Report to Congressional Committees

United States Government Accountability Office

GAO 

April 2008 DEFENSE 

INFRASTRUCTURE 

Continued 

Management Attention 

Is Needed to Support 

Installation Facilities 

and Operations 

GAO-08-502 
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

April 2008

DEFENSE INFRASTRUCTURE 

Continued Management Attention Is Needed to 

Support Installation Facilities and Operations

Highlights of GAO-08-502, a report to 

congressional committees 

The Department of Defense (DOD)

manages and operates about 

577,000 structures worldwide,

valued at about $712 billion. DOD

has worked for several years to

develop models that can reliably

estimate the installation support 

funds needed to sustain these 

facilities, and plans to spend over 

$55 billion to support these 

facilities and operate its bases in 

fiscal year 2008. Because GAO has 

identified support infrastructure as

a high-risk area that affects DOD’s

ability to devote funds to other 

more critical needs, GAO initiated 

this review under the Comptroller 

General’s authority. This report 

discusses (1) the reliability of the

annual funding estimates produced 

by the facilities sustainment model, 

(2) DOD’s progress in meeting 

funding goals for facility 

sustainment and recapitalization, 

(3) the extent to which DOD has 

addressed deferred facility 

sustainment funding needs, and 

(4) the status of DOD’s efforts to 

develop a new installation services 

model. To address these objectives, 

GAO reviewed the accuracy and 

support for the model’s key inputs, 

analyzed pertinent documents, and 

visited eight judgmentally selected

installations. 

What GAO Recommends

GAO recommends that DOD take

several actions to increase the 

facilities sustainment model’s 

reliability, address deferred facility

sustainment funding requirements, 

and advance progress 

implementing the installation 

services model. DOD generally

agreed with the recommendations. 

Although the facilities sustainment model, implemented in 2003, provides a 

consistent and reasonable framework for preparing estimates of DOD’s 

annual facility sustainment funding requirements, accuracy and supportability 

issues with two of the model’s key inputs have affected the reliability of the 

model’s estimates. First, regarding the inventory quantity input, GAO found 

that the services had not complied with DOD regulations requiring verification

of each real property inventory record. Without the verifications, DOD lacked 

assurance that the model used accurate inventory quantities, and GAO’s 

analysis identified inaccuracies in some quantities used by the model. Second, 

regarding the sustainment cost factor input, GAO identified issues concerning

some cost factors used by the model. For example, an independent study 

reported that only 13 of 45 cost factors evaluated were deemed to be 

reasonably accurate and adequately supported. Until DOD improves the 

accuracy of these two inputs, the model’s estimates of facility sustainment 

funding requirements will not be as reliable as possible. 

The military services have not met all of DOD’s goals for funding facility 

sustainment and recapitalization at levels to prevent deterioration and ensure 

that facilities are restored and modernized. Service officials stated that they 

generally did not meet the sustainment funding goals because resources were 

limited and programs such as force modernization often had higher funding 

priority. Although the services achieved more success in meeting DOD’s goal 

to fund recapitalization, funding remains an issue with the Army, the Navy, 

and the Air Force reporting recapitalization backlogs of over $50 billion at the 

end of fiscal year 2007. 

DOD has not taken actions to estimate and address its deferred facility 

sustainment requirements. In fiscal years 2005 through 2007, the services did 

not fund over $3.5 billion of their estimated annual facility sustainment 

requirements. The services do not have consistent estimates of their deferred 

sustainment requirements or plans to deal with these needs because DOD has 

not provided adequate guidance to clearly define deferred sustainment 

requirements, or direct the services to measure, track, and address these 

needs. As a result, DOD’s plans to address facility sustainment requirements 

do not include all deferred sustainment requirements, which could result in 

continued facility deterioration and increased future recapitalization costs. 

DOD’s progress in developing a new model to estimate funding requirements 

for installation services, such as airfield and port operations, has been slow. 

Although DOD’s goal is to establish common standards and metrics for 

installation services by the end of 2008, the services had agreed on common 

definitions and standards for only 2 of 29 areas by the end of 2007. DOD 

officials stated that reaching agreement has been difficult for several reasons, 

such as differences among the services in how tasks for installation services 

are performed and managed. Without a reliable model, DOD cannot provide 

the Congress with a clear basis for making funding decisions. 

To view the full product, including the scope 

and methodology, click on GAO-08-502. 

For more information, contact Brian J. Lepore 

at (202) 512-4523 or leporeb@gao.gov. 
Page i GAO-08-502 Defense Infrastructure 

Letter 1

Results in Brief 3 

Background 8 

Reliability of the Facilities Sustainment Model’s Estimates Can Be 

Improved 13 

Military Services Have Not Met All Funding Goals for Facility 

Sustainment and Recapitalization 26 

DOD Has Not Taken Actions to Address Deferred Facility 

Sustainment Requirements 35 

DOD’s Progress in Developing an Installation Services Model Has 

Been Slow 43 

Conclusions 47 

Recommendations for Executive Action 49 

Agency Comments and Our Evaluation 50 

Appendix I Scope and Methodology 55 

Appendix II Current Methods Used by the Military Services to 

Estimate Installation Support Services Funding 

Requirements 58 

Appendix III Comments from the Department of Defense 60 

Appendix IV GAO Contact and Staff Acknowledgments 63 

 

Related GAO Products 64 

Tables 

Table 1: Selected Results from the Independent Validation and 

Verification Study of DOD’s Sustainment Cost Factors 20 

Table 2: Attainment of Sustainment Goals—Percentage of 

Requirement Funded, Fiscal Years 2005 through 2008 27 

Table 3: DOD Facility Recapitalization Rates Expressed in Years 34 

Contents 
Page ii GAO-08-502 Defense Infrastructure 

Table 4: Unfunded Annual Facility Sustainment Requirements 37 

Figures 

Figure 1: DOD’s Planned Fiscal Year 2008 Funding for Installation 

Support 10 

Figure 2: Leaking Pipes and Cracked Walls at a Damaged 

Warehouse Facility at Fort Sam Houston 29 

Figure 3: Deteriorated Barracks Building at Fort Sam Houston 30 

Figure 4: Standing Water on a Leaking Roof of a Weapons and 

Radar Training Building at an Oceana Naval Air Station 

Annex 31 

Figure 5: Damaged Aircraft Hangar Doors at Oceana Naval Air 

Station 32 

Figure 6: Leaking Windows and Electrical Panels that Created a 

Safety Hazard at a Deteriorated Aircraft Maintenance 

Hangar on Randolph Air Force Base 33 

Figure 7: Cracking Aircraft Aprons at Randolph Air Force Base 33 

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Page 1 GAO-08-502 Defense Infrastructure 

April 24, 2008 

Congressional Committees 

Since 1997, we have identified the Department of Defense’s (DOD) 

management of its support infrastructure as a high-risk area because 

infrastructure costs have affected the department’s ability to devote funds 

to other more critical programs and needs. DOD is one of the world’s 

largest organizations in terms of physical plant, managing and operating 

about 577,000 buildings and structures at more than 5,300 sites worldwide 

with a total replacement value of about $712 billion. In fiscal year 2008, 

DOD plans to spend more than $55 billion to support these facilities and 

operate its bases. DOD refers to this funding as installations support,1

which includes funds for facilities sustainment, facilities recapitalization, 

installation services, and facilities operation services.2

 Accurate and 

consistent estimates of funding requirements for these areas can enable 

DOD to establish goals to optimally meet installation facility and 

operations needs and make informed decisions to more efficiently allocate 

resources at a time when our nation faces increased fiscal constraints. By 

providing adequate funding for facilities support to meet these goals, DOD 

can prevent facilities from becoming deteriorated and outdated faster than 

expected, and ensure that installations can provide the services needed to 

fully support military missions and personnel at the levels desired. 

DOD has worked for several years to develop models that can reliably 

estimate the funds needed in several installation support funding areas to 

effectively and efficiently support DOD’s missions and personnel. To date, 

DOD has developed and implemented only one installation support 

 1

Installation support includes five categories of services and support activities through 

which DOD manages and funds the life-cycle of its installations—facilities, installation 

services, family housing, environment, and base realignment and closure. 

2

Facility sustainment provides for the maintenance and repair needed to keep facilities in 

good working order over their service lives. This includes major repairs or replacement of 

facility components, such as roof replacements. Facility recapitalization consists of 

restoration (repair and replacement work) and modernization (alteration of existing 

facilities). Installation services consist of many diverse program areas, such as installation 

airfield and port operations, security, legal and financial services, and family and quality of 

life programs. Facilities operation services include facility-related services, such as utilities, 

leases, and custodial services, and grounds maintenance. In their budgets, the military 

components generally continue to refer to funding for installation services and facilities 

operation services as base operations support funding. 

 

United States Government Accountability Office

Washington, DC 20548 
Page 2 GAO-08-502 Defense Infrastructure 

funding model—the facilities sustainment model. This model has been 

used by the military services since fiscal year 2003 to estimate the annual 

sustainment funds the services need to budget to perform maintenance 

and repair activities necessary to keep their buildings and structures in 

good working order and maximize facility service life. To help estimate 

other installation facility and operations funding needs, DOD has used a 

metric for facility recapitalization,3

 has developed and will soon implement 

a model for facilities operation services, and continues to work on a model 

for other installation services, such as installation airfield and port 

operations, security, and family support services. 

Because of the challenges the department has faced in budgeting for the 

significant funding required to support DOD installations and the 

importance of adequate installation support to DOD’s missions and the 

quality of life for DOD personnel, we initiated this engagement under the 

authority of the Comptroller General of the United States to conduct 

evaluations on his own initiative.4

 We are reporting the results of our 

evaluation to you because of expressed interest related to your 

committees’ oversight responsibilities. This report discusses (1) the 

reliability of the annual funding estimates produced by the facilities 

sustainment model, (2) DOD’s progress in meeting funding goals for 

facility sustainment and recapitalization, (3) the extent to which DOD has 

addressed deferred facility sustainment funding needs, and (4) the status 

of DOD’s efforts to develop a funding requirements model for installation 

services. 

To address these questions, we (1) reviewed the adequacy of the 

documentation supporting the key inputs used by the facilities 

sustainment model as well as the military services’ compliance with 

procedures designed to verify the accuracy of the inventory information 

used by the model; (2) compared DOD’s goals for facility funding with 

accomplishments and discussed progress towards the goals with DOD and 

 3

DOD’s recapitalization metric uses as a measure the number of years that will elapse 

before facilities will be replaced based on the annual funding provided for restoration and 

modernization. DOD’s current goal is for military components to fund facility restoration 

and modernization in annual amounts that would result in facilities being replaced every 

67 years. DOD is developing a new facilities modernization model intended to improve 

upon the existing recapitalization metric and directly estimate annual funding requirements 

for facility recapitalization by considering the expected service life for each facility 

category. 

4

31 U.S.C. 717 (b) (1). 
Page 3 GAO-08-502 Defense Infrastructure 

military service officials;5 (3) discussed with DOD and military service 

officials efforts to identify and address deferred facility sustainment 

requirements, determined the amount of the annual sustainment 

requirement that was not funded, and reviewed the deferred facility 

maintenance amounts reported in the military services’ financial 

statements; and (4) documented the development history and status of the 

installation services model and discussed with DOD officials the remaining 

obstacles to the model’s completion. We also visited eight judgmentally 

selected military installations, selected to represent several different 

geographic locations, to gain local-level insight into compliance with 

inventory verification procedures, the accuracy of real property inventory 

records, support funding issues, and the condition of facilities. We 

conducted this performance audit from May 2007 through April 2008, in 

accordance with generally accepted government auditing standards. Those 

standards require that we plan and perform the audit to obtain sufficient, 

appropriate evidence to provide a reasonable basis for our findings and 

conclusions based on our audit objectives. We believe that the evidence 

obtained provides a reasonable basis for our findings and conclusions 

based on our audit objectives. A detailed description of our scope and 

methodology is included in appendix I of this report. 

Although the facilities sustainment model provides a consistent and 

reasonable framework for preparing estimates of DOD’s annual facility 

sustainment funding requirements, accuracy and supportability issues with 

two of the model’s key inputs—the inventory quantity and the sustainment 

cost factor associated with each of DOD’s 448 facility categories—have 

affected the reliability of the model’s estimates. Regarding the inventory 

quantity input, we found that the military services had not complied with 

DOD real property and financial regulations that require verification of 

each real property inventory record at least once every 5 years. For 

example, the Army and the Navy had not verified the accuracy of about 

39 percent and 59 percent, respectively, of their real property inventory 

records during the 5 years ending with fiscal year 2007. Without the 

verifications, which the services attributed to a lack of personnel, DOD 

lacked assurance that the inventory quantities used by the model were 

 5

In addition to data from the military services, some of the data related to facility funding 

goals in this report include data from the Defense Logistics Agency, the Tricare 

Management Activity, and the DOD Education Activity. However, we did not include these 

components in our review. 

Results in Brief 
Page 4 GAO-08-502 Defense Infrastructure 

accurate, and our analysis identified inaccuracies in some inventory 

quantities subsequently used by the model. During our visits to several 

installations we also identified discrepancies between the inventory 

quantities used by the model and the quantities indicated in the supporting 

real property records. Regarding the sustainment cost factor input, we 

identified issues concerning the accuracy and supportability of some cost 

factors used by the model. For example, a contractor hired by DOD to 

independently verify and validate the model’s cost factors reported in 

February 2006 that only 13 of 45 factors evaluated were deemed to be 

reasonably accurate and adequately supported. We also found that DOD 

did not maintain readily accessible information documenting how each 

factor was calculated or explaining the reasons that some factors changed 

from one year to the next, even when changes were significant, such as 

more than 50 percent. Furthermore, a change for fiscal year 2009 in DOD’s 

method for calculating sustainment cost factors that are not based on 

independent data sources can result in reduced accuracy of those factors. 

Until DOD takes additional steps to improve the accuracy of its inventory 

quantity and sustainment cost factor inputs to the facilities sustainment 

model, the model’s estimates of annual facility sustainment funding 

requirements will not be as reliable as possible, which could jeopardize 

DOD’s ability to adequately provide for and report on its facility 

sustainment needs. 

