Defense Infrastructure: Documentation Lacking to Fully Support How DOD Determined Specifications for the Landstuhl Replacement Medical Center
Published: 2012-05-25T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Landstuhl Regional Medical Center (LRMC) is DODs only tertiary medical center in Europe that provides specialized care for servicemembers, retirees, and their dependents. Wounded servicemembers requiring critical care are medically evacuated from overseas operations to the 86th Medical Group clinic at Ramstein Air Base to receive stabilization care before being transported to LRMC for intensive care. According to DOD, both facilities were constructed in the 1950s and are undersized to meet current and projected workload requirements. DOD plans to consolidate both facilities into a single medical center at an estimated cost of $1.2 billion. In this report, GAO (1) describes how DOD considered changes in posture and the beneficiary population when developing facility requirements, (2) assesses DODs process for determining facility requirements, and (3) reviews DODs process to develop the facilitys cost estimate. GAO examined posture planning documentation, beneficiary demographic data, plans for the replacement medical center, and relevant DOD guidance, as well as interviewed relevant DOD officials.
section_title: What GAO Found
paragraphs: Department of Defense (DOD) officials considered current beneficiary population data, contingency operations, and most of the expected changes in troop strength when planning for the replacement medical center. However, recently announced posture changes in January 2012 have yet to be assessed for their impact on the facility. DOD estimates that the replacement medical center will provide health care for nearly 250,000 beneficiaries. A majority of those who are expected to receive health care from the center come from within a 55-mile radius of the facility. DOD officials told us that because the replacement medical center was designed for peacetime operationswith the capacity to expand to meet the needs of contingency operationsreductions in ongoing contingency operations in Afghanistan would not have an impact on facility requirements. At the time of this review, DOD officials said they were in the process of assessing proposed changes in posture to better understand their possible impact on the sizing of the replacement medical center.
DOD officials incorporated patient quality of care standards as well as environmentally friendly design elements in determining facility requirements for the replacement medical center. DOD also determined the size of the facility based on its projected patient workload. Internal control standards require the creation and maintenance of adequate documentation, which should be clear and readily available for examination to inform decision making. However, GAOs review of the documentation DOD provided in support of its facility requirements showed (1) inconsistencies in how DOD applied projected patient workload data and planning criteria to determine the appropriate size for individual medical departments, (2) some areas where the documentation did not clearly demonstrate how planners applied criteria to generate requirements, and (3) calculation errors throughout. Without clear documentation of key analysesincluding information on how adjustments to facility requirements were madeand without correct calculations, stakeholders and decision makers lack reasonable assurances that the replacement medical center will be appropriately sized to meet the needs of the expected beneficiary population in Europe.
DODs process for developing the approximately $1.2 billion cost estimate for the replacement medical center was substantially consistent with many cost estimating best practices, such as cross-checking major cost elements to confirm similar results. However, DOD minimally documented the data sources, calculations, and estimating methodologies it used in developing the cost estimate. Additionally, DOD anticipates that the new facility will become the hub of a larger medical-services-related campus, for which neither cost estimates nor time frames have yet been developed. Without a cost estimate for the facility that includes detailed documentation, DOD cannot fully demonstrate that the proposed replacement medical center will provide adequate health care capacity at the current estimated cost. Further, DOD and Congress may not have the information they need to make fully informed decisions about the facility.
section_title: What GAO Recommends
paragraphs: GAO recommends that DOD provide clear and thorough documentation of how it determined the facilitys size and cost estimate, correct any calculation errors, and update its cost estimate to reflect these corrections and recent posture changes. In commenting on a draft of this report, DOD concurred with GAOs recommendations and stated that it has conducted a reassessment of the project that will be released once approved by the Secretary of Defense.

section_title: Letter
paragraphs: The Army’s Landstuhl Regional Medical Center (LRMC), in Germany, is  the Department of Defense’s (DOD) only tertiary care medical center in  the European Command (EUCOM) area of responsibility. As a tertiary  care center, LRMC provides specialized diagnostic and treatment  services, such as cardiology and neurosurgery, which are not available at  all medical facilities that provide acute inpatient care, for approximately  248,000 beneficiaries, including servicemembers and their families as  well as retirees and their families. Wounded servicemembers requiring  critical care are medically evacuated from overseas operations—including  Afghanistan—to Ramstein Air Base where the 86th Medical Group (MDG)  provides them immediate stabilization care on the flight line and then  transports them directly to LRMC for definitive care.
Both of these facilities were initially constructed in the 1950s and  according to DOD are deficient in meeting the department’s life safety  and force protection requirements, are out of compliance with many  building codes, have limited room in which to expand or renovate, and are  undersized to meet current and projected patient workload requirements.  In 2008, DOD approved plans to renovate and reconstruct the two  facilities at their existing locations. In 2009, the Senate Appropriations  Committee directed the department to complete a site assessment and  conduct a cost-benefit analysis on the proposed location for the  replacement medical center. The Office of the Deputy Under Secretary  of Defense (Installations and Environment) conducted an analysis, which  determined that consolidating the two facilities at one location, at a total  estimated cost of $1.2 billion, would be more efficient and cost-effective  than renovating both at their current locations. In January 2012, DOD  completed the initial design phase of the replacement medical center.  However, in December 2011, the Consolidated Appropriations Act, 2012,  required that among other things, the Secretary of Defense recertify to the  Appropriations Committees in writing that the replacement medical center  was properly sized and scoped to meet current and projected health care  requirements. During the course of our review, DOD was in the process  of conducting this recertification.
