

Environmental Policy Act of 1969.18 To address this requirement in the 

past, DOD performed an environmental review of certain proposed 

actions under the original 2006 realignment plan and released the Guam 

and Commonwealth of the Northern Mariana Islands Military Relocation 

Final Environmental Impact Statement (EIS)19 in July 2010.20 In 

September 2010, the Department of the Navy announced in the Record 

of Decision for the Guam and Commonwealth of the Northern Mariana 

Islands Military Relocation that it would proceed with the Marine Corps 

realignment, but it deferred the selection of a specific site for a live-fire 

training range complex on Guam pending further study.21 In February 

2012, the Department of the Navy gave notice that it intended to prepare 

a supplemental EIS22 to evaluate locations for a live-fire training range 

complex on Guam. 23

 18Pub. L. No. 91-190 (1970) (codified as amended at 42 U.S.C. §§ 4321-4347). Under the 

act, federal agencies must assess the effects of major federal actions—those they 

propose to carry out or to permit—that significantly affect the environment. The act has 

two principal purposes: (1) to ensure that an agency carefully considers detailed 

information concerning significant environmental impacts and (2) to ensure that this 

information will be made available to the public.

In October 2012, as a result of the announcement 

19An EIS is a document required by the National Environmental Policy Act and 

implementing regulations for certain major federal actions significantly affecting the quality 

of the human environment. See 42 U.S.C. § 4332(C); 40 C.F.R. § 1502.3. An EIS 

provides a full and fair discussion of significant environmental impacts and informs 

decisionmakers and the public of reasonable alternatives that would avoid or minimize 

adverse impacts or enhance the quality of the human environment. See 40 C.F.R. § 

1502.1.

20Department of the Navy, Final Environmental Impact Statement: Guam and CNMI 

Military Relocation: Relocating Marines from Okinawa, Visiting Aircraft Carrier Berthing, 

and Army Air and Missile Defense Task Force (July 2010).

21The Departments of the Navy and Army released a Record of Decision in September 

2010, which announced their decision to proceed with the Guam and the Commonwealth 

of the Northern Mariana Islands Military Relocation. See Departments of the Navy and 

Army, Record of Decision for Guam and CNMI Military Relocation (Sept. 2010); 75 Fed. 

Reg. 60,438 (Sept. 30, 2010).

22A supplemental environmental impact statement is a supplement to an existing EIS, 

conducted when the agency makes substantial changes in its proposed action or when 

there are significant new circumstances or information relevant to environmental 

concerns. See 40 C.F.R. § 1502.9(c)(1). Agencies may also prepare supplements when 

they determine that doing so will further the purposes of the National Environmental Policy 

Act. See § 1502.9(c)(2).

23See 77 Fed. Reg. 6,787 (Feb. 9, 2012).

Guam Environmental 

Impact Statement
Page 10 GAO-14-82 Defense Management

of the revised realignment plan, the Department of the Navy gave notice 

that it was planning to expand the scope of the ongoing supplemental EIS 

to also evaluate potential environmental consequences from the 

construction and operation of the main Marine installation.24

1. Further evaluation of possible locations for the establishment of a 

Marine Corps live-fire training range complex on Guam, to include 

locations on Naval Computer and Telecommunications Station 

Finegayan, Naval Magazine Guam, and the northwest part of 

Andersen Air Force Base, among other locations.

According to 

DOD, the reduction in the number of Marines and dependents to be 

relocated to Guam led to a reduction in the amount of land needed for the 

main Marine installation area, enabling the Navy to identify and consider 

other alternatives than it had previously analyzed for the 2010 EIS. The 

expanded supplemental EIS is expected to have three major 

components.

2. Determination of the potential environmental consequences of 

constructing and operating a main Marine Corps installation at several 

possible locations on Guam: Naval Base Guam, Naval Computer and 

Telecommunications Station Finegayan, South Finegayan, federal 

land in the village of Barrigada, and Andersen Air Force Base.

3. Assessment of associated impacts to Guam’s public infrastructure.

According to Marine Corps officials, the supplemental EIS is expected to 

be drafted by 2014, and DOD anticipates that a final decision on all 

matters being evaluated will be released by 2015 via a record of decision.

Several federal agencies have been assisting the Government of Guam 

in planning and preparing for the realignment of U.S. forces (see figure 2).

 24See 77 Fed. Reg. 61,746 (Oct. 11, 2012). The notice describes the main installation as 

a “main cantonment area,” which will provide military support functions to relocated 

Marines, including family housing.

Federal Framework

for Assisting Guam

in Preparing for the 

Realignment
Page 11 GAO-14-82 Defense Management

Figure 2: Federal Organizations Assisting Guam

Within DOD, three organizations have been assisting Guam to prepare 

for the military realignment.

• The Office of Economic Adjustment (OEA) is a DOD field activity that 

reports to the Deputy Under Secretary of Defense for Installations and 

Environment, within the office of the Under Secretary of Defense for 

Acquisition, Technology, and Logistics. The office facilitates DOD 

resources in support of local programs and provides direct planning 

and financial assistance to communities and states seeking 

assistance to address the impacts of DOD’s actions. OEA’s 

assistance to growth communities is primarily focused on assisting 

them with organizing and planning for population growth because of 

DOD activities, commonly referred to as “defense-affected” 

communities.
Page 12 GAO-14-82 Defense Management

• The Joint Guam Program Office (JGPO) is the DOD office primarily 

engaged in developing and implementing the military realignment 

plans. JGPO is a Navy staff office under the direct oversight of the 

Assistant Secretary of the Navy for Installations and Environment. 

Specifically, JGPO is leading the coordinated planning efforts among 

the DOD components and other stakeholders to consolidate, optimize, 

and integrate the existing DOD infrastructure capabilities on Guam. 

JGPO also leads the effort to develop the ongoing supplemental EIS.

• The Naval Facilities Engineering Command contracts for the military 

construction on Guam and, as the Navy’s primary facilities and utilities 

engineering command, is also helping to prepare the supplemental 

EIS.

The Secretary of the Interior has administrative responsibility for 

coordinating federal policy for U.S. insular areas, including Guam,25

The Federal Regional Council—Region IX is a consortium of 19 federal 

departments and agencies that oversee federal activities in four western 

states and the Outer Pacific Islands including Guam. Federal Regional 

Councils were established to provide a structure for interagency and 

intergovernmental cooperation. Membership includes regional 

representatives from the Departments of Agriculture, Commerce, 

Education, Energy, Health and Human Services, Homeland Security, 

Housing and Urban Development, Justice, Labor, the Interior, 

Transportation, Veterans Affairs, and the Environmental Protection 

Agency (EPA). The goal of the Federal Regional Council is for federal 

departments in Region IX to work in a coordinated manner in order to 

make federal programs more effective and efficient, through the 

regarding all matters that do not fall within the programmatic responsibility 

of another federal department or agency. Within the Department of the 

Interior, the Office of Insular Affairs executes these responsibilities. Part 

of the Office’s mission is to empower insular communities by improving 

the quality of life, creating economic opportunity, and promoting efficient 

and effective governance.

 25The Office of Insular Affairs describes an insular area as a jurisdiction that is neither a 

part of one of the several United States nor a federal district. Insular area is the current 

generic term to refer to any commonwealth, freely associated state, possession or 

territory. There are eight inhabited insular areas of the United States—American Samoa, 

Guam, Commonwealth of the Northern Mariana Islands, Commonwealth of Puerto Rico, 

U.S. Virgin Islands, Republic of the Marshall Islands, Federated States of Micronesia, and 

Republic of Palau. 
Page 13 GAO-14-82 Defense Management

establishment of task forces and development of reports on issues of 

concern in the region. The federal regional council meets monthly and 

has six committees focused upon broad geographic areas and special 

populations in the vast geographic area of Region IX. One of the 

committees, the Outer Pacific Committee, contains the Guam Buildup 

Committee/Task Force. The buildup task force’s mission is to help Guam 

develop a financial assistance strategy and serve as a communication 

liaison regarding local needs on Guam and federal budget decisionmaking.

Guam became a U.S. possession in 1898, initially placed under the 

control of the U.S. Navy. The Guam Organic Act of 195026

In addition, the following are several autonomous agencies related to 

public infrastructure that function as part of the Government of Guam:

conferred U.S. 

citizenship on Guamanians and established the territory’s government. 

Guam’s government is organized into three branches: executive, 

legislative, and judicial. The executive branch is led by the territory’s 

highest elected officials: the governor and lieutenant governor. These 

officials implement Guam’s laws through the departments, bureaus, 

agencies, and other entities that make up the executive branch of the 

Government of Guam, such as the departments of public health and 

social services and education. The legislative branch consists of a single 

chamber legislature presently with 15 members who are elected for 2-

year terms. The judiciary consists of the Superior Court of Guam and the 

Supreme Court of Guam.

• The Guam Power Authority manages the generation, transmission, 

and distribution of electrical power on the island to include 

engineering, operation, and maintenance activities.

• The Guam Waterworks Authority manages the engineering, operation, 

and maintenance of the public water and wastewater systems 

including the sources, treatment, distribution, and storage.

• The Port Authority of Guam operates and maintains the Port of Guam.

The Power and Waterworks authorities are governed by an elected, nonpartisan, five-member Consolidated Commission on Utilities. The Port of 

Guam is presided over by five board members appointed by the Governor 

 26Pub. L. No. 81-630, ch. 512, 64 Stat. 384 (1950).

Government of Guam 

Organization
Page 14 GAO-14-82 Defense Management

of Guam with the advice and consent of the legislature. Each of the 

agencies collects fees for its services and is able to issue bonds based on 

these fees and other revenue to finance infrastructure improvements.

While some investments have been made to improve Guam’s public 

infrastructure in recent years, many deficiencies continue to exist. The 

reliability, capacity utilization, and age of much of Guam’s public 

infrastructure indicates a need for additional upgrades to ensure that 

Guam can meet the demands of its current and future population, 

regardless of how many Marines and dependents are moved to Guam. 

For example, existing utility systems—electric power generation, potable 

water production, and wastewater collection and treatment—are largely 

operating at or near their maximum capacities and will require 

infrastructure improvements to meet any increase in demand. In addition, 

some of Guam’s public infrastructure sectors, such as its Waterworks 

Authority face issues complying with federal regulations. Other sectors, 

such as the fire and police departments are experiencing shortages in 

infrastructure, vehicles, and staffing. According to JGPO officials, they 

intend to perform assessments to determine what improvements are 

needed by Guam’s public infrastructure to support the current realignment 

plan during DOD’s development of the supplemental EIS expected to be 

completed by 2015. A discussion of DOD’s actions to assess Guam’s 

public infrastructure is presented later in the report.

We discuss these issues in more detail below for eight public 

infrastructure sectors:

1. Electric Power

2. Water and Wastewater

3. Port of Guam

4. Solid Waste

5. Public Health

6. Law Enforcement

7. Fire Department

8. Education

Investments

Have Been Made

to Improve Guam’s 

Public Infrastructure, 

but Deficiencies

and Regulatory 

Compliance Issues 

Persist
Page 15 GAO-14-82 Defense Management

Guam’s electric power system has experienced reliability problems, which 

have resulted in power outages, and is reliant on aging generators 

approaching the end of their life expectancy. The Guam Power Authority 

has made investments in its infrastructure to address some of these 

reliability problems. For example, it secured $206.5 million in bond 

financing in fiscal year 2010 to construct a new administration building 

and to make various generation, transmission, and distribution facility 

improvements. However, during our April 2013 visit to Guam, Power 

Authority officials indicated that system reliability continues to be a major 

concern because the Authority is not able to meet all of its operation and 

maintenance needs and may not be able to invest in its generators at 

appropriate levels due to diminished revenues. Officials also noted that 

multiple improvements are needed to the Authority’s peaking and 

emergency generators, but such improvements will have to be deferred 

until revenues improve—which directly affects the Authority’s ability to 

reduce customer outage duration and frequency. The electrical system’s 

reliability and age have led to five island-wide power blackouts since 

November 2010.

• On November 3, 2010, a power outage occurred due to a line that fell 

at a substation. This outage created a chain reaction that resulted in 

an island-wide blackout. Power was fully restored after 7 hours.

• On May 9, 2011, a power outage occurred due to a corroded static 

line that fell on the switchyard. The result of the outage was an islandwide blackout. Power was fully restored after 5 hours.

• On June 4, 2011, a power outage occurred due to a damaged control 

air pipe at the Marianas Energy Company, an Independent Power 

Producer which resulted in an island-wide blackout. Power was fully 

restored after 2.5 hours.

• On June 6, 2013, a power outage occurred due to a fault in the 

system that originated within the Dededo combustion turbine. The 

result of the outage was an island-wide blackout. Power was fully 

restored within 6 hours.

• On July 11, 2013, a power outage occurred due to a generator going 

off line. The loss of this generator and subsequent issues with the 

power generation system led to the outage. The result of the outage 

was an island-wide blackout. Power was fully restored in about 6.5 

hours.

Electric Power
Page 16 GAO-14-82 Defense Management

The concerns expressed by Authority officials are consistent with the 

findings of a 2012 Department of the Interior Inspector General report.27

Figure 3: Harmon Annex Power Station

That report found that Guam is susceptible to power blackouts and noted 

that about a quarter of the Power Authority’s generation units were 

installed before 1976 (see figure 3 for a photograph of an electrical power 

station location on Guam). The report concluded that if the Authority 

should have to replace its entire aging infrastructure at the same time, it 

would require a large financial investment.

The Power Authority provides all of the electricity on the island for both 

the public and DOD, with DOD the Authority’s largest customer 

accounting for 22 percent of the Authority’s fiscal year 2012 revenues. In 

terms of infrastructure needed for the realignment, Guam Power Authority 

officials told us that although the Authority has enough installed capacity 

(i.e., capacity the generation units were built to produce) to meet DOD’s 

 27U.S. Department of the Interior Office of Inspector General, Evaluation of Guam Power 

Authority, HI-EV-GUA-0001-2011 (Washington, D.C.: Aug. 9, 2012).
Page 17 GAO-14-82 Defense Management

realignment needs for electricity generation, some of the units are not 

operational without major repairs or improvements which will likely have 

to be made by the Authority. In addition, Authority officials told us 

improvements to the transmission system, such as additional substations 

and transmission lines, will need to be made to accommodate the revised 

realignment plan and will likely need to be funded by DOD.

Guam’s water and wastewater treatment systems have a number of 

deficiencies as a result of natural disasters, poor maintenance, and 

vandalism. Although the Guam Waterworks Authority invested more than 

$158 million in improvements to its water and wastewater systems over 

the last 10 years, the Authority continues to operate under an order 

issued by the U.S. District Court for the District of Guam requiring various 

treatment and infrastructure improvements because of issues related to 

compliance with the Safe Drinking Water Act28 and the Clean Water Act.29

• Potable water: According to Waterworks officials, Guam’s potable 

water system currently is in noncompliance with the Safe Drinking 

Water Act. The unreliable drinking water distribution system has 

historically resulted in bacterial contamination from sewage spills, 

causing “boil water” notices to be sent to residents. According to a 

2012 EPA report, in general, many of the potable water facilities on 

the island are in poor operating condition as a result of minimal 

preventative and corrective maintenance actions.30

 28 Pub. L. No. 93-523 (1974) (codified as amended at 42 U.S.C. §§ 300f–300j-26).

For example, 

several of the finished water storage tanks do not provide many of the 

normal functions of a well-designed and operated water system, and 

most of the storage tanks are old and deteriorating, have openings 

and/or leaks, and are susceptible to contamination. According to the 

EPA, part of the water supply problem stems from some of the water 

system’s old pipes. Distribution lines are repeatedly patched—with 

some single lengths of pipe having up to 7 patches—instead of being 

replaced. As a result of problems with distribution lines and 

maintenance, among other issues, the EPA estimates the Water 

Authority’s water loss rate is about 50 percent. According to EPA, 

2933 U.S.C. §§ 1251-1387. 

30U. S. Environmental Protection Agency Inspection and Sanitary Survey Report for the 

Guam Waterworks Authority Public Water System (San Francisco, CA..: Nov. 5, 2012).