The military services have not met all of DOD’s goals for funding facility 

sustainment and recapitalization at levels to prevent deterioration and 

ensure that facilities are restored and modernized in accordance with 

established benchmarks. Noting in 2004 that full funding of sustainment 

requirements was the most economical approach over a facility’s life 

cycle, DOD established a goal for the military services to fund sustainment 

at 95 percent of the requirement determined by the facilities sustainment 

model beginning in fiscal year 2005, and at 100 percent of the requirement 

beginning in fiscal year 2008. However, DOD actually funded 79 percent, 

91 percent, and 90 percent of its sustainment requirements in fiscal years 

2005, 2006, and 2007, respectively, falling short of the goal in each year. In 

fiscal year 2008, the Army, the Navy, the Air Force, and the Marine Corps 

budgeted funds to meet 89 percent, 83 percent, 92 percent, and 89 percent 

of their sustainment requirements, respectively, and thus did not budget to 

meet the fiscal year’s 100 percent funding goal. Service officials stated that 

they generally did not meet the sustainment funding goals because 

resources were limited and some programs, such as force modernization, 

often had a higher funding priority. Moreover, some budgeted sustainment 

funds were used to pay for other needs, such as unfunded facility 

restoration projects and bills for installation services, which reduced 
Page 5 GAO-08-502 Defense Infrastructure 

funding that would have been used to sustain facilities. At the eight 

installations we visited, facility sustainment requirements were not fully 

funded every year during fiscal years 2005, 2006, and 2007, and some 

facilities had fallen into disrepair at most of these installations. In the 

facility recapitalization area, the military services achieved more success 

in meeting DOD’s goal to fund recapitalization annually at levels that 

would result in replacing facilities every 67 years. For example, the Army, 

the Navy, and the Air Force exceeded the 67-year goal in some years since 

fiscal year 2005. However, the adequacy of recapitalization funding 

remains an issue because of underfunding in previous years. The Army, 

the Navy, and the Air Force reported recapitalization backlogs of about 

$20.4 billion, $27.6 billion, and $9.3 billion, respectively, at the end of fiscal 

year 2007 and some of the installations we visited also reported concerns 

over growing backlogs. As other important priorities, such as force 

modernization, compete for funding, DOD has been challenged to provide 

adequate resources for sustaining and recapitalizing its facilities. As a 

result, some facilities have not been sustained at a level to keep them in 

good working order and will likely experience reduced service lives, which 

in turn will lead to more costly recapitalization requirements in the future. 

DOD has not taken actions to estimate and address the military’s deferred, 

or backlogged, facility sustainment requirements. Deferred sustainment 

requirements might not exist if the annual sustainment requirement were 

fully funded each year. However, as noted above, this has not been the 

case and, in fiscal years 2005 through 2007, the military services did not 

fund over $3.5 billion of their estimated annual facility sustainment 

requirements. According to DOD, needed sustainment work that is not 

performed will eventually result in damaged facilities, shortened facility 

service lives, and increased future costs for facility restoration. Yet, 

because DOD has not provided guidance that clearly defines deferred 

sustainment requirements, directs the services to consistently measure 

and track deferred sustainment needs, or establishes a goal to address 

these needs, the services do not have consistent estimates of their 

deferred sustainment requirements or plans to deal with these needs. As a 

result, DOD lacks a complete picture of its facility sustainment funding 

needs and DOD’s current plans and goals to address facility sustainment 

requirements do not include all sustainment requirements, which could 

further jeopardize DOD’s ability to adequately provide for its facility 

sustainment needs and result in continued facility deterioration and 

increased future recapitalization costs. In addition, the military services’ 

financial reporting of deferred facility maintenance information has been 

inconsistent with financial reporting requirements intended to provide full 

disclosure of facility conditions. Largely because of a lack of clear 
Page 6 GAO-08-502 Defense Infrastructure 

guidance, the services’ financial statements before fiscal year 2007 

excluded required information concerning deferred facility sustainment 

requirements and included information that is not required concerning 

deferred facility modernization requirements. Although DOD issued 

revised guidance in September 2007 in part to address this issue, the 

guidance did not provide sufficient details to ensure that future financial 

reporting of deferred maintenance would be consistent with reporting 

requirements. As a result, the military services’ financial reporting of 

deferred maintenance information may continue to be inconsistent with 

financial reporting requirements. 

DOD’s progress in developing a model for estimating installation services 

funding requirements has been slow because DOD has been unable to 

overcome long-standing inconsistencies among the military services’ 

definitions of support service functions and other obstacles that prevent 

such a model from being ready for use. In 2004, DOD’s installation 

strategic plan noted the need to develop an analytical model based on 

common benchmarks to accurately forecast funding requirements for 

installation services. Although interservice teams have been studying 

installation support service areas since 2005 to develop common 

definitions, performance standards, metrics, and cost estimates, the 

military services had agreed on common definitions and standards for only 

2 of 29 service areas by the end of calendar year 2007. According to DOD 

officials, the difficulty in reaching agreement has been caused by several 

factors, such as traditional differences among the military services in how 

tasks and subtasks for installation services are grouped, performed, 

managed, and funded; differences in the value and emphasis placed on 

various support services, and differences in support service needs based 

on installation location and demographic characteristics. Although DOD’s 

goal is to establish common standards and metrics for installation services 

by the end of 2008, DOD had not formally established a milestone for when 

the model will be implemented for use in estimating the military’s 

installation services funding requirements. DOD officials stated that 

additional obstacles must be overcome to meet the 2008 goal and 

complete development of a reliable model. Key obstacles include 

overcoming differences among the military services in service program 

management and funding methods and identifying adequate information 

sources for estimating costs for the various installation services. In view of 

these remaining obstacles and prior progress, it is unclear whether the 

2008 target will be met. In the absence of a DOD-wide model, each military 

service has developed methods to determine its installation services 

requirements and funding needs subject to its own definition of the types 

and levels of services it deems necessary. According to Army, Navy, and 
Page 7 GAO-08-502 Defense Infrastructure 

Air Force officials, funding for installation services in some instances has 

been inadequate and resulted in installations providing reduced services, 

which, in turn, adversely affected the quality of life of DOD personnel. 

Until a reliable model is implemented, DOD cannot know its installation 

services funding requirements with confidence, set installation services 

funding and performance benchmarks, measure the military services’ 

progress in providing installation services, or provide the Congress with a 

clear, consistent basis for making related funding decisions. 

We are making several recommendations to increase the reliability of the 

facilities sustainment model, address deferred facility sustainment funding 

requirements, and advance progress towards implementing the installation 

services model. Specifically, we are recommending that DOD monitor and 

ensure compliance with guidance requiring verification of real property 

inventory records, maintain documentation on the basis for the 

sustainment cost factors used by the model, and revert to the previously 

used method to calculate sustainment cost factors that are not based on 

independent data sources. We also are recommending that DOD provide 

guidance that clearly defines deferred facility sustainment requirements, 

directs the services to consistently measure and track deferred 

sustainment needs, establishes a goal to address these needs, and ensures 

that the military services’ financial reporting of deferred facility 

maintenance is consistent with financial reporting requirements. Further, 

we are recommending that DOD establish a milestone for implementing 

the installation services model and provide adequate senior-level oversight 

to ensure that the milestone is met. 

In written comments on a draft of this report, DOD generally agreed with 

our recommendations and stated that it had already initiated several of the 

recommended actions. However, DOD’s comments and stated actions did 

not fully address some of our recommendations. Specifically, in addition 

to the steps that DOD stated it has taken or plans to take, we continue to 

believe that DOD needs to take further steps to monitor and ensure 

compliance with inventory verification guidance, provide a clear definition 

of deferred facility sustainment requirements, direct the military services 

to consistently measure and track deferred sustainment needs, ensure that 

the military services’ financial reporting and disclosure information 

regarding deferred facility maintenance is consistent with financial 

reporting requirements, and provide adequate senior-level oversight to 

ensure that an installation services model is implemented as soon as 

possible. DOD’s comments are discussed in more detail at the end of this 

report and are reproduced in full in appendix III. 
Page 8 GAO-08-502 Defense Infrastructure 

Since 1997, we have identified management of DOD support infrastructure 

as a high-risk area because infrastructure costs have affected the 

department’s ability to devote funds to other more critical programs and 

needs. In a January 2007 update to our high-risk series, we noted that DOD 

continued to face significant challenges in funding its installation support 

and sustainment, restoration, and modernization of its facilities, and 

questions persisted over the adequacy of funding provided to these areas.6

Further, we noted that because of these long-standing issues, DOD’s 

management of support infrastructure remains a high-risk area. 

We have issued several reports in recent years highlighting the long-term 

challenges DOD faces in managing its portfolio of facilities and halting the 

degradation of facilities. For example, in February 2003, we found that 

funds designated for facilities sustainment were held back at the service 

headquarters, major command, and installation levels to cover more 

pressing needs or emerging requirements, which resulted in continued 

facility deterioration.7

 In May 2003, we reported that although funding for 

maintaining and constructing reserve component facilities had increased 

by almost 50 percent during 1998 through 2003, the reserve components 

indicated the condition of about 64 percent of their facilities was 

inadequate.8

 In a June 2005 report, we found that DOD did not have a 

common framework for identifying base operating support functions and 

funding requirements to ensure adequate delivery of services, particularly 

in a joint environment.9

 We also found that, because of a lack of a common 

terminology across the services in defining base support functions and the 

lack of a mature analytic process for developing credible and consistent 

requirements, the services moved hundreds of millions of operation and 

maintenance dollars designated for facilities sustainment and other 

purposes to pay for base operations support. While such funding 

movements are permissible, we found that they were disruptive to the 

 6

GAO, High-Risk Series: An Update, GAO-07-310 (Washington, D.C.: January 2007). 

7

GAO, Defense Infrastructure: Changes in Funding Priorities and Strategic Planning 

Needed to Improve the Condition of Military Facilities, GAO-03-274 (Washington, D.C.: 

Feb. 19, 2003). 

8

GAO, Defense Infrastructure: Changes in Funding Priorities and Management 

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

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

9

GAO, Defense Infrastructure: Issues Need to Be Addressed in Managing and Funding 

Base Operations and Facilities Support, GAO-05-556 (Washington, D.C.: June 15, 2005). 

Background 
Page 9 GAO-08-502 Defense Infrastructure 

orderly provision of services and contributed to the overall degradation of 

facilities. In another 2005 report, we found that many of DOD’s training 

ranges were in deteriorated condition and lacked modernization, which 

adversely affected training activities and jeopardized the safety of military 

personnel.10

The Office of the Deputy Under Secretary of Defense for Installations and 

Environment has overall responsibility for DOD’s facilities and 

installations, which includes about 577,000 buildings and structures at 

more than 5,300 sites worldwide with a total replacement value of about 

$712 billion. During fiscal year 2008, DOD plans to spend around 

$55 billion to support its facilities and installations. DOD refers to this 

funding as installation support, which includes five broad categories of 

services, programs, and support activities—facilities, installation services, 

family housing, environment, and base realignment and closure. As shown 

in figure 1, the facilities category is composed of five subcategories—

sustainment, recapitalization, disposal, facilities operation services, and 

new footprint, which includes facility construction related to new or 

expanded missions. 

 10GAO, Military Training: Better Planning and Funding Priority Needed to Improve 

Conditions of Military Training Ranges, GAO-05-534 (Washington, D.C.: June 10, 2005). 

Funding of Installation 

Support 
Page 10 GAO-08-502 Defense Infrastructure 

Figure 1: DOD’s Planned Fiscal Year 2008 Funding for Installation Support 

Note: The Congress appropriates funds according to the categories listed under the appropriation 

heading, and DOD classifies funds for installation support according to the categories in the chart. 

Numbers in the chart may not total correctly due to rounding. 

Of these installation support categories, this report focuses on facility 

sustainment, recapitalization, installation services, and facilities operation 

services—the categories where DOD has or intends to implement models 

to help estimate funding requirements. 

• Sustainment, funded primarily with operation and maintenance 

appropriations, includes the maintenance and repair activities 

necessary to prevent deterioration, maintain safety, and keep facilities 

in good working order over their service lives. Sustainment includes 

Installations

support

$55.45

Base 

realignment 

and closure 

$8.05

Family 

housing

$3.10

Facilities

$25.32

Installation 

services

$15.73

Environment

$3.24

Sustainment

$7.11

Recapitalization

$6.15

Disposal

$0.15

Facilities

operation 

services

$7.15

New footprint

$4.77

Appropriation

Operation and maintenance

Military construction

Military personnel

Procurement

Working capital fund

Family housing

Base realignment and closure

Other

Total

Amount

$30.28

9.73

3.06

0.41

0.57

3.10

8.05

0.25

$55.45

Sustainment and recapitalization ($13.26)

Installation services related ($22.88)

Source: DOD.

(Dollars in billions)
Page 11 GAO-08-502 Defense Infrastructure 

regularly scheduled adjustments and inspections, preventive 

maintenance tasks, and emergency response and service calls for 

minor repairs. Sustainment also includes major repairs or replacement 

of facility components that are expected to occur periodically 

throughout a facility’s life cycle, such as regular roof replacement; 

refinishing wall surfaces; repairing and replacing electrical, heating, 

and cooling systems; and replacing tile and carpets. According to DOD, 

needed sustainment work that is not performed will eventually result in 

damaged facilities, shortened facility service lives, and increased future 

costs for facility restoration. 

• Recapitalization, funded primarily with operation and maintenance and 

military construction appropriations, provides for improving facilities 

through restoration and modernization. Restoration includes repair and 

replacement work needed to restore facilities degraded from several 

causes, such as natural disaster, fire, accident, excessive age, or 

inadequate sustainment. Modernization includes both renovation and 

replacement of existing facilities to implement new or higher 

standards, accommodate new functions, or replace building 

components that typically last more than 50 years. 

• Installation services, funded primarily with operation and maintenance 

appropriations, includes the personnel, support equipment, contracts, 

and associated costs to plan, manage, and deliver installation services 

and functions. Installation services consists of nine major program 

areas which include many diverse subfunctions, such as installation 

airfield and port operations; security; transportation; supply; 

communications; information management; personnel management; 

food services; administrative, legal, and financial services; 

unaccompanied personnel housing management; family and quality of 

life programs; and environmental compliance. 

• Facilities operation services, funded primarily with operation and 

maintenance appropriations, includes 10 facility-related services—fire 

and emergency services, utilities, pavement clearance, refuse collection 

and disposal, real property leases, grounds maintenance, pest control, 

custodial services, real property management and engineering services, 

and engineering readiness. DOD previously referred to facility 

operations as real property services and, together with installation 

services, family housing, and environment, were referred to as base 

operations support. In general, the military services’ budgets continue 

to refer to funding for installation services and facility operation 

services as base operations support funding. 
Page 12 GAO-08-502 Defense Infrastructure 

In order to more effectively and efficiently support DOD missions, several 

years ago the Office of the Deputy Under Secretary of Defense for 

Installations and Environment began to lead the military services in 

developing more accurate methods to estimate installation support 

funding requirements. According to DOD officials, in the past installation 

support funding requirements were often artificially derived, such as by 

basing funding needs on prior-year execution levels. DOD lacked 

departmentwide standards for determining future funding needs and did 

not have sufficient data to support informed decision making. DOD’s 

solution was to develop models that could predict future requirements 

based on known inputs that were specific to a facility category type, 

service, and location. The idea was to better support funding decisions by 

developing models that used benchmarked and validated inputs, estimated 

needs based on service levels commensurate with industry standards, 

where applicable, and showed the impact if funds were not provided. 

According to DOD officials, models can improve consistency, increase 

credibility, establish an auditable process, and provide a tool for setting 

funding goals and measuring progress towards meeting those goals. The 

following is a summary status of DOD’s model development for 

installation support as of January 2008. 

• The facilities sustainment model has been implemented and used by 

the military services to estimate the annual facility sustainment funding 

requirements since fiscal year 2003. The model estimates sustainment 

requirements for each of DOD’s 448 facility categories. DOD 

determined the facility categories by grouping facilities with similar 

functions and units of measure to provide for consistent analysis and 

planning across the military. 

• The facilities modernization model is under development and DOD 

plans to begin using the model to estimate recapitalization funding 

requirements in fiscal year 2010. According to DOD, the model will 

estimate annual funding requirements and improve upon DOD’s 

recapitalization metric that has been used for several years to help 

assess restoration and modernization funding needs. The 

recapitalization metric uses as a measure the number of years it would 

take for facilities to be replaced based on the annual funding provided 

for restoration and modernization. DOD’s current goal is for military 

services to fund facility restoration and modernization in annual 

amounts that would result in facilities being replaced every 67 years. 