DOD is also in the process of reassessing its force structure plans for  Europe and is planning to reduce the number of brigade combat teams  and the size of the military service component commands in Europe,  among other things. Adjustments to DOD posture, in combination with the  construction of a new medical center, have raised questions about the  appropriate size for the replacement facility as well as the types of  services it is to provide. Your subcommittee asked GAO to review DOD’s  plans for the replacement medical center, including how DOD determined  the appropriate size for the facility and the types of services it will need to  provide. In response, this report (1) describes how DOD officials  considered potential changes to DOD’s posture in Europe—and their  possible effect on the beneficiary population—when developing facility  requirements for the replacement medical center, (2) assesses DOD’s  process for determining facility requirements for the replacement medical  center to determine to what extent it incorporated recently developed  quality standards into the facility’s design and adhered to DOD guidance,  and (3) reviews the process used to develop the cost estimate for the  facility to determine to what extent DOD followed established best  practices for developing its cost estimate.
To describe how DOD officials considered potential changes to DOD’s  posture in Europe—and their possible effect on the beneficiary  population—when developing facility requirements for the replacement  medical center, we obtained available posture planning documentation,  including population estimates, and compared it with the beneficiary  population data used in planning assumptions for the replacement  medical center. We met with officials from the Offices of the Assistant  Secretary of Defense (Health Affairs) and the Deputy Under Secretary of  Defense (Installations and Environment), EUCOM, U.S. Army Europe,  and U.S. Air Forces Europe to gain insight into possible scenarios that  are being considered for posture changes in Europe. We also discussed  with these officials the steps they had taken to ensure the reasonable  accuracy of DOD beneficiary data and determined that the data  specifically related to the proposed replacement medical center were  sufficiently reliable for the purposes of this report.
To assess DOD’s process for determining facility requirements for the  replacement medical center to determine to what extent it incorporated  quality standards into its design and adhered to DOD guidance, we  obtained and reviewed documentation used to develop plans for the  proposed replacement medical center, such as health care requirements  analyses and facility designs. We also reviewed relevant  documentation—including checklists—to determine whether DOD  included quality and environmentally friendly standards. We also  identified key assumptions used to determine facility requirements for the  replacement medical center and obtained and reviewed applicable legal  and departmental guidance, including DOD instructions and directives,  and compared them with the documented assumptions and methods  used to develop the facility’s requirements. We also met with medical and  construction planners at the Office of the Assistant Secretary of Defense  (Health Affairs), the TRICARE Management Activity, U.S. Army Medical  Command, LRMC, the Air Force Medical Support Agency, and the 86th  MDG to discuss how they determined the size of the replacement medical  center.
To review the process used to develop the cost estimate for the facility to  determine to what extent DOD followed established best practices for  developing its cost estimate, we obtained and reviewed available cost  estimates for the proposed replacement medical center, as well as  supporting documentation. We evaluated this information using GAO’s  standardized methodology of cost estimating best practices. We  determined whether technical baseline documentation exists and is  reflected in the estimate. We also discussed project costs with officials  from the Office of the Assistant Secretary of Defense (Health Affairs), the  TRICARE Management Activity, and the U.S. Army Corps of Engineers,  among others.
We conducted this performance audit from July 2011 through May 2012  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. Further details on our scope  and methodology can be found in appendix I.
subsections: section_title: Background
paragraphs: The Military Health System operated by DOD is large and complex and  has a dual health care mission—readiness and benefits. The readiness  mission provides medical services and support to the armed forces during  contingency operations and involves deploying medical personnel and  equipment, as needed, around the world to support military forces. The  benefits mission provides medical services and support to members of  the armed forces, their family members, and others eligible for DOD  health care, such as retired servicemembers and their families. DOD’s  health care mission is carried out directly through military medical  centers, hospitals, and clinics throughout the United States and overseas,  commonly referred to as military treatment facilities, as well as by civilian  health care providers through TRICARE. Military treatment facilities make  up DOD’s direct care system for providing health care to beneficiaries.
DOD’s delivery of health care services includes, among other things,  inpatient and outpatient care. Inpatient care refers to care for a patient  who is formally admitted to a hospital or an institution for treatment, or  care. Outpatient care, also known as ambulatory care, refers to health  care services for an actual or potential disease, injury, or lifestyle-related  problem that does not require admission to a medical treatment facility for  inpatient care.
The Assistant Secretary of Defense (Health Affairs) is responsible for  ensuring the effective execution of DOD’s health care mission and  exercises authority, direction, and control over medical personnel  authorizations and policy, facilities, funding, and other resources within  DOD. The TRICARE Management Activity operates under the authority,  direction, and control of Health Affairs.
In 2008, the TRICARE Management Activity approved plans to renovate  LRMC and the 86th MDG clinic at their existing locations. The initial  LRMC plans included renovation of the inpatient tower; construction of an  additional tower for emergency medicine, inpatient nursing units, and  other clinical and support activities; and demolition of older facilities. The  initial plans for the 86th MDG clinic included construction of a single  building to consolidate health care services provided at separate facilities  that currently make up the 86th MDG clinic. In 2009, the Office of the  Deputy Under Secretary of Defense (Installations and Environment),  together with Health Affairs, conducted a cost-benefit analysis that  included consideration of alternative sites as well as consolidation of the  two projects into a single medical center, and determined that  consolidating the aging LRMC and 86th MDG clinic into one new facility  that provides tertiary care in an area adjacent to Ramstein Air Base,  known as the Weilerbach Storage Area, would be more efficient and cost- effective than pursuing two separate renovation or reconstruction  projects. The replacement medical center will be operated and  maintained by the Army, with the Air Force to provide clinical services that  are currently offered at the 86th MDG clinic.
