United States Government Accountability Office

Washington, DC 20548 

November 13, 2009 

The Honorable Jeff Bingaman 

Chairman 

The Honorable Lisa Murkowski 

Ranking Member 

Committee on Energy and Natural Resources 

United States Senate 

The Honorable Daniel K. Akaka 

United States Senate 

Subject: Defense Infrastructure: Guam Needs Timely Information from DOD to 

Meet Challenges in Planning and Financing Off-Base Projects and Programs to 

Support a Larger Military Presence 

The Department of Defense’s (DOD) plans to increase the U.S. military presence on 

Guam are expected to increase the island’s current military population by about two 

and a half times by 2020. If implemented as planned, this realignment would increase 

the military population on Guam from about 15,000 in 2009 to about 29,000 in 2014, 

and to more than 39,000 by 2020, which will increase the current island population of 

178,430 by about 14 percent over those years. The largest portion of the military’s 

population growth is related to the relocation of about 8,000 Marines and their 9,000 

dependents from Okinawa, Japan, to Guam as part of an agreement between the 

United States and Government of Japan to reduce forces in Japan while maintaining a 

continuing presence of U.S. forces in the region. The populations of each of the other 

military services also are expected to increase as a result of DOD plans to expand 

their operations and presence on Guam. DOD plans to fund DOD-owned and on-base 

infrastructure to support the military realignment and buildup, such as roads, 

buildings, and other facilities, while the government of Guam is expected to be 

largely responsible for funding and constructing government of Guam-owned off-base 

roads and utilities and providing certain public services. 

We have previously reported that the government of Guam faces significant 

challenges in addressing the impacts of the buildup and realignment. For example, 

Guam’s infrastructure would likely be inadequate to meet increased use resulting 

from the military buildup. In June 2009, we reported that Guam will need to 

significantly expand its existing utilities infrastructure and expand public services for 

electric power generation, potable water production, wastewater collection and 

treatment, and solid waste collection and disposal to provide the additional utility 

Page 1 GAO-10-90R Defense Infrastructure
capacities and services that will be required following the buildup.1

 Moreover, we 

have also reported that Guam’s major highways may not have enough capacity to 

accommodate the increased military and civilian traffic since the island’s two major 

highways may need major improvements.2 This report is one in a series of reports 

examining critical issues relating to the planned military buildup. We have included a 

listing of our past Guam reports at the end of this report. 

The government of Guam established the Civilian-Military Task Force in April 2006 to 

identify and develop cost estimates for potential nondefense projects and programs 

needed to support the larger military presence. The task force comprises 11 

subcommittees that focus on specific issues to identify community impacts resulting 

from the buildup and develop appropriate mitigation plans.3

 In addition, the task 

force has identified initial estimates of the cost to improve critical off-base 

infrastructure and expand needed public services to ensure adequate support to the 

expanded military and civilian community. In May 2008, the Governor of Guam 

testified before the Senate Committee on Energy and Natural Resources and stated 

that the government of Guam would need about $6.1 billion to expand the 

commercial port; roadways; power, water, and other infrastructure; and certain 

public services in support of the buildup.4

 These infrastructure needs and services are 

to be part of a multiyear funding program to ensure that Guam is able to support the 

buildup and secure post-buildup sustainability. In response to your request, this 

report examines (1) the processes used by the government of Guam to develop cost 

estimates for its off-base projects and programs related to the military buildup and 

(2) the key challenges, if any, affecting the government of Guam’s ability to finance 

off-base projects and programs that are needed to support the buildup and larger 

military and civilian community. 

To determine the processes used by the government of Guam to develop cost 

estimates for off-base projects and programs to support a larger military and civilian 

population resulting from the military buildup, we obtained and analyzed studies and 

assessments used by the government of Guam to develop the cost estimates.5

 We also 

examined the government of Guam’s fiscal year 2010 budget request. In addition we 

 

1

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

Utility Services When Needed to Support the Military Buildup on Guam, GAO-09-653 (Washington, 

D.C.: June 30, 2009). 

2

 GAO, Defense Infrastructure: Planning Efforts for the Proposed Military Buildup on Guam Are in 

Their Initial Stages, with Many Challenges Yet to Be Addressed, GAO-08-722T (Washington, D.C.: 

May 1, 2008). 

3

 These subcommittees are (1) Health and Social Services, (2) Public Safety, (3) Education, (4) Labor, 

(5) Ports and Customs, (6) Economic Development, (7) Infrastructure, (8) Housing, (9) Social and 

Cultural, (10) Government Services, and (11) the Environment. 

4

 Statement of The Honorable Felix P. Camacho, Governor of Guam, before the U.S. Senate Committee 

on Energy and Natural Resources Concerning the United States Military Buildup on Guam: Impact on 

the Civilian Community, Planning, and Response (May 1, 2008). 

5

 We did not validate the underlying assumptions of the estimates. 

Page 2 GAO-10-90R Defense Infrastructure
reviewed briefings, annual reports, and other pertinent documentation prepared by 

the government of Guam, DOD, and U.S. federal departments and agencies. In 

addition, we interviewed officials from DOD’s Office of Economic Adjustment, the 

Navy’s Joint Guam Program Office, U.S. Pacific Command, Naval Facilities 

Engineering Command-Pacific, Naval Facilities Engineering Command-Marianas, the 

Department of the Interior’s Office of Insular Affairs, the Guam Buildup Office, the 

Guam Office of the Public Auditor, the Guam Department of Public Works, the Guam 

Bureau of Budget and Management, the Guam Public Works Authority, and the Guam 

Waterworks Authority. To identify what key challenges, if any, may be affecting the 

government of Guam’s ability to plan and finance off-base projects and programs 

related to the buildup, we analyzed the government of Guam’s most recent financial 

statements and independent auditor’s reports, as well as information on Guam’s 

current bond ratings. We also examined information on Guam’s statutory debt 

limitation. In addition, we discussed key challenges with the Guam Buildup Office, 

the Office of the Public Auditor, the Bureau of Budget and Management, the 

Department of the Interior’s Office of Insular Affairs, the Joint Guam Program Office, 

and the DOD Office of Economic Adjustment. 