DOD established the 67-year benchmark after an assessment of DOD’s 

real property inventory in the late 1990s. According to DOD, the 

facilities modernization model will determine funding needs based on 

DOD’s real property inventory and the expected service life for each 

DOD Intends to Use 

Models to Estimate 

Funding Requirements 
Page 13 GAO-08-502 Defense Infrastructure 

facility category, rather than using the 67-year average service life for 

all facility categories. 

• The facilities operation model has been under development since fiscal 

year 2005 and DOD plans for all military services to use the model to 

estimate the fiscal year 2010 facilities operation funding requirements. 

According to DOD, the model will use commercial benchmarks for 

similar services performed in the private sector. The Air Force used a 

prototype of the model to help estimate the Air Force fiscal year 2008 

funding requirement for facilities operation. 

• The installation services model has been under development since 

2006, although work required to support the model, such as developing 

DOD-wide common definitions for support services, began in fiscal 

year 2004. The model is intended to provide a consistent framework in 

which the military services can develop annual funding requirements 

for installation services. DOD’s goal is to complete development of the 

model in calendar year 2008. DOD has not set a date for the military 

services to begin using the model to develop their installation services 

funding requirements. 

Although the facilities sustainment model provides a consistent and 

reasonable framework for preparing estimates of DOD’s annual facility 

sustainment funding requirements, accuracy and supportability issues with 

two of the model’s key inputs—the inventory quantity and the sustainment 

cost factor associated with each of DOD’s 448 facility categories—have 

affected the reliability of the model’s estimates. Regarding the inventory 

quantity input, we found that the military services had not verified the 

accuracy of the facility inventory records as required by DOD guidance, 

the model has used some inaccurate inventory quantities, and 

discrepancies existed between some facility inventory quantities used by 

the model and the quantities shown in supporting installation inventory 

records. Regarding the sustainment cost factor input, we identified issues 

concerning the accuracy and supportability of some cost factors used by 

the model. Because of these issues, the model’s estimates of annual facility 

sustainment funding requirements are not as reliable as possible. 

Reliability of the 

Facilities Sustainment 

Model’s Estimates 

Can Be Improved 
Page 14 GAO-08-502 Defense Infrastructure 

The facilities sustainment model provides a consistent and reasonable 

framework for estimating DOD’s facility sustainment requirements, 

providing that the information input to the model is accurate. DOD 

officials stated that the model was designed to incorporate the basic 

characteristics of effective cost estimates11 and was independently 

validated prior to implementation. The model calculates annual facility 

sustainment funding requirements for each of DOD’s facility categories by 

using an equation that considers four quantifiable variables: 

Sustainment requirement = (inventory quantity) times (sustainment cost factor) times 

(geographic location adjustment factor) times (inflation adjustment) 

The inventory quantities used by the model come from the real property 

inventory records maintained by military installations. Inventory quantities 

are totaled for each facility category and reported to DOD at the end of 

each fiscal year. Sustainment cost factors are estimates of the average 

annual unit cost to sustain the average size facility in each facility 

category—such as $2.53 per square foot for an aircraft maintenance 

hangar. DOD determines the sustainment cost factor from a variety of 

sources, such as private sector cost benchmarks for buildings and building 

components, other government agency standard cost estimates, and 

military-component-validated cost factors for facilities with no 

commercial counterpart. Although DOD prefers these sources to 

determine sustainment cost factors, DOD officials noted that such sources 

are not available for some facility categories. In these cases, DOD usually 

determines the cost factor based on costs from a separate but similar 

facility category. The model also adjusts sustainment costs to account for 

geographic location differences and annual inflation. To do this, the model 

applies a location factor developed by DOD to account for differences in 

labor, material, and equipment costs depending on where installations are 

located, and applies an inflation factor, determined by DOD, to account for 

cost escalation. Finally, the model makes adjustments to remove those 

facilities that are slated for closure or demolition in the near future, add 

those facilities under construction, account for some data differences 

among the military services, and categorize sustainment costs under the 

appropriate DOD organization and appropriation type. 

 11See GAO, Cost Assessment Guide: Best Practices for Estimating and Managing 

Program Costs, Exposure Draft, GAO-07-1134SP (Washington, D.C.: July 2007). 

Facilities Sustainment 

Model Provides a 

Consistent and Reasonable 

Framework for Preparing 

Funding Estimates 
Page 15 GAO-08-502 Defense Infrastructure 

We found the model’s estimates (output) were less reliable than possible 

in part because the facility inventory data used as an input by the model 

had not been validated as required. The model uses facility inventory 

information from each military installation as a key input in determining 

sustainment funding requirements, so the inventory information must be 

accurate if the model’s estimates are to be accurate. To help ensure 

inventory accuracy, DOD guidance requires that DOD components verify 

the accuracy of each real property inventory record every 5 years.12 The 

instructions require that the verifications be based on a physical inventory, 

which can verify that the inventory records accurately describe all 

installation facilities and accurately record each facility’s size, or quantity, 

using the unit of measure that DOD has prescribed for each facility 

category. The verification of real property inventory records also helps 

ensure the accuracy of facility-related information included in the military 

services’ annual financial statements. 

Despite the guidance, we found that the military services had not verified 

the accuracy of all facility inventory records within the past 5 years. 

According to service officials, the inventory verifications had not been 

performed because personnel resources at military installations were 

limited and the installations had higher priority work for the personnel 

who were available. The level of compliance with the verification 

requirements varied among the military services. 

• Army information showed that the inventory records for over 90,000 

Army facilities, about 39 percent of all Army facilities, had not been 

verified within the 5-year period ending with fiscal year 2007. Although 

some Army installations met the 5-year verification requirement, most 

installations did not. At some installations, a significant percentage of 

inventory records was not verified. For example, at Forts Irwin, Bragg, 

Shafter, and Polk, 93 percent, 83 percent, 82 percent, and 75 percent, 

respectively, of the inventory records had not been verified within the 

past 5 years. 

• Navy information showed that Navy installations had not verified the 

accuracy of about 59 percent of their real property inventory records 

within the 5-year period ending with fiscal year 2007. More specifically, 

the inventory records for about 49 percent of the Navy’s buildings, 

 12See DOD Instruction No. 4165.14, Real Property Inventory and Forecasting (Mar. 31, 

2006) and DOD Financial Management Regulation 7000.14-R, vol. 4, ch. 6, Property, Plant, 

and Equipment (July 2006). 

Facility Inventory Data 

Used in the Model Have 

Not Been Validated as 

Required 
Page 16 GAO-08-502 Defense Infrastructure 

58 percent of other Navy structures, and 80 percent of the Navy’s utility 

facilities had not been verified within the required time frame. 

• Although Air Force headquarters did not track compliance with the real 

property inventory verification requirement, at our request the Air 

Force queried its major commands about compliance levels. The Air 

Education and Training Command reported that about 17 percent of its 

inventory records had not been verified within the past 5 years. The Air 

Combat Command, the Space Command, and Materiel Command 

reported that about 10 percent, 3 percent, and 2 percent, respectively, 

of their inventory records had not been verified within the past 5 years. 

Reported information from the remaining commands did not state their 

level of compliance but stated that the commands were verifying about 

20 percent of their inventory records each year. 

• Marine Corps headquarters also did not track compliance with the real 

property inventory verification requirement. However, in May 2007, the 

Naval Audit Service issued a report on the reliability of the real 

property information included in the Marine Corps’ financial 

statements. The report stated that physical inventories of real property 

were not being performed every 5 years as required and that 

documentation supporting the performance of the physical inventories 

did not exist, except for critical facilities.13 

During visits to eight installations, we found that while four installations 

had verified their facility inventory records within the past 5 years, the 

other four installations had not performed this verification. For example, 

Randolph Air Force Base officials stated that about 60 percent of the 

installation’s real property inventory records had not been validated by a 

physical inventory within the past 5 years because of limited personnel. 

The officials stated that inventory validations were one of the last tasks to 

be performed because other tasks were given higher priority. At Langley 

Air Force Base, officials stated that about 50 percent of the installation’s 

real property inventory records had not been validated within the past 

5 years, also because of limited personnel. From a list of the inventory 

records that had been verified, we judgmentally selected and reviewed the 

documentation supporting the verifications of 10 records. We found 

discrepancies in 8 of the 10 records that raise questions about the 

 13Naval Audit Service, Independent Attestation Report--Agreed-Upon Procedures 

Attestation Engagement of Marine Corps Real Property Financial Statement 

Information, N2007-0031 (May 7, 2007). 
Page 17 GAO-08-502 Defense Infrastructure 

reliability of the verifications at Langley Air Force Base. For example, the 

inventory verification documentation identified one facility as a billboard 

when the real property record identified the facility as a vehicle bridge, 

and the verification documentation identified another facility as a youth 

center when the real property record identified the facility as an Air Force 

clinic. In addition, the inventory verification documentation in some cases 

included no signature, date, or facility size, as required by installation 

procedures. 

We also question the reliability of the facilities sustainment model’s 

estimate (output), because we found several errors in the inventory 

quantities used as input to the model. As shown in the following examples, 

the inventory quantity errors caused inaccuracies in the model’s funding 

estimates. 

• The inventory quantity used in the model to estimate sustainment 

requirements for the military services’ vehicle maintenance facilities 

increased from 6,785 facilities in fiscal year 2006 to 14,760 facilities in 

fiscal year 2007, an increase of 118 percent. The quantity then 

decreased to 6,599 facilities in fiscal year 2008. When we asked for an 

explanation for the fluctuation, DOD officials stated that the 

fluctuation was most likely caused by errors in five inventory records 

at one installation. These records used the wrong unit of measure in 

fiscal year 2007 to report inventory quantity. Specifically, the 

installation reported the square footage of the facilities as the inventory 

quantity instead of reporting the number of facilities. For example, a 

vehicle maintenance facility with 3,325 square feet was counted as 

3,325 separate facilities. Because of this error, the facilities sustainment 

model overstated the sustainment requirement for vehicle maintenance 

facilities by about $12.0 million in fiscal year 2007. 

• The inventory quantity used by the model to estimate sustainment 

requirements for the Navy’s hazardous waste storage or disposal 

facilities increased from 399 facilities in fiscal year 2006 to 2,350 

facilities in fiscal year 2007, an increase of 489 percent. The quantity 

then decreased to 385 facilities in fiscal year 2008. When we asked for 

an explanation for the fluctuation, Navy officials stated that the 

fluctuation was caused by an error in reporting the inventory quantity 

in fiscal year 2007. Because of this error, the facilities sustainment 

model overstated the sustainment requirement for the Navy’s 

hazardous waste storage or disposal facilities by about $10.8 million in 

fiscal year 2007. 

Inaccurate Inventory 

Quantities Used by the 

Model 
Page 18 GAO-08-502 Defense Infrastructure 

• The inventory quantity used by the model to estimate sustainment 

requirements for unsurfaced airfield pavement in the Army increased 

from 762,553 square yards in fiscal year 2005 to 2,634,221 square yards 

in fiscal year 2008, an increase of 245 percent. When we asked Army 

officials to explain the basis for the increase, Army officials stated that 

the Army had increased data emphasis and installations made great 

efforts to accurately capture their entire inventories. Although the 

dollar amount associated with this change in inventory is relatively 

small, the Army’s statement indicates that the Army’s previously 

reported inventory quantities for unsurfaced airfield pavement were 

not accurate. 

Our review also identified discrepancies between facility inventory 

quantities used by the facilities sustainment model and quantities shown in 

the supporting real property inventory records. We identified such 

discrepancies at five of the eight installations we visited. In many 

instances, the difference in the inventory quantities was relatively small. 

Nevertheless, local officials could not explain the differences, which cause 

the accuracy of the facility quantities used by the model to be 

questionable. The following examples illustrate discrepancies we 

identified during installation visits. 

• At Fort Eustis, we selected 39 facilities and for each facility compared 

the inventory quantity shown in the installation’s real property 

inventory record with the inventory quantity used in the facilities 

sustainment model. In 36 of the 39 cases, the inventory quantities did 

not match and local officials could not explain why. For example, the 

Fort Eustis inventory record showed the size of a shore erosion 

prevention facility to be 9,333 linear feet but the inventory size used in 

the model was 30,839 linear feet, a difference of 230 percent. In another 

instance, the Fort Eustis inventory record showed the size of a 

bulkhead facility to be 2,594 linear feet but the inventory size used in 

the model was 1,394 linear feet, a difference of 86 percent. In neither 

case could Fort Eustis officials explain the discrepancy between the 

quantities contained in the facility inventory records and the quantities 

used by the model. 

• At Randolph Air Force Base, we selected 39 facilities and for each 

facility compared the inventory quantity shown in the installation’s real 

property inventory record with the inventory quantity used by the 

facilities sustainment model. In 5 of the 39 cases, the inventory 

quantities did not match and local officials could not explain why. For 

example, the Randolph Air Force Base inventory record showed the 

Discrepancies Existed 

between Quantities Used 

in the Model and 

Supporting Inventory 

Records 
Page 19 GAO-08-502 Defense Infrastructure 

size of a heat source facility to be 5,918 million British thermal units, 

but the inventory size used in the model was 27.15 million British 

thermal units. The quantity used by the model was a default reset value 

that the model used when the reported size for this facility type 

exceeded 500 million British thermal units and the reporting 

installation did not confirm that its reported facility size was correct. 

Randolph Air Force Base officials did not resolve the discrepancy 

during our visit. 

• At Camp Lejeune, we found discrepancies in several of the inventory 

records we checked. For example, the model estimated sustainment 

requirements for seven aircraft runways at Camp Lejeune. When we 

asked for the supporting facility inventory records in order to compare 

inventory quantities in the records with the quantities used by the 

model, Camp Lejeune officials stated that they could not locate the 

inventory record for one of the runways. The model had used an 

inventory size of 172,083 square yards for this runway and estimated 

that its annual sustainment requirement was about $207,000. Camp 

Lejeune officials did not resolve the discrepancy during our visit. 

An independent study that found concerns with the sustainment cost 

factors used in the model contributed to our finding that the model’s 

estimates were less reliable than possible. As with inventory quantities, the 

facility sustainment cost factors associated with each of DOD’s 448 facility 

categories are a key input to the facilities sustainment model. The cost 

factors used by the model must be reliable in order for the model’s 

requirements estimates to be reliable. To assess the quality of the factors, 

DOD hired a contractor in fiscal year 2005 to perform an independent 

validation and verification study. The contractor selected 45 cost factors, 

primarily from those factors associated with facility categories with the 

highest sustainment requirements, independently determined a value for 

each factor, and compared these values with the cost factor values used by 

DOD. The study, completed in February 2006, reported that only 13 of 45 

factors evaluated were deemed to be reasonably accurate and adequately 

supported. The study concluded that 32 of DOD’s cost factors were either 

overvalued or undervalued and recommended that DOD adjust its cost 

factor values in order to more accurately estimate sustainment 

requirements. Table 1 illustrates selected results from the study. 