subsections: section_title: Facility Requirements Process
paragraphs: The version of DOD’s guidance governing the planning and acquisition of  military health facilities (DOD Instruction 6015.17) that was in effect when  the facility requirements for the replacement medical center were  determined in 2010 described the procedures to be used by the military  departments to prepare project proposals for military treatment facilities.  This instruction also identified the types of documentation needed to  support a project proposal. The documentation includes, among other  things, the current and projected beneficiary population served in a  military treatment facility’s catchment area, as well as current and  projected staffing and workload data. Army Medical Command, with  input from the Air Force Medical Support Agency, developed a report that  summarizes the projected health care requirements for Military Health  System beneficiaries in the areas served by the proposed medical  center. Generally, the combination of workload data and staffing  requirements are key considerations for determining the size and  configuration of military treatment facilities. These facility space  requirements are identified in a Program for Design document, which lists  square footage requirements per medical department and room. The  estimated square footage is then used as the basis for developing overall  project cost estimates as reflected on DD Form 1391 (Military  Construction Project Data), the standard format used throughout DOD to  support the planning and execution of military construction projects.  Figure 1 provides an illustration of the process used in determining  project costs for the replacement medical center.
section_title: DOD Considered Beneficiary Data, Contingency Operations, and Posture Changes in Sizing Its Replacement Medical Center but Has Not Assessed More Recent Posture Changes
paragraphs: In planning for the proposed replacement medical center, DOD officials  considered beneficiary population data, contingency operations, and  changes or expected changes in troop strength known at the time.  However, more recent posture changes, announced in January 2012, are  currently being assessed by military medical officials for their impact on  the replacement medical center. DOD used beneficiary population data  as of March 2010 and data on historical patterns of patient migration to  identify the areas served by the proposed replacement medical center. A  majority of the beneficiaries expected to receive health care from the  replacement medical center are located within a 55-mile radius of it. DOD  officials told us that because the replacement medical center was  designed for peacetime operations—with the capacity to expand to meet  the needs of contingency operations—reductions in ongoing contingency  operations in Afghanistan would not have an impact on facility   DOD posture in Europe has been reduced over the past  requirements.few years, and DOD had previously announced that one of four brigade  combat teams currently stationed in Europe would be removed by 2015.  According to DOD officials, this posture change was not expected to have  a significant impact on the size of the replacement medical center  because DOD plans to continue to use the facilities at Baumholder,  Germany, which will be vacated by the brigade combat team, for other  DOD personnel. In January 2012, DOD announced its decision to remove  a second brigade combat team currently stationed in Europe, thereby  reducing the remaining number of brigade combat teams in Europe to  two—one stationed in Germany and the other in Italy. At the time of our  review, DOD officials told us that they were in the process of assessing  these proposed changes in posture to better understand their  ramifications for DOD’s medical facility needs.
subsections: section_title: Beneficiary Population Areas Are Defined Using Historical Patterns of Patient Migration
paragraphs: The replacement medical center will serve as the only tertiary-level  referral hospital for the EUCOM, Central Command, and Africa Command  theaters of operation. Because of these unique aspects, according to  medical planners they did not use typical DOD catchment area standards.  Military treatment facilities are typically designed to offer sufficient health  care for active duty beneficiaries and their dependents within a 40-mile  radius of the military treatment facility. In the case of LRMC, medical  planners determined that the historical patterns of care indicated that this  area should be a 55-mile radius. Medical planners in the Office of the  Secretary of Defense, the Army, and the Air Force analyzed historical  patterns of patient migration and contingency operations at LRMC and  the 86th MDG to define four catchment areas. See figure 2 for the  location of these four catchment areas.
The four catchment areas, as defined by military medical planners, are  based on populations of patients who are enrolled as beneficiaries or who  are eligible to enroll for the following locations:  1.  The Kaiserslautern Military Community catchment area includes all  beneficiaries enrolled in LRMC, 86th MDG, and Kleber/Kaiserslautern  military treatment facilities. This catchment area is approximately 55- miles in radius surrounding the proposed facility’s site.  2.  The Germany-wide catchment area includes all beneficiaries enrolled  in the Kaiserslautern Military Community catchment area plus  beneficiaries enrolled in the military treatment facilities in Germany.  This catchment area definition was essential in determining the  patterns of enrolled beneficiaries’ use of German health care.3.  The Europe Regional Medical Command catchment area includes all  beneficiaries in the Germany-wide catchment area plus beneficiaries  enrolled in all military treatment facilities in Italy and Belgium. This  catchment area reflects historical inpatient referral patterns at LRMC.  4.  The EUCOM catchment area includes all enrolled beneficiaries and  eligible beneficiaries in Europe, including all beneficiaries in the other  three catchment areas.
Table 1 shows the beneficiary population, by catchment area and  beneficiary category, as of March 2010. In appendix II we include  catchment area populations by beneficiary category, for fiscal years 2006    through 2011.
According to DOD officials, the flow of patients from theaters of operation,  including contingency operations, minimally affects the volume of  inpatient care at LRMC and outpatient care at both LRMC and 86th MDG.  Table 2 shows that approximately half of all inpatient care at LRMC, a  little more than 77 percent of outpatient care at LRMC, and almost 96  percent of outpatient care at the 86th MDG is provided to beneficiaries  located within the Kaiserslautern Military Community catchment area as  well as the Germany-wide catchment area.
According to DOD officials, the replacement medical center is being sized  for peacetime operations, not for contingency operations. However, these  officials told us that the replacement medical center is being designed  with the flexibility to expand capacity during surges to be able to handle  casualties that result from contingency operations.
