Military Base Closures: Observations on Preparations for the Upcoming Base Realignment and Closure Round
Published: 2004-03-25T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The National Defense Authorization Act for Fiscal Year 2002 authorized an additional Base Realignment and Closure (BRAC) round in 2005. The legislation requires the Department of Defense (DOD) to provide Congress in early 2004 with a report that addresses excess infrastructure and certifies that an additional BRAC round is needed and that annual net savings will be realized by each military department not later than fiscal year 2011. GAO is required to assess this information as well as the selection criteria for the 2005 round and report to Congress within 60 days of DOD's submission. The legislation also retains the requirement for GAO to assess the BRAC 2005 decisionmaking process and resulting recommendations. This testimony addresses (1) the BRAC process from a historical perspective, (2) GAO's role in the process, and (3) GAO's initial observations on key issues DOD is required to address in preparation for the 2005 round. Because DOD had not submitted its required 2004 report at the time we completed this statement, this testimony relies on our prior work that addressed issues associated with excess capacity and BRAC savings.
section_title: What GAO Found
paragraphs: GAO's work in examining lessons learned from prior BRAC rounds found that the prior legislation and the framework it outlined served the process well, and that it should provide a useful framework for a future round. Furthermore, the legislation and its implementation provided for checks and balances to ensure the integrity of the process. GAO has played a long-standing role as an independent and objective observer of the BRAC process. GAO has operated in a real-time setting and has had access to significant portions of the process as it has evolved, thus affording DOD an early opportunity to address any concerns GAO might identify. GAO's role in the 2005 round remains the same, and GAO has been observing the process since DOD began work on the 2005 round. Timely access to DOD data is key to fulfilling GAO's role. GAO's initial observations on key issues DOD is required to address in its 2004 report are as follows. The selection criteria for the 2005 round are basically sound and provide a good framework for assessing alternatives. Nevertheless, GAO provided DOD with comments on the draft criteria that focused on the need for clarification of how DOD intends to consider total costs to DOD and other federal agencies and environmental costs in its analyses. The department has indicated that it would be issuing clarifying guidance. DOD plans to estimate its excess capacity using a methodology that it used in 1998 for similar purposes. While this methodology provides a rough indication of excess capacity for selected functional areas, it has a number of limitations that create imprecision when trying to project a total amount of excess capacity across DOD. A more complete assessment of capacity and the potential to reduce it must await the results of the current BRAC analyses being conducted by DOD during the 2005 round. DOD financial data suggest that, assuming conditions similar to those in the 1993 and 1995 BRAC rounds, each military department could achieve annual net savings by 2011. While we believe that the potential exists for significant savings to result from the 2005 round, there are simply too many unknowns at this time to say conclusively to what extent annual net savings will be realized by 2011. For example, in 2005 DOD is placing increased emphasis on jointness and transformation and is likely to use BRAC to incorporate any force redeployments from overseas locations that may result from ongoing overseas basing reassessments. This suggests a need for caution in projecting the timing and amount of savings from a new BRAC round.

section_title: Letter
paragraphs: I am pleased to have the opportunity today to provide you with an  overview of our work involving the Department of Defense’s (DOD) base  realignment and closure (BRAC) process. The National Defense  Authorization Act for Fiscal Year 2002 extended the authority of the  Defense Base Closure and Realignment Act of 1990, with some  modifications, to authorize an additional BRAC round in 2005. The  legislation required, among other things, that DOD provide the Congress in  2004, as part of its fiscal year 2005 budget justification documents, a  discussion of categories of excess infrastructure and infrastructure  capacity, an economic analysis of the effects of BRAC, and a certification  that there is a need for an additional BRAC round in 2005 and that annual  net savings will be realized by each military department not later than  fiscal year 2011. If the required certifications are provided, GAO is  required to evaluate DOD’s submission and provide a report to Congress  with its assessment within 60 days. Finally, the legislation also retains the  requirement for GAO’s involvement in assessing the 2005 BRAC decision- making process by requiring that GAO provide the BRAC Commission and  congressional defense committees a detailed analysis of the Secretary of  Defense’s recommendations and selection process for the 2005 round, as  we have done during the previous four BRAC rounds.