We conducted this performance audit from March 2009 through November 2009 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. 

Summary 

The processes used by the government of Guam to develop the key cost estimates for 

planned off-base projects and programs varied depending on project or program 

value, complexity, and size; whether independent consultants provided input; and the 

extent to which DOD provided data to help set project requirements. As a result, the 

estimates prepared to date vary in quality, and the overall costs to develop supporting 

off-base infrastructure are still uncertain. These off-base projects range from large, 

multiyear projects, such as improving Guam’s road network linking the commercial 

port to DOD’s bases, to small, local projects, such as expanding certain fire stations. 

In instances where DOD was involved in clarifying or providing updated information 

on its buildup requirements, and the government of Guam used independent 

consultants to help develop and verify cost estimates, we found that the government 

of Guam developed cost estimates that may better reflect likely final requirements 

and may better justify investment decisions since they are informed by expert 

analysis and the most up-to-date planning information. For example, when Guam’s 

Department of Public Works initially estimated that it needed $4.4 billion to improve 

the road network on Guam, it did not have the benefit of DOD’s involvement. 

However, after the May 1,2008, hearing and after engaging DOD in further defining 

buildup requirements, Guam’s Department of Public Works was able to narrow the 

scope of the project from overall highway improvements to roadways directly 

affected by the military buildup. Guam hired consultants from two national 

Page 3 GAO-10-90R Defense Infrastructure 
transportation and engineering firms, using funding from the Federal Highway 

Administration, to develop and validate cost estimates based on DOD’s input in 

clarifying requirements. As a result, the government of Guam’s road projects cost 

estimate fell by nearly $3 billion to about $1.5 billion. This reduced the overall 

estimate for multiyear projects from $6.1 billion to $3.2 billion. Conversely, on 

another large project—the expected expansion of the water and sewer system—DOD 

input provided general buildup information for cost estimates, but DOD and Guam 

had not reached agreement on the key question of whether to have a single water 

system for military and civilian customers or two separate systems, thus making 

current system upgrade cost estimates potentially unreliable. For the smaller fire 

station expansion project, the government of Guam’s Civilian-Military Task Force 

developed a cost estimate without direct DOD involvement or use of independent 

consultants. The Guam Fire Department followed National Fire Protection 

Association standards to project expansion of the two fire stations, and the CivilianMilitary Task Force’s Infrastructure Subcommittee then estimated that expanding 

two stations would cost $425,000. However, since the process did not have the 

benefit of updated DOD input, these estimates may not fully reflect actual buildup 

requirements. Key buildup decisions to reflect actual buildup requirements, such as 

the exact location, size, and makeup of forces moving to Guam as well as the size and 

type of facilities to be constructed, will not be finalized until the environmental 

impact statement and its associated record of decision are complete. These 

documents are currently targeted to be finalized in January 2010. 

The government of Guam faces two key challenges in financing off-base 

infrastructure projects and programs required to support a larger military and civilian 

population resulting from the military buildup. First, the impact of Guam’s debt 

ceiling on the ability of the government of Guam to incur debt to help fund off-base 

projects and programs is uncertain. While the Organic Act of Guam includes a 

statutory debt limitation on government borrowing, limiting Guam’s public 

indebtedness to no more than 10 percent of the aggregate tax valuation of the 

property on Guam, not all government obligations are included in this debt ceiling. 

For example, bonds or other obligations of the government of Guam payable solely 

from revenues derived from any public improvement or undertaking are not 

considered public indebtedness of Guam within the meaning of this limitation. Thus, 

until the precise form and terms of the debt that the government of Guam might 

contemplate for the purposes of the military buildup on Guam is known, the impact 

that Guam’s debt ceiling may have on the ability of the government of Guam to incur 

such a debt obligation is unclear. Second, the government of Guam’s operating deficit 

was approximately $415 million at the time of our review, and this deficit can affect 

Guam’s ability to borrow because of questions about the extent to which additional 

debt service payments are affordable. Officials from Guam’s Bureau of the Budget 

and Management said that they will have difficulty finding revenue sources to close 

the current deficit while also attempting to fund projects related to the military 

buildup. Nonetheless, the government of Guam may have some ability to raise 

revenue through issuing bonds despite the deficit. In June 2009, the government of 

Guam sold $473.5 million worth of bonds to help pay for cost-of-living adjustments 

owed to government of Guam retirees and tax refund payments owed to residents, 

Page 4 GAO-10-90R Defense Infrastructure
and to fund part of the construction of a new landfill to help meet projected 

expansion needs, demonstrating that a market may exist among investors for Guam’s 

debt. Also, Guam’s ability to finance needed infrastructure projects could improve 

because of potentially improved local economic conditions as the military buildup 

continues. We have previously reported that available studies indicate that 

communities surrounding military growth installations can expect to realize 

economic benefits stemming from the growth.6 DOD’s Office of Economic 

Adjustment has provided the government of Guam with approximately $2.5 million to 

hire an international consulting firm to assist Guam with financial advisory services, 

determine its ability to underwrite buildup requirements, and recommend various 

options for Guam to consider in developing future revenue streams needed to fund 

off-base infrastructure development and expanded public services. 

In commenting on this report, DOD stated that it accurately characterizes the 

challenges that both DOD and Guam face in developing cost estimates for off-base 

projects and programs designed to deal with the impact of the military buildup and 

realignment on Guam. DOD also provided technical comments, which we 

incorporated as appropriate into this report. DOD’s comments are reprinted in their 

entirety in enclosure II. 

Background 

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

Foreign Affairs and Minister of State for Defense began a series of sustained security 

consultations aimed at strengthening the U.S.-Japan security alliance and better 

addressing the rapidly changing global security environment. The resulting U.S.-Japan 

Defense Policy Review Initiative established a framework for the future of the U.S. 

force structure in Japan and is to facilitate a continuing presence for U.S. forces in 

the Pacific theater by relocating military units to Guam. As part of this initiative, DOD 

plans to move 8,000 Marines and their estimated 9,000 dependents from Okinawa, 

Japan, to Guam by 2014. In addition to this initiative, the United States plans to 

expand the capabilities and presence of Navy, Air Force, and Army forces on Guam. 