Water and Wastewater
Page 18 GAO-14-82 Defense Management

studies indicate that the national average water loss rate is about 14 

percent.

• Wastewater: According to the DOD Inspector General, Guam’s 

existing wastewater plants do not meet primary treatment standards 

and lack sufficient capacity due to poor conditions of the existing 

assets.31 For example, the Northern District Wastewater Treatment 

Plant (see figure 4) has a legacy of deferred maintenance and 

minimal capital improvements that have caused the systems to slowly 

deteriorate over the years. In addition to not meeting primary 

treatment standards, according to the EPA, Guam’s wastewater 

facilities, do not meet the requirements of its secondary treatment 

permit.

32

 31Inspector General of the Department of Defense, Report on the Program and Contract 

Infrastructure Technical Requirements Development for the Guam Realignment Program,

DODIG-2012-052 (Washington, D.C.: Feb. 8, 2012).

Since 1986, Guam has had variances under section 301(h) 

of the Clean Water Act, allowing it to discharge primary treated 

wastewater to Hagatna Bay and the Philippine Sea. However, in 

November 2011, the EPA disallowed the variances and therefore 

established full secondary treatment requirements at both the 

Northern District wastewater treatment plant and the Hagatna plant in 

the island’s central region. According to the Chairman of the Guam 

Consolidated Commission on Utilities, achieving full secondary 

treatment at both plants will require between $300 million and $500 

million in infrastructure improvements and, if funded by Guam alone, 

would necessitate rate increases that could potentially lead to average 

monthly water bills of $250 by 2020—double what the average is now. 

According to the Chairman, the Commission is currently negotiating 

with EPA on timelines for achieving secondary treatment and hopes to 

extend the timelines so as to allow more time to obtain additional 

funding.

32Secondary treatment is the second step in most wastewater treatment systems during 

which bacteria consume the organic parts of the wastes. This is accomplished by bringing 

the sewage, bacteria and oxygen together in trickling filters or within an activated sludge 

process. Secondary treatment removes all floating and settleable solids and about 90 

percent of the oxygen—demanding substances and suspended solids. Disinfection by 

chlorination is the final stage of the secondary treatment process. 
Page 19 GAO-14-82 Defense Management

Figure 4: Northern District Wastewater Treatment Plant

In terms of supporting the current military presence on Guam, the 

Waterworks Authority provides wastewater services to Andersen Air 

Force Base (including Northwest Field), Naval Computer and 

Telecommunications Station– Guam, and South Finegayan Navy 

housing. Naval Base Guam handles all of its own wastewater needs, and 

both the Navy and Air Force get their potable water from their own wells 

and the Fena Reservoir. Therefore, DOD only accounted for 2.2 percent 

of the Authority’s fiscal year 2012 revenues. However, according to 

representatives of Guam’s legislature and the Chairman of the 

Consolidated Commission on Utilities, the Guam Waterworks Authority is 

operating near capacity and cannot meet any surge in demand related to 

the realignment without significant infrastructure improvements.

According to the Port Authority of Guam and DOD officials, the Port of 

Guam (see figure 5) is currently outdated, in need of repairs, and requires 

expansion in order to support the realignment. Of particular concern is the 

port wharf. A 2012 DOD inspector general report found that the structural 

integrity of the commercial wharf, which includes the port’s six berths, is 

damaged and at risk of failure. The current state of the wharf was caused 

by a lack of adequate repairs to damages from earthquakes, corrosion, 

and stresses from ships and cargo-handling equipment. There have been 

multiple earthquakes in Guam, with the most devastating taking place in 

August 1993. As a result of this earthquake, the island sustained massive 

devastation with significant damage to one of the port’s berths, which 

Port of Guam
Page 20 GAO-14-82 Defense Management

required major reconstruction. Although other port berths were also 

damaged, they were not reconstructed. The DOD Inspector General also 

found that there are multiple continuous defects that have been 

documented in various reports and surveys performed on the structural 

integrity of the wharf bulkhead at the Port—the bulkhead is the vertical 

face (or wall) of the wharf along which ships are berthed. The report and

surveys indicate that the bulkhead was damaged both above and below 

the water. On the facade, the sides and the surface show cracks and 

separation, while underwater there is extensive damage to the concrete 

bulkhead.33

Figure 5: Port of Guam

Both DOD and the Government of Guam have identified the Port of Guam 

as a potential choke point as the realignment moves forward since all 

materials needed for both military and public construction projects will be 

transported to Guam by sea and enter through the Port. Port Authority 

officials told us that the Port has not been modernized since it was 

constructed in the 1960s and that, typically, most ports are modernized 

every 20 years. According to Port Authority officials, to accommodate the 

realignment, the Port requires building modifications, selected 

modifications to yards where cargo is offloaded, and facility expansion, as 

well as significant structural integrity improvements to the wharf. For 

 33DODIG-2012-052.
Page 21 GAO-14-82 Defense Management

example, the port requires a lot of maintenance due to corrosive ocean 

waters, typhoons, earthquakes, and years of maintenance neglect. Some 

of the specific improvements identified include site expansion, utilities 

upgrades, bulkhead fortification, and building renovations. In 2010, DOD 

provided the Port $50 million in funding to begin some of these 

improvements. According to DOD officials, this $50 million is the amount 

needed to directly address the requirements of the realignment and will 

be used for building modifications and modifications to the yard where 

cargo is offloaded as well as expansion of selected port facilities. In 

addition, the Port Authority continues to seek non-federal funding sources 

to allow for successful operations and execution of its mission. For 

example, according to Port Authority officials, the Authority recently 

obtained a $10 million commercial loan to address pier service life 

extension, financial management system upgrades, and a cargo handling 

crane purchase and has proposed a 5.65 percent tariff increase across 

the board to increase revenues. However, according to Port Authority 

officials, if future military activity requirements extend beyond the 

Authority’s current planned upgrades, there may be a need for additional 

federal support to accommodate the increased capacity requirements.

According to OEA officials, Guam’s current landfill is environmentallycompliant with sufficient capacity to meet current solid waste disposal 

needs and has sufficient expansion capacity to meet future needs related 

to the realignment. Previously, the EPA found Guam’s public solid waste 

operations to be in violation of the Clean Water Act as the Ordot Dump 

facility, located in the center of the island, was discharging contaminants 

into the Lonfit River. As a result of a lack of remediation and other actions 

on the part of the Government of Guam in response to the contamination, 

in March 2008, the U. S. District Court placed the public solid waste 

operations under the control of an appointed receiver.34

 34See United States v. Government of Guam, Civ. No. 02-00022, 2008 WL 732796, at 

*10-11 (D. Guam Mar. 17, 2008).

Since the court 

order, the receiver has opened a new public landfill and ceased 

operations at the Ordot Dump facility. According to the Government of 

Guam, the new landfill bans certain types of waste, including construction 

and demolition waste. As a result, future organic and realignment solid 

waste disposal needs will require the government to continue to develop 

Solid Waste
Page 22 GAO-14-82 Defense Management

systems to handle landfill-banned waste and construct and open new 

solid waste disposal areas at the landfill.

Historically, the Government of Guam and DOD used separate solid 

waste facilities. The Government of Guam disposed of all civilian waste at 

the Ordot Dump facility and DOD disposed of its solid waste in one of two 

DOD-operated landfill sites—Andersen Air Force Base and Naval Base 

Guam. However, the two DOD-operated landfill sites are almost at 

capacity. DOD has begun sending its solid waste to the new public 

landfill, paying the current rates set by the receiver.

The Government of Guam reported, as part of the ongoing supplemental 

EIS, that its public health system is undersized for the population it is to 

serve and is experiencing staff shortages. The following are examples:

• The Guam Memorial Hospital Authority, Guam’s only public civilian 

hospital, is often over capacity and this is exacerbated by the fact that 

it usually does not have enough nursing staff to operate all of its 

available acute care beds. According to Guam Memorial Hospital 

Authority officials’ response to a questionnaire conducted for the 

supplemental EIS, Guam needs approximately 500 acute care beds to 

fully meet the island’s needs using national hospital standards and the 

Guam Memorial Hospital Authority provides the Guam community 

with only 162 of those acute care beds. Therefore, according to these 

officials, the shortage can only be addressed by either expanding the 

existing Guam Memorial Hospital, building a much larger replacement 

public civilian hospital, or through the building of a new private 

hospital that is currently underway. Though there are no current plans 

to build a new civilian public hospital at this time, the Guam Memorial 

Hospital Authority is in the process of implementing its 2013 Strategic 

Plan, which includes identifying the Authority’s future expansion 

needs. The Government of Guam has tried to address some of the 

hospital’s space issues. For example, in fiscal year 2009, it secured 

$11 million in bond financing to fund certain infrastructure 

improvements for the Guam Memorial Hospital Authority, including the 

expansion and renovation of the emergency department and critical 

care unit/Intensive care unit, the upgrading of its pharmacy 

department, and the modernization of two hospital elevators. 

Public Health
Page 23 GAO-14-82 Defense Management

• Guam’s current mental health and substance abuse facility also faces 

issues with meeting standards of care. In 2004, the U.S. District Court 

issued a permanent injunction against Guam’s Department of Mental 

Health and Substance Abuse35 and various Guam officials to address 

deficiencies in the proper care for the mentally ill and developmentally 

disabled to address violations of statutory and constitutional standards 

of care.36 To achieve compliance with the injunction and address 

continuing problems, the court appointed a federal management team 

in 2010 and gave the team control over Guam’s mental health 

agencies to remedy the deficiencies.37

In addition to these infrastructure challenges, officials identified a number 

of challenges related to staffing. For example, Guam has experienced 

difficulty in recruiting and retaining an adequate number of health care 

personnel. According to the U.S. Department of Health and Human 

Services, Guam has been designated as a medically underserved area.

Medically underserved areas are areas designated as having too few 

primary care providers, high infant mortality, high poverty, and/or high 

elderly population. Likewise, Guam also qualifies as a health professional 

According to Government of 

Guam officials, as a result of the injunction, the Guam Behavioral 

Health and Wellness Center had to hire additional staff and implement 

several new substance abuse treatment programs. The officials 

further explained that to fully implement the mandates of the 

injunction, a new mental health facility will need to be constructed. On 

August 22, 2012, the U.S. District Court established a transition period 

for the return of duties and powers from the federal management 

team. In January 2013, the federal management team and Guam 

Behavioral Health and Wellness Center officials presented a transition 

plan to the court and control was transferred to the Guam Behavioral 

Health and Wellness Center in February 2013. According to 

Government of Guam officials, the Guam Behavioral Health and 

Wellness Center continues to report on a quarterly basis to the U.S. 

District Court.

 35In 2013, the name of Guam’s Department of Mental Health and Substance Abuse was 

changed to the Guam Behavioral Health and Wellness Center.

36See J.C. v. Camacho, Civ. Case No. 01-0041, 2010 U.S. Dist. LEXIS 18512, at *2-5 (D. 

Guam Mar. 2, 2010); J.C. v. Camacho, Case No. 01-0041, 2009 U.S. Dist. LEXIS 129232, 

at *2-3 (D. Guam July 1, 2009), The court issued an amended permanent injunction in 

2005.

37See Camacho, 2010 U.S. Dist. LEXIS 18512, at *6-14.
Page 24 GAO-14-82 Defense Management

shortage area, which is a geographic area, population group, or health 

care facility that has been designated by the federal government as 

having a shortage of health professionals. According to Guam public 

health officials, because of this designation, certain health professionals 

(e.g., nurses, mid-level providers, chiropractors, health dentists, and 

psychologists) can apply to work at Guam medical facilities and have the 

federal government pay for relocation costs and school loans. Generally, 

it is a 4-year program and people stay for the length of the term but then 

move away, resulting in turnover that makes it difficult to provide stable 

care. As we previously found, this is particularly true for insular areas 

such as Guam because citizens of insular areas are free to migrate to the 

United States, making it difficult to retain highly educated or skilled 

workers.38

Military personnel and their dependents generally do not use Guam’s 

health facilities, other than the occasional emergency room visit. 

However, the Government of Guam anticipates that any DOD civilian or 

migrant and construction workers associated with the realignment would 

use the facilities. Guam officials also told us that the island lacks a Center 

for Disease Control and Prevention level 2 public health lab.39 Since 

Guam is expected to become a focal point for regional job seekers and 

foreign construction workers under any realignment scenario, officials told 

us the island must have the ability to test for and contain various 

communicable diseases, due to this increase in migration. Government of 

Guam officials told us, currently, the nearest lab is in Hawaii and many 

times samples are spoiled and not testable by the time they arrive in 

Hawaii from Guam.

The Guam Police Department is experiencing deficiencies in 

infrastructure, vehicles, and staffing. In terms of infrastructure, according 

to Police Department officials, although its four precinct buildings are in 

good to fair condition, the Police Department does not have a permanent 

 38GAO, U.S. Insular Areas: Economic, Fiscal, and Financial Accountability Challenges, 

GAO-07-119 (Washington, D.C.: Dec. 12, 2006).

39These labs support containment efforts in the day-to-day work with biological agents. 

There are four levels of labs and the requirements of the labs vary in terms of required 

laboratory practices, safety equipment, and facilities based on the type of work performed, 

information about the infectious agent, and the function of the laboratory. A level 2 lab is 

suitable for work with agents that pose moderate risks to personnel and the environment.

Law Enforcement
Page 25 GAO-14-82 Defense Management

headquarters building or location. The current police headquarters is 

located on land owned by the Guam International Airport Authority, which 

wants the Police Department to vacate the facilities so it can redevelop 

the property. In addition, according to Guam officials, the adult corrections 

facility is in poor physical condition, overcrowded, poorly designed, and 

inefficient. The officials also noted that the judicial center needs at least 

two additional courtrooms to support current needs and normal population 

growth.

In addition to these infrastructure challenges, Police Department officials 

identified a number of challenges in servicing the public because of 

limited equipment and staffing. According to Guam Police Department 

officials, the Guam Police Department does not have enough vehicles to 

fully equip all shifts and have vehicles in reserve for downtime. Police 

Department officials estimate they need 18 more patrol vehicles to 

address the vehicle shortage. Likewise, Guam Police Department officials 

estimated that they need about 160 additional officers to appropriately 

serve the public. According to Guam Public Law, each village must have 

a minimum of 2 police officers capable of patrolling and responding to 

calls at all times, and 1 additional officer is required for each additional 

2,000 residents for each shift.40

Military personnel, their dependents, and any contractor or construction 

worker arriving on Guam because of the realignment would necessarily 

Therefore, according to the Department 

of the Interior Inspector General, the Guam Police Department should 

have 464 patrol officers to cover all of its precincts—it currently has 304. 