My testimony today addresses (1) the BRAC process from a historical  perspective, (2) GAO’s role in the process, and (3) key issues DOD is  required to report on in preparation for the 2005 round. In preparing this  testimony, we relied on our prior work related to assessing BRAC  decision-making processes and the implementation of the previous four  rounds. Because DOD had not submitted its required 2004 report at the  time we completed this statement, this testimony relies on our prior work  that addressed issues associated with excess capacity, BRAC savings, and  economic impact. Any comments regarding the 2005 round will of  necessity be somewhat limited because of nondisclosure requirements in  place as DOD works toward the issuance of proposed realignment and  closure recommendations in May 2005. Our work was performed in  accordance with generally accepted government auditing standards.
subsections: section_title: Background
paragraphs: The National Defense Authorization Act for Fiscal Year 2002 extended the  authority of the Defense Base Closure and Realignment Act of 1990, with  some modifications, to authorize an additional BRAC round in 2005. The  legislation also required that DOD provide Congress in 2004, as part of its  budget justification documents, a 20-year force structure plan, a  worldwide infrastructure inventory, a description of the infrastructure  necessary to support the force structure plan, a discussion of categories of  excess infrastructure and infrastructure capacity, an economic analysis of  the effect of BRAC on reducing excess infrastructure, and a certification  that there is a need for BRAC in 2005 and that annual net savings will be  realized by each military department not later than fiscal year 2011. The  legislation also stipulated that if the certification is provided in DOD’s  submission to Congress, GAO is to prepare an evaluation of the force  structure plan, the infrastructure inventory, the final selection criteria, and  the need for an additional BRAC round, and to report to Congress not later  than 60 days after the force structure plan and the infrastructure inventory  are submitted to Congress.
The 2002 legislation also required the Secretary of Defense to publish in  the Federal Register the selection criteria proposed for use in the BRAC  2005 round and to provide an opportunity for public comment. The  proposed selection criteria were published on December 23, 2003, with a  public comment period ending January 30, 2004. The final criteria were  published on February 12, 2004.
section_title: Historical Context of BRAC
paragraphs: Closing unneeded defense facilities has historically been difficult because  of public concern about the economic effects of closures on communities  and the perceived lack of impartiality in the decision-making process.  Legislative restrictions effectively precluded bases from being closed  between 1977 and 1988. However, legislation enacted in 1988 supported  the tasking of a special commission chartered by the Secretary of Defense  to identify bases for realignment and closure and provided relief from  certain statutory provisions that had hindered DOD’s previous efforts.  With this legislation, a base realignment and closure round was initiated in  1988.
Congress later passed the Defense Base Closure and Realignment Act of  1990, which created an independent commission and authorized three  BRAC rounds in 1991, 1993, and 1995. The four commissions generated  499 recommendations—97 major closures, and hundreds of smaller base  realignments, closures, and other actions. However, DOD recognized at  the time it was completing its recommendations for the 1995 BRAC round  that excess infrastructure would remain after that round and that  additional closures and realignments would be needed in the future.  Subsequent Defense Science Board and Quadrennial Defense Review  studies, and others, echoed the need for one or more future additional  BRAC rounds, but congressional action to authorize a future BRAC round  did not occur for several years, in part because of concerns over how  some decisions were made in the 1995 BRAC round. Ultimately, the  National Defense Authorization Act for Fiscal Year 2002 extended the  authority of the Defense Base Closure and Realignment Act of 1990,  authorizing another round of base realignments and closures in 2005.
Some key requirements mandated by the 1990 act or procedures adopted  by DOD in implementing it to ensure the fairness and objectivity of the  base closing process include:    All installations must be compared equally against selection criteria  and a current force structure plan developed by the Secretary of  Defense.
Decisions to close military installations with authorization for at least  300 civilian personnel must be made under the BRAC process.  Decisions to realign military installations authorized for at least 300  civilian personnel that involve a reduction of more than 1,000, or 50  percent or more of the civilian personnel authorized, also must  undergo the BRAC process.
Selection criteria for identifying candidates for closure and realignment  must be made available for public comment before being finalized.
All components must use specific models for assessing (1) the cost and  savings associated with BRAC actions and (2) the potential economic  impact on communities affected by those actions.
Information used in the BRAC decision-making process must be  certified-–that is, certified as accurate and complete to the best of the  originator’s knowledge and belief. This requirement was designed to  overcome concerns about the consistency and reliability of data used  in the process.