As a result, the military population, including dependents, on Guam is expected to 

grow by over 160 percent, from its current population of about 15,000 to over 39,000 

by 2020. Most of the extensive population growth and development resulting from the 

buildup will occur on the northern half of the island, primarily in the northwestern 

portion, where DOD currently plans to construct a new Marine Corps base. 

According to Joint Guam Program Office officials, the current planned schedules and 

levels of population growth and force structure could change as buildup plans are 

further refined and approved. 

In response to the projected military buildup on Guam, the government of Guam 

established the Civilian-Military Task Force as a means to identify and develop cost 

 

6

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

Challenges Caused by DOD-Related Growth, GAO-08-665 (Washington, D.C.: June 17, 2008). 

Page 5 GAO-10-90R Defense Infrastructure 
estimates for potential nondefense projects and programs needed to support the 

larger military presence on Guam.7 The task force consists of 11 subcommittees that 

comprise members from the community, the government of Guam, the military, the 

business community, and civic organizations. The task force helps to identify 

community impacts resulting from the buildup and develop appropriate mitigation 

plans. At the time of our review, the task force had developed cost estimates for two 

types of funding requests: (1) a multiyear request to include major infrastructure 

needs and to secure post-buildup sustainability and (2) a onetime fiscal year 2010 

budget request that identifies pre-buildup needs for Guam to adequately prepare for 

the realignment and buildup. Enclosure I provides additional information on the 

government of Guam’s estimates for off-base projects and programs. The government 

of Guam initially identified its large, multiyear off-base projects and programs during 

the hearing before the Senate Committee on Energy and Natural Resources in May 

2008. The cost estimates for these off-base projects and programs totaled $6.1 billion 

at that time and involved the expansion of Guam’s port, improvement to Guam’s 

roadways, and expansion of Guam’s water infrastructure. In April 2008, the task force 

developed a fiscal year 2010 budget request that totaled approximately $238 million, 

which was in addition to the $6.1 billion in the Governor’s May 2008 hearing 

statement. The government of Guam sent the 2010 budget request to the Office of 

Management and Budget for funding consideration in July 2008. 

The Navy holds primary responsibility for overseeing the military buildup on Guam. 

In August 2006, the Office of the Secretary of Defense directed the Navy to establish 

the Joint Guam Program Office, which reports to the Assistant Secretary of the Navy 

(Installations and Environment), to facilitate, manage, and execute requirements 

associated with the rebasing of U.S. assets from Okinawa, Japan, to Guam. 

Specifically, the office was tasked with leading the coordinated planning efforts of all 

DOD components and other stakeholders to consolidate, optimize, and integrate the 

existing military infrastructure on Guam, and is currently preparing a Guam master 

plan to address all aspects of the buildup. The Naval Facilities Engineering Command 

is primarily responsible for contracting for the construction of the military’s buildup 

infrastructure as well as developing the environmental impact statement.8

In accordance with the National Environmental Policy Act of 1969, DOD is currently 

preparing an environmental impact statement in order to evaluate the likely 

environmental effects of its buildup and realignment plans.9

 The environmental 

 

7

 The Civilian-Military Task Force was established in April 2006 by Governor of Guam Executive Order 

2006-10. 

8

 The primary purpose of an environmental impact statement is to serve as an action-forcing device to 

ensure that the policies and goals defined in the National Environmental Policy Act of 1969 are infused 

into the ongoing programs and actions of the federal government. 

9

 The National Environmental Policy Act of 1969, codified as amended at 42 U.S.C. § 4321-4347, 

establishes environmental policies and procedures that are to be followed by all federal agencies to the 

fullest extent possible. The act established the Council on Environmental Quality, which is responsible 

for, among other things, issuing guidelines and reviewing agencies’ policies and procedures to ensure 

compliance with the act. Council on Environmental Quality regulations implementing the National 

Page 6 GAO-10-90R Defense Infrastructure
impact statement is also expected to contain an analysis of various socioeconomic 

impacts of the realignment related to specific proposed actions (as appropriate), 

among other matters. The environmental impact statement and associated record of 

decision are currently targeted to be finalized by January 2010, and are to be used by 

the Joint Guam Program Office to finalize the buildup master plan. The master plan 

will form the baseline for military construction budget planning and facility and 

utility designs and provide a top-level view of the size and type of facility 

requirements, candidate and preferred land sites, and proposed use of the land to 

meet the requirements for new personnel and forces planned for Guam. 

The Office of Economic Adjustment is a DOD field activity that reports to the Deputy 

Under Secretary of Defense (Installations and Environment), under the Under 

Secretary of Defense (Acquisition, Technology and Logistics). It is responsible for 

facilitating DOD resources in support of local programs and providing direct planning 

and financial assistance to communities and states seeking assistance to address the 

impacts of DOD’s actions. The Office of Economic Adjustment’s assistance to growth 

communities is primarily focused on assisting these communities with organizing and 

planning for population growth because of DOD activities, commonly referred to as 

defense-affected communities. 

DOD policies and guidance on assistance to defense-affected communities indicate 

that DOD should seek to minimize negative economic impacts on communities 

resulting from changes in defense programs, such as base closures, realignments, 

consolidations, transfer of functions, and reductions in force.10 Specifically, the 

secretaries of the military departments are to provide maximum advance information 

and support to local governments to allow planning for necessary adjustments in 

local facilities and public services, workforce training programs, and local economic 

development activities. In addition, DOD is to take the leadership role in assisting 

substantially and seriously affected communities with the negative effects of major 

defense base closures, realignments, and contract-related adjustments. We previously 

reported that it has been long-standing DOD policy that DOD take the leadership role 

within the federal government in helping communities respond to the effects of 

defense-related activities.11 This is based on a series of executive orders, the current 

version of which establishes the Economic Adjustment Committee made up of 22 

federal departments and agencies to, among other duties, advise, assist, and support 

 Environmental Policy Act of 1969 appear at 40 C.F.R. Part 1500. In accordance with National 

Environmental Policy Act of 1969 requirements and Council on Environmental Quality regulations, 

federal agencies typically evaluate the likely environmental effects of projects they are proposing to 

undertake using an environmental assessment or, if a project constitutes a major federal action 

significantly affecting the quality of the human environment, a more detailed environmental impact 

statement. 