An Independent Study 

Found Concerns with the 

Model’s Sustainment Cost 

Factors 
Page 20 GAO-08-502 Defense Infrastructure 

Table 1: Selected Results from the Independent Validation and Verification Study of DOD’s Sustainment Cost Factors 

DOD’s factor value less 

study’s factor value: 

Facility category 

Unit of 

measure 

DOD’s cost 

factor valuea

Study’s estimated 

cost factor valuea

Amount Percentage

Surfaced road Square yard $0.54 $1.77 ($1.23) -228

Unsurfaced road Square yard 0.16 0.53 (0.37) -231

Operating fuel storage Gallon 0.08 0.26 (0.18) -225

Sidewalk and walkway Square yard 0.86 1.84 (0.98) -114

Vehicle bridge Square yard 76.42 37.79 38.63 51

Standby emergency power Kilowatt 17.17 10.43 6.74 39

Airfield pavement lighting Linear foot 3.30 2.30 1.00 30

General administration building Square foot 2.56 3.21 (0.65) -25

Fence and wall Linear foot 0.60 0.73 (0.13) -22

Potable water distribution line Linear foot 0.85 0.67 0.18 21

Source: US COST, Facilities Sustainment Cost Factor Evaluation for the Office of the Secretary of Defense (February 2006). 

a

Fiscal year 2005 dollars. 

In response to the study’s recommendations, DOD made changes to some 

but not all of the factors recommended for adjustment. Specifically, DOD 

cited the study as the basis for making changes to 16 cost factors when 

factors were adjusted for use in estimating the fiscal year 2009 

sustainment requirements. However, some of these changes were not 

consistent with the study’s recommendations. For example, the study 

found that the factor for general administration buildings was 25 percent 

too low and recommended a change. Although DOD made a change and 

attributed the study for the change, the revised cost factor was still 

16 percent below the study’s recommended amount after adjusting for 

inflation. The study also found that the factor for standby emergency 

power facilities was 39 percent too high and recommended a change. 

Although DOD made a change and attributed the study for the change, the 

revised cost factor was still 40 percent higher than the study’s 

recommended amount after adjusting for inflation. 

DOD did not document the reasons why some of the study’s 

recommendations were accepted and some were not, and in some cases 

DOD’s decisions appeared inconsistent. For example, the study 

recommended increasing the cost factors for surfaced roads and 

unsurfaced roads. DOD accepted the recommendation for unsurfaced 

roads, which will result in adding over $90 million to the sustainment 

requirement, but did not accept the recommendation for surfaced roads. 
Page 21 GAO-08-502 Defense Infrastructure 

Because the reasons for these decisions were not documented, we asked 

DOD officials to explain the basis for the decisions. The officials stated 

that the recommendation for unsurfaced roads was accepted because a 

DOD panel decided that the data used to support the study’s 

recommended cost factor value were superior to the data used to support 

DOD’s cost factor value. However, because the data used by the study 

were readily available to DOD, it is unclear why the data were not already 

used as the basis for DOD’s cost factor. The officials stated that the panel 

decided the opposite for surfaced roads—that the data used to support 

DOD’s cost factor were superior to the data supporting the study’s 

recommended cost factor. However, the basis for the panel decision is 

somewhat unclear because DOD’s cost factor was based on a University of 

Kansas study and reasons were not stated to explain why that study was 

considered a superior source. 

It is important to note that the verification and validation study evaluated 

45 (about 10 percent) of DOD’s 448 sustainment cost factors and identified 

concerns with 32 (about 71 percent) of the factors evaluated. Of these 

32 factors, DOD made changes to 16 factors and attributed the changes to 

the study. On the basis of these percentages, it appears likely that if 

further study and analysis were performed on the remaining 395 cost 

factors not subjected to an independent review, additional reliability 

concerns would be identified and DOD would be in a position to make 

adjustments to additional factors. 

We identified issues concerning the supportability of some cost factors 

used by the facilities sustainment model. DOD officials stated that, as 

resources permit, several cost factors are refined each year in an effort to 

continually improve the accuracy of the model. However, DOD has not 

provided a clear audit trail with readily accessible information 

documenting the support or basis for each factor’s value, such as the 

details on the calculations used and explanations for changes in factors 

from year to year. Without this documentation, the support for many 

factors is unclear, as illustrated below. 

• From fiscal year 2008 to 2009, DOD decreased the sustainment cost 

factor for potable water storage facilities and pedestrian bridges by 

90 percent and 88 percent, respectively. Because documentation did 

not explain the reason for these changes, we asked DOD officials for an 

explanation. The officials stated that the changes were made to correct 

a math error that had been made in the calculation of the previously 

used cost factor values. Such errors might be more easily detected if 

Support for Some 

Sustainment Cost Factors 

Is Unclear 
Page 22 GAO-08-502 Defense Infrastructure 

calculation details were provided in the documentation supporting the 

cost factors. 

• From fiscal year 2008 to 2009, DOD increased the sustainment cost 

factor for airfield pavement lighting by 90 percent. The February 2006 

verification and validation study had found this factor, before the 

increase, to be high. Because documentation did not explain the reason 

for the increase, we asked DOD officials for an explanation. The 

officials stated that the increase resulted from a change in the basis for 

the cost factor. The revised cost factor was based on a detailed cost 

analysis of a standard design using vendor quotes. Still, documentation 

showing the calculations and the number of vendors contacted to 

ensure competitive pricing would help support this cost factor change. 

• From fiscal year 2008 to 2009, DOD increased the sustainment cost 

factor for fences and walls by 92 percent. Because documentation did 

not explain the reason for the increase, we asked DOD officials for an 

explanation. The officials stated that the change resulted from a change 

in the planned design life for fences and walls from 50 to 26 years. The 

February 2006 verification and validation study had recommended that 

this factor be increased by 22 percent but did not recommend a change 

in service life. Documentation showing the detailed reasons for the 

change and the calculations used would help support this cost factor 

change. 

• From fiscal year 2008 to 2009, DOD decreased the sustainment cost 

factor for sidewalks and walkways from $1.82 per square yard to $0. 

The change reduced DOD’s sustainment requirements by about $98 

million. Because documentation did not explain the reason for the 

decrease, we asked DOD officials for an explanation. The officials 

stated that the decrease resulted from a change in the planned design 

life for sidewalks and walkways from 50 to 28 years, which resulted in 

eliminating sustainment costs but increasing recapitalization costs. We 

asked facility maintenance personnel at four of the installations we 

visited whether they agreed with the change in the cost factor. In each 

case, the officials stated that they disagreed because sidewalks and 

walkways do have sustainment costs. Documentation showing the 

detailed reasons for the change and the calculations used would help 

support this cost factor change. 

The support for some sustainment cost factors was also unclear because 

of the method DOD used to determine the values for the factors. 

Specifically, DOD attempts to use independent data sources as the basis 

for determining sustainment cost factors. However, according to DOD 
Page 23 GAO-08-502 Defense Infrastructure 

officials, independent data sources are not available for some facility 

categories. To develop a sustainment cost factor for one of these facility 

categories, DOD normally performs a ratio analysis based primarily on 

costs from a similar facility category where costs are based on 

independent sources.14 For example, the sustainment cost factor for 

satellite communications buildings is based on a ratio of costs from 

communications buildings, where the sustainment cost factor is based on 

independent data sources. 

However, we found that the cost factors for some facility categories were 

based on costs from seemingly dissimilar facility categories. In such cases, 

the support for the factors was unclear because documentation did not 

explain the relationship between the facility categories. For example, the 

sustainment cost factor for petroleum pipelines, which are measured in 

miles, and the sustainment cost factor for aircraft fueling facilities, which 

are measured in gallons per minute, were both based on a ratio of costs 

from automobile service facilities, which are measured in square feet. 

DOD officials stated that sustainment costs for automobile service 

facilities include hydrant and fuel truck station records, periodic 

maintenance inspections, and replacement of worn parts, which are 

similar to costs associated with petroleum pipelines and aircraft fueling 

facilities. However, because automobile service facilities also include 

costs for items not clearly associated with petroleum pipelines and aircraft 

fueling facilities, such as linoleum flooring, painted walls, water heaters, 

and heating and air conditioning systems, the connection between these 

facility categories remains unclear. 

 14The premise is that there is a similar relationship between the sustainment and 

replacement cost factors for two facility categories. The replacement cost factor is DOD’s 

estimate of the average unit cost to replace a facility in a given facility category based on 

the category’s prescribed unit of measure. Thus, when the sustainment and replacement 

cost factors for the first facility category are known and the replacement cost factor of the 

second facility category is known, a ratio analysis can be used to estimate the unknown 

sustainment cost factor of the second facility category by multiplying the ratio of the cost 

factors from the first facility category by the replacement cost factor of the second facility 

category. 
Page 24 GAO-08-502 Defense Infrastructure 

Each year since the facilities sustainment model was implemented in 2003, 

DOD has adjusted the sustainment cost factors for estimated inflation. 

However, for fiscal year 2009, DOD changed the calculation method used 

to make the inflation adjustment and the change can result in reduced 

accuracy for those sustainment cost factors that are not based on 

independent data sources but rather are based on ratio analyses. As 

discussed above, when independent data sources are not available to 

estimate a sustainment cost factor for a facility category, DOD normally 

estimates the unknown cost factor by performing a ratio analysis based on 

costs from a similar facility category where the costs are based on 

independent sources. DOD’s premise is that because there is a similar 

relationship between the sustainment and replacement cost factors for the 

two facility categories, a ratio analysis can be used to estimate the 

unknown sustainment cost factor.15 DOD uses ratio analyses to estimate 

the sustainment cost factors for approximately one-third of DOD’s facility 

categories. 

DOD officials stated that because several years had passed since the 

facilities sustainment model was implemented and the actual inflation 

rates for each of those years was known, DOD decided that it could 

improve the accuracy of the factors if they were recomputed using the 

actual prior year inflation rates. Thus, in developing the cost factors to be 

used in estimating DOD’s fiscal year 2009 facility sustainment funding 

requirements, DOD recomputed all cost factors using actual prior year 

inflation rates. 

The recomputation should result in increased accuracy for those 

sustainment cost factors that are based on independent data sources. 

However, depending on the method used to make the inflation adjustment 

for those cost factors that are based on ratio analyses, the recomputation 

can also result in decreased accuracy for those factors. To illustrate, for 

cost factors based on ratio analyses, DOD previously made inflation 

adjustments by first applying the estimated annual inflation rate to the 

individual sustainment and replacement cost factors and then using a ratio 

analysis to calculate the unknown sustainment cost factor. DOD did not 

use this method for fiscal year 2009. Instead, DOD used the value of the 

sustainment cost factor that was determined in the first year that a ratio 

analysis was used and then applied actual prior year inflation to 

recompute the cost factor’s value for fiscal year 2009. DOD’s new method 

 15See note 14. 

DOD’s Fiscal Year 2009 

Calculation Method Can 

Reduce the Accuracy of 

Sustainment Cost Factors 

Not Based on Independent 

Data Sources 
Page 25 GAO-08-502 Defense Infrastructure 

would be appropriate and result in accurate estimates under two 

circumstances—if the similar relationship between the two facility 

categories used in the ratio analyses existed only in the first year that the 

ratio analysis was used, or if the relationship between the known 

sustainment and replacement cost factors used in the ratio analysis 

remained the same from the original year to the current year. However, 

according to DOD officials and our review of supporting documentation, 

neither circumstance is applicable. More specifically, DOD officials stated 

that the similar relationship between the facility categories continues from 

year to year and our review found that the relationship between the 

known sustainment and replacement cost factors often do not stay the 

same because the individual costs can change at different rates from year 

to year. 

For example, the cost factor for retaining structure facilities is not based 

on independent data sources but rather on a ratio analysis of costs from 

fence and wall facilities. To adjust the retaining structure facilities’ cost 

factor for fiscal year 2009, DOD applied actual inflation rates to the 

factor’s value in 2005, the year that the factor was first determined using a 

ratio analysis. The result was a sustainment cost factor of $11.57 per linear 

foot. However, if DOD had used its previously used method and calculated 

the cost factor using a ratio analysis after the individual costs used in the 

analysis had been adjusted for actual inflation, the sustainment cost factor 

would have been $21.99 per linear foot, or 90 percent more. Using the 

previously used calculation method would have increased the accuracy of 

the cost factor because costs would continue to be based on a current year 

ratio analysis and actual prior year inflation would still be considered 

because the individual costs used in the ratio analysis would have been 

adjusted for actual prior year inflation. Based on DOD’s inventory of 

retaining structure facilities, the difference resulted in the facilities 

sustainment model estimating about $13 million less for sustaining these 

facilities in fiscal year 2009. 

As another example, the cost factor for petroleum pump station facilities 

is not based on independent data sources but rather on a ratio analysis of 

costs for automobile service facilities. To adjust the petroleum pump 

station facilities’ cost factor for fiscal year 2009, DOD applied actual 

inflation rates to the factor’s value in 2006, the year that the factor was 

first determined using a ratio analysis. The result was a sustainment cost 

factor of $20.85 per square foot. However, if DOD had calculated the cost 

factor using the previously used method, the sustainment cost factor 

would have been $18.56 per square foot, or 11 percent less. Based on 

DOD’s inventory of petroleum pump station facilities, the difference 
Page 26 GAO-08-502 Defense Infrastructure 

resulted in the model estimating about $2.4 million more for sustaining 

these facilities in fiscal year 2009. 

In commenting on the calculation method used for fiscal year 2009 and the 

resulting impact on those factors based on ratio analyses, DOD officials 

stated that the intent was to reduce the number of variables and 

unknowns in developing the cost factors and inflating the original 

calculation appeared to be the least complicated method. Although the 

method used by DOD for fiscal year 2009 may provide for some 

consistency, the method does not appear to be any less complicated than 

the previously used method, does not appear to reduce any variables or 

unknown quantities, and can result in reduced accuracy for those cost 

factors that are determined by a ratio analysis. 

The military services have not met all of DOD’s goals for funding facility 

sustainment and recapitalization at levels to prevent deterioration and 

ensure that facilities are restored and modernized in accordance with 

established benchmarks. Full funding of sustainment requirements is the 

most cost-effective approach to managing facilities because it provides the 

most performance over the longest period for the least investment. 

However, the military services collectively have not met DOD’s facility 

sustainment funding goals each year since goals were established in fiscal 

year 2005, and some facilities had fallen into disrepair at most installations 

we visited. As a result, some facilities have deteriorated and will likely 

experience reduced service lives, which, in turn, will lead to more costly 

recapitalization requirements in the future. Although the military services 

achieved more success in meeting DOD’s recapitalization goals—largely 

because of factors outside the normal facility recapitalization funding 

process—service officials noted concern over the shortage of restoration 

and modernization funds and a growing backlog of restoration and 

modernization requirements. 

According to DOD, full funding of sustainment requirements is the most 

cost effective approach to managing facilities because it provides the most 

performance over the longest period for the least investment. However, as 

other important priorities, such as force modernization, have competed for 

funding, DOD has been challenged to provide adequate resources for 

sustaining and recapitalizing its facilities. In April 2007 testimony, DOD 

noted that full funding of facilities sustainment had been and continued to 

be the foundation of the department’s long-term facilities strategy and 

goals in order to optimize DOD’s facility investment and ensure facility 

Military Services Have 

Not Met All Funding 

Goals for Facility 

Sustainment and 

Recapitalization 

Full Funding of 

Sustainment Requirements 

Is Cost Effective 
Page 27 GAO-08-502 Defense Infrastructure 

readiness.16 When full sustainment funding is not provided, service officials 

noted that facility deterioration accelerates, facility service lives shorten, 

mission capabilities and quality of life decrease, and expected future costs 

increase. In view of these positions and recognizing that funding of 

sustainment requirements had been a challenge because of competing 

budget priorities, DOD’s 2004 installations strategic plan established a goal 

for the military services to fund sustainment at 95 percent of the 

requirement determined by the facilities sustainment model beginning in 

fiscal year 2005, and at 100 percent of the requirement beginning in fiscal 

year 2008. Because the facilities sustainment model provides a consistent 

and reasonable framework for estimating sustainment requirements, use 

of the model for setting funding goals appears reasonable, even though the 

reliability of the model’s estimates can be improved. 