DOD officials determined that the replacement medical center should be  able to accommodate contingency operations’ medical needs similar to  those experienced in Fallujah, Iraq, during November 2004, in which the  United States sustained about 100 casualties and 600 wounded over a 2- month period. For this reason, the new medical center is designed to be  able to nearly double its medical/surgical bed capacity if needed to  support contingency operations.
According to Army officials, to mitigate the increase in patient workload  resulting from surges caused by contingency operations, the new medical  center will follow the procedures currently in use at LRMC. These  procedures require that priority be given to active duty servicemembers,  and therefore, other beneficiaries normally treated at LRMC would be  directed to German health care facilities during a time when surge  capability is needed (and capacity is constrained) and then redirected  back to LRMC when the workload from contingency operations lessens.
section_title: Earlier Posture Reduction Decisions Not Expected to Affect Replacement Medical Center Size, but More Recent Posture Changes Have Yet to Be Evaluated
paragraphs: DOD has been reducing its military posture in Europe since German  reunification in 1990. At its peak, the United States had approximately  350,000 active duty servicemembers stationed in EUCOM’s area of  responsibility. The size of DOD’s military posture in EUCOM’s area of  responsibility is currently estimated at about 78,000 active duty  servicemembers. DOD has been reducing its medical treatment capacity  over time to correspond to the reduction in the number of military  servicemembers stationed in Europe. Today, LRMC is DOD’s only  remaining tertiary care medical center in Europe. Furthermore, it is the  only medical center in Europe, Asia, or Africa that serves beneficiaries  from the EUCOM, Central Command, Africa Command, and Special  Operations Command areas of responsibility.
In 2004, DOD announced its plans for an overseas basing strategy that  called for reducing the number of Army brigade combat teams stationed  in Europe from four to two. However, in the February 2010 Quadrennial  Defense Review, DOD decided that it would retain all four Army brigade  combat teams in Europe, rather than returning two to the United States as  originally planned. Moreover, in April 2011, based on several factors,  including consultations with allies and the findings of the North Atlantic  Treaty Organization's new Strategic Concept, DOD announced that it  planned to remove by 2015 only a single brigade combat team from  Europe. According to DOD officials, the brigade they anticipated removing  from Europe was stationed at U.S. Army Garrison (USAG) Baumholder,  Germany, initially leaving brigades at USAG Grafenwoehr and USAG  Vilseck, which are located close to one another in Germany and at USAG  Vicenza, Italy. There are also elements of the Grafenwoehr brigade at  USAG Schweinfurt, Germany.  DOD also has plans to eventually close  four Army locations in Germany—Heidelberg, Mannheim, Bamberg, and  Schweinfurt. As a result of these closures, the elements of the  Grafenwoehr brigade at Schweinfurt were expected to move to  Grafenwoehr when Schweinfurt closed. As of the date of this report, the  four brigade combat teams are still assigned at their original locations in  EUCOM. The April 2011 announcement also included a DOD decision to  station four Aegis Cruisers in Spain, a change that would increase the  military beneficiary population in Europe. Figure 3 shows the locations of  DOD military installations in Europe where posture changes are expected  to take place that could affect the facility requirements for the  replacement medical center.
The brigade combat team currently located at Baumholder is within the  Kaiserslautern Military Community catchment area and is expected to  reduce the beneficiary population when it leaves. According to Army  officials, the brigade consists of approximately 4,200 soldiers, who are  accompanied by about 6,300 dependents. However, according to DOD  officials, when this brigade leaves Baumholder other DOD personnel will  be restationed there because Baumholder is considered an enduring  installation with accessible joint military training facilities nearby. Army  officials also told us that because some of the housing at Baumholder is  substandard, they expect only 2,300 to 3,500 servicemembers to move to  Baumholder. Using the Army ratio of 1.5 dependents to each military  member indicates that as approximately 10,500 servicemembers and  their dependents who are medical beneficiaries of LRMC leave the  catchment area, they will be replaced by 5,750 to 8,750 new  servicemembers and their dependents—an overall reduction in the  Kaiserslautern Military Community catchment area of from 4,750 to 1,750  beneficiaries.
DOD officials told us that even though the beneficiary population at  Baumholder will be reduced, they expect this change to have little impact  on the workload and sizing requirements for the replacement medical  center. In October 2009, DOD hired an independent contractor, Noblis, to  perform a sensitivity analysis that would provide an order of magnitude  estimate of potential changes to the beneficiary population that would  need to occur to affect the size of the facility. This sensitivity analysis was further refined and updated in 2010. It specifically assessed the type  of population changes that would require the addition or subtraction of  intensive-care unit (ICU) and medical/surgical beds, as well as specialty  care exam rooms for outpatients. The analysis concluded that the  planned capacities for the replacement medical center would be resilient  to sizable changes in the population served.
A population change of up to 70,000 beneficiaries—a change in the  total EUCOM beneficiary population of about 29 percent—would  necessitate resizing of the requirements for ICU or medical/surgical  beds by the addition or subtraction of a 20-bed module.
A population change of 25,000 to 31,000 beneficiaries—a change in  the total EUCOM beneficiary population of between 10 percent and 13  percent would necessitate re-sizing requirements for specialty care  exam rooms by the addition or subtraction of an 8 to 10 exam room  module.