10 DOD Directive 5410.12, Economic Adjustment Assistance to Defense-Impacted Communities, July 

5, 2006. 

11 GAO, High-Level Leadership Needed to Help Guam Address Challenges Caused by DOD-Related 

Growth, GAO-09-500R (Washington, D.C.: Apr. 9, 2009). 

Page 7 GAO-10-90R Defense Infrastructure 
the Defense Economic Adjustment Program, which is to assist defense-affected 

communities.12 

The Processes Used by the Government of Guam to Develop Cost Estimates 

Varied, and Buildup Requirements Are Not Yet Fully Known 

The government of Guam used differing processes to develop cost estimates based 

on (1) the type and size of off-base projects and programs, (2) the extent to which 

DOD provided data to inform project and program requirements, and (3) whether 

appropriate consulting services were available or used to refine cost estimates. Offbase projects range from large, multiyear projects, such as improving Guam’s road 

network linking the commercial port to DOD’s bases and expanding and modernizing 

Guam’s port, to small, local projects, such as expanding certain fire stations. 

Although the government of Guam has developed some cost estimates, the 

environmental impact statement, which will inform DOD’s overall Guam master plan 

and plan implementation decisions, and its associated record of decision are targeted 

to be finalized by January 2010. Government of Guam officials believe that their 

ability to plan for off-base infrastructure development has been hampered by a lack 

of finalized buildup plans. According to DOD officials, DOD has provided information 

on buildup plans to the government of Guam as requirements have become more fully 

known to try and assist the government of Guam with planning efforts. 

Some Large, Multiyear Projects Were Developed Using Independent Consultants and 

Increased DOD Involvement in Clarifying Requirements

For some of the larger, multiyear off-base infrastructure projects, DOD clarified or 

provided updated data regarding its potential buildup requirements. The government 

of Guam also hired independent consultants to help develop and verify cost estimates 

based on its understanding of buildup requirements. In these instances, we found that 

the government of Guam developed cost estimates that may better reflect likely final 

requirements and may better justify investment decisions.13 For example, as stated at 

the May 1, 2008, hearing, Guam’s Department of Public Works initially estimated that 

overall roadway improvements related to the buildup would cost around $4.4 billion. 

However, the Guam Department of Public Works subsequently engaged DOD to 

identify specific improvements based on factors such as the preferred routing of 

truck traffic, points of congestion, and the expeditious and safe movement of military 

equipment, materials, supplies, and personnel. Moreover, the Guam Department of 

Public Works hired two national transportation and engineering firms, using funding 

from the Federal Highway Administration, to develop and verify cost estimates on 

 

12 Exec. Order No. 12049, 43 Fed. Reg. 13363 (Mar. 27, 1978), as superseded by Exec. Order No. 12788, 

57 Fed. Reg. 2213 (Jan. 21, 1992), as amended. 

13 We have reported in the past that cost estimates will need to be continually updated as actual costs 

begin to replace the original estimates. GAO, GAO Cost Estimating and Assessment Guide: Best 

Practices for Developing and Managing Capital Program Costs, GAO-09-3SP (Washington, D.C. 

March 2009). 

Page 8 GAO-10-90R Defense Infrastructure
roadway inputs based on the revised project requirements. This resulted in a new 

estimate for roadway improvements that totaled $1.5 billion—a decrease of 

$2.9 billion or almost 66 percent of the original estimate. This revision also 

substantially affected the government of Guam’s overall estimate for larger, multiyear 

projects, reducing it from $6.1 billion to $3.2 billion.14 In addition to its input to the 

government of Guam’s estimate for roadway improvements, DOD supplied the 

government of Guam with anticipated port throughput requirements during and after 

the buildup, from 2010 to 2018, permitting a longer-term planning horizon. Similarly, 

the Port Authority of Guam combined its funding with that provided by the Office of 

Economic Adjustment to hire a national engineering firm to develop a port master 

plan update that incorporated DOD’s cargo throughput requirements. The 

engineering firm estimated that port upgrades addressing the projected increases in 

population and ship traffic due to the buildup would cost approximately $195 million 

(calendar year 2008 dollars). 

In other instances, the government of Guam hired independent consultants to help 

develop cost estimates for larger, multiyear infrastructure projects even though 

updated or detailed buildup information was not available from DOD because certain 

agreements were still to be negotiated. For example, the Guam Waterworks Authority 

contracted with an independent consultant from a national environmental 

engineering firm using its own funds and an Environmental Protection Agency grant 

to develop a cost estimate for the expansion of Guam’s water system (e.g., potable 

water production and wastewater collection and treatment) to meet increased 

demand from the military buildup. The $192 million estimate was issued in 2007 and 

is based on the assumption that a unified water and wastewater system will be used 

to serve both the civilian and military populations. However, as we previously 

reported, DOD is in the process of determining how it will meet its potable and 

wastewater needs, and whether it will use a unified water system or develop its 

own.15 The Guam Waterworks Authority has indicated that if DOD provides additional 

detailed information, it will modify the assumptions used to develop its estimate for 

expanding Guam’s water system. As the government of Guam and DOD reach 

agreements on water and wastewater systems and more specific requirements are 

identified, the cost estimate will likely have to be revised to reflect material changes 

associated with these agreements. 

Smaller Onetime Pre-Buildup Estimates Developed Solely by the Government of 

Guam’s Civilian-Military Task Force

For smaller estimates that were part of the government of Guam’s fiscal year 2010 

budget request, the Civilian-Military Task Force helped to identify requirements and 

developed estimates without engaging DOD or using independent consultants. As 

such, these estimates did not have the benefit of updated DOD input on its plans to 

expand on Guam, raising questions about how reliable these estimates are in that 

 

14 As the government of Guam has continued to revise its estimate for larger, multiyear projects, the 

total is currently about $2.9 billion. See enc. I for more details about the projects. 