Collectively, the military services did not meet DOD’s sustainment funding 

goal in fiscal years 2005 through 2007 and they did not budget funds to 

meet the goal in fiscal year 2008. As shown in table 2, during fiscal years 

2005 through 2007, only the Marine Corps met or exceeded the goal by 

funding over 100 percent of the Marine Corps’ annual sustainment 

requirement in fiscal years 2006 and 2007, thus reducing some of the 

Marine Corps’ backlog of deferred sustainment needs. 

Table 2: Attainment of Sustainment Goals—Percentage of Requirement Funded, Fiscal Years 2005 through 2008 

Fiscal year 2005 Fiscal year 2006 Fiscal year 2007 Fiscal year 2008 

Component Goal Actual Goal Actual Goal Actual Goal Budgeted

Army 95 64 95 88 95 73 100 89

Navy 95 90 95 79 95 92 100 83

Air Force 95 78 95 84 95 88 100 90

Marine Corps 95 94 95 126 95 113 100 89

 DOD-widea 95 79 95 91 95 90 100 88

Source: DOD. 

a

Also includes data from the Tricare Management Activity and the DOD Education Activity. 

 16Statement of Mr. Philip W. Grone, Deputy Under Secretary of Defense (Installations and 

Environment), before the Subcommittee on Readiness and Management Support, Senate 

Armed Services Committee (Apr. 10, 2007). 

Military Services Have Not 

Met Sustainment Goals 
Page 28 GAO-08-502 Defense Infrastructure 

Service officials stated that they generally did not meet the sustainment 

funding goals because resources were limited and some programs, such as 

force modernization, often had higher funding priority. In addition, in 

some cases funds budgeted for sustainment needs were used to pay for 

other needs, such as unfunded facility restoration projects or unfunded 

bills for installation services. When sustainment funds are used to pay for 

other needs, the result is that even more facility sustainment requirements 

are unmet, which could lead to additional restoration and modernization 

requirements in the future. The following is a summary of the comments 

on this issue from the military services. 

• Army officials stated that the Army achieved a lower facility 

sustainment rate than budgeted in some years because facility 

sustainment funds were used to make up for funding shortages in 

installation services by covering some must-pay bills. In fiscal year 

2005, the officials stated about $600 million of budgeted sustainment 

funds were used to pay for installation support services. The officials 

also noted that, because sustainment requirements have not been fully 

funded, using sustainment funds for other purposes amplifies the 

impact on facilities by causing additional deterioration. 

• Navy officials also stated that budgeted sustainment funds were used 

to pay for other critical unfunded needs. The officials stated that about 

$200 million in budgeted sustainment funds were used each year to pay 

for critical restoration and modernization projects. In addition, Navy 

officials told us that about $195 million and $184 million of budgeted 

sustainment funds in fiscal years 2005 and 2006, respectively, were 

used to pay for installation support services. Navy officials also stated 

that although other critical needs were met with the sustainment funds, 

the result was the deferment of a significant amount of needed 

sustainment work. 

• Air Force officials noted that in some instances installations have used 

sustainment funds to pay for unfunded restoration and modernization 

projects in order to repair damaged facilities or prevent catastrophic 

facility failures so that missions were met. The officials stated that in 

fiscal year 2005 and also in fiscal year 2006, about $250 million of 

budgeted sustainment funds were used each year to pay for facility 

restoration projects. Although the result was less funding for needed 

sustainment work, the officials stated that the funds were still used on 

facility needs rather than on other needs, such as installation services. 

• Marine Corps officials stated that nearly all budgeted sustainment, 

restoration, and modernization funds have been used as intended. 
Page 29 GAO-08-502 Defense Infrastructure 

Although many facilities are in good condition, service officials stated that 

underfunding of sustainment requirements over many years has resulted in 

some deteriorated facilities. Deteriorated facilities will likely experience 

reduced service lives, which, in turn, will lead to more costly 

recapitalization requirements in the future. Army officials noted that when 

sustainment funding is inadequate, planned projects are delayed, which 

sometimes causes further deterioration, such as damage to interior walls 

and floors from leaking roofs. Navy and Air Force officials also stated that 

inadequate facility sustainment funding has resulted in deteriorated 

facilities, reduced mission capabilities, and lower quality of life for 

installation personnel. Navy officials stated that in some instances 

installation aircraft runways have been closed because sustainment funds 

were not available to perform needed repairs. 

At the eight installations we visited, facility sustainment requirements 

were not fully funded every year during fiscal years 2005, 2006, and 2007. 

At some, but not all, of the installations, local officials stated that 

sustainment funding had not been available to accomplish all needed work 

and, as a result, many installation facilities were in a deteriorated 

condition. For example, officials at Fort Sam Houston stated that the 

foundation of a warehouse facility had shifted, which caused cracks in the 

walls, warped door frames, and leaking pipes (see fig. 2). Repairs had not 

been completed because adequate sustainment funds were unavailable. 

Fort Sam Houston officials also noted that several barracks buildings, 

which were still in use, had deteriorated because of inadequate funding. 

For example, porch surfaces were crumbling, paint was peeling, and 

windows needed repair (see fig. 3). 

Figure 2: Leaking Pipes and Cracked Walls at a Damaged Warehouse Facility at 

Fort Sam Houston 

Underfunding of 

Sustainment Requirements 

Has Resulted in Some 

Deteriorated Facilities 

Source: GAO.
Page 30 GAO-08-502 Defense Infrastructure 

Figure 3: Deteriorated Barracks Building at Fort Sam Houston 

Officials at Oceana Naval Air Station stated that many facility roof 

structures at the installation had exceeded their service lives and some 

were leaking, causing damage to interior building components. The 

officials noted that the roof of a weapons and radar training building at an 

Oceana Naval Air Station annex had standing water and leaked, which 

caused problems inside the building (see fig. 4). Local officials stated that 

the roof repair would cost about $2.3 million and had been deferred 

because of inadequate sustainment funding. Oceana officials also stated 

that needed repairs to several aircraft hangar doors at the installation had 

been deferred due to inadequate sustainment funding (see fig. 5). Because 

hangar door motors did not work, employees used a tow tractor to open 

and close the doors, which resulted in additional damage to the doors. The 

officials also stated that an employee had been injured by a hangar door 

because the door’s safety device did not work. 

Source: GAO.
Page 31 GAO-08-502 Defense Infrastructure 

Figure 4: Standing Water on a Leaking Roof of a Weapons and Radar Training 

Building at an Oceana Naval Air Station Annex 

Source: GAO.
Page 32 GAO-08-502 Defense Infrastructure 

Figure 5: Damaged Aircraft Hangar Doors at Oceana Naval Air Station 

At Randolph Air Force Base, officials stated that although an aircraft 

maintenance hangar needed substantial window repairs or replacement to 

prevent safety violations, funds were not available to accomplish the 

work. The officials noted that the facility’s window frames were corroded, 

which allowed rain water to enter the building. The windows were located 

directly above electrical panels and water ran over the panels when it 

rained, creating a safety hazard (see fig. 6). On occasion, water in the 

building had caused aircraft maintenance operations to temporarily shut 

down. The officials told us that the facility had already received one safety 

violation and another one could permanently shut down the facility. 

Randolph Air Force Base officials also stated that some aircraft runways 

and aprons had deteriorated due to inadequate sustainment funding. The 

officials said the concrete on some runways and aprons was old and prone 

to cracking, which could cause concrete pieces to break off, creating a 

foreign object hazard to aircraft engines (see fig. 7). The officials 

explained that some holes had been patched as a temporary fix, but that 

the patches tended to crack and pop out. The officials stated that projects 

costing about $56 million were needed to complete all needed runway and 

apron repairs. 

Source: GAO.
Page 33 GAO-08-502 Defense Infrastructure 

Figure 6: Leaking Windows and Electrical Panels that Created a Safety Hazard at a 

Deteriorated Aircraft Maintenance Hangar on Randolph Air Force Base 

Figure 7: Cracking Aircraft Aprons at Randolph Air Force Base 

In comparison to facility sustainment goals, the military services have 

achieved more success in attaining DOD recapitalization goals. Although 

DOD has not used a standardized model to determine facilities 

recapitalization funding requirements, for several years the department 

has used a metric that measures the number of years that would be 

required to replace the facility inventory on the basis of the annual funding 

provided for restoration and modernization. According to February 2006 

testimony, DOD’s recapitalization rate in fiscal year 2001 was 192 years, a 

rate that DOD considered inadequate in view of DOD’s current goal of 

Military Services Achieved 

More Success in Attaining 

Recapitalization Goals 

Source: GAO.

Source: GAO.
Page 34 GAO-08-502 Defense Infrastructure 

67 years and similar private sector industries, which replace their facilities 

every 50 years, on average.17

Since fiscal year 2001, DOD’s recapitalization rate has improved and, as 

shown in table 3, the military services have met or bettered the 67 year 

benchmark in many instances. For example, the Army bettered the goal in 

fiscal years 2005, 2006, and 2007, the Navy bettered the goal in fiscal years 

2006 and 2007, and the Air Force bettered the goal in fiscal year 2005. 

Table 3: DOD Facility Recapitalization Rates Expressed in Years 

Component 

Fiscal year 

2005

Fiscal year 

2006

Fiscal year 

2007

Fiscal year 

2008a

Army 62 61 42 72

Navy 77 48 62 66

Air Force 66 69 71 97

Marine Corps 72 97 119 83

 DOD-wideb 67 60 59 74

Source: DOD. 

Note: To exceed DOD’s 67-year recapitalization rate goal, the number of years must be less than 67. 

a

Budgeted. 

b

Also includes data from the Defense Logistics Agency, the Tricare Management Activity, and the 

DOD Education Activity. 

According to DOD officials, one reason for greater success in meeting 

recapitalization goals is that additional restoration and modernization 

funds were provided from programs outside of the normal funding 

process. For example, the officials stated that many installations have 

received additional recapitalization funding as the result of decisions 

related to the implementation of base realignment and closure 

recommendations, the global basing strategy, and the Army’s restructuring 

initiative. 

Although the military services met recapitalization goals in some years, the 

adequacy of restoration and modernization funding remains an issue, 

particularly in view of existing backlogs of needed restoration and 

 17Statement of Mr. Philip W. Grone, Deputy Under Secretary of Defense (Installations and 

Environment), before the Military Quality of Life and Veterans Affairs Subcommittee, 

House Appropriations Committee (Feb. 15, 2006). 
Page 35 GAO-08-502 Defense Infrastructure 

modernization work. Army officials stated that Army restoration and 

modernization needs were not fully funded in fiscal years 2005 and 2006, 

and at the end of fiscal year 2007 the Army reported a backlog of 

restoration and modernization needs of about $20.4 billion. Navy officials 

stated that the Navy’s restoration and modernization backlog grew from 

about $13.3 billion in fiscal year 2005 to about $27.6 billion at the end of 

fiscal year 2007, an increase of 108 percent. Air Force officials stated that 

restoration and modernization requirements had not been adequately 

funded and that the Air Force had a restoration and modernization 

backlog of about $9.3 billion at the end of fiscal year 2007. Marine Corps 

officials stated that the Marine Corps had a restoration and modernization 

backlog of about $1 billion at the end of fiscal year 2007. Without adequate 

restoration and modernization funding, facilities cannot be restored, 

improved, or modernized in accordance with military needs and 

expectations. 

Officials at some of the installations we visited also stated that inadequate 

funding for restoration and modernization needs was a concern. For 

example, officials at Fort Sam Houston stated that the installation’s 

backlog of restoration and modernization requirements grew from about 

$341 million in fiscal year 2005 to about $456 million in fiscal year 2007, an 

increase of about $115 million (34 percent). At Langley Air Force Base, 

officials stated that the installation’s backlog of restoration and 

modernization requirements grew from about $24 million in fiscal year 

2005 to about $46 million in fiscal year 2007, an increase of about 

$22 million (92 percent). 

DOD has not taken actions to estimate and address the military’s deferred 

facility sustainment requirements. Deferred facility sustainment 

requirements—specifically unfunded facility sustainment needs that carry 

over from one year to the next—can eventually result in damaged 

facilities, shortened facility service lives, and increased future costs for 

facility restoration. However, because DOD has not provided guidance 

that clearly defines deferred sustainment requirements, directs the 

services to consistently measure and track deferred sustainment needs, or 

establishes a goal to address these needs, the military services do not have 

consistent estimates of their deferred sustainment requirements or plans 

to deal with these needs. As a result, DOD lacks a complete picture of its 

facility sustainment funding needs and DOD’s current plans and goals to 

address facility sustainment requirements do not include all sustainment 

requirements. In addition, without consistent estimates, the military 

services’ annual financial statements have not included the cumulative 

DOD Has Not Taken 

Actions to Address 

Deferred Facility 

Sustainment 

Requirements 
Page 36 GAO-08-502 Defense Infrastructure 

amount of deferred facility sustainment requirements as required by 

Federal Financial Accounting Standards in order to provide full disclosure 

of facility conditions. 

The military services do not have consistent estimates of their deferred 

sustainment requirements or plans to deal with these needs because DOD 

has not provided adequate guidance on deferred sustainment 

requirements. Although DOD guidance provides a clear definition of work 

classified as facility sustainment and DOD’s facilities sustainment model 

provides a framework for estimating and addressing annual facility 

sustainment funding requirements, DOD has not provided a clear 

definition of work that should be classified as deferred facility sustainment 

or issued guidance for estimating and addressing deferred sustainment 

funding requirements. According to DOD officials, deferred sustainment 

has not been emphasized because the goal has been for the military 

services to fully fund their annual sustainment requirements. If the annual 

sustainment requirements were fully funded each year, then facilities 

could be optimally maintained and needed sustainment work would not be 

deferred, so deferred sustainment requirements would not exist. However, 

this has not been the case. As shown in table 4, the military services did 

not fund over $3.5 billion of their annual sustainment requirements in 

fiscal years 2005 through 2007. According to DOD, needed sustainment 

work that is not performed—specifically unfunded facility sustainment 

needs that carry over from one year to the next—will eventually result in 

damaged facilities, shortened facility service lives, and increased future 

costs for facility restoration. 

DOD Has Not Provided 

Adequate Guidance on 

Deferred Sustainment 

Requirements 
Page 37 GAO-08-502 Defense Infrastructure 

Table 4: Unfunded Annual Facility Sustainment Requirements 

(Dollars in millions) 

Component Fiscal year 2005 Fiscal year 2006 Fiscal year 2007 3-year total

Army $918 $574 $735 $2,228

Navy 34 61 121 216 

Air Force 375 418 214 1,007 

Marine Corps 70 47 (15)a 102 

 Total $1,398 $1,100 $1,056 $3,553 

Source: DOD. 