According to Guam Police Department officials, the personnel shortfall 

has caused the department to exceed its overtime budget annually due to 

excessive overtime work needed to sustain its operations. More recently, 

in a questionnaire conducted for the ongoing supplemental EIS, Police 

Department officials stated that prolonged work hours and excessive 

workload are causing fatigue and unhealthy physical conditions among 

the personnel. To address its staffing shortage, the department is 

currently deputizing civilians. According to Guam Police Department 

Officials, the Guam Police Department is training these civilians and 

giving them law enforcement authority to perform as police officers, but 

without compensation. The program has over 100 volunteer members 

and is increasing.

 40See Guam Code Ann. tit. 10, § 77301(b), (c).
Page 26 GAO-14-82 Defense Management

need to rely on the Guam Police Department in case of emergencies. In 

addition, any person—including military members and their dependents—

who is cited or arrested by the Guam Police Department for violating local 

laws off-base would be processed or prosecuted through Guam’s legal 

system. As such, Police Department officials told us that any population 

increase associated with the revised realignment plan would exacerbate 

the current infrastructure, vehicle, and staffing challenges the department 

is experiencing and could potentially create new ones as shifts in traffic 

patterns and land use occur, for example, because of new commercial 

development, and higher-density housing.

Like the Guam Police Department, Guam’s Fire Department is 

experiencing deficiencies in infrastructure, vehicles, and staffing. In terms 

of infrastructure, Fire Department officials told us that the department is 

currently leasing office space as it does not have a permanent 

headquarters location. In addition, according to a 2012 Department of the 

Interior Inspector General report, the Guam Fire Department does not 

have enough ambulances to service Guam and does not have any 

reserve vehicles in its fleet.41

In addition to these infrastructure and equipment challenges, Fire 

Department officials identified a number of challenges related to staffing. 

For example, Fire Department officials told us that the department does 

not have enough staff to meet its current needs and that its staffing 

numbers have dropped below the National Fire Protection Association 

safety standards which requires a minimum of four personnel on a fire 

truck. The Fire Department currently has about 250 uniformed firefighters. 

According to the Chief of the Fire Department, they require about 72

additional firefighters in order to satisfy the 5 to 6 on-duty personnel per 

engine company standard of the National Fire Protection Association. 

At the time of that report, the Fire 

Department owned 15 ambulances, and of those, only 3 were in service. 

Further, according to the report, there has been at least one documented 

occasion in which the Fire Department had only 1 ambulance to service 

the entire island. The report also noted that although the Fire Department 

owns 12 fire trucks, none have ladders with high-rise capabilities to 

service hotels and other high-rise structures on the island.

 41U.S. Department of Interior Office of Inspector General, Guam Public Safety, HI-EVOIA-0003-2012, (Washington, D.C.: Nov. 20, 2012).

Fire Department
Page 27 GAO-14-82 Defense Management

Officials stated that they are slowly trying to address their personnel 

issues and have received funding from Government of Guam to hire more 

firefighters. For example, in fiscal year 2013 the Government of Guam 

provided the Fire Department approximately $1.8 million for hiring 

personnel and the Fire Department added 28 new firefighter recruits.

Military personnel and their dependents living off base and any 

contractors or construction workers associated with the realignment 

would require the services of the Guam Fire Department for emergencies. 

As such, like the Guam Police Department, Fire Department officials told 

us that any population increase associated with the revised realignment 

would exacerbate the current infrastructure, vehicles, and staffing 

challenges the Fire Department is experiencing.

The Guam Department of Education has been challenged in meeting its 

requirements to effectively maintain its facilities with adequate staffing, 

buses, and supplies, citing continuing budget constraints. In terms of 

infrastructure, the Department of Education through a public/private 

partnership constructed five new schools. Additionally, the Government of 

Guam has secured funds for school infrastructure improvements through 

bond financing. For example, the Government of Guam in fiscal year 

2010 secured approximately $50 million in bond financing for the 

construction of a new high school and in fiscal year 2007 secured 

approximately $27 million in bond financing for school improvements 

including Americans with Disabilities Act compliance, asbestos 

abatement, security and fire alarm systems installation, and other 

improvements. The Guam Department of Education also received $75.7 

million in fiscal year 2010 through the American Recovery and 

Reinvestment Act State Fiscal Stabilization Fund. The funding that was 

received through the American Recovery and Reinvestment Act was 

focused on improving the existing facilities. A significant portion of the 

funding went to repairing all of the roofing at all of the schools, upgrading 

electrical and fire alarm systems, replacing air conditioning units, and 

renovating a middle school. The Army Corp of Engineers recently 

completed a study commissioned by the Department of the Interior which 

estimated $90 million in deferred maintenance costs. The Guam 

Department of Education has been working with Guam’s Legislature and 

Governor’s Office to identify funding sources to repair and renovate aging 

school facilities. 

Although efforts have been to improve the Department of Education’s

infrastructure, the department continues to face staffing challenges. 

Education
Page 28 GAO-14-82 Defense Management

According to Department of Education officials, with an extremely limited 

pool of applicants, the supply of fully certified, highly qualified teachers on 

Guam continues to be an issue since teachers on the island can apply to 

and be hired by the Department of Defense school system. In addition, 

Guam officials also noted that the school system is experiencing a 

shortage of school buses and that each of its buses averages five trips 

per day to transport the island’s children to and from school. Generally, 

children of military service members and DOD civilians attend DOD 

schools, but it is anticipated that any children of temporary workers 

associated with the realignment would attend Guam schools.

Historically, the majority of DOD’s support to defense-affected 

communities has been to provide technical assistance and support 

community planning and coordination efforts due to Base Realignment 

and Closure (BRAC) decisions.42 However, OEA officials identified a few 

examples in the past where DOD has provided direct funding to defenseaffected communities to provide additional capacity specifically needed to 

support DOD growth. DOD’s position has been that existing federal 

programs should be leveraged as much as possible to pay for public 

infrastructure needs and that local communities should largely be 

responsible for obtaining funding for their public infrastructure 

requirements. The Government of Guam has obtained non-DOD federal 

funding for some public infrastructure projects through several federal 

programs, such as a grant from the EPA to improve the water system. In 

addition, local communities can also raise their own funds for public 

infrastructure projects. However, in the case of Guam, some challenges 

have been identified as affecting its ability to raise funds for such projects.

 42DOD describes BRAC as the process the department has used to reorganize its 

installation infrastructure to more efficiently and effectively support its forces, increase 

operational readiness and facilitate new ways of doing business. The BRAC process is 

governed by the Defense Base Closure and Realignment Act of 1990, originally passed as 

Title XXIX of the National Defense Authorization Act for Fiscal Year 1991, Pub. L. No. 

101-510 (1990). It has subsequently been amended many times, including in 2001, when 

Congress authorized a 2005 BRAC round as part of the National Defense Authorization 

Act for Fiscal Year 2002, Pub. L. No. 107-107 (2001).

DOD Generally 

Provides Planning and 

Technical Assistance 

Support to Affected 

Communities While 

Public Infrastructure 

Projects Are Typically 

Funded by Other 

Federal Programs or 

the Communities
Page 29 GAO-14-82 Defense Management

OEA is the primary DOD office responsible for providing assistance to 

communities, regions, and states affected by significant DOD program 

changes. A majority of OEA’s support to defense-affected communities 

has been for community planning and coordination efforts because of 

BRAC decisions. For example, from 2005 through 2012, OEA provided 

$76 million in grants to communities affected by BRAC decisions for 

activities ranging from hiring planners and staff to developing land reuse 

and redevelopment plans. Much of OEA’s assistance in the past was 

directed toward communities that lost military and civilian personnel 

because of the closure or major realignment of a base. However, 

because the 2005 BRAC round and other DOD initiatives created 

significant growth at many bases, OEA also has assisted defenseaffected communities with growth planning. For example, one defenseaffected community used OEA funding to hire personnel, maintain offices, 

and conduct planning. Another community’s local redevelopment 

authority used OEA funding to hire dedicated professional staff and 

contract with a consultant to prepare a redevelopment plan. For each 

community it assists, OEA assigns a project manager who can provide 

assistance in a variety of ways. OEA can provide funds for hiring 

consultants to assist in developing a reuse plan, information on federal 

grant money or other available resources, and information on best 

practices used by other closure communities. In addition, OEA’s website 

provides reports containing lessons learned from other communities and 

information on other available resources and OEA is currently developing 

a community forum function on its website where community members 

can exchange ideas and learn from each other’s experiences.

OEA has generally provided funding for technical assistance, but it also 

has provided public infrastructure funding to local communities. For 

example, OEA officials noted the public infrastructure funding associated 

with the construction of Trident submarine bases at Bangor, Washington, 

and Kings Bay, Georgia. In these two instances, DOD provided millions of 

dollars in funding for public infrastructure projects to the local 

communities surrounding Bangor and Kings Bay because DOD’s public 

infrastructure needs would exceed those already in place and serving the 

communities. During the 1970s, DOD decided to build submarine bases 

at Bangor and Kings Bay and determined that the subsequent growth 

would generate significant public infrastructure needs that the local 

communities could not support. In both cases, the expansion of the bases 

would require significant construction and result in the eventual influx of 

significant amounts of personnel to the surrounding communities for 

which the local governments’ public infrastructure was generally 

inadequate. Congress authorized the Secretary of Defense to provide 

Majority of DOD Support 

to Communities Has Been 

for Planning and Technical 

Assistance Efforts, but 

Limited Direct Funding for 

Projects Has Been Made 

Available
Page 30 GAO-14-82 Defense Management

financial assistance to the local communities for the costs of providing 

increased municipal services and facilities.43

Additionally, in some instances, specific appropriations have been made 

by Congress to OEA’s budget for public infrastructure improvements to 

assist affected communities. For example, in 2011, Congress 

appropriated $300 million for use by OEA for transportation infrastructure 

improvements associated with medical facilities related to 

recommendations of the BRAC Commission.

For both programs, DOD 

assigned OEA with responsibility for program management. According to 

congressional documents, DOD reported that it provided approximately 

$55 million, in nominal dollars (i.e., not adjusted for inflation), to 

communities surrounding Bangor for infrastructure improvements in 

areas, such as water resources, schools, fire protection, parks, roads, law 

and justice, social and health services, sewers, and libraries. According to 

DOD documents, DOD reported providing approximately $48 million, in 

nominal dollars, to communities surrounding Kings Bay for infrastructure 

improvements similar to Bangor, such as utility systems, elementary 

schools, a city hall, a fire station, and various public vehicles.

44 Some of the communities 

receiving funding were Montgomery County, Maryland, for the 

construction of a pedestrian and bicycle underpass near the Walter Reed 

National Military Medical Center and the City of San Antonio, Texas, for 

the construction of a safer highway interchange near Brooke Army 

Medical Center. In addition, also in 2011, Congress appropriated $500 

million in funding for the construction, renovation, repair, or expansion of 

public schools located on military installations to address capacity or 

facility condition deficiencies.45

 43See Military Construction Authorization Act, 1981, Pub. L. No. 96-418, § 802 (1980); 

Military Construction and Reserve Forces Facilities Authorization Acts, 1975, Pub. L. No. 

93-552, § 608 (1974). In both cases, the authorization was linked to the Secretary’s 

determination of an immediate and substantial increase in the need as a direct result of

work carried out in connection with DOD actions, and that an unfair and excessive 

financial burden would be incurred by the communities as a result. See id.

As implemented by OEA, these funds 

44See Department of Defense and Full-Year Continuing Appropriations Act 2011, Pub. L. 

No. 112-10, § 8110 (2011).

45See Consolidated Appropriations Act, 2012, Pub. L. No. 112-74, § 8118 (2011); Pub. L. 

No. 112-10, § 8109. Each Act appropriated $250 million for this purpose.
Page 31 GAO-14-82 Defense Management

were available for local educational agencies operating such public 

schools.46

According to OEA officials, DOD’s position is that local communities 

should largely be responsible for obtaining funding for public 

infrastructure requirements related to DOD basing decisions. This funding 

can come from other, non-DOD federal programs, with DOD advocating 

that existing federal programs should be leveraged as much as possible. 

Along these lines, several federal agencies have existing programs that 

have funded public infrastructure improvements on Guam in recent years. 

For example, EPA, which assists Territories under its Environmental 

Protection Consolidated Grants program, provided Guam with almost 

$6.8 million in fiscal year 2012 to fund drinking water and wastewater 

system improvements. The Department of the Interior’s Office of Insular 

Affairs provided Guam with over $6 million in fiscal year 2013 in capital 

improvement grants to fund a variety of infrastructure needs. Table 1 

shows examples of public infrastructure programs for which Guam has 

received funding from non-DOD federal programs in the last few years.

 46See, e.g., Department of Defense Program for Construction, Renovation, Repair or

Expansion of Public Schools Located on Military Installations, 76 Fed. Reg. 55,883 (Sept. 

9, 2011).

Other Federal Funding 

Sources Have Been 

Used to Fund Guam 

Infrastructure Projects
Page 32 GAO-14-82 Defense Management

Table 1: Examples of Non-DOD, Federal Programs that Funded Guam Public Infrastructure Projects 

Agency Program

Last fiscal year 

received funding

Amount provided in 

last fiscal year funding 

was received 

Department of Agriculture Community Facilities Loans and Grants: Provide 

loans, grant and loan guarantees for essential 

community facilities in rural areas. Priority is given to 

health care, education and public safety projects. 

Typical projects are hospitals, health clinics, schools, 

fire houses, community centers and many other 

community based initiatives. 

2010 $102,102

Department of the Interior Capital Improvement Project Funding: Provide 

grants to be used for capital improvements in the four 

U.S. territories. A unique feature of these grants is that 

they may be used to meet the local matching 

requirement for capital improvement grants of other 

federal agencies, subject to Office of Insular Affairs 

approval.

2013 $6,128,000

Environmental Protection 

Agency

Environmental Protection Consolidated Grants for 

the Insular Areas—Program Support: Provides 

technical, managerial, and financial support in relation 

to EPA’s consolidated environmental program and 

Drinking Water and Clean Water grants for the 

protection of public health and welfare in the Territories 

of Guam, American Samoa, and the Virgin Islands, 

and the Commonwealth of the Northern Mariana 

Islands.

2012 $6,770,000

Source: GAO analysis of Guam single audits and 2014 executive budget request.

Note: We did not review all potential programs and, therefore, the information we collected should not 

be viewed as complete.