15 GAO-09-653. 

Page 9 GAO-10-90R Defense Infrastructure 
they do not reflect updated or final buildup requirements. For example, the Guam 

Fire Department followed National Fire Protection Association standards in 

conjunction with the anticipated locations of population growth due to the buildup to 

conclude that two fire stations will need to be expanded by constructing dormitories 

to accommodate additional firefighters as well as for a space to shelter new 

emergency vehicles. The Fire Department provided that information to the CivilianMilitary Task Force’s Infrastructure Subcommittee, which in turn estimated that the 

expansion project would cost $425,000. 

Similarly, Guam’s Department of Public Health and Social Services used the number 

of recent tuberculosis cases on Guam in conjunction with information from the 

Centers for Disease Control and Prevention, the anticipated number of construction 

laborers needed for the buildup, and the percentage of tuberculosis cases occurring 

in countries expected to supply these laborers to determine the need for a 

tuberculosis control program. The program includes an increase in staff and 

additional office space for Guam’s Bureau of Communicable Disease Control in order 

to provide an increase in surveillance, counseling, and treatment services to help 

minimize the spread of tuberculosis on Guam thought to be possible because of an 

influx of construction laborers from countries where the disease is more prevalent. 

The Department of Public Health and Social Services then provided the information 

to the Health and Social Services Subcommittee, which estimated that establishing 

the program would cost $458,988. 

Guam’s Economic Development and Commerce Authority, using past studies in 

conjunction with the anticipated location of military facilities, determined a need to 

assess the nature and types of infrastructure necessary for economic development 

opportunities in civilian-owned undeveloped areas in proximity to military bases, as 

these areas are expected to be prime locations for development in support of or in 

response to military growth. The Economic Development and Commerce Authority 

provided this information to the Economic Development Subcommittee, which 

estimated the total cost of performing such a study, including hiring a project 

manager, to be $350,000. 

Buildup Requirements Are Not Yet Fully Known

The government of Guam will likely not receive finalized plans and requirements 

from DOD until its master plan has been issued, although DOD has provided some 

interim information. Naval Facilities and Engineering Command is currently 

developing the environmental impact statement related to the realignment and 

buildup, and this document and its associated record of decision must be completed 

before the master plan and key decisions, such as the exact location, size, and 

makeup of forces moving to Guam as well as the size and type of facility 

requirements, can be finalized. Both the environmental impact statement and record 

of decision are currently targeted to be finalized in January 2010. As such the 

government of Guam’s ability to develop cost estimates that reflect actual buildup 

requirements is somewhat limited because there is greater potential for margins of 

error if its estimates are based on requirements that can change. Though buildup 

Page 10 GAO-10-90R Defense Infrastructure
plans are not yet finalized, DOD’s Office of Economic Adjustment, which provides 

planning information and support to communities affected by DOD programs, has 

been providing technical and financial assistance to the government of Guam based 

on the government of Guam's incremental response strategy and information 

provided by the Joint Guam Program Office. However, government of Guam officials 

believe that their ability to plan and develop cost estimates for the off-base 

infrastructure development to support the larger population has been hampered 

because overall buildup plans are not finalized. According to DOD officials, DOD has 

provided information on buildup plans to the government of Guam as requirements 

have become more fully known to assist with Guam’s planning.

Although the government of Guam has received some preliminary information 

regarding the military buildup, we have previously reported that uncertainties 

associated with the exact size, makeup, and timing of the forces to be moved to 

Guam make it difficult for the government of Guam to develop comprehensive plans 

to address the effects of the proposed military buildup since the environmental 

impact statement process has not been completed yet.16 Any delays in the issuance of 

the environmental impact statement and its associated record of decision until after 

January 2010 can adversely affect Guam as it will compress the time period in which 

the government of Guam plans and develops final cost estimates for the construction 

and improvement of new off-base infrastructure, and ensures that enhanced public 

services are available to serve the larger military force currently scheduled to arrive 

by 2014. 

The Government of Guam Faces Some Potential Challenges in Financing OffBase Projects and Programs, but May Also Be Able to Raise Some Revenue 

on Its Own 

The government of Guam faces two key challenges in identifying and financing its offbase projects and programs related to the military buildup. These financing 

challenges are its statutory debt limitation and operating deficit. Despite such 

challenges, Guam’s ability to finance needed infrastructure projects could improve 

because of enhanced local economic conditions as the military buildup continues. 

The Government of Guam Is Facing Challenges in Identifying and Securing Financing 

to Help Carry Out Its Off-Base Projects and Programs Related to the Military Buildup

Guam’s financing challenges are its statutory debt limitation and its operating deficit. 

First, the government of Guam’s ability to borrow funds to help pay for off-base 

infrastructure projects and programs related to the military buildup may be 

constrained because of a statutory debt limitation contained in the Organic Act of 

Guam, depending on the form and terms of the prospective debt. Section 11 of the act 

places a limitation on government borrowing, limiting Guam’s public indebtedness to 

 

16 GAO-08-722T. 

Page 11 GAO-10-90R Defense Infrastructure 
no more than 10 percent of the aggregate tax valuation of property on Guam.17

However, not all government obligations are included in the debt ceiling. For 

instance, section 11 notes that bonds or other obligations of the government of Guam 

payable solely from revenues derived from any public improvement or undertaking 

shall not be considered public indebtedness as defined in the Organic Act of Guam. 

Further, whether certain government obligations constitute debts, and thus are to be 

included in a particular debt limit calculation, is generally a highly litigated issue.18

Thus, until the government of Guam has determined and decided on the form and 

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

the buildup, it is unknown what impact this debt limitation provision will have on the 

ability of the government of Guam to incur debt for the purposes of the buildup. 