DOD officials told us that changes in the beneficiary population are  expected to occur in the EUCOM catchment area through 2015. Although  some of these changes will increase the population in certain locations,  the overall change will be a reduction in the overall number of  beneficiaries in EUCOM’s area of responsibility. The following beneficiary  changes are expected:
The Army expects a reduction in the Europe Regional Medical  Command’s active duty servicemembers and their dependents’  population of about 21,000—a reduction in the total EUCOM  beneficiary population by about 8 percent—by fiscal year 2015,  according to the Updated (FY10) Health Care Requirements  Analysis. However, it does not expect a significant change to the  beneficiary population in the immediate Kaiserslautern Military  Community catchment area.
The Air Force does not expect a change in its beneficiary population  through fiscal year 2015.
The Navy expects to gain about 1,200 sailors from the stationing of  the Aegis Cruisers in Rota, Spain, along with about 1,300 additional  dependents—for a total increase of about 2,500 beneficiaries, or a 1  percent gain in the total EUCOM beneficiary population.
Based on the results of DOD’s 2009 sensitivity analysis, the expected  changes would not necessitate a change in the number of ICU beds,  medical/surgical beds, or outpatient exam rooms.
In January 2012, however, DOD announced new posture decisions that  will further reduce EUCOM’s troop strength. According to DOD, these  posture decisions are part of a deficit reduction package based on the  Budget Control Act of 2011 requirement to reduce the department’s  future expenditures by approximately $487 billion over the next decade.  EUCOM data indicate that by 2015 approximately 71,500 active duty  military servicemembers will remain in Europe following the latest  changes to DOD’s European posture.
According to the January 2012 DOD publication Defense Budget  Priorities and Choices, DOD has updated its April 2011 plans for its  European basing strategy and has stated that it intends to now remove  two brigade combat teams from Europe. These two brigades are currently located at Baumholder and Grafenwoehr with elements of the  brigade in Grafenwoehr located in Schweinfurt. As a result, the elements  in Schweinfurt will not relocate to Grafenwoehr as previously planned.
DOD’s decision to remove two brigades from Europe and how this shift in  troop numbers will affect health care requirements in the EUCOM area of  responsibility have yet to be fully determined. However, DOD officials  noted that they did not believe the removal of a second brigade combat  team would affect the beneficiary population of the replacement medical  center because the second brigade is currently stationed outside the  immediate Kaiserslautern Military Community catchment area. DOD  officials told us that they have started a review to confirm that the shift in  DOD posture will not affect the requirements for the proposed  replacement medical center. They noted that recent troop reductions are  being studied to determine what impact, if any, they will have on the  proposed size of the replacement medical center. They also noted that  they are developing a sensitivity analysis to accommodate the information  and will include it as part of DOD’s statutorily required recertification of  the facility. As of the date of this report, they had not completed the study  because along with the recertification, DOD must also submit a plan for  implementing GAO’s recommendations with respect to the LRMC facility.
section_title: DOD Incorporated Quality Standards When Determining Facility Requirements, but Inadequate Documentation Makes It Unclear Whether DOD Adhered to Its Own Guidance
paragraphs: When developing facility requirements for the replacement medical  center, DOD officials incorporated many patient quality of care and  environmentally friendly design standards. However, our review of the  documentation DOD provided in support of these facility requirements  revealed gaps, inconsistencies, and calculation errors that required  extensive explanation by DOD officials to understand the deviations and  decisions made to develop the requirements. Without clear  documentation that explains how the analyses were performed and any  adjustments made, stakeholders and decision makers lack reasonable  assurance that the proposed replacement medical center will be  appropriately sized to meet the needs of the expected beneficiary  population in Europe.
subsections: section_title: DOD Incorporated Quality of Care and Environmentally Friendly Design Standards in Determining Facility Requirements
paragraphs: DOD officials used checklists and discussions with external health care  providers to incorporate updated patient quality of care standards into the  facility requirements for the replacement medical center; they also  incorporated environmentally friendly design standards. They used DOD’s  military hospital construction checklists to ensure that they incorporated  updated patient quality of care standards, such as evidence-based  design and world-class standards, when determining the size of the  replacement medical center. For example, DOD officials told us they used  the Evidence Based Design Checklist—which DOD created in August  2007 and updated in 2009—to incorporate design concepts into health  care construction projects that have impacts on patient-centered care.  Examples of evidence-based design include single-patient instead of  multiple-patient rooms to better accommodate family involvement in the  provision of care and to better control infections, and studying layouts and  workspace ergonomics to maximize work pattern efficiency. Additionally,  DOD officials and the architectural and engineering firm contracted for the  design of the replacement medical center used DOD’s Military Health  Service World-Class Checklist to ensure that world-class standards were  integrated into the facility’s design. The checklist identifies areas for DOD  officials to research to help ensure that world-class standards are  systematically developed, validated, and communicated with project  teams. The completed checklist described examples of how world-class  standards—which encompass many of the evidence-based designs from  the Evidence Based Design Checklist—were integrated into the facility’s  design. Some of the world-class standards incorporated into the facility  requirements were (1) optimizing the size and position of the patient  windows to provide exterior views for the patient from the bed,   (2) providing patient and family control over the environment in the patient  room (e.g., heating and cooling), and (3) providing full height walls with  higher noise transmission ratings (a higher noise transmission rating  blocks more noise from transmitting through a wall) in spaces where  patients would be asked to disclose personal information. DOD officials  told us they also met with officials from Department of Veterans Affairs’  hospitals, private sector hospitals, and German hospitals to obtain  information on evidence-based practices for providing health care that  could be applied to the replacement medical center’s design.