In addition to obtaining funding through non-DOD federal programs, local 

communities can also raise their own funds for public infrastructure 

projects. In the case of Guam, two key challenges have been identified as 

affecting its ability to raise funds. Specifically, according to Government of 

Guam officials, limited government revenues and limited debt capacity 

due to its statutory debt limitation hinder its ability to finance its public 

infrastructure projects. First, Guam has faced an operating deficit over the 

past few years and current revenues are not sufficient to support 

operational requirements. The Governor of Guam told us that without a 

major increase in economic activity and the resulting increase in 

revenues, the administration will be unable to address additional public 

infrastructure requirements other than those necessary for basic 

operations and debt service requirements. Government of Guam officials 

explained that the major revenue challenges for the government are the 

Despite Revenue 

Challenges, the 

Government of Guam

Has Obtained Funding 

through Issuing Bonds
Page 33 GAO-14-82 Defense Management

inability of taxpayers to pay taxes, the inability of the government to 

access military bases to conduct random inspections to ensure military 

contractors and vendors are in compliance with Guam’s tax laws, and the 

large amount of DOD-controlled land on Guam that is not available for 

economic development. Two Department of the Interior reports identified 

that Guam’s operating revenues challenges are partly a result of poor tax 

collection efforts.47

We have previously found that although communities near military growth 

locations can face growth-related challenges in the short term, such as 

challenges in providing additional infrastructure, they can expect to 

realize economic benefits in the long term, such as increased revenue.

At the time of those reports, the Department of the 

Interior estimated that persistent deficiencies in Guam’s tax collection 

process were resulting in lost tax revenues of at least $23.5 million each 

year. Guam officials told us that since those reports were issued they 

have taken steps to address the findings in the reports and improve their 

tax collection efforts but that the taxpayer’s inability to pay will always be 

a challenge.

48

An increase in military and federal civilian employees on Guam stemming 

from the realignment may be a potential source of additional revenue. For 

instance, Guam receives federal income taxes paid by military and civilian 

employees of the U.S. government stationed in Guam. Under section 30 

of the Organic Act of Guam and a related statute,49

 47U.S. Department of the Interior Office of Inspector General, Tax Collection Activities 

Government of Guam: Revitalized Tax Collection and Enforcement Effort Needed, P-EVGUA-0002-2008 (Washington, D.C.: Nov. 26, 2008) and Department of the Interior Office 

of Inspector General, Guam’s Tax Collection Activities: Office of Insular Affairs 

Involvement Needed to Achieve Lasting Improvements, HI-EV-GUA-0002-2008 

(Washington, D.C.: Nov. 28, 2008).

the Internal Revenue 

Service reimburses Guam for the income taxes it collects from federal 

civilian and military personnel assigned to Guam. The Internal Revenue 

Service pays section 30 funding to Guam annually. The money 

represents the income tax paid by federal employees and military service 

members who work on Guam but not collected locally. This amounted to 

$52 million in 2010, and this amount is expected to increase with the 

48GAO, Defense Infrastructure: High-Level Leadership Needed to Help Communities 

Address Challenges Caused by DOD-Related Growth, GAO-08-665 (Washington, D.C.: 

June 17, 2008).

49See Pub. L. No. 81-630, ch. 512, § 30, 64 Stat. 384, 392 (1950) (codified as amended at 

48 U.S.C. § 1421h) and 26 U.S.C. § 7654.
Page 34 GAO-14-82 Defense Management

realignment thereby providing the Government of Guam with increased 

revenue. However, Guam officials told us they were concerned that since 

the composition of the Marines to be relocated to Guam under the revised 

realignment plan would be mostly rotational, they would not be 

reimbursed for the income taxes since these personnel may be stationed 

on Guam for less than 6 months. In response to these concerns, DOD 

recently announced procedures to account for and reimburse to Guam 

income tax paid by all U.S. Marines—whether part of a rotational unit or 

permanently stationed on island. With DOD’s announcement, according 

to Government of Guam officials, Marines stationed in Guam will be 

included under section 30, regardless of how long they are on Guam, 

thereby providing the Government of Guam with additional revenue.

The second challenge identified as affecting Guam’s ability to raise funds 

is its statutory debt limitation. The Government of Guam’s ability to 

borrow funds to help pay for public infrastructure projects and programs 

related to the realignment may be constrained because of a statutory debt 

limitation contained in the Organic Act of Guam,50 depending on the form 

and terms of the prospective debt. Section 11 of the act places a 

limitation on government borrowing, limiting Guam’s public indebtedness 

to no more than 10 percent of the aggregate tax valuation of property on 

Guam.51

 50See Pub. L. No. 81-630, ch. 512, § 11, 64 Stat. at 387-88.

However, not all government obligations are included in the debt 

ceiling. For instance, section 11 of the Organic Act notes that bonds or 

other obligations of the Government of Guam payable solely from 

revenues derived from any public improvement or undertaking shall not 

be considered public indebtedness as defined in the Organic Act of 

Guam. As such, they would not be counted towards the government’s 

statutory debt limitation. However, whether certain obligations fall into this 

exception and should not be included in the Government of Guam’s debt 

limit calculation has generally been a highly litigated issue and may be 

5148 U.S.C. § 1423a. Most U.S. states and local municipalities have similar constitutional 

or statutory limitations on borrowing. Debt limitation provisions “serve as a limit to taxation 

and as a protection to taxpayers; to maintain ... solvency, both governmental and 

proprietary; and to keep [local] ... residents from abusing their credit, and to protect them 

from oppressive taxation.” In Re Request of Camacho, 2003 Guam 16, 2003 WL 

21697180, at *3 (Guam July 23, 2003) (quoting 15 McQuillin, The Law of Municipal 

Corporations § 41.01, 41.02 (3d ed., 1949)), reversed on other grounds in Limtiaco v. 

Camacho, 549 U.S. 483 (2007).
Page 35 GAO-14-82 Defense Management

determined on a case-by-case basis by the Guam courts.52

Despite these challenges, the Government of Guam has been able to 

obtain funding through issuing bonds in the past. For example, in 

December 2011, the Government of Guam successfully issued $235 

million in bonds to pay unpaid tax refunds and past due cost of living 

allowances to certain retired government employees. These bonds were 

financed from revenues generated from the island’s business privilege 

tax. Further, in April 2011, the Government of Guam successfully sold

$90.7 million worth of bonds to construct a new Guam museum and for 

other projects that benefit Guam’s tourism industry, such as the 

restoration of a community center and bell tower and the construction of a 

historic monument and plaza to commemorate Ferdinand Magellan’s visit 

to Guam. These bonds were financed from revenues generated from 

Guam’s hotel occupancy tax. These successful bond offerings 

demonstrate that a market may exist among investors for the Government 

of Guam’s debt, which could be a potential source of funding for its 

necessary public infrastructure improvements. Further, Guam’s 

autonomous government agencies related to public infrastructure—

Power, Waterworks, and Port Authorities—have the ability to issue bonds 

for infrastructure improvements. Bonds issued by autonomous agencies 

are often backed by the agencies’ own revenue streams, such as 

customer rates. Guam officials cautioned, however, there is a limit to how 

much they can raise rates on their customers to increase revenue, 

particularly since for some utilities, Guam already has relatively high rates 

when compared to other insular areas and Hawaii. Like other bonds 

issued by the Government of Guam, the determination of whether a bond 

issued by one of these agencies would count against the Government of 

Guam’s statutory debt ceiling also depends upon the form and terms of 

the debt and can be a highly litigated issue.

Until the 

Government of Guam has determined and decided on the form and terms 

of debt it plans to incur to help fund off-base projects and programs 

related to the realignment, it is unknown what effect this debt limitation 

provision will have on the ability of the Government of Guam to incur debt

for the purposes of the realignment.

 52Courts have interpreted “debt” to include a wide variety of financial arrangements. For 

example, the Guam Supreme Court held that bonds issued by the Guam Telephone 

Authority should be included in the debt ceiling because the Government of Guam was 

committed to pay to the authority any deficiencies in the bond reserve fund from general 

tax revenues. Guam Telephone Authority v. Rivera, 416 F.Supp. 283 (1976).
Page 36 GAO-14-82 Defense Management

DOD has requested funding from Congress for projects to improve 

Guam’s public infrastructure. However, the projects included in these 

budget requests were validated based on the 2006 realignment plan, and 

DOD has not revalidated public infrastructure requirements for Guam to 

reflect the revised realignment plan or differentiated between 

requirements to address long-standing conditions in Guam’s public 

infrastructure and those specifically related to additional capacity for the 

realignment. According to DOD, a revised list of Guam public 

infrastructure requirements and cost estimates based on the revised 

realignment plan that calls for over 11,000 less people coming to Guam 

than the previous plan will not be available until 2015 when DOD 

completes the supplemental EIS. Even so, DOD has requested over 

$400 million for Guam infrastructure projects in its budget requests for 

fiscal years 2012 through 2014. However, since these projects were 

originally validated on the basis of the 2006 realignment plan, it is 

uncertain to what extent these projects are necessary or necessary to the 

same extent given the significant reduction in forces associated with the 

revised realignment plan and the fact that the potential effect has not 

been revalidated. Congress has restricted the use of funds until further 

information is provided related to the realignment plan and imposed other 

restrictions on use of the funding. It is also unclear to what extent the

projects specified in DOD’s budget requests are required to address 

additional capacity to accommodate the current realignment plan or to 

address long-standing deficiencies in Guam’s infrastructure because 

DOD has not clearly differentiated between these two types of 

requirements.

Although a list of public infrastructure projects was developed for the 

2006 realignment plan for approximately 17,600 people relocating to 

Guam, Joint Guam Program Office officials stated that a revised list of 

Guam public infrastructure requirements and cost estimates based on the 

current realignment plan for approximately 6,300 people will not be 

available until sometime in 2015 when DOD completes the ongoing 

supplemental EIS. In February 2010 after the original realignment plan 

was announced, the Deputy Secretary of Defense chaired a meeting of 

the Economic Adjustment Committee, the goal of which was to develop a 

DOD Has Not 

Revalidated Its Guam 

Public Infrastructure 

Requirements or 

Differentiated 

Between 

Requirements to 

Address LongStanding Conditions 

and Those Related to 

the Revised 

Realignment Plan

An Updated List of 

Infrastructure 

Requirements for the 

Realignment Will Not Be 

Available Until after the 

Supplemental EIS
Page 37 GAO-14-82 Defense Management

Guam public infrastructure funding plan for the original realignment.53

According to OEA officials the Economic Adjustment Committee divided 

this task into a public infrastructure assessment team and a 

socioeconomic project assessment team. The public infrastructure team 

examined Guam’s water and wastewater system, port, solid waste, power 

system, and roads. The socioeconomic project team examined health 

care, education, cultural resources, emergency services, judicial services, 

and other public infrastructure throughout the island. Input to the 

assessments was initially provided by the Office of the Governor of 

Guam, working with the territory’s executive departments, who proposed 

specific projects within each infrastructure area for further consideration. 

Finally, a team comprised of officials from federal agencies with purview 

over one or more of the identified infrastructure areas validated the need, 

scope, and funding required for each public infrastructure project. 

Ultimately, the Economic Adjustment Committee developed a list of 

validated projects needed to prepare Guam for the original realignment 

plan and these projects were subsequently included in DOD’s budget 

requests (see table 2). The Economic Adjustment Committee considered 

other projects but did not include them on the validated list and, as a 

result, the projects were not included in DOD budget requests.

 53The Economic Adjustment Committee is chaired by the Secretary of Defense or his 

designee, and is made up of representatives from 22 federal agencies. The committee is 

to develop procedures for ensuring, among other things, that communities that are 

substantially and seriously affected by certain DOD actions are notified of available federal 

economic adjustment programs. The committee is also to advise, assist, and support the 

Defense Economic Adjustment Program, which assures coordinated interagency and 

intergovernmental adjustment assistance concerning defense impact problems and serves 

as a clearinghouse to exchange information among federal, state, regional, metropolitan, 

and community officials involved in the resolution of community economic adjustment

problems, among other functions. See Exec. Order No. 12,788, 57 Fed. Reg. 2213 (Jan. 

15, 1992), amended by Exec. Order No. 13,286, § 33, 68 Fed. Reg. 10,619, 10,625 (Feb. 

28, 2003) and Exec. Order No. 13,378, 70 Fed. Reg. 28,413 (May 12, 2005), reprinted as 

amended in 10 U.S.C. § 2391 note. In regards to the Guam realignment, the committee 

was comprised of subject matter experts from the Departments of Agriculture, Defense, 

Education, Interior, Justice, Health and Human Services, and Housing and Urban 

Development, as well as the Office of Management and Budget and the Council on 

Environmental Quality.
Page 38 GAO-14-82 Defense Management

DOD has requested over $400 million to fund Guam public infrastructure 

projects in DOD’s budget requests for fiscal years 2012 through 2014. 

Because OEA is the primary DOD office responsible for providing 

assistance to communities, regions, and states affected by significant 

DOD program changes, DOD included these projects in OEA’s budget 

requests. Table 2 provides additional details regarding the requests and 

associated infrastructure projects and justifications.

Table 2: Guam Public Infrastructure Projects Included in OEA’s Budget Requests, Fiscal Years 2012 through 2014

Dollars (in millions)

Project 

Number

Fiscal year 

budget request Project DOD justification

Amount 

requested

1 2012 Transfer to Department of 

the Interior for vehicles 

and supplies for civilian 

student transportation.

To allow the civilian school system to support all civilian 

student growth resulting from the permanent contractor 

support population growth and to accommodate the 

current under-capacity school bus fleet in additional to 

this increased demand.

$10.1 

2 2012 Transfer to the U.S. 

Department of Housing 

and Urban Development 

for construction of 

Archeological 

Preservation Act artifact 

repository

First phase of the 

construction of a Guam 

mental health and 

substance abuse facility

To provide for the preservation and repository of 

artifacts unearthed during military construction.

To address induced population growth impacts (migrant 

construction labor during the realignment and 

contractors) that will further strain Guam’s mental health 

and substance abuse system. 

22.9 

Total fiscal year 2012 $33

3 2013 Second phase of the 

construction of a Guam 

mental health and 

substance abuse facility.

To address induced population growth impacts (migrant 

construction labor during the realignment and 

contractors) that will further strain Guam’s mental health 

and substance abuse system.

20.1

4 2013 Construction of a Guam 

regional public health 

laboratory

To replace and relocate the current public health 

Centers for Disease Control and Prevention level I 

laboratory with a current Centers for Disease Control 

and Prevention Level II laboratory, which provide 

detection capabilities for the increased supplies, 

construction materials, etc., related to the realignment 

and protection capabilities for island workers.

12.9 

5 2013 First phase of Guam water 

and wastewater 

infrastructure 

improvements.

To address the fragile state of Guam’s water and 

wastewater infrastructure, remedies and new 

infrastructure are required to support growth resulting 

from the U.S. Marine Corps relocation to Guam.

106.4

DOD Has Requested 

Funding to Improve 

Guam’s Public 

Infrastructure
Page 39 GAO-14-82 Defense Management

Dollars (in millions)

Project 

Number

Fiscal year 

budget request Project DOD justification

Amount 

requested

Total fiscal year 2013 139.4

6 2014 Second phase of Guam 

water and wastewater 

infrastructure 

improvements.

• Upgrade the Northern 

District Wastewater 

Treatment Plant and 

the Hagatna 

Wastewater 

Treatment Plant to full 

secondary treatment.

• Address wastewater 

collection system 

deficiencies, including 

leaking underground 

fuel tanks (for backup 

generators) at 

wastewater pump 

stations.

• Technical support and 

project development.

To address the deteriorating condition of Guam’s water 

distribution and wastewater treatment and collection 

systems. The requested funding will address public 

infrastructure deficiencies that (1) impact the public 

health of DOD personnel and (2) are beyond the 

financial capability of Guam to correct. The funding also 

will provide safe, sustainable water resources and 

capacity critical not only for DOD personnel currently 

based on Guam and for future DOD growth, but also for 

current residents of the territory and civilian population 

growth induced by the military realignment. Additionally, 

EPA is requiring both wastewater treatment plants to 

achieve secondary treatment.