Note: The amounts shown reflect the difference between each service’s annual facility sustainment 

requirements, as determined by the facilities sustainment model, and the amount each service spent 

on facility sustainment. The actual unfunded facility sustainment requirements could differ from the 

estimates due to concerns with the model’s inputs that we discussed earlier in this report. Numbers in 

the table may not total correctly due to rounding. 

a

The Marine Corps funded more than its annual sustainment requirement in fiscal year 2007. 

Without guidance that places emphasis on deferred facility sustainment 

needs, the military services and the installations we visited did not have 

consistent estimates of their deferred sustainment needs, and DOD 

officials noted that preparing these estimates is difficult for several 

reasons. Although each service knew the amount of its annual sustainment 

requirements that was not funded, they did not know the amounts of their 

deferred sustainment requirements and each service expressed a different 

view of the issue. For example, Army officials stated that although the 

Army does not have information documenting its cumulative deferred 

sustainment requirements, deferred sustainment needs were being 

addressed with the Army’s current funding of its annual sustainment, 

restoration, and modernization programs. However, the Army did not fund 

over $735 million of its annual sustainment requirements in fiscal year 

2007 and budgeted funds to pay for only 89 percent of the Army’s fiscal 

year 2008 sustainment requirements. Meanwhile, Navy officials stated that 

it did not need to estimate deferred sustainment needs because 

sustainment work that is deferred becomes a restoration and 

modernization requirement. However, according to DOD definitions, 

deferred sustainment does not become a restoration requirement until it 

results in damaging a facility, and it could take several years before 

deferred sustainment work actually damages a facility to the point that it 

must undergo restoration. In contrast, officials from the Air Force stated 

that deferred sustainment requirements should be estimated and added to 

the annual sustainment requirements in order to see the total sustainment 

funding requirement, even though the cost to fund the total requirement 

Services Do Not Have 

Consistent Estimates of 

Deferred Sustainment 

Needs and Preparing 

These Estimates Can Be 

Difficult 
Page 38 GAO-08-502 Defense Infrastructure 

would be too high to be fully funded considering other Air Force budget 

priorities. Finally, Marine Corps officials stated that, based on periodic 

facility inspections, it has an estimate of total facility needs that includes 

all deferred sustainment, restoration, and modernization requirements. 

However, this estimate does not distinguish the deferred sustainment 

requirement from the restoration and modernization requirement, which 

means that the Marine Corps does not know its actual deferred 

sustainment requirement. The Marine Corps also stated that funding over 

100 percent of the annual sustainment requirement, as it did in fiscal year 

2007, would be required to reduce the size of the deferred sustainment 

requirement. 

At some of the installations we visited, officials noted that deferred 

sustainment requirements needed to be adequately estimated and 

addressed if facilities are to be sustained at an optimum level. For 

example, officials at Langley Air Force Base stated that because the 

facilities sustainment model only estimated the annual sustainment 

requirement and did not address deferred sustainment, deferred facility 

sustainment needs at many installations would not be met even if the 

installations were funded at the amounts estimated by the model. The 

officials also stated that deferred sustainment requirements needed to be 

specifically recognized and a plan developed to address these 

requirements. At Camp Lejeune, officials noted that the facilities 

sustainment model was based on facility life-cycle costs and the model’s 

annual funding estimates were based on the assumption that facilities 

were fully sustained in the past and were in good condition. However, the 

officials stated that this is not the case at many installations because years 

of inadequate funding had resulted in a backlog of deferred sustainment 

requirements. Fort Sam Houston officials stated that although a backlog of 

deferred sustainment needs existed, it was difficult to quantify the size of 

the backlog because the installation lacked the personnel required to fully 

inspect all installation facilities and catalogue all of the needed 

sustainment work and projects. Similarly, Randolph Air Force Base 

officials stated that all deferred sustainment needs at the installation had 

not been identified partly because there was little confidence that the 

work would be funded even if the effort were expended to document the 

requirement. 
Page 39 GAO-08-502 Defense Infrastructure 

Although Federal Real Property Council guidance requires federal 

activities to know the repair needs of their facilities,18 DOD officials 

indicated that for several reasons, determining deferred facility 

sustainment needs is not an easy task. First, DOD officials noted that all 

unfunded annual sustainment requirements do not become deferred 

requirements. To illustrate, if a facility has an annual inspection 

requirement and the inspection is not performed, the inspection cost 

would not become a deferred sustainment requirement because two 

annual inspections would not be required in the following year and the 

facilities sustainment model would include the annual inspection cost in 

the subsequent year’s funding estimate. However, if a facility were 

scheduled for a roof replacement and roof was not replaced, the cost of 

the replacement would become a deferred requirement because it would 

still be needed and the cost would not be included in the subsequent year’s 

funding estimate. 

Second, DOD officials also noted that the facilities sustainment model 

estimates the average annual sustainment funding requirements for each 

facility category but does not identify the actual sustainment work that 

each installation facility needs. The officials noted that a model might be 

developed that could provide reliable estimates of deferred sustainment 

requirements. However, according to the officials, actual facility 

sustainment needs can only be determined through facility inspections in 

which actual conditions are determined, needed repair and maintenance 

work is documented, and costs to complete this work are estimated. A 

comparison of an installation’s actual facility sustainment needs with the 

installation’s annual sustainment funding would provide an estimate of the 

installation’s deferred sustainment requirement. Of the military services, 

only the Marine Corps systematically inspected its facilities and 

documented needed repairs and improvements so that actual deferred 

facility needs were known. However, because the documentation did not 

distinguish facility sustainment needs from restoration and modernization 

needs, the Marine Corps did not know its actual deferred sustainment 

funding requirements. The Army used a facility inspection method that 

provided an estimate of facility funding needs based on facility condition 

assessments. However, the method did not document each facility’s actual 

needed sustainment, restoration, and modernization projects. The Navy 

stopped performing facility condition inspections after fiscal year 2005 

 18Federal Real Property Council, 2007 Guidance for Real Property Inventory Reporting

(June 8, 2007). 
Page 40 GAO-08-502 Defense Infrastructure 

because of the high cost of the inspections. Although the Navy plans to 

implement a model beginning in fiscal year 2008 designed to estimate 

facility conditions and funding needs, the model will not document each 

facility’s actual needed sustainment, restoration, and modernization 

projects. Air Force officials stated that its facilities are inspected as funds 

permit and facility deficiencies, work requests, and projects are 

documented. However, the officials stated that the list of needed work was 

not considered all inclusive and did not categorize needed work as 

sustainment, restoration, or modernization. 

Third, as noted previously, estimating deferred sustainment requirements 

can be further complicated by DOD’s definition of facility restoration and 

the associated decisions on when deferred sustainment requirements 

become restoration requirements. Specifically, DOD defines restoration as 

including repair and replacement work to restore facilities damaged by 

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

Marine Corps officials noted that it can be difficult to determine when 

deferred sustainment work actually damages a facility and thus should be 

reclassified from a sustainment funding requirement to a restoration 

funding requirement. 

The military services’ financial reporting of deferred facility maintenance 

information is not consistent with federal financial reporting requirements 

due to a lack of clear DOD reporting guidance. We found that prior to 

fiscal year 2007, the services’ financial statements excluded required 

information concerning deferred facility sustainment requirements and 

included information concerning deferred facility modernization 

requirements. Including deferred facility modernization requirements is 

not consistent with federal financial reporting requirements because these 

requirements pertain to activities intended to expand or upgrade facility 

capacity. Although DOD issued revised guidance in September 2007 in part 

to address these issues, the guidance did not provide sufficient details to 

ensure that future financial reporting of deferred maintenance would be 

consistent with reporting requirements. Unreliable deferred maintenance 

information, could further jeopardize DOD’s ability to adequately provide 

for its facility sustainment needs and result in continued facility 

deterioration and increased future recapitalization costs. 

Lack of Clear Guidance 

Impedes Reliable Financial 

Reporting of Deferred 

Sustainment Costs 
Page 41 GAO-08-502 Defense Infrastructure 

Federal financial accounting standards require that federal entities that 

own property, plant, and equipment include information in their financial 

statements disclosures related to the condition and the estimated deferred 

maintenance costs of these assets.19 The accounting standards define 

maintenance as the act of keeping fixed assets in acceptable condition, 

including preventive maintenance, normal repairs, replacement of parts 

and structural components, and other activities needed to preserve the 

asset so that it continues to provide acceptable services and achieves its 

expected life. The distinction between maintenance and deferred 

maintenance is that deferred maintenance is maintenance that was not 

performed when it should have been or was scheduled to be and which, 

therefore, was put off or delayed for a future period. By definition, both 

maintenance and deferred maintenance exclude activities aimed at 

expanding the capacity of an asset or otherwise upgrading it to serve 

needs different from, or significantly greater than, those originally 

intended. In other words, expenditures to modernize or upgrade property, 

plant, and equipment should not be reported as maintenance costs. 

According to DOD officials, prior to fiscal year 2007, the military services’ 

financial statement reports included disclosures pertaining to only to the 

annual amount of their sustainment requirements, as determined by the 

facilities sustainment model, which was not funded. In addition, the 

military services' financial statement disclosures for deferred maintenance 

also included information on the cumulative deferred restoration and 

modernization requirements as a component of the reported deferred 

maintenance amounts. Reporting deferred modernization requirement 

amounts is not consistent with reporting standards because modernization 

includes facility work to implement new or higher facility standards, 

accommodate new functions, or replace building components that have 

exceeded their useful life, typically about 50 years. However, DOD 

guidance did not clearly instruct the military services to exclude deferred 

modernization requirement amounts from the amounts they reported for 

deferred maintenance. Thus, the reporting of deferred modernization 

requirements as part of deferred facility maintenance in the financial 

statements results in misleading deferred maintenance disclosures and is 

not consistent with what is called for by federal accounting standards. 

 19Statement of Federal Financial Accounting Standards No. 6, Accounting for Property, 

Plant, and Equipment (June 1996) and Statement of Federal Financial Accounting 

Standards No. 14, Amendments to Deferred Maintenance Reporting (April 1999). 
Page 42 GAO-08-502 Defense Infrastructure 

DOD officials further stated that while in the process of updating DOD 

financial regulations in 2007, DOD recognized that the financial statements 

should include the cumulative, not just the annual, deferred sustainment 

amounts. To address this issue beginning with the fiscal year 2007 

financial statements, an official in the Office of the Secretary of Defense 

(Comptroller) stated that the military services were directed to begin 

reporting deferred maintenance amounts that include cumulative deferred 

sustainment requirements. However, because the military services did not 

have estimates of their deferred sustainment requirements, DOD officials 

stated that the military services were directed to estimate their total 

deferred maintenance needs based on each service’s facility quality 

ratings. Facility quality ratings, prepared for each real property inventory 

asset, reflect each facility’s condition at a specific point in time and the 

estimated cost to correct existing deficiencies to bring the facility to a fully 

serviceable operating condition. 

Although DOD decided to use the facility quality ratings for estimating and 

reporting deferred maintenance, DOD’s guidance for determining the 

quality ratings specifically excluded consideration of sustainment 

requirements and specifically included all restoration and modernization 

requirements, except for construction of new facility capacity.20 To 

address this issue, DOD issued new guidance on September 5, 2007.21 The 

new guidance directed the military services to begin including sustainment 

requirements in the facility quality ratings and to exclude restoration and 

modernization requirements that were related to facility conversion and 

construction of new facility capacity. However, the guidance did not 

provide details to the military services on how to do implement these 

changes and permitted each service to decide on a method, as long as the 

service validated the accuracy of the method used. 

Although the military services attempted to implement the new guidance 

in reporting deferred maintenance information in their fiscal year 2007 

financial statements, the reported information was still inconsistent and 

incomplete. First, because the new guidance did not provide details on 

how to implement the changes, each service used its own methods. Yet, 

according to a May 2006 report commissioned by DOD to provide an 

 20See Department of Defense Instruction No. 4165.14, Real Property Inventory and 

Forecasting (Washington, D.C.: Mar. 31, 2006). 

21See Under Secretary of Defense (Acquisition, Technology and Logistics) Memorandum, 

Facility Quality Rating Guidance (Washington, D.C.: Sept. 5, 2007). 
Page 43 GAO-08-502 Defense Infrastructure 

independent verification and validation of the services’ facility quality 

ratings, the services used inconsistent methods to determine facility 

conditions, which resulted in inconsistent estimates of needed 

maintenance costs.22 Second, with the new guidance being issued on 

September 5, 2007, the military services had little time to make any 

adjustments to their facility quality ratings prior to preparation of their 

fiscal year 2007 financial statements, which were due in November 2007. 

According to Navy officials, Navy facility quality ratings had not been 

updated since 2005 because the Navy stopped performing facility 

inspections. Third, when reporting deferred facility maintenance amounts 

in its fiscal year 2007 financial statement, the Air Force included a note 

stating that the use of facility quality ratings as a basis for calculating 

deferred maintenance did not seem prudent because the quality of the 

information used to determine the ratings was questionable. Without 

guidance providing for consistent methods for measuring deferred 

sustainment requirements and determining which portion of the deferred 

restoration and modernization requirements to include in the financial 

statements, the military services’ financial reporting of deferred 

maintenance information may continue to be inconsistent with financial 

reporting requirements, which could further jeopardize DOD’s ability to 

adequately provide for its facility sustainment needs and result in 

continued facility deterioration and increased future recapitalization costs. 

DOD’s progress in developing a model for estimating installation services 

funding requirements has been slow because DOD has been unable to 

overcome long-standing inconsistencies among the military services’ 

definitions of support service functions and other obstacles that prevent 

such a model from being ready for use. In an effort to ensure consistent 

delivery of adequate installation services among DOD components and 

provide the Congress with a clearer basis for making funding decisions, 

DOD began in 2004 to develop an analytically sound model for determining 

installation services funding requirements. However, progress has been 

slow and it is unclear whether DOD’s target for completing this work will 

be met. Without a DOD-wide model, the military services have used 

various methods to estimate their support services requirements subject to 

their own definition of the types and levels of services deemed necessary. 

On the basis of these estimates, Army, Navy, and Air Force officials have 

 22Black & Veatch, DOD Facility Quality IVV Report - Independent Verification and 

Validation of Condition Reporting for Defense Facilities (May 16, 2006). 

DOD’s Progress in 

Developing an 

Installation Services 

Model Has Been Slow 
Page 44 GAO-08-502 Defense Infrastructure 

raised concerns about the adequacy of support services funding from 

fiscal years 2005 through 2007, stating that this funding was less than the 

amounts needed to provide services at the levels desired and resulted in 

some installations providing reduced services, which caused the quality of 

life of DOD personnel in some instances to be negatively affected. 

DOD’s efforts to develop a model for estimating installation services 

funding requirements began in 2004, when the Office of the Deputy Under 

Secretary of Defense for Installations and Environment designated the 

improvement of installation services management as a priority. According 

to officials from this office, DOD’s and the military services’ ability to 

forecast installation services requirements and funding needs had been 

hindered by the lack of a common terminology across the military services 

and the lack of common definitions had caused differing expectations for 

service support when multiple military services were collocated on a 

single installation.23 The 2004 Defense Installations Strategic Plan

articulated the need to define common standards and performance metrics 

for managing installation support and established goals to implement 

DOD-wide support service standards and to develop an analytical model 

based on common benchmarks to accurately forecast installation services 

funding requirements. The plan noted that installation services included a 

large collection of diverse functions and that work towards a model would 

first focus on services related to real property—work that subsequently 

resulted in DOD’s facilities operation model—and then on all other 

installation services—work now directed at developing the installation 

services model. 