Second, Guam has faced an operating deficit over the past few years. In May 2009 

Guam’s Office of the Public Auditor reported that the government of Guam’s general 

fund operating deficit for fiscal year 2007 was $510 million.19 An independent audit of 

the government of Guam’s fiscal year 2008 financial statements showed that Guam’s 

operating deficit had decreased to $415 million.20 However, the estimated general 

fund expenditures for fiscal year 2009 total around $490 million. Thus the operating 

deficit is almost 85 percent of the government’s total operating expenses. Officials 

from Guam’s Bureau of Budget and Management said that they will have difficulty 

finding and securing enough revenue sources to close the current deficit while also 

attempting to fund new off-base projects and programs related to the buildup. The 

Office of Public Auditor noted that while the military buildup may be a catalyst for 

growth, if all revenue increases from the buildup will be used to fund current 

government operations, little, if any, new cash will be available to pay past debt, and 

cash shortfall problems could continue. 

 

17 48 U.S.C. § 1423a. Most U.S. states and local municipalities have similar constitutional or statutory 

limitations on borrowing. Debt limitation provisions “serve as a limit to taxation and as a protection to 

taxpayers; to maintain ... solvency, both governmental and proprietary; and to keep [local] ... 

residents from abusing their credit, and to protect them from oppressive taxation.” In Re Request of 

Camacho, 2003 Guam 16, 2003 WL 21697180 at 3 (Guam July 23, 2003), quoting McQuillin (3rd ed., § 

41.02); reversed on other grounds in Limtiaco v. Camacho, 549 U.S. 483 (2007). 

18 Courts have interpreted “debt” to include a wide variety of financial arrangements. For example, the 

Guam Supreme Court held that bonds issued by the Guam Telephone Authority should be included in 

the debt ceiling, because the government of Guam was committed to pay to the authority any 

deficiencies in the bond reserve fund from general tax revenues. Guam Telephone Authority v. 

Rivera, 416 F.Supp. 283 (1976). 

19 Office of the Public Auditor, Annual Report Calendar Year 2008 (Hagåtña, Guam, May 22, 2009). 

The general fund is the government of Guam’s primary operating fund. 

20 Deloitte and Touche, Government of Guam General Fund Financial Statements and Independent 

Auditors Report Year Ended September 30, 2008 (Tamuning, Guam, May 11, 2009). 

Page 12 GAO-10-90R Defense Infrastructure
The Government of Guam May Have Some Potential to Raise Revenue in Support of 

the Military Buildup

The government of Guam has demonstrated that it can raise revenue by issuing 

bonds. In June 2009, the government of Guam successfully sold $473.5 million worth 

of bonds to help pay for cost-of-living adjustments owed to government of Guam 

retirees and tax refund payments owed to residents, and to fund part of the 

construction of a new landfill to help meet projected expansion needs. This 

demonstrates that a market may exist among investors for Guam’s debt. Moreover, 

we have reported that communities near military growth locations face growthimpact challenges in the short term, including challenges to identify and provide 

additional infrastructure—such as schools, roads, housing, and other services—to 

support the expected population growth, but that these communities can also expect 

to realize economic benefits in the long term.21

An increase in military and federal civilian employees on Guam stemming from the 

buildup may be a potential source of additional revenue. For instance, Guam receives 

federal income taxes paid by military and civilian employees of the U.S. government 

stationed in Guam.22 As the buildup progresses and both military and federal civilian 

personnel come to Guam, the amount of this income tax revenue provided to Guam 

may increase. 

The Office of Economic Adjustment has been providing technical and financial 

assistance to the government of Guam in preparation for the buildup since July 2006. 

At the time of our review, the Office of Economic Adjustment had provided the 

government of Guam with approximately $7.6 million in grants that have been used 

to: provide logistical support to the Office of the Governor; develop a financial 

modeling tool for the Port Authority of Guam and a port financial feasibility study; 

undertake a variety of studies on the port expansion and solid waste management; 

and support the government of Guam with international consulting services. Office of 

Economic Adjustment officials stated that the assistance provided to the government 

of Guam is intended to enable the territory to make informed decisions on how to 

respond to the buildup program. As part of the $2.5 million grant provided by the 

Office of Economic Adjustment in September 2008, the government of Guam hired an 

internationally recognized consulting team with expertise in planning, environmental, 

and fiscal/financial advisory services. The consulting team provides the government 

of Guam with the expertise to develop response alternatives, evaluate the associated 

risks, and determine appropriate financing mechanisms. At the time of our review, 

the consulting team was developing a fiscal impact analysis using information from 

the environmental impact statement. This analysis will include an estimate of the 

impact of the buildup on the territory's cash flow, taking into account projected 

changes in expenses and tax revenues. This could help indicate the extent to which 

 

21 GAO-08-665. 

22 See 26 U.S.C. § 7654 and 48 U.S.C. § 1421h. 

Page 13 GAO-10-90R Defense Infrastructure 
the government of Guam may be able to identify and develop revenue streams rather 

than rely solely on federal grants for funding of off-base infrastructure. 

Agency Comments

In commenting on this report, DOD stated that it accurately characterizes the 

challenges that both DOD and Guam face in developing cost estimates for off-base 

projects and programs designed to deal with the impact of the military buildup and 

realignment on Guam. DOD also provided technical comments, which we 

incorporated as appropriate into this report. DOD’s comments are reprinted in their 

entirety in enclosure II. 

----- 

We are sending copies of this report to the appropriate congressional committees. We 

are also sending copies to the Secretaries of Defense and the Interior; the Secretaries 

of the Army, the Navy, and the Air Force; the Commandant of the Marine Corps; and 

the Director of the Office of Management and Budget. This report also is available at 

no charge on our Web site at http://www.gao.gov. 

If you or your staff have any questions, about this report, please contact me at (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 major contributions to this report are listed in enclosure III. 