An independent commission is required to review DOD’s proposed  closures and realignments and to finalize a list of proposed closures  and realignments to be presented to the President and, subject to the  President’s approval, to Congress.
The BRAC Commission is required to hold public hearings.
The BRAC process imposes specific time frames for completing  specific portions of the process (see app. I for time frames related to  the 2005 BRAC round).
The President and Congress are required to accept or reject the  Commission’s recommendations in their entirety.
In addition to GAO’s role in monitoring the BRAC process, service  audit agencies and DOD Inspector General (IG) personnel are  extensively involved in auditing the process to better ensure the  accuracy of data used in decision-making and enhance the overall  integrity of the process.
Our work in examining lessons learned from prior BRAC rounds found  general agreement that the prior legislation and the framework it outlined  served the process well, and general agreement that it should provide a  useful framework for a future round. That is not to say that the previous  process was perfect or entirely devoid of concerns over the role of politics  in the process. As we have previously noted, we recognize that no public  policy process, especially none as open as BRAC, can be completely  removed from the U.S. political system. However, the elements of the  process noted above provide several checks and balances to keep political  influences to a minimum. That said, the success of these provisions  requires that all participants of the process adhere to the rules and  procedures.
section_title: GAO Has Had a Long- standing Role in the BRAC Process
paragraphs: GAO has played a long-standing role in the BRAC process. As requested by  congressional committees (1988 BRAC round) or mandated by law since  1990, we have served as an independent and objective observer of the  BRAC process and have assessed and reported on DOD’s decision-making  processes leading up to proposed realignment and closure  recommendations in each of the four prior rounds. To make informed and  timely assessments, we have consistently operated in a real-time setting  since the 1991 BRAC round and have had access to significant portions of  the process as it has evolved, thus affording the department an  opportunity to address any concerns we raised on a timely basis. By  mandate, our role in the BRAC 2005 round remains the same, and we have  been observing the process since DOD began work on the 2005 round.  Finally, I also want to recognize the important role played by the DOD  Inspector General and the military services’ audit agencies in the BRAC  process.
GAO has been called upon to examine various issues associated with prior  BRAC rounds, including the one held in 1988. The 1990 BRAC legislation,  which governed the 1991, 1993, and 1995 rounds, specifically required that  we provide the BRAC Commission and Congress a detailed analysis of the  Secretary of Defense’s recommendations and selection process.  Legislation authorizing the 2005 BRAC round retained the requirement for  a GAO review of the Secretary’s recommendations and selection process,  with a report to the congressional defense committees required no later  than July 1, 2005, 45 days after the latest date by which the Secretary must  transmit to the congressional defense committees and the BRAC  Commission his recommendations for closures or realignments.
The tight time frame under which we have to report our findings on the  department’s BRAC selection process and recommendations necessitates  that we have access to the BRAC decision-making processes as they are  unfolding within DOD. During the past rounds, DOD and its components  have granted us varying degrees of access to their processes a year or  more in advance of the Secretary’s public release of his recommendations  for closures and realignments. This has greatly facilitated our ability to  monitor the process as it was unfolding and has provided us with  opportunities to address issues and potential problem areas during the  process. Furthermore, it has aided our ability to complete some detailed  analysis of individual recommendations in the time available after the  Secretary’s proposed closures and realignments were finalized and made  public.
We have been observing the 2005 BRAC process since DOD’s initial work  began on the 2005 round. From our vantage point, we are looking to see to  what extent DOD follows a clear, transparent, consistently applied  process, one where we can see a logical flow between DOD’s analysis and  its decision-making. Although we do not attend or participate in  deliberative meetings involving BRAC, we are permitted access to the  minutes of these meetings and to officials involved in the process.
I also want to acknowledge the key roles played by the DOD Inspector  General and service audit agencies to help ensure the accuracy of data  used in BRAC decision-making. These agencies play a front-line role in  checking the accuracy of data obtained in BRAC data calls, as well as  verifying data entries and output pertaining to the cost and analytical  models used as part of the BRAC process. They also identify and refer any  errors to defense components on a real-time basis, to facilitate corrective  actions. We coordinate regularly with these other audit agencies, and in  selected instances we observe the work of these audit agencies in  checking the data used as part of BRAC decision-making.