Also in 2004, in an effort to promote joint installation management, DOD 

established a working group to develop policy and create a strategic 

framework for delivery of installation services. The framework was to 

include the establishment of common definitions, tiered performance 

standards, and performance measures to assist in managing support 

services resources and help ensure the common delivery of applicable 

support services across all military installations. To support this effort, 

service standards teams, composed of members from each military 

service, were formed and charged with developing common output-level 

standards, which include common definitions, performance standards, 

metrics, and unit cost estimates for each installation support service. The 

 23See GAO-05-556. 

Efforts to Develop an 

Installation Services Model 

Began in 2004 
Page 45 GAO-08-502 Defense Infrastructure 

common output-level standards would also provide a key component 

needed to develop an installation services model. 

Service standards teams were formed to develop common definitions and 

standards for 29 different support services. The initial goal was for the 

teams to complete their work by February 2006. According to DOD 

officials, from the beginning the teams had difficulty completing their 

work and obtaining agreement from all military services on the common 

definitions and standards. By December 2007, the military services had 

accepted the common definitions and service standards for only 2 of the 

29 support services addressed by the service standards teams, and the 

target date for completing the work had slipped to March 2008. DOD’s 

2007 Defense Installation Strategic Plan set a goal to establish common 

standards and metrics for installation services and complete the model by 

the end of 2008. 

According to DOD officials, several factors have hampered progress 

towards completing the common output-level standards and developing 

the installation services model. For example, each military service has its 

own long-standing policies and practices on how tasks and subtasks for 

each installation service are grouped, performed, managed, and funded. 

Also, differences in the military services’ policies, practices, and traditions 

have resulted in service differences in (1) the value of and emphasis 

placed on the various support services, (2) views on whether service 

programs should be managed and funded centrally or not, and (3) support 

service requirements based on installation location and demographic 

characteristics. For example, remote installations might provide some 

services that are normally provided by local communities in more 

populated areas, and installations with a high percentage of young, single 

personnel might provide some services not provided at installations with 

different demographics. 

As one example of an installation support service that is managed 

differently among the military services, DOD cited differences in the 

management of chaplain services. According to DOD officials, the Navy, in 

accordance with its policy, donates all funds collected during on-base 

religious services to charities. The other military services, in accordance 

with their policies, use funds collected during on-base religious services to 

directly support the chaplain program, such as paying for program 

expenses. Thus, in order to reach a common definition and service 

standard for the chaplain program, this difference among the military 

services must be resolved. 

Several Factors Have 

Hampered Progress in 

Developing an Installation 

Services Model 
Page 46 GAO-08-502 Defense Infrastructure 

Office of the Deputy Under Secretary of Defense for Installations and 

Environment officials, who were overseeing the development of the 

model, stated that resolving the differences in support service definitions 

and service standards remains a key obstacle to completing an installation 

services model that can reliably estimate the funds required to provide 

services at appropriate levels across all installations. The officials also 

noted that other obstacles exist and must be overcome before a model is 

completed. For example, because each of the installation services is 

unique, a separate model will be required for each service. Thus, the 

installation services model will be a collection of many separately 

developed, service-specific models. According to the officials, a few 

service standards teams believe the services they studied will be difficult 

to model. Further, it may also be difficult to identify adequate information 

sources for estimating the standard costs for some installation services, 

such as for mission-based services, including airfield and port operations, 

and regulatory services, including environmental services. The problem is 

that historical metrics and costs for some services are not readily available 

within DOD, and private sector data sources may not be suitable for 

services that are performed differently by the private sector and DOD. 

Given these obstacles and the slow pace of prior progress in developing 

the common definitions and standards, it is unclear whether the 2008 

target in DOD’s plan will be met. In addition, the plan did not establish a 

milestone for when the model will be implemented for use in estimating 

the military’s installation services funding requirements. Until DOD 

formally establishes a milestone for when the installation services model 

will be implemented and provides adequate senior-level oversight to 

ensure that the milestone is met, DOD may not have the necessary impetus 

to resolve these obstacles so that development of the model can be 

completed. 

The adequacy of funding for installation services has been a concern for 

the military services. Without a DOD-wide model, each military service has 

developed methods to estimate its installation services requirements and 

funding needs subject to its own definition of the types and levels of 

services it deems necessary. Appendix II provides a brief description of 

the methods used by each military service to estimate installation services 

funding requirements. On the basis of these estimates and other 

information, Army, Navy, and Air Force officials stated that installation 

services funding for fiscal years 2005 through 2007 was less than the 

amounts needed to provide services at the levels desired. For example, 

according to Army officials, installation services and facility operations 

services—collectively classified as base operations support in the Army’s 

Adequacy of Installation 

Services Funding Has Been 

a Concern 
Page 47 GAO-08-502 Defense Infrastructure 

budget—were funded at about 80 percent, 82 percent, and 87 percent of 

requirements in fiscal years 2005, 2006, and 2007, respectively. Of the 

military services, only the Marine Corps stated that its installation services 

and facility operations services were adequately funded during these fiscal 

years. 

Although it was beyond the scope of our review to assess the impacts that 

resulted from less than full funding of installation services, we did ask the 

military services for their views. Army officials stated that, because of 

inadequate funding levels, installation services were reduced and provided 

at lower than optimum levels at some installations, which reduced the 

support provided to military personnel. Navy officials stated that effects of 

inadequate funding included (1) reduced operating hours at some 

installation entrance gates, which slowed base access; (2) reduced law 

enforcement patrols, pier security, and surveillance detection, which 

increased security risks; (3) cutbacks in facility cleaning contracts, which 

caused mold and mildew growth, which could potentially create health 

issues; (4) closure of some installation swimming pools and automobile 

hobby shops, which affected personnel quality of life; and (5) scaled back 

special events, which reduced the connection between some bases and the 

local communities. Air Force officials stated that inadequate installation 

services funding resulted in reduced in-house and contractual support for 

day-to-day operations at some installations in areas such as installation 

security, transportation, and supply. In addition, the quality of life for 

service members was affected at some installations by the closure of 

dining and fitness facilities and decreased library hours and other 

contractual services supporting base personnel. 

Officials at some of the installations we visited also commented that 

because of inadequate funding, some installation services and facility 

operations services were reduced causing negative effects on the quality of 

life of installation personnel. At Fort Eustis, for example, officials 

estimated that custodial services were funded at about 25 percent of the 

amount needed to meet normal requirements. The officials stated that 

custodial services no longer provided for cleaning carpets or windows and 

only provided for cleaning restrooms once a week. At Langley Air Force 

Base, officials stated that, although essential services were being provided, 

funding shortages had caused the installation to reduce custodial and 

ground maintenance services and close one dining facility. 

Although the facilities sustainment model provides a consistent and 

reasonable framework for preparing estimates of DOD’s annual facility Conclusions 
Page 48 GAO-08-502 Defense Infrastructure 

sustainment funding requirements, accuracy and supportability issues with 

two of the model’s key inputs—the inventory quantity and the sustainment 

cost factor associated with each of DOD’s 448 facility categories—have 

affected the reliability of the model’s estimates. In particular, the military 

services had not complied with DOD guidance that requires verification of 

real property inventory records and consequently the inventory records 

contained inaccuracies and discrepancies, information documenting the 

basis for each sustainment cost factor was not readily available, and the 

fiscal year 2009 method for calculating sustainment cost factors that are 

not based on independent data sources can reduce the accuracy of these 

factors. Until DOD takes additional steps to improve the accuracy and 

supportability of its inventory quantity and sustainment cost factor inputs 

to the facilities sustainment model, the model’s estimates of annual facility 

sustainment funding requirements will not be as reliable as possible, 

which could jeopardize DOD’s ability to adequately provide for its facility 

sustainment needs. 

Furthermore, because the military services do not have consistent 

estimates of their deferred facility sustainment requirements, DOD lacks a 

complete picture of its facility sustainment funding needs. Thus, current 

plans and goals to address sustainment needs do not include all 

sustainment requirements, which could further jeopardize DOD’s ability to 

adequately sustain its facilities and result in continued facility 

deterioration and increased future restoration costs. In addition, largely 

because of lack of clear guidance, the military services’ financial reporting 

of deferred facility maintenance information has been inconsistent with 

financial reporting requirements intended to provide full disclosure of 

facility conditions. Until DOD provides guidance that clearly defines 

deferred sustainment requirements, directs the services to consistently 

measure and track deferred sustainment needs, establishes a goal to 

address these needs, and ensures that the military services’ financial 

reporting of deferred facility maintenance is consistent with financial 

reporting requirements, the services will not have consistent estimates of 

their total facility sustainment requirements, will be unable to develop 

plans to address these needs, and may continue to report deferred 

maintenance information that is inconsistent with financial reporting 

requirements. 

DOD has yet to overcome long-standing inconsistencies among the 

military services’ definitions of support service functions, as well as other 

obstacles, to complete a model for estimating installation services funding 

requirements. Until a reliable model is implemented, DOD cannot know its 

installation services funding requirements with confidence, set installation 
Page 49 GAO-08-502 Defense Infrastructure 

services funding and performance benchmarks, measure the military 

services’ progress in providing installation services, or provide the 

Congress with a clear, consistent basis for making related funding 

decisions. DOD has a goal to establish common standards and metrics for 

installation services by the end of 2008. However, until DOD formally 

establishes a milestone for when the installation services model will be 

implemented and provides adequate senior-level oversight to ensure that 

the milestone is met, DOD may not have the necessary impetus to 

complete the model as quickly as possible. 

To improve the support provided for DOD’s facilities and installation 

services, we recommend that the Secretary of Defense direct the Deputy 

Under Secretary of Defense (Installations and Environment) to take the 

following five actions in order to increase the reliability of the facilities 

sustainment model, address deferred facility sustainment funding 

requirements, and advance progress towards implementing the installation 

services model: 

• Monitor and ensure compliance with guidance requiring verification of 

real property inventory records. 

• Maintain documentation regarding the basis for the sustainment cost 

factors used by the model to include the calculations used to determine 

each factor as well as the reasons for any changes from year to year. 

• Revert to the previously used ratio analysis method to calculate the 

values of those sustainment cost factors that are not based on 

independent data sources. 

• Issue guidance to the military services that (1) provides a clear 

definition of deferred facility sustainment requirements and explains 

when deferred facility sustainment becomes a facility restoration 

requirement, (2) directs the military services to consistently measure 

and track deferred sustainment needs, (3) establishes a goal to address 

deferred facility sustainment needs, and (4) ensures that the military 

services’ financial reporting and disclosure information regarding 

deferred facility maintenance is consistent with financial reporting 

requirements. 

• Establish a milestone for implementing the installation services model 

for use in estimating DOD’s installation services funding requirements 

Recommendations for 

Executive Action 
Page 50 GAO-08-502 Defense Infrastructure 

and provide adequate senior-level oversight to ensure that the 

milestone is met. 

In written comments on a draft of this report, DOD concurred with four 

recommendations, partially concurred with one recommendation, and 

stated that it had already initiated several of the recommended actions. 

However, DOD’s comments and stated actions did not fully address some 

of our recommendations. While DOD’s actions represent positive first 

steps, we believe that DOD needs to take additional steps to fully address 

the issues discussed in this report. Specifically, in addition to the steps 

that DOD stated it has taken or plans to take, we continue to believe that 

DOD needs to take further steps to monitor and ensure compliance with 

inventory verification guidance, provide a clear definition of deferred 

facility sustainment requirements, direct the military services to 

consistently measure and track deferred sustainment needs, ensure that 

the military services’ financial reporting and disclosure information 

regarding deferred facility maintenance is consistent with financial 

reporting requirements, and provide adequate senior-level oversight to 

ensure that an installation services model is implemented as soon as 

possible. 

DOD concurred with our recommendation to monitor and ensure 

compliance with guidance requiring verification of real property inventory 

records. DOD stated that it added a data element to its real property 

inventory records that will record the most recent date that each facility 

was inspected. DOD stated that this data, which it expects will be available 

by fiscal year 2009, will provide a means of identifying the verification 

dates and taking action to update them as required. However, as noted in 

this report, data are already available showing facility inspection dates and 

the data show that the military services have not complied with 

verification requirements. Our recommendation is that DOD ensure 

compliance with the guidance in order to help ensure inventory accuracy 

and it is not clear that DOD’s action of adding a data element to its 

inventory records will improve compliance. We continue to believe that 

additional steps are needed to monitor and ensure compliance with 

guidance requiring verification of real property inventory records. 

DOD concurred with our recommendation that it maintain documentation 

regarding the basis for the sustainment cost factors used by the model to 

include the calculations used to determine each factor as well as the 

reasons for any changes from year to year. DOD stated that it has 

maintained documentation for sustainment cost factors since the 

Agency Comments 

and Our Evaluation 
Page 51 GAO-08-502 Defense Infrastructure 

inception of the facilities sustainment model. However, as noted in this 

report and as we discussed with DOD officials during our review, the 

documentation did not always show the basis for the sustainment cost 

factors, the calculations used to determine each factor, or the reasons for 

any changes from year to year and that is the basis for our 

recommendation. DOD also stated that it has revised its documentation 

standards to improve the level of detail and accessibility. If fully 

implemented, DOD’s action should result in an improved audit trail 

documenting the basis for each factor’s value. 

DOD concurred with our recommendation that it revert to the previously 

used ratio analysis method to calculate the values of those sustainment 

cost factors that are not based on independent data sources. DOD stated 

that it will adopt the GAO-preferred method to inflate the small number of 

sustainment cost factors generated by ratios beginning in fiscal year 2009. 

As noted in this report, the “GAO-preferred” method is the method that 

can result in greater accuracy of the sustainment cost factor values. Also, 

regarding the “small” number of sustainment cost factors generated by 

ratios, as noted in this report, DOD has used a ratio analysis to estimate 

the sustainment cost factors for approximately one-third of DOD’s 448 

facility categories. 

DOD concurred with our recommendation related to deferred facility 

sustainment requirements stating that it had issued guidance in September 

2007 that revised the definition of facility quality ratings to represent 

deferred sustainment and restoration, revised its methodology for 

estimating deferred maintenance in its financial reports by using the 

facility quality ratings, and planned to develop program guidance with the 

fiscal year 2011 budget process to establish goals to address deferred 

sustainment requirements. As noted in this report, we were aware of the 

September 2007 guidance. However, we made our recommendation 

because our review found that the guidance did not provide a clear 

definition of deferred facility sustainment requirements, details to the 

military services on how to implement the revised quality rating guidance, 

or sufficient details to ensure that future financial reporting of deferred 

maintenance would be consistent with reporting requirements. We 

continue to believe that additional guidance is needed to provide a clear 

definition of deferred facility sustainment requirements, direct the military 

services to consistently measure and track deferred sustainment needs, 

and ensure that the military services’ financial reporting and disclosure 

information regarding deferred facility maintenance is consistent with 

financial reporting requirements. 
Page 52 GAO-08-502 Defense Infrastructure 

DOD partially concurred with our recommendation to establish a 

milestone for implementing the installation services model for use in 

estimating DOD’s installation services funding requirements and provide 

adequate senior-level oversight to ensure that the milestone is met. DOD 

stated that it had established a milestone to implement an installation 

services model in support of the fiscal year 2012 budget and had made 

initial progress toward that goal. However, DOD stated that the 

development process had revealed several obstacles that may require it to 

reevaluate the goal for at least some installation service functions. 