DOD has also incorporated additional environmental and efficiency  features into the design of the replacement medical center and expects to  exceed the U.S. Green Building Council’s Leadership in Energy and  Environmental Design (LEED) green building standards, which have been  adopted by several federal agencies. The LEED system awards points  for meeting a variety of standards and certifies buildings as silver, gold, or  platinum. The replacement medical center’s current design will likely  qualify for a “silver” certification. However, the facility’s extensive energy  efficiency and renewable energy features indicate that it may qualify for a  “gold” certification once it has met the more stringent German design  requirements. For example, the project will use low water plumbing  fixtures and commercial kitchen equipment available in Germany to  reduce water use and achieve higher efficiency.
section_title: Inconsistencies, Gaps, and Calculation Errors in Planning Documentation Make It Unclear Whether DOD Adhered to Its Own Guidance for Determining Facility Requirements
paragraphs: DOD sized the replacement medical center based on projected patient  workload data. However, our review of the planning documentation DOD  provided in support of its facility requirements showed that there were   (1) inconsistencies in how DOD projected patient workload and applied  the planning criteria, (2) some areas where the planning documentation  did not clearly show how DOD officials had applied the formulas provided  in the criteria to generate requirements, and (3) calculation errors  throughout. DOD guidance in effect when the facility was designedprovided that when designing medical facilities, planners should develop  patient workload factors—both current and projected—and use these  factors to determine the sizing requirements for the facility. While DOD  officials acknowledged that inconsistencies, gaps in documentation, and  calculation errors existed in the requirements documentation, they did not  think the identified issues alone would necessitate a revision of the facility  requirements. However, because DOD has not yet determined the effects  of the newly proposed posture changes on projected patient workload— which in turn drives the requirement for the facility size—it is not known if  the inconsistencies, gaps, and calculation errors coupled with the posture  change will require DOD to revise its facility requirements. DOD officials  plan to examine these concerns in their recertification process.
The Updated (FY10) Health Care Requirements Analysis report for LRMC  captures some of these data and steps DOD used to determine the sizing  requirements for the replacement medical center (see table 3 for the  sizing requirements that DOD developed, by medical center  department).
Inconsistencies in projecting workload and applying criteria. To  project most inpatient and outpatient workload for the replacement  medical center, DOD officials used fiscal year 2010 estimated patient  workload data as a baseline. However, they used different baseline data  in different parts of the analysis. For example, in determining the number  of labor and delivery rooms, DOD officials did not use workload data from  fiscal year 2010 as the baseline. According to DOD officials, the  obstetrician workload has historically been relatively stable. Therefore,  they used the labor and delivery room workload data from the Health  Care Requirements Analysis, which had been conducted in fiscal year  2008 to support the original plan for renovating and reconstructing LRMC  and determined that the data were accurate enough for their purposes.
Once DOD officials determined what projected workload data to use in  their calculations for the new facility, they were to use the criteria in DOD  Space Planning Criteria for Health Facilities to calculate the facility’s  requirements, for example, the appropriate number of inpatient beds and  outpatient exam rooms. DOD officials generally used the formulas  provided in this document, but they applied them inconsistently when  determining the appropriate size for individual departments within the  facility. For example, the space planning criteria direct DOD officials to  divide an inpatient department’s projected workload—in this case, the  average daily census—by a particular occupancy rate to determine the  number of inpatient beds that would be required. The criteria specify  that certain inpatient beds should be designed in modules of 4, 6, or 8  beds. DOD generally followed these criteria in calculating the number of  nursing unit medical/surgical beds, a type of inpatient bed. The criteria  specify an occupancy rate of 85 percent for inpatient medical/surgical  beds. Following this formula, DOD officials divided the projected average  daily census (48.7 patients) by 0.85. This calculation resulted in a  requirement for 57.3 beds. To conform to the modular grouping criteria,  DOD officials rounded to 60 beds.
However, in determining the number of inpatient behavioral health beds  DOD officials deviated from these criteria. The projected average daily  census for behavioral health was 24 patients. The space planning criteria  specify a 70 percent occupancy rate for psychiatric (i.e., behavioral  health) beds when the average daily census is fewer than 25 patients,  instead of the 85 percent occupancy rate specified for nursing unit  medical/surgical beds. Nevertheless, DOD officials used an 85 percent  occupancy rate to calculate the requirement for behavioral health beds.  This resulted in a requirement for 28.2 beds—rounded to 30 beds to  conform to the modular grouping criteria. According to DOD officials, they  chose to use a different occupancy rate factor because they reasoned  that since space planning criteria had not been updated to reflect the shift  to single occupancy rooms, the 70 percent rate would likely result in a  requirement for a higher number of beds. Following the space planning  criteria’s guidance would have produced a requirement for 34.3 beds,  which would have been rounded to 36 beds to account for the modular  grouping criteria. As a result, the need for behavioral health beds may  actually be higher than DOD officials determined. The documentation did  not clearly convey the reasons for the deviations or adjustments DOD  officials made when applying the criteria, and as a result, decision makers  may lack reasonable assurances that the number of beds required would  be sufficient to meet the needs of the expected beneficiary population in  Europe. Although these deviations or adjustments may not adversely  affect the size of the replacement medical center, their effect when  combined with the yet to be assessed posture changes remains  unknown.
Inadequate documentation of how facility requirements were  estimated. DOD’s documentation of its processes for determining the  replacement medical center’s sizing requirements did not always clearly  indicate how DOD officials had generated these requirements and  omitted details that would have helped demonstrate how DOD officials  had determined the size of the replacement medical center. For example,  DOD’s planning documentation reported contradictory methods for  projecting patient workload. According to the Updated (FY10) Health Care  Requirements Analysis, DOD used three different scenarios to project the  facility’s workload, resulting in a low, a midrange, and a high projection;  all three scenarios used estimated patient workload data from fiscal year  2010 as the baseline:
Scenario A excluded the workload attributable to the conflicts in Iraq  and Afghanistan, and assumed that the change in patient workload  would continue to follow the trend set over the previous 5 years.