Another part of our role involves assessing and reporting on the status of  prior BRAC recommendations. These reports provide insights into the  long and tedious process of transferring unneeded base property to other  federal recipients and communities for future reuse. While the actual  closures and realignments of military bases in the prior rounds were  completed by 2001, the processes of environmental cleanup and property  transfer continue today and will most likely continue for several more  years. As of September 30, 2003, DOD data show that the department has  transferred over 280,000 acres of unneeded property to other users but has  about 220,000 acres that have yet to be transferred. While the progress of  property transfer varies among the affected bases and is dependent upon a  number of factors, our work has shown that environmental cleanup has  long been a key factor in slowing the transfer process. We are currently in  the process of updating our prior work on the implementation actions  associated with the prior BRAC rounds.
Our key BRAC reports, which can be accessed at www.gao.gov, are listed  in appendix II of this statement.
section_title: Observations on Key Issues DOD Is Required to Report on in Preparation for the 2005 Round
paragraphs: The legislation authorizing a BRAC round in 2005 also requires that DOD  provide information on a number of BRAC-related issues in 2004, and that  GAO report to Congress not later than 60 days after the department  submits this information to Congress. Since DOD has published its  selection criteria for the 2005 round, I can provide you with some  observations in that area. We expect to complete our full assessment of  other issues within 60 days of receiving DOD’s report. Therefore, I can  make only preliminary and general observations about some of the issues,  such as excess capacity, certification of annual net savings by 2011, and  economic impact.
subsections: section_title: Selection Criteria for 2005 BRAC Round Continue Sound Framework Used in Prior Rounds
paragraphs: The department’s final selection criteria essentially follow a framework  similar to that employed in prior BRAC rounds, with specificity added in  selected areas in response to requirements contained in the 2002  legislation. The 2002 legislation required that DOD give priority to military  value and consider (1) the impact on joint warfighting, training, and  readiness; (2) the availability and condition of training areas suitable for  maneuver by ground, naval, or air forces throughout diverse climates and  terrains, and staging areas for use by the armed forces in homeland  defense missions; and (3) the ability to accommodate contingency,  mobilization, and future force requirements. The legislation also required  DOD to give consideration to other factors, many of which replicated  criteria used in prior BRAC rounds. Further, the legislation required DOD  to consider cost impacts to other federal entities as well as to DOD in its  BRAC decision-making. Additionally, the National Defense Authorization  Act for Fiscal Year 2004 required DOD to consider surge requirements in  the 2005 BRAC process. Table 1 compares the 1995 BRAC criteria with  that adopted for 2005, with changes highlighted in bold.
Our analysis of lessons learned from prior BRAC rounds affirmed the  soundness of these basic criteria and generally endorsed their retention  for the future, while recognizing the potential for improving the process by  which the criteria are used in decision-making. Adoption of these criteria  adds an element of consistency and continuity in approach with those of  the past three BRAC rounds. The full analytical sufficiency of the criteria  will best be assessed through their application, as DOD completes its data  collection and analysis.
Notwithstanding our endorsement of the criterion framework, on January  27, 2004, we sent a letter to DOD that identified two areas where we  believed the draft selection criteria needed greater clarification in order to  fully address the special considerations called for in the 2002 legislation.  Specifically, we noted that the criterion related to costs and savings did  not indicate the department’s intention to consider potential costs to other  DOD activities or federal agencies that may be affected by a proposed  closure or realignment recommendation. Also, we noted that it was not  clear to what extent the impact of costs related to potential environmental  restoration, waste management, and environmental compliance activities  would be included in cost and savings analyses of individual BRAC  recommendations. We suggested that DOD could address our concerns by  incorporating these considerations either directly, in its final criteria, or  through later explanatory guidance. DOD decided to address our concerns  through clarifying guidance.
section_title: DOD’s Prior Analysis Provided a Rough Measure of Excess Base Capacity
paragraphs: DOD faced a difficult task in responding to a congressional mandate that it  report on excess capacity, without compromising the integrity of the 2005  BRAC process. In this regard, DOD opted to use a methodology that would  give some indication of excess capacity but would not be directly linked to  the capacity analysis being performed as part of the 2005 BRAC process.  DOD officials indicated that they would build on the approach they used in  their 1998 report to estimate excess base capacity and address other  BRAC issues. In November 1998, we reported that DOD’s analysis gave  only a rough indication of excess base capacity because it had a number of  limitations. In addition, the methodology did not consider any additional  excess capacity that might occur by looking at facilities or functions on a  cross-service basis, a priority for the 2005 round.