273.3

Total of all fiscal years $445.7

Source: OEA budget requests.

In response to DOD’s requests for Guam public infrastructure funding, 

Congress has appropriated some funds, but it has placed limitations on 

the use of the funds. For example, in 2011, Congress appropriated $33 

million to DOD, acting through the OEA, to assist the civilian population of 

Guam in response to the military realignment.54

 54See Consolidated Appropriations Act, 2012, Pub. L. No. 112-74, § 8110 (2011).

However, this funding 

was subject to restrictions on the expenditure of funds for military and 

public infrastructure projects in Guam related to the realignment of Marine 
Page 40 GAO-14-82 Defense Management

Corps forces from Okinawa to Guam.55 The National Defense 

Authorization Act for Fiscal Year 2013 contained similar restrictions,56 and

in the Consolidated and Further Continuing Appropriations Act, 2013, 

Congress rescinded $21 million of the $33 million appropriated to DOD 

for fiscal year 2012 for Guam.57 OEA requested $139.4 million for public 

infrastructure projects on Guam for fiscal year 2013. Congress 

appropriated $243.4 million for OEA for fiscal year 2013,58

 55See National Defense Authorization Act for Fiscal Year 2012, Pub. L. No. 112-81, § 

2207(a) (2011). Specifically, the provision restricts the use of funds authorized to be 

appropriated under the National Defense Authorization Act for Fiscal Year 2012 and 

amounts provided by the Government of Japan until certain information is provided to the 

congressional defense committees. See § 2207(a). Additionally, the provision imposed 

restrictions on the use of DOD funds for the development of public infrastructure projects 

on Guam absent specific authorization by law. See § 2207(b). The provision contained 

specified exceptions. See § 2207(c).

but provided 

no authorization for use of the funding for public infrastructure projects on 

Guam. Consequently, according to an OEA official, because DOD did not 

have the authority to spend the funds for Guam, $119.4 million was 

reprogrammed in July 2013 to address shortcomings elsewhere in DOD. 

As a result, these funds are no longer available to DOD for Guam public 

infrastructure projects. These congressional actions have implications for 

DOD’s fiscal year 2014 budget request. For example, in its fiscal year 

2014 budget request, DOD requested $273.3 million to fund 

improvements to the water treatment system on Guam. These funds were 

intended to fund the second phase of those improvements, as DOD’s 

expectation was that the $106.4 million requested for fiscal year 2013 

would have funded the first phase. While DOD is awaiting congressional 

action on its fiscal year 2014 budget request, it appears that DOD’s 

request is in advance of need since there was no phase one of the water 

and wastewater treatment funding and the funds were reprogrammed. As 

of October 2014, bills pending in Congress varied on the extension of the 

restriction on the use of funds for the realignment of Marines to Guam, 

including the restriction related to public infrastructure. While the House 

56See Pub. L. No. 112-239, § 2832(a), (b) (2013). Section 2832 contained exceptions to 

the funding restriction, including for required environmental analysis or studies, planning 

and design of construction projects at Andersen Air Force Base and Andersen South, and 

to carry out specified military construction projects. See § 2832(c).

57See Pub. L. No. 113-6, § 8040 (2013); 159 Cong. Rec. S1520 (daily ed. Mar. 11, 2013) 

(Explanatory Statement for the Act, labeling the rescission as “Operation and 

Maintenance, Defense-Wide Office of Economic Adjustment grant to Guam”).

58See 159 Cong. Rec. S1365, 1366 (daily ed. Mar. 11, 2013) (Explanatory Statement).
Page 41 GAO-14-82 Defense Management

bill for the National Defense Authorization Act for Fiscal Year 2014 would 

repeal the restriction from the previous year,59 the version of the bill 

reported by the Senate Armed Services Committee included an extension 

of the restriction on use of funds to implement the realignment and public 

infrastructure funding.60

DOD has not revalidated the projects identified in its budget requests to 

reflect the smaller DOD population associated with the revised 

realignment plan. As a result, it is unclear to what extent these projects 

are still needed or are scoped appropriately, given the reduced numbers 

of Marines slated to relocate to Guam. OEA said that some of these 

projects, such as the artifact repository, should not be affected despite the 

change in the realignment plans because it is needed to fulfill federal 

historic preservation requirements and would be required under either 

plan. However, it is unclear if other projects, such as the water and 

wastewater improvements and the mental health facility, are still 

necessary or necessary to the same extent given the significant reduction 

in forces under the revised realignment plan and the as yet undetermined 

location of the main Marine Corps installation on the island. According to 

DOD officials, the projects initially validated by the Economic Adjustment 

Committee for the 2006 realignment plan and included in DOD budget 

requests will be reassessed based on the revised realignment plan as 

part of the supplemental EIS process to be completed in 2015.

DOD also has not clearly differentiated between requirements to address 

long-standing conditions in Guam’s public infrastructure and those to 

address increased capacity to support the new realignment plan for most 

sectors. As a result, it is unclear to what extent the public infrastructure 

projects in DOD’s budget requests are needed to support the 

realignment. For example, one of the possible locations for constructing 

and operating the main Marine installation being considered under the 

ongoing supplemental EIS is Naval Base Guam in the southern part of 

the island. However, this base handles all of its own wastewater needs 

and gets its potable water from its own wells and the Fena Reservoir, 

thus not requiring DOD to rely on the public water and wastewater 

 59See H.R. 1960, 113th Cong., § 2832 (as passed by House, June 14, 2013).

60See S. 1197, 113th Cong., § 2821 (as reported in the Senate, June 20, 2013); see also

S. Rep. No.113-44, at 239 (2013).

DOD Has Not Revalidated 

the Guam Public 

Infrastructure Projects 

Included in Budget 

Requests or Differentiated 

Between Current 

Requirements and Those 

for the Realignment
Page 42 GAO-14-82 Defense Management

systems. If this location is chosen, it would raise questions about the 

funding DOD has requested for making improvements to the water and 

wastewater treatment plant that DOD had justified by citing the need for 

additional capacity to support the additional troops associated with the 

realignment. Similarly, DOD has not estimated the extent to which the 

mental health facility or school bus acquisition projects would actually be 

used by personnel associated with the new realignment, none of whom 

were on Guam in 2012 or will be on Guam in 2013 or 2014 even though 

DOD cited the additional capacity associated with the realignment as a 

basis for its budget request.

For the electricity sector, we found that DOD has taken steps to 

differentiate between requirements related to the realignment and those 

to address long-standing conditions. In February 2013, DOD asked the 

Guam Power Authority to model what upgrades would be needed to meet 

the increased demand associated with three of the possible five locations 

for constructing and operating the main Marine Corps installation. The 

Power Authority provided DOD with the specific electric transmission and 

distribution improvements that would be needed and their estimated costs 

which ranged from $25 million to $35 million depending on the location. 

However, according to our discussions with Government of Guam and 

DOD officials, DOD has not asked for similar analyses from other affected 

Guam agencies or begun a comprehensive analysis across all public 

infrastructure sectors to differentiate between requirements to address 

existing conditions and what is needed specifically to address additional 

capacity for the realignment.

The Joint Guam Program Office and Naval Facilities Engineering 

Command officials told us that they are currently conducting assessments 

to reexamine and revalidate the need, scope, and funding required for all 

utilities and infrastructure projects during DOD’s development of the 

supplemental EIS. However, they were uncertain regarding the degree to 

which the supplemental EIS would fully differentiate between identifying 

projects that address existing Guam conditions and additional capacity for 

DOD requirements. Office of Management and Budget guidance 

containing best practices for cost estimating in the context of capital 

programming, which includes planning and budgeting, suggests that it is 

a best practice to continuously update the cost estimating process, based 

on the latest information available, to keep estimates current, accurate, 
Page 43 GAO-14-82 Defense Management

and valid.61 In addition, GAO’s Cost Estimating and Assessment Guide

states that cost estimates should have all cost inputs checked to verify 

that they are as accurate as possible and that estimates should be 

updated to reflect changes in requirements.62 While we acknowledge that 

DOD has not completed the supplemental EIS and developed an updated 

list of public infrastructure project requirements, DOD is requesting funds 

for existing Guam public infrastructure projects in its budget requests that 

DOD has not revalidated in light of changes to its realignment plans. 

Moreover, DOD has not conducted a comprehensive analysis to 

differentiate between requirements to address long-standing Guam public 

infrastructure deficiencies and extra capacity to support the realignment. 

Without such an analysis, DOD will not have the information to identify 

accurately the costs directly attributable to the realignment and help 

justify its budget requests to Congress to help pay for the portion of the 

projects that are attributable to the extra capacity to support the 

realignment. Both Guam and DOD officials also agreed that developing 

this type of information would better determine what appropriate amount 

of Guam public infrastructure improvements DOD should fund and those 

Guam should fund. Without this information, DOD cannot fully inform 

Congress of what funding is actually needed to fund public infrastructure 

development to support the revised realignment plan.

The cost estimate, DOD has used to support its budget requests for water 

and wastewater infrastructure projects on Guam, did not fully adhere to 

best practices for developing a reliable cost estimate, which is at the core 

of successfully managing a project within cost and affordability guidelines. 

During the development of the EIS, DOD, the Guam Waterworks 

Authority, and the EPA cooperated to identify and prioritize water and 

wastewater projects island-wide that were necessary to support the 2006 

Marine Corps realignment plan. As part of this effort, DOD (as the EIS 

sponsor) paid for and EPA (as an EIS cooperating agency) managed a 

contract with an environmental firm for the development of a refined 

Guam water and wastewater infrastructure cost estimate. The contractor 

updated the original 2010 estimate on several occasions with the latest 

 61Office of Management and Budget, Capital Programming Guide: Supplement to OMB 

Circular A-11: Planning, Budgeting, and Acquisition of Capital Assets, app. 8 (ver. 3.0 

(July 2013).

62GAO-09-3SP, pp. i and 182. 

DOD’s Cost Estimate 

to Improve Guam’s 

Water and Wastewater 

Infrastructure Is Not 

Reliable
Page 44 GAO-14-82 Defense Management

being in September 2012. That update indicates that approximately $1.3 

billion in improvements are needed for Guam’s water and wastewater 

infrastructure to address existing deficiencies, including out-of-compliance 

facilities, as well as requirements to support the Marine Corps 

realignment. DOD used this cost estimate to support its fiscal year 2013 

and 2014 budget requests for Guam water and wastewater 

improvements. However, when reviewing this cost estimate, we were 

unable to determine which projects within the $1.3 billion estimate were 

specifically for capacity increases due to the military realignment and 

associated with the fiscal years 2013 and 2014 budget requests. In 

assessing the estimate against best practices, we determined that this 

estimate is not reliable because it does not include all relevant costs, is 

based on limited data, and, as documented, lacks many of the key 

characteristics to be considered a reliable cost estimate. In addition, we 

found no evidence that actual costs were incorporated into the estimate 

and that risk and uncertainty were adequately assessed in the estimate.

Office of Management and Budget (OMB) guidance containing best 

practices for cost estimating in the context of capital programming notes 

that a disciplined cost estimating process provides greater information 

management support, more accurate and timely cost estimates and 

improved risk assessments that will help to increase the credibility of 

capital programming cost estimates.63

Consistent with OMB guidance, in March 2009, we issued a cost 

estimating and assessment guide that compiled cost estimating best 

practices from across industry and government.

Among other things, OMB’s 

guidance states that credible cost estimates are vital for sound 

management decision making and for any program or capital project to 

succeed. It further notes that early emphasis on cost estimating during 

the planning phase is critical to successful life cycle management of a 

program or project. Without such an estimate, agencies are at increased 

risk of experiencing cost overruns, missed deadlines, and performance 

shortfalls.

64

 63See Office of Management and Budget Capital Programming Guide: Supplement to 

OMB Circular A-11: Planning, Budgeting, and Acquisition of Capital Assets, app. 8 (V 3.0 

July 2013).

According to our cost 

estimating guide, a reliable cost estimate is critical to successfully 

64GAO-09-3SP.
Page 45 GAO-14-82 Defense Management

managing capital program costs. Such an estimate provides the basis for 

informed investment decision making, realistic budget formulation, and 

accountability for results. Furthermore, the guide indicates that these best 

practices can be organized into the four characteristics of a reliable cost 

estimate that management can use for making informed program and 

budget decisions. Specifically, an estimate is considered

• comprehensive when it accounts for all possible costs associated 

with a program, is structured in sufficient detail to ensure that costs 

are neither omitted nor double counted, and documents all costinfluencing assumptions;

• well-documented when supporting documentation explains the 

process, sources, and methods used to create the estimate, contains 

the underlying data used to develop the estimate, and is adequately 

reviewed and approved by management;

• accurate when it is not overly conservative or optimistic, is based on 

an assessment of the costs most likely to be incurred, and is regularly 

updated so that it always reflects the current status of the program; 

and

• credible when any limitations of the analysis because of uncertainty 

or sensitivity surrounding data or assumptions are discussed, the 

estimate’s results are cross-checked, and an independent cost 

estimate is conducted by a group outside the acquiring organization to 

determine whether other estimating methods produce similar results.

Each of these four characteristics consists of several best practices (see 

appendix II for a summary of these practices and our Cost Estimating and 

Assessment Guide for more details on the individual best practices).65

• Not Met (1 point)—DOD provided no evidence that satisfies any 

portion of the best practice criterion.

We 

evaluated the estimate against each of the individual best practices, 

assigning a score on a scale of 1 to 5 to indicate the degree to which the 

cost estimate met each best practice.

• Minimally Met (2 points)—DOD provided evidence that satisfies a 

small portion of the best practice criterion.

• Partially Met (3 points)—DOD provided evidence that satisfies about 

half of the best practice criterion.

 65GAO-09-35P. 
Page 46 GAO-14-82 Defense Management

• Substantially Met (4 points)—DOD provided evidence that satisfies a 

large portion of the best practice criterion.

• Fully Met (5 points)—DOD provided complete evidence that satisfies 

the entire best practice criterion.

We then determined the overall assessment rating for each of the four 

characteristics by totaling the scores assigned to the individual best 

practices within each characteristic to derive an average score for that 

characteristic. The average scores fell into the following ranges:

• Not Met = 0 to 1.4

• Minimally Met = 1.5 to 2.4

• Partially Met = 2.5 to 3.4

• Substantially Met = 3.5 to 4.4

• Fully Met = 4.5 to 5.0.

Best practices assessed as not applicable were not given a score and 

were not included in our calculation of the overall assessment. 66

To be considered reliable, an estimate must substantially or fully meet all 

four characteristics. We found that the water and wastewater cost 

estimate for Guam did not meet one of the characteristics and only 

minimally met the remaining three. As a result, we determined that the 

estimate is not reliable. Table 3 provides a summary of the results of 

GAO’s assessment of the Guam water and wastewater cost estimate 

based on cost estimating best practices. See appendix II for our complete 

analysis of the individual best practices for each of the characteristics.