Scenario B adjusted for potential future decreases in beneficiary  population, and assumed that the change in patient workload would  continue to follow the trend set over the previous 5 years.
Scenario C assumed that the change in patient workload would  continue to follow the trend set over the previous 5 years and made  no exclusions or adjustments.
The Updated (FY10) Health Care Requirements Analysis first reported  using Scenario B—the scenario that resulted in midrange projections—to  project inpatient and outpatient workload for the replacement facility.  However, later sections of the document report the use of different  methods to project patient workload. DOD officials confirmed that they  had used a combination of methods to project inpatient and outpatient  workload, and that they had used Scenario B only to validate these  projections after they had calculated them. These officials acknowledged  that the Updated (FY10) Health Care Requirements Analysis could have  better documented how these projections were developed. The lack of  clear documentation makes it difficult to understand the processes used  without extensive explanation by DOD officials.
In addition, the Updated (FY10) Health Care Requirements Analysis  omitted details on how DOD officials developed certain data. For  example, the document does not show how DOD officials projected  inpatient workload for behavioral health beds, only noting that the  projected average daily census was 24 patients. Although the Updated  (FY10) Health Care Requirements Analysis did not document how the  average daily census was calculated, DOD officials told us that the  historical data on inpatient behavioral health workload were not sufficient  for projecting workload because LRMC’s behavioral health inpatient  capacity was such that any beneficiaries other than active duty  servicemembers were referred to the German economy for treatment.  Therefore, the officials said they used another method (Scenario C) to  project workload, so that the facility would have the inpatient behavioral  health capacity to treat additional patients. The planning documentation  also does not show how DOD officials projected the number of providers  required for outpatient ambulatory departments. The Updated (FY10)  Health Care Requirements Analysis contains a table with the number of  outpatient ambulatory providers but does not show how or whether  projected outpatient workload data for the replacement medical center  were used to determine the number of outpatient providers that would be  required. These gaps in documentation make it unclear whether the size  of the replacement medical center will be adequate to meet the needs of  the beneficiary population, and when combined with potential posture  changes and previously discussed deviations or adjustments, the extent  to which they may affect the size of the facility is unknown.
Calculation errors in the planning documentation. We also found  several calculation errors within the Updated (FY10) Health Care  Requirements Analysis report. One table in the report that shows  historical (5-year average), baseline, and projected workload for inpatient  and outpatient care had errors in the 5-year average column for inpatient   and bed days of care. When we spoke with DOD officials,  dispositionswe pointed out these errors. DOD officials acknowledged the errors and  noted that the correct numbers could be found in a separate table in the  report’s appendix—although the appendix table was not listed as a  reference to support the historical workload numbers. Additionally, a table  in the report’s appendix, which illustrated the different projected inpatient  and outpatient workload data, calculated using the three different  scenarios, had many calculation errors in the projected outpatient  workload columns. Specifically, in calculating projected workload using  Scenarios A and B, DOD incorrectly used the 5-year average—instead of  the fiscal year 2010 data—as a baseline, and when using Scenario C,  DOD adjusted for potential decreases in the beneficiary population,  although this scenario did not call for such an adjustment. As a result,  outpatient workload data using Scenario B, for example, was calculated  to be 288,534 encounters instead of 328,944 (a 14 percent difference).  The projected data derived by incorrectly applying Scenario B were then  used in another table in the report’s appendix to verify that the projected  outpatient provider staffing would be sufficient to treat the projected  number of outpatients. DOD officials acknowledged the error and  provided us with correct data. According to DOD officials, even though  there was a 14 percent difference in the projected outpatient workload  data, the outpatient provider staffing levels would still be sufficient.  Although these calculation errors may not adversely affect the size of the  replacement medical center, it remains unknown to what extent this error  will affect facility requirements when combined with the yet to be  assessed posture changes, previously discussed deviations or  adjustments, and gaps in documentation.
Standards for internal controls include, among other things, control  activities. Control activities include policies, procedures, techniques, and  mechanisms that enforce management’s directives. They can include a  wide range of activities—such as authorizations, verifications, and  documentation—that should be readily available for examination. Detailed  and appropriate documentation is a key component of internal controls.  Without clear documentation of key analyses, and of how adjustments to  facility requirements were made, stakeholders lack reasonable  assurances that the proposed replacement medical center will be able to  provide the appropriate health care capacity to meet the needs of the  beneficiary population it is expected to serve.
section_title: DOD’s Cost Estimate Was Not Well Documented and Cost Elements for Associated Facilities Have Yet to Be Developed
paragraphs: In developing the cost estimate for the replacement facility, DOD followed  many of the best practices in developing estimates of capital projects, but  DOD minimally documented the data sources, calculations, and  estimating methodologies used in developing the cost estimate. Further, it  is anticipated that the replacement medical center will become the hub of  a larger medical-services-related campus, for which neither cost  estimates nor time frames have yet been developed.
subsections: section_title: DOD’s Cost Estimation Methodology Substantially Met Best Practice Criteria but Was Not Well Documented
paragraphs: The GAO Cost Estimating and Assessment Guide contains cost  estimating best practices that have been identified by GAO and cost  experts within organizations throughout the federal government and  industry. These best practices can be grouped into four general  characteristics of sound cost estimating:   1.  “Accurate” refers to being unbiased and ensuring that the cost  estimating is not overly conservative or overly optimistic and is based  on an assessment of most likely costs.   2.  “Credible” refers to discussing any limitations of the analysis because  of uncertainty or bias surrounding data or assumptions used in the  cost estimating process.   3.  “Comprehensive” refers to ensuring that cost elements are neither  omitted nor double counted, and all cost-influencing ground rules and  assumptions are detailed.   4.  “Well documented” refers to thoroughly documenting the process,  including source data and significance, clearly detailed calculations  and results, and explanations of why particular methods and  references were chosen.