Brian J. Lepore, Director 

Defense Capabilities and Management 

Page 14 GAO-10-90R Defense Infrastructure
Enclosure I 

Government of Guam Cost Estimates for Off-Base Projects and Programs 

The government of Guam has developed cost estimates for two types of funding 

requests: (1) a multiyear request to include major infrastructure needs and to secure 

post-buildup sustainability and (2) a onetime fiscal year 2010 budget request that 

identifies pre-buildup needs for Guam to adequately prepare for the realignment and 

buildup.23 These estimates were developed by the government of Guam’s CivilianMilitary Task Force. Table 1 provides information on the government of Guam’s cost 

estimates for off-base projects and programs. The fiscal year 2010 estimates in table 1 

are categorized and totaled by Civilian-Military Task Force subcommittee as they are 

in the government of Guam’s budget request.24 These estimates are made up of 

smaller projects and programs that when summed together produce each 

subcommittee’s estimate. The examples provided for each subcommittee category 

illustrate the types of projects and programs the government of Guam has identified 

as needed to adequately prepare for the buildup. 

Table 1: Government of Guam Cost Estimates for Off-Base Projects and Programs as of 

September 2009 

Dollars in millions 

Estimates Descriptions Amounta

Multiyear estimates 

Roadway improvements • Identify and improve road infrastructure based on military use 

during and after buildup 

$1,547 

Guam power infrastructure • Expansion of power infrastructure capacity to generate additional 

power and improve its reliability 

666 

Education • Expansion of educational services, including purchase of school 

supplies and hiring additional staff

206 

Port expansion • Expansion and modernization of Guam’s port to address 

increases in ship traffic 

195 

Water infrastructure • Expansion of Guam’s water system, including potable water 

production and wastewater collection and treatment 

192 

Public health • Expansion of Guam Memorial Hospital and construction of a new 

central public health and social services building 

135 

Total multiyear estimates $2,941 

Fiscal year 2010 estimates (example projects and programs under each estimate)

Infrastructure • Purchase of additional X-ray machines and washdown facilities at 

ports of entry to Guam 

• Architectural and engineering designs for expansion of Guam 

Memorial Hospital 

• Expansion of fire stations 

• Increase in staff at Guam’s Department of Agriculture 

$170.0 

 

23 The initial overall cost estimate for the government of Guam’s multiyear projects and programs was 

$6.1 billion, as indicated in Governor Camacho’s May 1, 2008, hearing statement. This initial estimate 

was reduced to $3.2 billion because of subsequent revisions in the estimate for roadway 

improvements. As the government of Guam has continued to revise its estimate for larger, multiyear 

projects, the total is currently about $2.9 billion. 

24 Government of Guam, Civilian-Military Task Force FY2010 Budget Request (Hagåtña, Guam, July 

16, 2008). 

Page 15 GAO-10-90R Defense Infrastructure 
Dollars in millions 

Estimates Descriptions Amounta

• University of Guam Health-Science Renovation and Expansion 

Project 

• Architecture and engineering services for construction of a new 

building for the University of Guam’s Center for Excellence in 

Developmental Disabilities Education, Research, and Services 

• Renovation of building space for the University of Guam’s Marine 

Laboratory 

• Increase in Port Authority of Guam staff 

• Retrofit of the civilian airport to accommodate military aircraft 

• Design phase for new court facility 

• Architectural and engineering design for the construction of new 

buildings for the Department of Health and Social Services 

• Installation of new water sources 

• Expansion of sewer capacity 

• Upgrade of power-generation infrastructure 

Labor • Increase in Guam Department of Labor staff to assist in alienlabor certification and workers compensation 

• Increase in Guam Department of Administration staff to assist in 

training and development of worker training programs and to 

establish employment and training programs 

• Increase in staff levels within the Guam Department of 

Administration 

• Review of the classification and compensation of government of 

Guam employees 

• Improvement in government of Guam human resources 

information systems 

• Increase in staff at the Guam Board of Registration for 

Professional Engineers, Architects, and Land Surveyors 

29.0 

Economic Development • Establishment of revolving loan program to provide financial 

support to local and small businesses that will vie for military 

contracts 

• Obtaining consultant services from University of Guam to prepare 

an economic plan to guide the civilian community as a result of 

rapid military growth 

• Designing, testing, and implementation of an econometric model 

to identify income, output, and employment multipliers due to the 

buildup 

• Access and infrastructure feasibility studies 

• Financial advisory services 

• Increase in staff at Guam’s Department of Revenue and Taxation 

• Hiring of a consultant for the Chamorro Land Trust Commission 

• Development of a financial management and general services 

plan 

12.0 

Public Safety • Recruiting, hiring, and training police officers as well as providing 

additional equipment and vehicles for new officers 

• Impact study to address the effect of accelerated population 

growth on the Guam Police Department 

• Purchase of emergency vehicles and hiring of additional customs 

enforcement officers for the Guam Customs and Quarantine 

Agency 

• Increase in staff at the Attorney General of Guam’s Prosecution 

and Family Divisions 

• Increase in staff at the Guam Public Defender Service 

Corporation 

• Increase staff at the Guam Department of Corrections 

9.0 

Health and Social 

Services 

• Increase in Guam Bureau of Communicable Disease Control staff 

to improve surveillance of potential disease rate increases, 

5.0 

Page 16 GAO-10-90R Defense Infrastructure
Dollars in millions 

Estimates Descriptions Amounta

increase awareness of communicable diseases, and increase 

immunization outreach services 

• Implementation of tuberculosis and sexually transmitted 

disease/HIV control programs 

• Expansion of community health centers through hiring of 

additional staff and purchase of medical equipment 

• Increase in staff and supplies at Guam’s Bureau of Family Health 

and Nursing Services 

• Increase in staff and supplies at Guam’s Bureau of Professional 

Support Services 

• Increase in staff and supplies at Guam’s Bureau of Inspection and 

Enforcement 

• Development of a master plan for Guam’s Department of Mental 

Health and Substance Abuse 

Natural Resources • Increase in staff in Guam’s Coastal Management Program to 

provide an adequate review of the environmental impact 

statement when it is released by the U.S. Department of Defense 

• Implementation of a watershed restoration program to reforest 

badly degraded areas in the southern part of Guam 

• Increase in the number of agricultural quarantine inspectors to 

deal with the influx of military personnel and foreign workers 

• Conducting a fiscal year 2010 needs assessment for the Guam 

Historic Preservation Office 

• Development of an overall master plan in obtaining a complete 

survey of all farmers registered with the Guam Department of 

Agriculture 

• Increase in staff for the Plant Nursery Program in the Guam 

Department of Agriculture 

• Increase in staff in the Guam Department of Agriculture’s Division 

of Animal Health, Quarantine, and Control 

3.5 

Education • Increase in University of Guam personnel to expand its capacity 

to increase academic and support staff functions in areas 

identified as high priorities in producing more workforce personnel 

as well as maintaining additional facilities expansion 

• Increase in institutional capacities in career and technical 

education and apprenticeship programs at Guam Community 

College 

• Assessment of the needs of the Guam Public Library System to 

serve the increased population anticipated from the buildup 

3.0 

Ports and Customs • Purchase of additional X-ray machines and washdown facilities at 