To estimate excess capacity in 1998, the military services and the Defense  Logistics Agency (DLA) compared capacity for a sample of bases in 1989  with projected capacity for a sample of bases in 2003, after all scheduled  BRAC actions were completed. The services and DLA categorized the  bases according to their primary missions, and they defined indicators of  capacity, or metrics, for each category. Varied metrics were used to depict  capacity. For example, metrics included maneuver acres per brigade for  Army training bases, square feet of parking apron space for active and  reserve Air Force bases, or capacity direct labor hours as compared with  budgeted or programmed direct labor hours for Navy aviation depots.  DOD officials are building on this methodology to compare 1989 data with  more recent data in order to estimate current excess capacity as a means  of meeting their 2004 reporting requirement.
That methodology, while providing an indication of excess capacity, has a  number of limitations that make it difficult to be precise when trying to  project a total amount of excess capacity across DOD. In addition to the  factors already noted, GAO and the Congressional Budget Office  previously reported that by using 1989 as a baseline DOD did not take into  account the excess capacity that existed in that year, which was prior to  the base closures of the prior four rounds. As a result, the percentage of  excess increased capacity reported may be understated or overstated for  functional areas considered. Furthermore, the Congressional Budget  Office reported that the approach could understate the capacity required if  some types of base support were truly a fixed cost, regardless of the size  of the force. Another limitation of DOD’s methodology is that each  installation could be counted only in one category even though it might  have multiple functions. For example, an Air Force base that has a depot  and a fighter wing could only be categorized in one functional area.
While the prior BRAC rounds have focused solely on reducing excess  capacity, DOD officials have stated this is not the sole focus of the 2005  BRAC round. DOD officials have noted that the 2005 round aims to further  transform the military by rationalizing base infrastructure to the force  structure, enhancing joint capabilities and seeking crosscutting solutions  and alternatives for common business-oriented support functions, as well  as eliminating excess capacity. A complete assessment of capacity and  opportunities to reduce it must await the completion of DOD’s ongoing  official analyses under BRAC 2005. Nevertheless, we believe sufficient  indicators of excess capacity exist, as well as opportunities to otherwise  achieve greater efficiencies in operations, to justify proceeding with the  upcoming round.
section_title: Certification of BRAC 2005 Round Annual Net Savings by 2011
paragraphs: DOD financial data indicate that the department has generated net savings  of about $17 billion through fiscal year 2001—the final year of the prior  BRAC rounds—-and is accruing additional, annually recurring savings of  about $7 billion thereafter. We have consistently affirmed our belief that  the prior BRAC rounds have generated substantial net savings—primarily  in the form of future cost avoidances—for the department. While these  amounts are substantial, we have, at the same time, viewed these savings  estimates as imprecise for a variety of reasons, such as weaknesses in  DOD’s financial management systems that limit its ability to fully account  for the costs of its operations; the fact that DOD’s accounting systems, like  other accounting systems, are oriented to tracking expenses and  disbursements, not savings; the exclusion of BRAC-related costs incurred  by other agencies; and inadequate periodic updating of the savings  estimates that are developed. DOD, in its 1998 report to Congress,  indicated that it had plans to improve its savings estimates for the  implementation of future BRAC rounds. We have also recommended that  DOD improve its savings estimates for future BRAC rounds, such as the  2005 round. DOD has not yet acted on our recommendation, but DOD  officials told us that they intend to implement a system to better track  savings for the upcoming round.
As required by the fiscal year 2002 legislation, DOD is required to certify  for the upcoming 2005 BRAC round that it will achieve “annual net  savings” for each military department by 2011. Using precise terminology  is critical in statements regarding BRAC savings, because it can make a big  difference in specifying when savings will actually occur and the nature of  those savings. According to DOD officials, “annual net savings” essentially  refer to the estimated savings that are generated from BRAC in a given  year that are greater than the costs incurred to implement BRAC decisions  in that same year.