 66This rating scale was developed by GAO staff in consultation with some of the cost 

estimating experts who helped develop the Cost Estimating and Assessment Guide.
Page 47 GAO-14-82 Defense Management

Table 3: Summary of GAO’s Assessment of the Guam Water and Wastewater Cost Estimate Based on Best Practices Criteria

Characteristic GAO assessment summary Assessment

Comprehensive Officials outlined and documented the ground rules and assumptions of the project in the 

estimate. However, because of limited data, we were unable to determine whether risks 

associated with any assumptions were identified and traced to specific elements. Additionally, 

the estimate does not include all of the life-cycle costs needed to sustain the infrastructure 

improvement program. For example, the cost estimate does not include any operation and 

maintenance costs for equipment and upkeep of improvements made to the water and 

wastewater infrastructure.

Because assumptions are best guesses, best practices state that the risks associated with 

assumptions need to be identified and assessed. Unless ground rules and assumptions are 

clearly documented, the cost estimate will not have a basis for areas of potential risk to be 

resolved. Additionally, excluding operation and maintenance costs will likely increase the cost 

of the overall estimate. Without a full accounting of life cycle costs, management will have 

difficulty matching project resources to requirements and will not be reasonably assured of 

making the right decisions about where to allocate resources. 

Minimally Met

Well Documented Although the documentation describes step-by-step how the estimate was developed and 

includes all of the material and labor costs for each capital improvement project, the estimate 

did not include a technical baseline describing the scope and technical details of the program. 

Additionally, the estimate relied on expert opinion to develop nonqualified work factors, but the 

expert’s qualifications are not documented, and there is no data supporting the establishment 

of the factors. Furthermore, the documentation did not sufficiently explain why certain 

assumptions and cost adjustments were made, which is inconsistent with best practices.

Without good documentation, management and oversight officials will not have reasonable 

assurance that the estimate is credible; supporting data, lessons learned, and reasons why 

costs changed will not be available for future use; questions about the approach or data used 

to create the estimate cannot be answered; and the scope of the analysis cannot be thoroughly 

defined.

Minimally Met

Accurate Although the estimate has been updated three times, the estimate cannot be considered 

accurate because sufficient supporting documentation was not available regarding the updates. 

For example, the September 2012 update to the cost estimate was provided but at a summary 

level with no detailed supporting documentation. This update made few substantive changes 

with only a small percentage of the project costs changing and with little explanation for the 

changes. Additionally, the estimate is not accurate because it does not differentiate between 

costs specific to the realignment and current Guam deficiencies. As previously discussed in 

this report, the costs included in the cost estimate, which span 30 years of implementation, 

reflect both costs to correct long-standing deficiencies and costs for the existing water and 

wastewater infrastructure, but no costs distinctions were made between long-needed 

improvements and those needed to meet the current reduced realignment needs. Further, the 

cost estimate has not been properly adjusted for inflation and there was no evidence that 

actual costs from any contracts that may exist were included.

A lack of cost estimate updates interferes with analysis of changes in program costs and 

hinders collection of cost and technical data to support future estimates. As called for with best 

practices, a properly updated cost estimate can provide decision makers with accurate 

information for assessing alternative decisions. Moreover, without adjusting for inflation, 

management runs the risk of making decisions on less than likely cost information.

Minimally Met
Page 48 GAO-14-82 Defense Management

Characteristic GAO assessment summary Assessment

Credible The cost estimate is not credible because it does not include a sensitivity analysis that 

identified a range of possible costs based on varying major assumptions and data inputs, which 

is inconsistent with best practices.a

Without a sensitivity analysis, decision makers lack complete information regarding the 

potential for cost growth and the reasons for it, and, as a result, may be unprepared to deal 

with unexpected contingencies. Additionally, an estimate that has not been reconciled with an 

independent cost estimate has an increased risk of being underfunded because the 

independent cost estimate provides an objective and unbiased assessment of whether the 

project estimate’s cost can be achieved.

For example, the credibility of the estimate was lessened 

because program officials did not perform a sensitivity analysis that would have identified key 

drivers of costs, such as changes in labor hours and rates. In addition, program officials did not 

commission an independent cost estimate, which is considered one of the best and most 

reliable estimate validation methods because it shows whether other estimating procedures 

produce similar results and it provides an independent view of expected project costs that test 

the estimate for reasonableness.

Not Met

Source: GAO.

a

Sensitivity analysis examines the effect of changing one assumption or cost input at a time while 

holding all other variables constant.

OEA officials stated that the intent of the estimate was to develop a 

preliminary rough-order-of-magnitude estimate in order to provide enough 

information to get the budget process started for funding urgent Guam 

water and wastewater improvements. The officials further stated that they 

believe the estimate was sufficient for this purpose. In addition, according 

to OEA and EPA officials, the cost estimate was not intended to represent 

a “budget quality” life cycle cost estimate given the complexity of the 

project and lack of documentation submitted by the Government of Guam 

in developing the estimate. Nonetheless, DOD used this cost estimate to 

support its fiscal year 2013 and 2014 budget requests for funding Guam 

water and wastewater improvements.

In the future, as DOD updates its list of Guam public infrastructure project 

requirements when the supplemental EIS is completed and develops the 

associated cost estimates, it has the opportunity to ensure that the 

estimates it is using more completely incorporate cost estimating best 

practices, thereby improving the quality of the cost estimates and making 

them easier to defend in future budgets and decision making. According 

to documentation attached to DOD’s fiscal year 2013 budget, DOD 

emphasized that it cannot continue the practice of starting programs that 

prove to be unaffordable and according to our Cost Estimating and 

Assessment Guide, whether or not a program is affordable depends a 

great deal on the quality of its cost estimate. Without a reliable estimate 

that is updated in response to program changes, Congress is hindered in 

its ability to assess budgets and affordability. Also, without complete cost 
Page 49 GAO-14-82 Defense Management

estimates for the potential total financial commitment for operating and 

maintaining Guam’s water and wastewater systems, Congress will not 

have needed information to weigh the proposed cost of the Marine 

realignment plans against other demands for resources.

Until DOD has the results of the supplemental EIS and issues a record of 

decision, it is understandable that DOD will not be able to finalize 

comprehensive public infrastructure requirements and cost estimates for 

its planned realignment of Marines and dependents from Japan to Guam. 

Nevertheless, in the interim, DOD through OEA has continued to request 

funds for Guam public infrastructure projects without updating its 

requirements based on the revised realignment plan that calls for a much 

smaller Marine Corps presence in Guam than previously planned. 

Furthermore, DOD and the Navy’s JGPO have not clearly identified which 

Guam public infrastructure requirements and costs directly support the 

additional capacity needed for the realignment and which address current 

deficiencies. In addition, OEA did not fully incorporate cost estimating 

best practices in developing its cost estimate for Guam’s water and 

wastewater infrastructure projects that was used to support previous 

budget requests. Our analysis of the cost estimate and its updates found 

that the estimate satisfies a small portion of the best practice criteria and 

thus is not a reliable estimate to support budget requests. Further, two 

important points emerged: (1) the true cost of this water and wastewater 

project is not known, and (2) it is unclear whether all of the underlying 

improvements are needed to support the realignment.

Actions such as revalidating the original list of infrastructure projects, 

conducting analyses that differentiate existing Guam public infrastructure 

deficiencies from additional capacity needed to support the realignment, 

and more fully incorporating cost estimating practices to help DOD 

identify the costs directly attributable to the realignment would provide 

DOD with the information it needs to support its Guam budget requests to 

Congress. Without reliable cost estimates developed for the realignment 

plan in a manner consistent with GAO’s cost estimating guide, DOD will 

be hampered in achieving its affordability goal of not starting a program 

without firm cost goals in place and may be seeking funds for public 

infrastructure projects that may no longer be needed. Furthermore, the 

credibility of DOD’s estimate will be questionable, and Congress cannot 

be reasonably assured that it is sufficiently informed regarding the funding 

that may be needed for Guam public infrastructure projects.

Conclusions
Page 50 GAO-14-82 Defense Management

To provide DOD and Congress with sufficient information regarding the 

requirements and costs associated with DOD’s current Guam realignment 

plans and the public infrastructure necessary to support that realignment, 

we recommend that the Secretary of Defense direct the Department of 

the Navy’s JGPO in concert with OEA take the following three actions:

• Revalidate the need and scope of Guam public infrastructure projects 

included in DOD budget requests based on the reduced number of 

Marines and dependents DOD intends to relocate to Guam.

• Conduct a comprehensive analysis across all applicable public 

infrastructure sectors to determine what infrastructure requirements 

and costs are needed to address existing deficiencies in Guam’s 

infrastructure and what requirements and costs are needed to directly 

support the additional capacity needed to support the realignment, 

and

• As future cost estimates for Guam public infrastructure projects are 

developed, fully incorporate the best practices identified by GAO for 

developing high quality cost estimates.

We provided a draft of this report to DOD, the Department of the Interior, 

EPA, and the Office of the Governor of Guam for review and comment. In 

written comments, which are reprinted in their entirety in appendix III, 

DOD partially concurred with our three recommendations. DOD, the 

Department of the Interior, EPA, and the Office of the Governor of Guam 

provided technical comments that have been incorporated into this report 

as appropriate. 

DOD partially concurred with our first recommendation to revalidate the 

need and scope of Guam public infrastructure projects included in DOD 

budget requests. DOD concurred that the need and scope of additional, 

realignment-related Guam public infrastructure projects will be revalidated 

as necessary based on the results of the analysis in the ongoing 

supplemental EIS. However, for the Guam wastewater public 

infrastructure project, DOD commented that the requested funding is not 

contingent upon the size of the realignment but rather represents funding 

for improvements to address noncompliance with EPA regulations. As a 

result, DOD concluded that the requests associated with the wastewater 

treatment facilities do not warrant realignment-related revalidation. We 

disagree. First, while DOD’s justifications for the wastewater treatment 

funding cite the need for remedies and residents’ current needs, the 

justifications also state that the funding and project is required to support 

growth resulting from the military realignment. Given that the size of the 

Recommendations for 

Executive Action

Agency and Third 

Party Comments and 

Our Evaluation
Page 51 GAO-14-82 Defense Management

realignment has been reduced significantly, a revalidation of the 

wastewater project remains warranted. Second, without a revalidation of 

the wastewater project, it will continue to be unclear to what extent the 

requested funds for the project are still necessary or necessary to the 

same extent given the significant reduction in forces under the revised 

realignment plan and the as yet undetermined location of the main Marine 

Corps installation. Specifically, as discussed in the report, a possible 

location for the main Marine installation is Naval Base Guam, which 

handles its own wastewater needs and does not require DOD to rely on 

the public wastewater system. If this location is chosen, DOD would 

appear to no longer have a basis for its cited need for additional 

wastewater capacity to support the realignment as part of its budget 

request justifications.

DOD stated that it partially concurred with our second recommendation to 

conduct a comprehensive analysis across all applicable public 

infrastructure sectors to determine what infrastructure requirements and 

costs are needed to address long-standing deficiencies in Guam’s 

infrastructure and which are needed to directly support the realignment. 

DOD noted that a determination of realignment-related infrastructure 

requirements and costs is an anticipated outcome of the supplemental 

EIS. DOD’s comments, however, do not address whether it plans to 

clearly differentiate between those infrastructure requirements and costs 

needed to address existing deficiencies in Guam’s infrastructure and 

those needed to directly support the additional capacity associated with 

the realignment, as we specifically recommended. Doing so is important, 

because as explained in the report, clearly differentiating between 

existing public infrastructure deficiencies and any additional capacity 

needed to support the realignment would help DOD more accurately 

identify the costs directly attributable to the realignment. DOD’s analysis 

would then provide congressional decision makers with information they 

need to appropriately fund requests for public infrastructure projects on 

Guam.

DOD partially concurred with our third recommendation to fully 

incorporate the best practices identified by GAO for developing high 

quality cost estimates, as future cost estimates for Guam public 

infrastructure projects are developed. In response to this 

recommendation, DOD stated that future realignment-related cost 

estimates and budget submissions will be developed in accordance with 

DOD’s Financial Management Regulation and that final engineering cost 

estimates for specific projects will be developed in the normal course of 

executing the fiscal year 2014 program. While budget submissions must 
Page 52 GAO-14-82 Defense Management

conform to DOD guidance, OMB guidance and our cost estimating and 

assessment guide, which is a compilation of cost estimating best 

practices from across industry and government, confirm that cost 

estimates should conform to best practices and follow certain specific 

steps to ensure that they are reliable and credible. Development of 

reliable and credible cost estimates is important, whether as part of 

budget submissions or in advance of those submissions. As discussed in 

this report, our analysis of DOD’s cost estimate for Guam’s largest public 

infrastructure project—the water and wastewater treatment facility—

demonstrates that weaknesses exist in DOD’s cost estimating practices 

that, if left unaddressed, increase the likelihood that costs will increase. 

By not following best practices in preparing its cost estimate, DOD cannot 

ensure that the estimate is reliable and credible. As DOD continues to 

provide information to Congress regarding the realignment, we believe 

DOD has the opportunity to improve the quality of its estimates by 

applying cost estimating best practices in its approach. To better inform 

the budget decisionmaking process of the likely costs, affordability, and 

scheduling of funding needed to support the Guam realignment, DOD 

should take every available opportunity to employ best practices and 

provide Congress with the highest quality cost estimates possible.

We are sending copies of this report to appropriate congressional 

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

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

of Management and Budget; and appropriate organizations. In addition, 

this report will be available at no charge on our website at 

http://www.gao.gov.

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

at (202) 512- 5741 or ayersj@gao.gov. Contact points for our Offices of 

Congressional Affairs and Public Affairs may be found on the last page of 

this report. GAO staff who made major contributions to this report are 

listed in appendix IV.

Johana Ayers

Acting Director

Defense Capabilities and Management
Page 53 GAO-14-82 Defense Management

List of Committees

The Honorable Carl Levin

Chairman

The Honorable James Inhofe

Ranking Member

Committee on Armed Services

United States Senate

The Honorable Tim Johnson

Chairman

The Honorable Mark Kirk

Ranking Member

Subcommittee on Military Construction, Veterans’ Affairs, 

and Related Agencies

Committee on Appropriations

United States Senate

The Honorable Howard P. McKeon

Chairman

The Honorable Adam Smith

Ranking Member

Committee on Armed Services

House of Representatives

The Honorable John Culberson

Chairman

The Honorable Sanford Bishop

Ranking Member

Subcommittee on Military Construction, Veterans’ Affairs, 

and Related Agencies

Committee on Appropriations

House of Representatives
Appendix I: Scope and Methodology

Page 54 GAO-14-82 Defense Management

To describe the existing condition of the public infrastructure on Guam, 

we interviewed and collected information from various Department of 

Defense (DOD) officials, including those in the

• Office of the Under Secretary of Defense for Policy;

• Office of Economic Adjustment (OEA), Office of the Under Secretary 

of Defense for Acquisitions, Technology, and Logistics;

• Naval Facilities Engineering Command;

• Joint Region Marianas, Department of the Navy; and

• Joint Guam Program Office, Department of the Navy.

We also interviewed other federal officials from the following offices and 

agencies assisting Guam in preparing for the realignment:

• Office of Management and Budget

• Council on Environmental Quality

• Department of the Interior’s Office of Insular Affairs

• Environmental Protection Agency, Region IX

• Department of Health and Human Services, Region IX.

We conducted a site visit to Guam in April 2013, where we met with

• the Governor of Guam,

• the Speaker and other members of the Guam Legislature,

• the Guam Auditor General, and

• officials in Guam’s Military Buildup Office.