Although we believe that DOD’s action to establish an implementation goal 

is a step in the right direction, we also recommended and continue to 

believe that adequate senior-level oversight is needed to ensure that an 

installation services model is implemented as soon as possible. DOD’s 

comments did not explain to what extent it plans to do this. 

DOD’s comments are reproduced in full in appendix III. 

We are sending copies of this report to the Secretaries of Defense, the 

Army, the Navy, and the Air Force; the Commandant of the Marine Corps; 

and the Director, Office of Management and Budget. We will provide 

copies of this report to others upon request. In addition, the report will be 

available at no charge on the GAO Web site at http://www.gao.gov. 

If you or your staff have any questions on the information discussed in this 

report, please contact me on (202) 512-4523 or leporeb@gao.gov. Contact 

points for our Offices of Congressional Relations and Public Affairs may 

be found on the last page of this report. GAO staff who made key 

contributions to this report are listed in appendix IV. 

Brian J. Lepore 

Director 

Defense Capabilities and Management 
Page 53 GAO-08-502 Defense Infrastructure 

List of Committees 

The Honorable Carl Levin 

Chairman 

The Honorable John McCain 

Ranking Member 

Committee on Armed Services 

Unites States Senate 

The Honorable Daniel K. Inouye 

Chairman 

The Honorable Ted Stevens 

Ranking Member 

Subcommittee on Defense 

Committee on Appropriations 

Unites States Senate 

The Honorable Tim Johnson 

Chairman 

The Honorable Kay Bailey Hutchison 

Ranking Member 

Subcommittee on Military Construction, 

 Veterans’ Affairs, and Related Agencies 

Committee on Appropriations 

Unites States Senate 

The Honorable Ike Skelton 

Chairman 

The Honorable Duncan L. Hunter 

Ranking Member 

Committee on Armed Services 

House of Representatives 

The Honorable John P. Murtha 

Chairman 

The Honorable C.W. Bill Young 

Ranking Member 

Subcommittee on Defense 

Committee on Appropriations 

House of Representatives 
Page 54 GAO-08-502 Defense Infrastructure 

The Honorable Chet Edwards 

Chairman 

The Honorable Zach Wamp 

Ranking Member 

Subcommittee on Military Construction, 

 Veterans’ Affairs, and Related Agencies 

Committee on Appropriations 

House of Representatives 
Appendix I: Scope and Methodology 

Page 55 GAO-08-502 Defense Infrastructure 

To determine the reliability of the annual funding estimates produced by 

the facilities sustainment model, we reviewed the documentation 

supporting the model’s analytic framework—including the model’s inputs, 

calculations, and assumptions—to determine whether the model provides 

a consistent and reasonable framework for estimating sustainment funding 

requirements. In addition, we assessed the accuracy and supportability of 

the model’s key inputs—the inventory quantity and the sustainment cost 

factor. Regarding inventory quantity, we reviewed DOD regulations that 

require periodic verification of the accuracy of real property inventory 

information, determined the extent to which the military services had 

complied with these regulations, and discussed with service officials the 

reasons for noncompliance. During visits to eight military installations,1

 we 

compared the inventory information contained in selected installation real 

property records with the inventory information used by the model and 

asked local officials to explain discrepancies. We judgmentally selected 

the records to include a variety of facility categories. At the installations 

visited, we also determined compliance with the required procedures for 

verifying real property inventory accuracy and, at one installation, we 

reviewed the records that documented the compliance. In addition, we 

analyzed the inventory quantities used by the model for each facility 

category during fiscal years 2005 through 2008 to identify large 

fluctuations from one year to the next and asked DOD and service 

headquarters officials to explain some of the fluctuations. In cases where 

the fluctuations were caused by an error, we determined the resulting 

impact on the model’s sustainment cost estimate by recomputing 

sustainment costs based on the correct inventory quantity. Although we 

assessed the accuracy of selected real property inventory information, 

which is discussed in this report, we did not assess the overall reliability of 

DOD’s real property inventory records. Regarding sustainment cost 

factors, we discussed the development of the factors with DOD officials, 

reviewed the findings of a study designed to provide an independent 

verification and validation of the sustainment cost factors used by the 

 1

To gain insight at the installation level into the accuracy of real property inventory 

records, compliance with inventory verification procedures, support funding issues, and 

the condition of facilities, we visited the following eight installations: Fort Eustis, Virginia; 

Fort Sam Houston, Texas; Naval Air Station Oceana, Virginia; Naval Station Mayport, 

Florida; Langley Air Force Base, Virginia; Randolph Air Force Base, Texas; Marine Corps 

Base Quantico, Virginia; and Marine Corps Base Camp Lejeune, North Carolina. We 

judgmentally selected these installations because they represented two installations from 

each of the military services and were located in several different geographic locations. We 

recognize that information obtained from these installations, as well as the facility 

conditions observed, may or may not be representative of other military installations. 

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

Page 56 GAO-08-502 Defense Infrastructure 

model, and documented DOD’s response to the study’s recommendations. 

In addition, we reviewed the documentation supporting the factors for 

each facility category to determine whether the documentation provided a 

clear basis for each factor’s value. Further, we analyzed the impact of a 

revised method used by DOD to adjust factors for use in fiscal year 2009 

by comparing the values of selected factors adjusted under the revised and 

the previously used methods. 

To determine DOD's progress in meeting funding goals for facility 

sustainment and recapitalization, we reviewed DOD’s installation strategic 

plans to identify DOD’s goals for facility sustainment and recapitalization. 

We also reviewed DOD information showing the amounts budgeted for 

facility sustainment, restoration, and modernization for fiscal years 2005 

through 2008 and the amounts spent for fiscal years 2005 through 2007 and 

compared these amounts to the corresponding goals.2

 The amounts 

budgeted and spent represented DOD official financial information and we 

did not independently verify the amounts. In addition, we reviewed prior 

DOD testimony on installation support funding goals and we discussed the 

goals and DOD’s progress in meeting the goals with DOD and service 

headquarters officials. To the extent that goals were not met, we asked 

DOD and service officials to explain why and describe the associated 

consequences on installation facilities. We also reviewed the restoration 

and modernization backlog amounts reported by the military services. At 

each of the installations visited, we asked local officials to describe the 

impacts when sustainment and recapitalization funding goals were not 

met. Further, we observed and took photographs of installation facilities 

that were in a deteriorated condition because of a shortage of sustainment 

funds. 

To determine the extent to which DOD has addressed deferred facility 

sustainment funding needs, we compared the military services’ annual 

sustainment funding requirements with the amounts actually funded to 

determine the annual unfunded sustainment requirements for fiscal years 

2005 through 2007. We discussed the issue with DOD and military service 

officials and reviewed DOD guidance and definitions related to facility 

maintenance. We also reviewed prior DOD testimony on installation 

 2

In addition to data from the military services, some of the data related to facility funding 

goals in this report include data from the Defense Logistics Agency, the Tricare 

Management Activity, and the DOD Education Activity. However, we did not include these 

components in our review. 
Appendix I: Scope and Methodology 

Page 57 GAO-08-502 Defense Infrastructure 

support and DOD’s installation strategic plans for information on deferred 

sustainment requirements. We asked officials in each military service 

whether any difficulties or obstacles existed in developing estimates of 

deferred sustainment needs, whether the service had estimated its 

deferred sustainment funding requirements, and whether the service had 

plans or goals to address deferred sustainment requirements. In addition, 

we reviewed federal financial accounting requirements pertaining to the 

reporting of deferred property maintenance and compared these 

requirements to the information reported in the military services’ financial 

statements. Further, we reviewed the military services’ efforts to respond 

to September 2007 DOD guidance that was intended to improve the 

military services’ reporting of deferred maintenance amounts. 

To determine the status of DOD's efforts to develop a funding 

requirements model for installation services, we obtained and reviewed 

documentation on the history of the model’s development and interviewed 

DOD officials concerning past progress on the model, the model’s status at 

the end of calendar year 2007, and future plans for completing and 

implementing the model. We also documented the timeline of DOD’s 

efforts since DOD decided to develop the model and compared various 

developmental milestones with actual progress. Further, we discussed 

with DOD officials the factors that have affected progress in developing 

the model and asked the officials to identify any remaining obstacles that 

must be overcome before the model could be completed and used to 

estimate DOD’s installation services funding requirements. In the absence 

of a DOD-wide model, we also interviewed officials from each of the 

military services and reviewed related information to document the 

methods used by each military service to determine installation services 

funding needs. Further, we asked service headquarters officials and 

officials at the installations we visited to explain the consequences when 

installation services funding was less than required. 

We conducted this performance audit from May 2007 through April 2008, 

in accordance with generally accepted government auditing standards. 

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

sufficient, appropriate evidence to provide a reasonable basis for our 

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

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives. 
Appendix II: Current Methods Used by the 

Military Services to Estimate Installation 

Support Services Funding Requirements 

Page 58 GAO-08-502 Defense Infrastructure 

The Army determines its installation services funding requirements 

primarily through the Army’s base operations support requirements model. 

This model uses Army-defined service standards and a costing 

methodology that estimates costs for 95 different installation services 

across Army installations based on cost pacing measures and data unique 

to each support service. Examples of cost pacing measures include 

population served, facility square footage, and number of transactions 

required. According to the Army, the model’s process results in estimated 

funding requirements for what each support service should cost based on 

a predefined level of support. The Army adjusts the model’s funding 

estimate to include costs for some services that are not modeled and 

determines the amount of funding actually budgeted based upon the 

availability of resources and Army priorities. Beginning with its fiscal year 

2010 budget, the Army plans to use the facilities operation model to 

estimate support services funding requirements for the facility-related 

services included in that model.1

The Navy determines its installation services funding requirements 

primarily from the Navy’s base operating support model. This model 

estimates the funding required for 18 Navy service support functions, 

which represent about 67 percent of all Navy support services costs. 

Funding estimates for 9 other service support functions are not modeled 

but are determined primarily from prior-year costs for the required level of 

support. For each of the 18 modeled service support functions, the model 

estimates funding requirements for four separate standard levels of service 

by multiplying a unit factor, such as square feet of a building, by a unit cost 

factor for each of the four levels of service that could be provided. 

According to the Navy, the unit costs used by the model are established in 

several ways, including Navy historical costs and commercial estimating 

manuals and data sources. Each year senior Navy leadership decides 

which of the four levels of service will be provided for each service 

support function at naval installations. On the basis of these decisions and 

information from the model, the Navy determines its installation services 

funding requirement. Beginning with its fiscal year 2010 budget, the Navy 

 1

Since fiscal year 2005, DOD has been developing a model to estimate funding requirements 

for 10 facility-related services—fire and emergency services, utilities, pavement clearance, 

refuse collection and disposal, real property leases, grounds maintenance, pest control, 

custodial services, real property management and engineering services, and engineering 

readiness. According to DOD, the model will use commercial benchmarks for similar 

services performed in the private sector. DOD plans for all military components to use the 

model to estimate the fiscal year 2010 facilities operation funding requirements. 

Appendix II: Current Methods Used by the 

Military Services to Estimate Installation 

Support Services Funding Requirements 
Appendix II: Current Methods Used by the 

Military Services to Estimate Installation 

Support Services Funding Requirements 

Page 59 GAO-08-502 Defense Infrastructure 

plans to use the facilities operation model to estimate support services 

funding requirements for the facility-related services included in that 

model. 

The Air Force used a prototype of the facilities operation model to 

estimate its fiscal year 2008 funding requirements for the 10 facility-related 

support services included in that model. Even though the model was not 

yet at full operational capability, the Air Force decided that the model 

provided a more realistic estimate of facility-related service funding 

requirements than the Air Force’s previously used method, which was 

based on historical costs. The Air Force plans to continue to use this 

model. To estimate its funding requirements for several other installation 

services that are not included in the model, including security forces, 

airfield operations, installation administration, food services, and lodging, 

the Air Force uses a cost projection formula. The formula primarily uses 

the number of personnel assigned to each installation and the value of the 

installation’s facilities as key inputs to determining its funding 

requirements estimates. The Air Force does not use a model or formula for 

some installation services, such as environmental conservation and 

compliance, pollution prevention, unaccompanied personnel housing, 

child development centers, and base communications and multimedia 

activities. According to Air Force officials, the Air Force leadership makes 

final decisions on the annual installation services budget based on Air 

Force priorities and budget constraints. 

The Marine Corps currently does not use a comprehensive model to 

estimate funding requirements for installation services except for utility 

costs. For utilities, Marine Corps officials stated that funding requirements 

are based on a model that organizes and aggregates available consumption 

and cost data by utility type and predicts future costs to support budgeting 

and programming needs. For all other installation support service areas, 

the Marine Corps estimates funding requirements primarily by direct 

review of historical program execution and future needs. During its budget 

development process, the Marine Corps makes final decisions on funding 

levels based on needs, resources, and priorities. Beginning with its fiscal 

year 2010 budget, the Marine Corps plans to use the facilities operation 

model to estimate support services funding requirements for the facilityrelated services included in that model. 
Appendix III: Comments from the Department 

of Defense 

Page 60 GAO-08-502 Defense Infrastructure 

Appendix III: Comments from the 

Department of Defense 
Appendix III: Comments from the Department 

of Defense 

Page 61 GAO-08-502 Defense Infrastructure 
Appendix III: Comments from the Department 

of Defense 

Page 62 GAO-08-502 Defense Infrastructure 
Appendix IV: GAO Contact and Staff 

Acknowledgments 

Page 63 GAO-08-502 Defense Infrastructure 

Brian J. Lepore, (202) 512-4523 or leporeb@gao.gov 

In addition to the contact named above, Mark Little, Assistant 

Director; Bonita Anderson; Harry Knobler; Mary Jo Lacasse; Josh 

Margraf; and Gary Phillips made significant contributions to this 

report. 

Appendix IV: GAO Contact and Staff 

Acknowledgments 

GAO Contact 

Acknowledgments 
Related GAO Products 

Page 64 GAO-08-502 Defense Infrastructure 

Cost Assessment Guide: Best Practices for Estimating and Managing 

Program Costs. Exposure Draft. GAO-07-1134SP. Washington, D.C.: July 

2007. 

High-Risk Series: An Update. GAO-07-310. Washington, D.C.: January 

2007. 

Defense Infrastructure: Issues Need to Be Addressed in Managing and 

Funding Base Operations and Facilities Support. GAO-05-556. 

Washington, D.C.: June 15, 2005. 

Military Training: Better Planning and Funding Priority Needed to 

Improve Conditions of Military Training Ranges. GAO-05-534. 

Washington, D.C.: June 10, 2005. 

Defense Infrastructure: Changes in Funding Priorities and Management 

Processes Needed to Improve Condition and Reduce Costs of Guard and 

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

Defense Infrastructure: Changes in Funding Priorities and Strategic 

Planning Needed to Improve the Condition of Military Facilities. GAO03-274. Washington, D.C.: February 19, 2003. 

Related GAO Products 

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