Another way of looking at net savings is to consider the point at which  cumulative savings exceed the cumulative costs of implementing BRAC  decisions over a period of years. Experience has shown that the  department incurs significant upfront investment costs in the early years  of a BRAC round, and it takes several years to fully offset those cumulative  costs and begin to realize cumulative net savings. The difference in the  terminology is important to understand because it has a direct bearing on  the magnitude and assessment of the savings at any given time. For  example, as shown in table 2, initial annual net savings reported by the  department as a whole in the 1995 BRAC round did not begin to occur  until fiscal year 2000, or the fifth year of implementation; in each of the  prior years, the costs had exceeded the estimated savings.
On the other hand, as shown in table 2, there were no cumulative net  savings as of fiscal year 2001, the sixth and final year of BRAC  implementation. Cumulative net savings did not occur in this case until  fiscal year 2002, based on DOD’s data.
DOD financial data suggest that, assuming conditions similar to those of  the 1993 and 1995 rounds, annual net savings for each of the military  departments for the 2005 round could be achieved by 2011—that is, by  2011 savings could exceed closure-related costs for that year. While we  believe that the potential exists for significant savings to result from the  2005 BRAC round, we are not in a position to say conclusively at this point  to what extent DOD will realize annual net savings by 2011. In addition to  the imprecision of DOD’s data, there simply are too many unknowns at  this time, such as the specific timing of individual closure or realignment  actions that affect savings estimates and the implementation costs that  may be required. The savings to be achieved depend on the circumstances  of the various recommended closures and realignments as put forth by the  2005 BRAC Commission and on the implementation of those  recommendations. Further, DOD has gone on record stating that the  upcoming round is more than just an exercise of trimming its excess  infrastructure. DOD is also seeking to maximize joint utilization and  further its transformation efforts. To what extent these goals may affect  savings is also unknown at this point. And finally, to what extent forces  that are currently based overseas may be redeployed to the United States  and what effect that redeployment may have on BRAC and subsequent  savings remain unknown as well.
Notwithstanding the issues we raise that could affect savings, and the  point at which savings would exceed the costs associated with  implementing recommendations from a 2005 BRAC round, we continue to  believe that it is vitally important for DOD to improve its mechanisms for  tracking and updating its savings estimates. DOD, in its 1998 report to  Congress on BRAC issues, cited proposed efforts that, if adopted, could  provide for greater accuracy in the estimates. Specifically, the department  proposed to develop a questionnaire that each base affected by future  BRAC rounds would complete annually during the 6-year implementation  period. Those bases that are closing, realigning, or receiving forces  because of BRAC would complete the questionnaire. DOD would request  information on costs, personnel reductions, and changes in operating and  military construction costs in order to provide greater insight into the  savings created by each BRAC action. DOD suggested that development of  such a questionnaire would be a cooperative effort involving the Office of  the Secretary of Defense, the military departments, the defense agencies,  the Office of the DOD Inspector General, and the service audit agencies.  This proposal recognizes that better documentation and updating of  savings will require special efforts parallel to the normal budget process.  We strongly endorse such action. If the department does not take steps to  improve its estimation of savings in the future, then previously existing  questions about the reliability, accuracy, and completeness of DOD’s  savings estimates will likely continue. We intend to examine DOD’s  progress in instituting its proposed improvements during our review of the  2005 BRAC process.
section_title: Most Affected Communities Are Recovering from BRAC Actions
paragraphs: While the short-term impact can be very traumatic, several factors, such as  the strength of the national and regional economies, play a role in  determining the long-term economic impact of the base realignment or  closure process on communities. Our work has shown that recovery for  some communities remains a challenge, while other communities  surrounding a base closure are faring better. Most are continuing to  recover from the initial economic impact of a closure, allowing for some  negative effect from the economic downturn in recent years.
Our analysis of selected economic indicators has shown over time that the  economies of BRAC-affected communities compare favorably with the  overall U.S. economy. We used unemployment rates and real per capita  income rates as broad indicators of the economic health of those  communities where base closures occurred during the prior BRAC rounds.  We identified 62 communities surrounding base realignments and closures  from all four BRAC rounds for which government and contractor civilian  job losses were estimated to be 300 or more.