We also interviewed other Guam officials representing the following public 

infrastructure sectors on Guam likely to be affected by the realignment:

• Guam Waterworks Authority

• Guam Power Authority

• Consolidated Commission on Utilities

• Guam Department of Public Works

• Port Authority of Guam

• Guam Department of Public Health and Social Services

• Guam Environmental Protection Agency

• Guam Fire Department

• Guam Police Department

• Guam Department of Education

• Guam State Historic Preservation Office.

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

Page 55 GAO-14-82 Defense Management

During our site visit to Guam, we toured Andersen Air Force Base and 

some of the locations cited in documents related to the supplemental 

Environmental Impact Statement (EIS) as possible locations for the 

establishment of a main Marine Corps installation and Marine Corps livefire training range complex on Guam. We also visited the Northern District 

Wastewater Plant and Port of Guam which had been cited by DOD and 

Government of Guam officials as two of the most critical infrastructure 

sectors requiring improvements.

For the purposes of our review, public infrastructure is defined as 

including the utilities, methods of transportation, equipment, or facilities 

under the control of a public entity, such as a power authority, or local 

government for use by the public to support the realignment of forces and 

dependents.

1 The public infrastructure sectors covered by our review 

were chosen based on inclusion in (1) prior Government of Guam and 

DOD project lists developed for the 2006 Roadmap realignment plan, (2) 

DOD budget requests, (3) prior GAO reports on the realignment of U.S. 

forces to Guam, and (4) federal agency inspector general reports, as well 

as those sectors identified during our interviews by Government of Guam 

and DOD officials. The following eight sectors are included in our review: 

electric power, water and wastewater, port, solid waste, public health, law 

enforcement, fire department, and education infrastructure. The highways 

and other roads sector is not included in our analysis because 

Government of Guam and DOD officials did not identify it as a sector 

likely to be adversely affected by the realignment since existing programs 

and agencies, such as the Defense Access Roads2

 1

The definition of public infrastructure used for this report is based on the definition 

contained in the National Defense Authorization Act for Fiscal Year 2013. Section 2832 of 

that Act defined “public infrastructure” as any utility, method of transportation, item of 

equipment, or facility under the control of a public entity or state or local government that 

is used by, or constructed for the benefit of, the general public. See Pub. L. No. 112-239, 

§ 2832(d)(2) (2013).

and the Department 

2

The Defense Access Roads program provides a method for DOD to pay a fair share for 

public highway improvements required as a result of sudden or unusual defensegenerated traffic impacts or unique defense public highway requirements. Projects may be 

eligible for funding under the following five criteria: (1) a new access road to an installation 

is needed to accommodate a defense action, (2) a defense action causes traffic to double, 

(3) urgent improvements are needed to accommodate a temporary surge in traffic to or 

from an installation due to a defense action, (4) a new or improved access road is needed 

to accommodate special military vehicles, such as heavy equipment transport vehicles, or 

(5) a road is needed to replace one closed for defense needs.
Appendix I: Scope and Methodology

Page 56 GAO-14-82 Defense Management

of Transportation’s Federal Highway Administration, are currently 

allocating funds for road and highway improvements on Guam.

For our first objective regarding the existing condition of Guam’s public 

infrastructure, we reviewed the original EIS, a DOD engineering review, 

technical studies, and business case analyses and conducted interviews. 

In addition, we reviewed inspector general reports prepared by the 

Department of the Interior regarding the condition of specific sectors of 

Guam’s public infrastructure. We reviewed these reports and determined 

that their methodologies were sufficiently reliable for our purposes. We 

corroborated the information contained in the inspector general reports by 

interviewing Guam officials from the relevant public infrastructure sectors 

to determine the extent to which the findings of the various reports 

accurately portrayed the condition of Guam’s public infrastructure and 

remained valid. We also reviewed the socioeconomic project needs 

assessment worksheets developed by Guam and provided to the 

Economic Adjustment Committee in 2010 as part of the Economic 

Adjustment Committee’s efforts to develop a list of public infrastructure 

requirements for the original realignment plan. Additionally, we reviewed 

the completed supplemental EIS questionnaires administered by DOD to 

Guam to obtain updated information regarding the state of Guam’s public 

infrastructure and potential impact of the revised realignment plan.

For our second objective to describe the types of assistance DOD 

generally has provided to defense-affected communities and the other 

types of funding sources that have been used to fund Guam public 

infrastructure projects, we interviewed OEA officials to identify the most 

relevant historical examples similar to Guam and reviewed past 

congressional hearings, DOD documents, and fiscal impact analyses to 

determine previous instances of where DOD provided public 

infrastructure funding to communities. To identify examples of non-DOD, 

federal programs from which Guam has received public infrastructure 

funding in the past, we interviewed OEA, Department of the Interior, and 

Government of Guam officials and reviewed Guam’s Single Audit report 

and Summary of Schedule of Expenditures of Federal Awards. To 

determine Guam’s potential for raising additional revenue to fund 

infrastructure projects, we interviewed Guam officials and reviewed the 

Government of Guam’s 2014 executive budget request and long-term 

debt abstract.

For our third objective to assess DOD’s efforts to revalidate its public 

infrastructure requirements under the revised realignment plan and 

differentiate between requirements needed to address Guam’s existing 
Appendix I: Scope and Methodology

Page 57 GAO-14-82 Defense Management

public infrastructure deficiencies and those related to the realignment, we 

reviewed information on DOD and the Government of Guam’s planning 

activities related to public infrastructure improvements needed to support 

the revised realignment plan and compared this information to previous 

public infrastructure lists developed by the Government of Guam, DOD, 

and other federal entities to support the 2006 Roadmap realignment plan. 

We interviewed DOD officials regarding the extent to which DOD was 

revalidating and differentiating between requirements as part of the 

current supplemental EIS and also interviewed Government of Guam 

officials from all the infrastructure sectors we reviewed to determine the 

extent to which they had been contacted by DOD to update or 

differentiate between requirements. We evaluated DOD’s efforts with 

criteria established in our Cost Estimating and Assessment Guide: Best 

Practices for Developing and Managing Capital Program Costs3

For our fourth objective to assess the extent to which the cost estimate for 

Guam’s water and wastewater infrastructure improvements used by DOD 

to support its budget requests was developed according to the 

characteristics of a reliable cost estimate, we assessed the cost 

estimating approach used to develop the estimate against best practices 

found in our 2009 Cost Estimating and Assessment Guide.

and OMB 

guidance containing best practices for capital programming. To determine 

how much DOD has requested to support public infrastructure projects on 

Guam, we reviewed DOD budget materials and interviewed OEA officials 

to determine what funding DOD has requested to support public 

infrastructure projects on Guam related to the realignment, as well as 

statutory restrictions on the use of these funds for these types of projects.

4

 3

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

Managing Capital Program Costs, 

GAO 

designed the guide to be used by federal agencies to assist them in 

developing reliable cost estimates. To develop the guide, GAO cost 

experts assessed measures applied by cost estimating organizations 

throughout the federal government and industry and considered best 

practices for the development of reliable cost estimates. We analyzed the 

cost estimating practices used to develop the estimate against these best 

practices. We categorized these best practices into four general 

GAO-09-3SP (Washington, D.C.: Mar 2, 2009). This 

guide is a compilation of best practices that federal cost estimating organizations and 

industry use to develop and maintain reliable cost estimates throughout the life of a 

government acquisition program.

4

GAO-09-3SP. 
Appendix I: Scope and Methodology

Page 58 GAO-14-82 Defense Management

characteristics representing practices that help ensure that a cost 

estimate is (1) comprehensive, (2) well documented, (3) accurate, and (4) 

credible. Each of these four characteristics consists of several best 

practices (see appendix II for a summary of these practices and our Cost 

Estimating and Assessment Guide for more details on the individual best 

practices). We evaluated the estimate against each of the individual best 

practices, assigning a score on a scale of 1 to 5 to indicate the degree to 

which the cost estimate met each best practice.

• Not Met (1 point)— DOD provided no evidence that satisfies any 

portion of the best practice criterion.

• Minimally Met (2 points)—DOD provided evidence that satisfies a 

small portion of the best practice criterion.

• Partially Met (3 points)—DOD provided evidence that satisfies about 

half of the best practice criterion.

• Substantially Met (4 points)—DOD provided evidence that satisfies a 

large portion of the best practice criterion.

• Fully Met (5 points)—DOD provided complete evidence that satisfies 

the entire best practice criterion.

We determined the overall assessment rating for each of the four 

characteristics by totaling the scores assigned to the individual best 

practices within each characteristic to derive an average score for that 

characteristic. The average scores fell into the following ranges:

• Not Met = 0 to 1.4

• Minimally Met = 1.5 to 2.4

• Partially Met = 2.5 to 3.4

• Substantially Met = 3.5 to 4.4

• Fully Met = 4.5 to 5.0.

Best practices assessed as not applicable were not given a score and 

were not included in our calculation of the overall assessment.5

 5

This rating scale was developed by GAO staff in consultation with some of the cost 

estimating experts who helped develop the our Cost Estimating and Assessment Guide.

We also 

held detailed discussions with EPA and DOD officials and reviewed 

program documentation to identify key factors that could affect the 

potential total costs. We also met with these officials to discuss the results 

of our evaluation.
Appendix I: Scope and Methodology

Page 59 GAO-14-82 Defense Management

To determine the reliability of the numerical data provided to us by DOD, 

other federal organizations, and by Government of Guam officials, we 

collected information on how the data was collected, managed, and used 

through interviews with relevant officials. By assessing this information 

against GAO data quality standards,6

We conducted this performance audit from February 2013 through 

December 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 the evidence obtained provides a reasonable basis for our 

findings and conclusions based on our audit objectives.

we determined that the data 

presented in our findings were sufficiently reliable for the purposes of this 

report.

 6

GAO, Assessing the Reliability of Computer-Processed Data, GAO-09-680G

(Washington, D.C.: July 2009).
Appendix II: Detailed Assessment of the Guam 

Water and Wastewater Cost Estimate

Page 60 GAO-14-82 Defense Management

This appendix provides the detailed results of our analysis of the cost 

estimate that was used to support the Department of Defense’s (DOD) 

budget requests for funding to improve Guam’s water and wastewater 

systems. Specifically, we assessed the extent to which the cost estimate 

followed the best practices of a reliable cost estimate as documented in 

our 2009 Cost Estimating and Assessment Guide: Best Practices for 

Developing and Managing Capital Program Costs.

1

• Not Met (1 point)—DOD provided no evidence that satisfies any 

portion of the best practice criterion.

We reviewed the cost 

estimate for the water and wastewater system and assessed each 

individual best practice that comprises each of the four characteristics of 

a reliable cost estimate as summarized in the report’s body and assigned 

a score on a scale of 1 to 5 to indicate the degree to which the estimate 

met each best practice.

• Minimally Met (2 points)—DOD provided evidence that satisfies a 

small portion of the best practice criterion.

• Partially Met (3 points)—DOD provided evidence that satisfies about 

half of the best practice criterion.

• Substantially Met (4 points)—DOD provided evidence that satisfies a 

large portion of the best practice criterion.

• Fully Met (5 points)—DOD provided complete evidence that satisfies 

the entire best practice criterion.

We determined the overall assessment rating for each characteristic by 

totaling the scores assigned to the individual best practices within each 

characteristic to derive an average score for that characteristic. The 

average scores fell into the following ranges:

• Not Met = 0 to 1.4

• Minimally Met = 1.5 to 2.4

• Partially Met = 2.5 to 3.4

• Substantially Met = 3.5 to 4.4

• Fully Met = 4.5 to 5.0.

 1

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

Managing Capital Program Costs, GAO-09-3SP (Washington, D.C., Mar 2, 2009). This 

guide is a compilation of best practices that federal cost estimating organizations and 

industry use to develop and maintain reliable cost estimates throughout the life of a 

government acquisition program.

Appendix II: Detailed Assessment of the 

Guam Water and Wastewater Cost Estimate
Appendix II: Detailed Assessment of the Guam 

Water and Wastewater Cost Estimate

Page 61 GAO-14-82 Defense Management

Best practices assessed as not applicable were not given a score and 

were not included in our calculation of the overall assessment.2

Table 4: GAO’s Assessment of the Guam Water and Wastewater Cost Estimate Based on Best Practices Criteria

Table 4 

provides the detailed results of our analysis of the cost estimate.

Characteristic

Overall 

assessment Best practice Individual assessment

Best 

practice 

rating

Comprehensive Minimally met 

Average score 2

1. The cost estimate 

includes all life 

cycle costs

Minimally met

The estimate does not include all of the life-cycle 

costs needed to sustain the infrastructure 

improvement program. For example, the cost 

estimate does not include any operation and 

maintenance costs for equipment and upkeep of 

improvements made to the water and wastewater 

infrastructure.

Excluding operation and maintenance costs will 

likely increase the cost of the overall estimate. 

Without a full accounting of life cycle costs, 

management will have difficulty matching project 

resources to requirements and will not be 

reasonably assured of making the right decisions 

about where to allocate resources.

2

 2

This rating scale was developed by GAO staff in consultation with some of the cost 

estimating experts who helped develop our Cost Estimating and Assessment Guide.
Appendix II: Detailed Assessment of the Guam 

Water and Wastewater Cost Estimate

Page 62 GAO-14-82 Defense Management

Characteristic

Overall 

assessment Best practice Individual assessment

Best 

practice 

rating

2. The cost estimate 

completely defines 

the program, 

reflects the current 

schedule, and is 

technically 

reasonable

Minimally met

The estimate includes documentation of the 

engineering methodology used to develop the cost 

estimate for each critical infrastructure project. So 

while the estimate appears to be technically 

reasonable, it neither reflects the current schedule 

nor completely defines the program’s life cycle. For 

example, a technical baseline document, describing 

the scope and technical details of the program, was 

not provided. A brief discussion and description of 

individual projects was provided in the technical 

memorandum. There are multiple, independent 

projects comprising both the water and wastewater 

efforts, but none is sufficiently defined to 

understand the scope of work. In addition, there is 

no indication that the project’s scope or complexity 

has been updated to reflect more current 

environmental studies or reports, infrastructure 

inspections, or other reviews.

Understanding the program—including the 

acquisition strategy, technical definition, 

characteristics, system design features, and 

technologies to be included—is key to developing a 

credible cost estimate. Without these data, the cost 

estimator will not be able to identify the technical 

and program parameters that will bind the cost 

estimate.

2
Appendix II: Detailed Assessment of the Guam 

Water and Wastewater Cost Estimate

Page 63 GAO-14-82 Defense Management

Characteristic

Overall 

assessment Best practice Individual assessment

Best 

practice 

rating

3. The cost estimate 

work break-down 

structure is productoriented, traceable 

to the statement of 

work/objective, and 

at an appropriate 

level of detail to 

ensure that cost 

elements are 

neither omitted nor 

double counted. A 

work break-down 

structure 

deconstructs a 

program’s end 

product into 

successive levels 

with smaller 

specific elements 

until the work is 

subdivided to a 

level suitable for 

management 

control.