ports of entry to Guam 

• Increase in Port Authority of Guam staffb

3.0 

Environment • Increase in Guam Environmental Protection Agency staff to issue 

permits for buildup projects and monitor such projects for 

compliance with both Guam and U.S. environmental regulations 

2.0 

Housing • Property retracement surveys to ensure that property boundaries 

are properly delineated and mapped 

0.8 

Social and Cultural • Master planning for the Guam Visitors Bureau, the Guam Council 

on Arts and Humanities, and the Department of Chamorro Affairs 

to plan out services and needs in connection with the military 

buildup 

0.2 

Total fiscal year 2010 estimates $237.5 

Source: GAO analysis of government of Guam data. 

a

Amounts rounded. 

b

These items also included in the Infrastructure Subcommittee’s estimates. 

Page 17 GAO-10-90R Defense Infrastructure 
Enclosure II 

Comments from the Department of Defense 

Page 18 GAO-10-90R Defense Infrastructure
Page 19 GAO-10-90R Defense Infrastructure 
Page 20 GAO-10-90R Defense Infrastructure
Enclosure III 

GAO Contact and Staff Acknowledgments 

GAO Contact 

Brian Lepore, (202) 512-4523 or leporeb@gao.gov

Acknowledgments 

In addition to the contact named above, Harold Reich, Assistant Director; Grace 

Coleman; Amy Frazier; Kate Lenane; Josh Margraf; Richard Meeks; Richard 

Powelson; John Van Schaik; and Michael Willems made key contributions to this 

report. 

Page 21 GAO-10-90R Defense Infrastructure 
Related GAO Products 

Defense Infrastructure: DOD Needs to Provide Updated Labor Requirements to Help 

Guam Adequately Develop Its Labor Force for the Military Buildup. GAO-10-72. 

Washington, D.C.: October 14, 2009. 

Defense Infrastructure: Planning Challenges Could Increase Risks for DOD in 

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

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

High-Level Leadership Needed to Help Guam Address Challenges Caused by DODRelated Growth. GAO-09-500R. Washington, D.C.: April 9, 2009. 

Defense Infrastructure: Opportunity to Improve the Timeliness of Future Overseas 

Planning Reports and Factors Affecting the Master Planning Effort for the Military 

Buildup on Guam. GAO-08-1005. Washington, D.C.: September 17, 2008. 

Defense Infrastructure: High-Level Leadership Needed to Help Communities 

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

June 17, 2008. 

Defense Logistics: Navy Needs to Develop and Implement a Plan to Ensure That 

Voyage Repairs Are Available to Ships Operating near Guam when Needed. GAO08-427. Washington, D.C.: May 12, 2008. 

Defense Infrastructure: Planning Efforts for the Proposed Military Buildup on 

Guam Are in Their Initial Stages, with Many Challenges Yet to Be Addressed. GAO08-722T. Washington, D.C.: May 1, 2008. 

Defense Infrastructure: Challenges Increase Risks for Providing Timely 

Infrastructure Support for Army Installations Expecting Substantial Personnel 

Growth. GAO-07-1007. Washington, D.C.: September 13, 2007. 

Defense Infrastructure: Overseas Master Plans Are Improving, but DOD Needs to 

Provide Congress Additional Information about the Military Buildup on Guam. 

GAO-07-1015. Washington, D.C.: September 12, 2007. 

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

GAO-07-119. Washington, D.C.: December 12, 2006. 

DOD’s Overseas Infrastructure Master Plans Continue to Evolve. GAO-06-913R. 

Washington, D.C.: August 22, 2006. 

Results-Oriented Government: Practices That Can Help Enhance and Sustain 

Collaboration among Federal Agencies. GAO-06-15. Washington, D.C.: October 21, 

2005. 

Page 22 GAO-10-90R Defense Infrastructure
Page 23 GAO-10-90R Defense Infrastructure 

U.S. Insular Areas: Multiple Factors Affect Federal Health Care Funding. GAO-06-

75. Washington, D.C.: October 14, 2005. 

Opportunities Exist to Improve Future Comprehensive Master Plans for Changing 

U.S. Defense Infrastructure Overseas. GAO-05-680R. Washington, D.C.: June 27, 2005. 

Results-Oriented Government: GPRA Has Established a Solid Foundation for 

Achieving Greater Results. GAO-04-38. Washington, D.C.: March 10, 2004. 

Environmental Cleanup: Better Communication Needed for Dealing with Formerly 

Used Defense Sites in Guam. GAO-02-423. Washington, D.C.: April 11, 2002. 

Compact of Free Association: Negotiations Should Address Aid Effectiveness and 

Accountability and Migrants’ Impact on U.S. Areas. GAO-02-270T. Washington, 

D.C.: December 6, 2001. 

Foreign Relations: Migration From Micronesian Nations Has Had Significant 

Impact on Guam, Hawaii, and the Commonwealth of the Northern Mariana 

Islands. GAO-02-40. Washington, D.C.: October 5, 2001. 

Overseas Presence: Issues Involved in Reducing the Impact of the U.S. Military 

Presence on Okinawa. GAO/NSIAD-98-66. Washington, D.C.: March 2, 1998. 

U.S. Insular Areas: Development Strategy and Better Coordination Among U.S. 

Agencies Are Needed. GAO/NSIAD-94-62. Washington, D.C.: February 7, 1994. 

(351302)
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