We previously reported that as of September 2001, of the 62 communities  surrounding these major base closures, 44 (71 percent) had average  unemployment rates lower than the (then) average 9-month national rate  of 4.58 percent. We are currently updating our prior assessments of  economic recovery, attempting to assess the impact of the recent  economic downturn on affected BRAC communities we had previously  surveyed. What we are seeing is that, in keeping with the economic  downturn in recent years, the average unemployment rate in 2003  increased for 60 of the 62 communities since 2001. However, the year 2003  unemployment rate data indicated that the rates for many of these BRAC  communities continue to compare favorably with the U.S. rate of 6.1  percent. That is, 43 (69 percent) of the communities had unemployment  rates at or below the U.S. rate.
As with unemployment rates, we had also previously reported that annual  real per capita income growth rates for BRAC-affected communities  compared favorably with national averages. From 1996 through 1999, 53  percent, or 33, of the 62 areas had an estimated average real per capita  income growth rate that was at or above the average of 3.03 percent for  the nation at that time. Data included in our 2002 report were the latest  available at that time, recognizing time lags in data availability. Our recent  analysis has also noted that changes in the average per capita income  growth rate of affected communities over time compared favorably and  were similar to corresponding changes at the national level. Our more  recent analysis indicates that 30 of the 62 areas examined (48.4 percent),  had average income growth rates higher than the average U.S. rate of 2.2  percent between 1999 and 2001, which represents a drop from the rate  during the previous time period.
We have previously reported on our discussions with various community  leaders who felt the effects of base closures. These discussions identified a  number of factors affecting economic recovery from base closures,  including:  robustness of the national economy,    diversity of the local economy,   regional economic trends,    natural and labor resources,   leadership and teamwork,    public confidence,    government assistance, and   reuse of base property.
If history is any indicator, these factors are likely to be equally applicable  in dealing with the effects of closures and realignments under BRAC 2005.
This concludes my statement. I would be pleased to answer any questions  you or other Members of the Subcommittee may have at this time.
For further information regarding this statement, please contact Barry W.  Holman at (202) 512-8412. Individuals making key contributions to this  statement include Paul Gvoth, Michael Kennedy, Warren Lowman, Tom  Mahalek, David Mayfield, James Reifsnyder, Cheryl Weissman, and Dale  Wineholt.
section_title: Appendix II: Key GAO Reports on DOD’s Base Realignments and Closures
paragraphs: U.S. General Accounting Office, Military Base Closures: Better Planning  Needed for Future Reserve Enclaves (GAO-03-723, June 27, 2003).
U.S. General Accounting Office, Military Base Closures: Progress in  Completing Actions from Prior Realignments and Closures (GAO-02-433,  Apr. 5, 2002).
U.S. General Accounting Office, Military Base Closures: Overview of  Economic Recovery, Property Transfer, and Environmental Cleanup  (GAO-01-1054T, Aug. 28, 2001).
U.S. General Accounting Office, Military Base Closures: DOD’s Updated  Net Savings Estimate Remains Substantial (GAO-01-971, July 31, 2001).
U.S. General Accounting Office, Military Bases: Status of Prior Base  Realignment and Closure Rounds (GAO/NSIAD-99-36, Dec. 11, 1998).
U.S. General Accounting Office, Military Bases: Review of DOD’s 1998  Report on Base Realignment and Closure (GAO/NSIAD-99-17, Nov. 13,  1998).
U.S. General Accounting Office, Military Bases: Lessons Learned From  Prior Base Closure Rounds (GAO/NSIAD-97-151, July 25, 1997).
U.S. General Accounting Office, Military Bases: Closure and  Realignments Savings Are Significant, but Not Easily Quantified  (GAO/NSIAD-96-67, Apr. 8, 1996).
U.S. General Accounting Office, Military Bases: Analysis of DOD’s 1995  Process and Recommendations for Closure and Realignment  (GAO/NSIAD-95-133, Apr. 14, 1995).
U.S. General Accounting Office, Military Bases: Analysis of DOD’s  Recommendations and Selection Process for Closures and Realignments  (GAO/NSIAD-93-173, Apr. 15, 1993).
U.S. General Accounting Office, Military Bases: Observations on the  Analyses Supporting Proposed Closures and Realignments (GAO/NSIAD- 91-224, May 15, 1991).
U.S. General Accounting Office, Military Bases: An Analysis of the  Commission’s Realignment and Closure Recommendations  (GAO/NSIAD-90-42, Nov. 29, 1989).
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