Minimally met

The cost estimates appear to be presented in 

organizational breakdown structures that show 

some hierarchal relationship, but the cost estimates 

are not presented in a work break-down structure 

as typically seen in DOD with a clearly labeled 1.0, 

1.1, 1.1.1, etc. structure. However, both methods of 

grouping would logically allow management to 

easily plan and schedule the program’s activities 

and track costs. In addition, there is no schedule 

identified or any indication of any earned value 

management or similar cost reporting.

Without an adequate work break-down structure, 

the program lacks a framework to develop a 

schedule and cost plan that can be used to easily 

track technical accomplishments. A standard 

product-oriented work break-down structure 

facilitates the tracking of resource allocations and 

expenditures, which can give an agency insight to 

reliably estimate the cost of future similar programs.

2

4. The estimate

documents all cost 

influencing ground 

rules and 

assumptions.

Minimally met

Although ground rules and assumptions are 

presented, they are at a very high level and difficult 

to relate to the individual projects. Additionally, the 

2012 update to the estimate did not identify any 

additions or changes to the assumptions found in 

the 2010 estimate.

According to our Cost Estimating and Assessment 

Guide, it is imperative that cost estimators 

document all assumptions well, so that 

management fully understands the conditions on 

which the estimate was structured. Failing to do so 

can lead to overly optimistic assumptions that 

heavily influence the overall cost estimate, to cost 

overruns, and to inaccurate estimates and budgets.

2
Appendix II: Detailed Assessment of the Guam 

Water and Wastewater Cost Estimate

Page 64 GAO-14-82 Defense Management

Characteristic

Overall 

assessment Best practice Individual assessment

Best 

practice 

rating

Well documented Minimally met 

Average score 2.2

1. The documentation 

should capture the 

source data used, 

the reliability of the 

data, and how the 

data were 

normalized.

Partially met

The technical memorandum includes the cost 

estimate, for both summary level and detailed 

projects, and the ground rules and assumptions and 

the methodology and calculations. However, there 

is no discussion or indication if or how the data 

were normalized, or how reliable the data sources 

are. The data are primarily generic construction unit 

cost data or factors, applied to the individual tasks. 

The basis of the estimate is predominantly 

engineering judgment, subject matter opinion, and 

quotes from the Guam Waterworks Authority or 

quotes provided to the Authority from external 

suppliers.

According to our Cost Estimating and Assessment 

Guide, data are the foundation of every cost 

estimate. Depending on data quality, an estimate 

can range anywhere from a mere guess to a highly 

defensible cost position. Data are often in many 

different forms and need to be adjusted before 

being used. The cost estimator needs information 

about the source and reliability of the data in order 

to know whether the data collected can be used 

directly or need to be modified.

3

2. The documentation 

describes in 

sufficient detail the 

calculations 

performed and the 

estimating 

methodology used 

to derive each 

element’s cost.

Partially met

The cost estimate utilizes engineering build-up 

methodology—where the estimate is “built-up” from 

the lowest component and documents the source of 

material costs—but does not document the source 

of labor rates. Additionally, the estimate relied on 

expert opinion to develop non-qualified work 

factors. However, the expert’s qualifications are not 

documented and there is no data supporting the 

establishment of the factors. Adjustments were 

made to the estimate to account for complexity, 

planning and engineering, non-quantified work, and 

location, but these were not based on site specific 

or location specific data but rather were developed 

using engineering judgment. However, there was 

no indication what experience provided for the 

engineering judgment.

Poorly documented cost estimates can cause a 

program’s credibility to suffer because the 

documentation cannot explain the rationale for the 

methodology or the calculations. Estimates that lack 

sufficient documentation are not useful for updates 

or information sharing and can hinder 

understanding and proper use.

3
Appendix II: Detailed Assessment of the Guam 

Water and Wastewater Cost Estimate

Page 65 GAO-14-82 Defense Management

Characteristic

Overall 

assessment Best practice Individual assessment

Best 

practice 

rating

3. The documentation 

describes step-by 

step how the 

estimate was 

developed so that a 

cost analyst 

unfamiliar with the 

program could 

understand what 

was done and 

replicate it.

Partially met

The documentation describes step-by-step how the 

estimate was developed in terms of including all of 

the materials and labor costs for each critical 

infrastructure project. However, the documentation 

does not capture how the scope of the project was 

determined. It also does not capture at a detailed 

level how quantities of materials, labor hours, and 

labor rates were determined.

Without good documentation, management and 

oversight officials will not have reasonable 

assurance that the estimate is credible; supporting 

data, lessons learned, and reasons why costs 

changed will not be available for future use; 

questions about the approach or data used to 

create the estimate cannot be answered; and the 

scope of the analysis cannot be thoroughly defined.

3

4. The documentation 

discusses the 

technical baseline 

description and that 

the data in the 

baseline are 

consistent with the 

estimate.

Not met

A brief description of each project is included, and 

the elements of each cost estimate, although 

limited, appear to be consistent with the type of 

work and the scope of work defined. However, 

there is no overarching technical baseline and each 

project is minimally defined in terms of labor hour 

requirements and material dollars.

Without a technical baseline that provides explicit 

documentation of the basis of a program’s 

estimates, it is difficult to update the cost estimate 

and provide a verifiable trace to a new cost baseline 

as key assumptions change during the course of 

the program’s life.

1

5. The documentation 

provides evidence 

that the cost 

estimate was 

reviewed and 

accepted by 

management.

Not met

Although DOD officials stated that the Joint Guam 

Program Office and Naval Facilities Engineering 

Command both reviewed the estimate, no 

documentation was provided to us clearly showing 

that the cost estimate was reviewed by the Joint 

Guam Program, the Office of Economic Adjustment, 

Naval Facilities Engineering Command, or the 

Environmental Protection Agency.

Because a cost estimate should form the basis for 

establishing the budget, it is imperative that 

management understands how the estimate was 

developed, including the risks associated with 

source data and estimating methodologies.

1
Appendix II: Detailed Assessment of the Guam 

Water and Wastewater Cost Estimate

Page 66 GAO-14-82 Defense Management

Characteristic

Overall 

assessment Best practice Individual assessment

Best 

practice 

rating

Accurate Minimally met 

Average score 2.4

1. The cost estimate 

results are 

unbiased, not 

overly conservative 

or optimistic, and 

based on an 

assessment of 

most likely costs.

Minimally met

As previously discussed, the costs included in the 

cost estimate which span 30 years of 

implementation, reflect both costs to correct longstanding deficiencies and costs for the existing 

water and wastewater infrastructure, but no costs 

distinctions were made between long-needed 

improvements and those needed to meet the 

current reduced realignment needs. Moreover, 

given that the estimate was developed based on 

early conceptual design and not a detailed or 

engineering design, the method of building the 

estimate from the “bottom up” from the lowest 

component is highly questionable. This 

methodology is generally reserved for estimating 

programs with greater levels of definition and 

certainty since it requires a detailed build-up of 

labor, material, and overhead costs. No risk or 

sensitivity analysis has been developed. In the 

absence of cost risk and uncertainty analysis, it is 

not possible to determine if the estimate is 

unbiased.

Unless the estimate is based on an assessment of 

the most likely costs and reflects the degree of 

uncertainty given all of the risks considered, 

management will be hindered in making informed 

decisions.

2

2. The estimate has 

been adjusted 

properly for 

inflation.

Not met

Updates were made to the cost estimate in 2011 

and 2012; however, costs for all estimate updates 

were presented in 2010 dollars.

Without adjusting for inflation, management runs 

the risk of making decisions on less than likely cost 

information.

1

3. The estimate 

contains few, if any, 

minor mistakes.

Met

What is provided in the cost estimate 

documentation appears to contain no mathematical 

mistakes.

5
Appendix II: Detailed Assessment of the Guam 

Water and Wastewater Cost Estimate

Page 67 GAO-14-82 Defense Management

Characteristic

Overall 

assessment Best practice Individual assessment

Best 

practice 

rating

4. The cost estimate 

is regularly updated 

to reflect significant 

changes in the 

program so that it is 

always reflecting 

current status.

Minimally met

The baseline estimate being evaluated was from 

2010. Officials indicated that this estimate had been 

updated in January and November 2011 and again 

in September 2012. The January 2011 and 

November 2011 updates were not provided and 

therefore could not be evaluated. The September 

2012 update was provided but at the summary 

level, with no supporting documentation. The 2012 

update made few substantive changes with only a 

small percentage of the project costs changing and 

with little explanation for the changes.

A lack of cost estimate updates interferes with 

analysis of changes in program costs and hinders 

collection of cost and technical data to support 

future estimates. A properly updated cost estimate 

can provide decision makers with accurate 

information for assessing alternative decisions.

2

5. Variances between 

planned and actual 

costs are 

documented, 

explained, and 

reviewed.

Not met

There is no evidence from the documentation that 

actual costs were incorporated into the estimate.

Without a documented comparison between the 

current estimate (updated with actual costs) and the 

old estimate, cost estimators cannot determine the 

level of variance between the two estimates. That 

is, the estimators cannot see how well they are 

estimating and how the program is changing over 

time. 

1
Appendix II: Detailed Assessment of the Guam 

Water and Wastewater Cost Estimate

Page 68 GAO-14-82 Defense Management

Characteristic

Overall 

assessment Best practice Individual assessment

Best 

practice 

rating

6. The estimate is 

based on a 

historical record of 

cost estimating and 

actual experiences 

from other 

comparable 

programs.

Partially met

Administrative and planning costs were 

predominantly based on assumed/estimated labor 

hours by critical trade (senior engineer, junior 

engineer, and technician). Hours were estimated by 

labor category and multiplied by a labor rate; then 

an overhead rate was applied. To this, indirect 

costs were added to determine unit costs. These 

costs were then adjusted upward for complexity, 

planning and engineering, non-quantified work, and 

location. The basis for the fundamental elements, 

labor rates, overhead factor, or other adjustment 

factors, was not provided. While the contractor 

personnel, who prepared the cost estimate, met 

with management and staff from the Guam 

Waterworks Authority to refine the cost estimate, 

the extent to which these individuals had access to 

historical records and actual experiences with 

comparable programs was not documented. 

Presumably, these costs may be based on general 

construction industry experience. While we 

acknowledge that most engineering judgment 

comes from practical experience, no comparable or 

analogous projects were identified as a basis for 

cost adjustments.

Historical data provide the cost estimator with 

insight into actual costs on similar programs, 

including any cost growth that occurred after the 

original estimate. As a result, historical data can be 

used to challenge optimistic assumptions and bring 

more realism to a cost estimate.

3
Appendix II: Detailed Assessment of the Guam 

Water and Wastewater Cost Estimate

Page 69 GAO-14-82 Defense Management

Characteristic

Overall 

assessment Best practice Individual assessment

Best 

practice 

rating

7. The estimating 

technique for each 

cost element was 

used appropriately.

Partially met

Estimates were based on factors from the 

construction industry and although they appear to 

utilize more generic data than specific, the 

technique seems consistent with the construction 

industry. However, without life cycle cost estimate 

documentation that completely defines the program, 

captures source data used, and contains sufficient 

detail about the methodology used to develop the 

estimate, we are unable to verify that the source 

data was based on a historical record of costs from 

comparable programs.

Validating that a cost estimate is accurate requires 

thoroughly understanding and investigating how 

costs were constructed. Estimating methods used 

to develop each cost element should, according to 

best practices, be thoroughly documented so that 

their derivation can be traced to all sources, 

allowing for the estimate to be easily replicated and 

updated.

3

Credible Not met Average 

score 1

1. The cost estimate 

includes a 

sensitivity analysis 

that identifies a 

range of possible 

costs based on 

varying major

assumptions, 

parameters, and 

data inputs.

Not met

A sensitivity analysis was not conducted that 

identified a range of possible costs based on 

varying major assumptions, parameters, and data 

inputs.

Without sensitivity analysis that reveals how the 

cost estimate is affected by a change in a single 

assumption, the cost estimator will not fully 

understand which variable most affects the cost 

estimate.

1

2. A risk and 

uncertainty analysis 

was conducted that 

quantified the 

imperfectly 

understood risks 

and identified the 

effects of changing 

key cost driver 

assumptions and 

factors.

Not met

A risk and uncertainty analysis was not conducted 

that quantified the imperfectly understood risks and 

identified the effects of changing key cost driver 

assumptions and factors.

Lacking risk and uncertainty analysis, management 

cannot determine a defensible level of contingency 

reserves that are necessary to cover increased 

costs resulting from unexpected design complexity, 

incomplete requirements, technology uncertainty, 

and other uncertainties.

1
Appendix II: Detailed Assessment of the Guam 

Water and Wastewater Cost Estimate

Page 70 GAO-14-82 Defense Management

Characteristic

Overall 

assessment Best practice Individual assessment

Best 

practice 

rating

3. Major cost 

elements were 

cross- checked to 

see whether results 

were similar.

Not met

Major costs elements (projects in this case) were 

not cross-checked.

The main purpose of cross-checking is to determine 

whether alternative methods produce similar 

results. If so, then confidence in the estimate 

increases, leading to greater credibility.

1

4. An independent 

cost estimate was 

conducted by a 

group outside the 

acquiring 

organization to 

determine whether 

other estimating 

methods produce 

similar results.

Not met

An independent cost estimate was not developed 

for any of the projects.

According to our Cost Estimating and Assessment 

Guide, an independent cost estimate is considered 

one of the best and most reliable estimate 

validation methods. It provides an independent view 

of expected program costs that tests the program 

office’s estimate for reasonableness. Without an 

independent cost estimate, decisions makers will 

lack insight into a program’s potential costs 

because independent cost estimates frequently use 

different methods and are less burdened with 

organizational bias.

1

Source: GAO
Appendix III: Comments from the Department 

of Defense

Page 71 GAO-14-82 Defense Management

Appendix III: Comments from the 

Department of Defense
Appendix III: Comments from the Department 

of Defense

Page 72 GAO-14-82 Defense Management
Appendix III: Comments from the Department 

of Defense

Page 73 GAO-14-82 Defense Management
Appendix IV: GAO Contact and Staff 

Acknowledgments

Page 74 GAO-14-82 Defense Management

Johana Ayers (202) 512-5741 or ayersj@gao.gov

In addition to the contact named above, Laura Durland, Assistant 

Director; Shawn Arbogast, Remmie Arnold, Grace Coleman, Tisha 

Derricotte, Adam Hatton, Jim Manzo, Karen Richey, Ophelia Robinson, 

Michael Shaughnessy, and Amie Steele made key contributions to this 

report.

Appendix IV: GAO Contact and Staff 

Acknowledgments

GAO Contact 

Staff 

Acknowledgments
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Page 76 GAO-14-82 Defense Management

Defense Infrastructure: High-Level Leadership Needed to Help 

Communities Address Challenges Caused by DOD-Related Growth. 

GAO-08-665. Washington, D.C.: June 17, 2008.

Defense Infrastructure: Planning Efforts for the Proposed Military Buildup 

on Guam Are in Their Initial Stages, with Many Challenges Yet to Be 

Addressed. GAO-08-722T. Washington, D.C.: May 1, 2008.

Defense Infrastructure: Overseas Master Plans Are Improving, but DOD 

Needs to Provide Congress Additional Information about the Military 

Buildup on Guam. GAO-07-1015. Washington, D.C.: September 12, 

2007.

U.S. Insular Areas: Economic, Fiscal, and Financial Accountability 

Challenges. GAO-07-119. Washington, D.C.: Dec. 12, 2006.

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