See appendix III for detailed information on each of these cost estimating  characteristics.
In addition, Office of Management and Budget (OMB) best practices note  that programs should maintain current and well-documented estimates of  program costs, and that these estimates should encompass the full life  cycle of the program.
The characteristics of sound cost estimating are divided into individual  criteria, which we used to assess DOD’s process for developing its cost  estimate. Our process for evaluating the cost estimate consisted of  assigning an assessment rating for the various criteria evaluated on a 1 to  5 scale: not met = 1, minimally met = 2, partially met = 3, substantially  met = 4, and met = 5. Then, we took the average of the individual  assessment ratings to determine an overall rating for each of the  overarching characteristics: accurate, credible, comprehensive, and well  documented. Criteria assessed as not applicable were not given a score  and were not included in our calculation of the overall assessment.  Furthermore, our review of DOD’s process for developing the cost  estimate does not reflect an assessment of how facility requirements  were developed or their quality, but only a determination of whether they  are described in technical documentation and reflected in the estimate.However, as discussed previously in this report, during our assessment of  DOD’s process for determining facility requirements for the replacement  medical center, we found some calculation errors in the facility  requirements.
Table 4 provides a summary of our assessment of DOD’s cost estimating  process.
We determined that the cost estimate for the replacement medical center  had been updated as project requirements were better defined. The  overall cost estimate was broken down into costs per square foot, which  were based on historical records of costs and actual experiences from  other comparable programs. Although the DD Form 1391 does not  include documentation regarding how inflation was factored into the  estimated costs for the replacement medical center, DOD officials told us  that costs on the DD Form 1391 have been adjusted for inflation using  departmental guidance.
We found no evidence indicating that the cost estimate is biased.  However, it is not possible to fully assess the accuracy and reliability of a  cost estimate without conducting a risk analysis that indicates the  confidence level associated with the project’s estimated cost. Yet, the  independent estimate and estimate validation that are further described  below are sufficient to meet the requirements of this criterion.
DOD hired an architecture and engineering firm to validate the cost  estimate using a cross-check of major cost elements to determine  whether alternative methods would have produced similar results. The  contractor concluded that the cost estimate was valid. It also developed  an independent cost estimate and determined that the design of the  facility was within 1 percent of the size listed on the DD Form 1391, and  that the resulting cost was also within 1 percent of DOD’s cost estimate.
DOD officials told us that they also hired a separate firm to develop  sensitivity and risk analyses that were designed to meet GAO cost  estimating standards as published in the Cost Estimating and  Assessment Guide.  However, we found some limitations in these  analyses. The only cost drivers evaluated were the exchange rate,  German inflation, the cost of various raw materials, and a composite labor  rate. The analyses did not evaluate the potential cost impact of variations  in the beneficiary population, catchment area, level of care provided, or  amount of battle-related injuries. Moreover, the analyses did not evaluate  the cost impact of varying the square footage requirements documented  in the Program for Design.credible, key cost elements should be tested for sensitivity, and other cost  estimating techniques should be used to cross-check the reasonableness  of the ground rules and assumptions. It is also important to determine  how sensitive the final results are to changes in key assumptions and  parameters.
DOD’s cost estimating methodology for the replacement medical center  substantially met best practice criteria for overall comprehensiveness, but  some costs and assumptions were not included in the individual criteria  that make up the comprehensive cost estimating characteristic. The cost  estimate generally includes categories of costs for the design,  construction, and outfitting of the replacement medical center.  Additionally, DOD provided an appropriate work breakdown structure for  the facility to help ensure that cost elements were neither omitted nor  double counted.
DOD also provided us with technical baseline documentation, including  the Updated (FY10) Health Care Requirements Analysis report and the  Program for Design, which defines the technical and programmatic  requirements of the project. DOD officials told us that technical baseline  documentation was developed by qualified personnel—including a  multidisciplinary team of health care planners, architects, and  engineers—and has been updated as the project has evolved. We found  no instances in which any costs for design, construction, and outfitting of  the replacement medical center were omitted.
Although DOD provided us with some cost information as well as  technical baseline documentation, additional recurring life cycle costs  were, for the most part, not available, resulting in this subcategory  criterion for comprehensiveness being rated as minimally met. The cost  estimate does not include any facility sustainment costs, costs for  supporting infrastructure, or any operation and maintenance costs for  personnel or equipment required to operate the facility. In addition, the  cost estimate does not include costs associated with the disposition or  retirement of proposed medical center facilities at the end of their life  cycles, such as demolition or renovation costs. In addition, DOD officials  said costs associated with the disposition of the current LRMC or 86th  MDG are not included in the cost estimate. Army officials told us that the  facilities that make up the current LRMC will remain under the auspices of  the Army. These officials noted that following completion of the  replacement medical center, ownership of the current LRMC facilities will  transfer to Army Installation and Management Command. Under this  arrangement, these facilities will no longer be classified as part of the  Military Health System. Therefore, Army officials told us that any costs  associated with their disposition should not be included in the overall  estimate for the replacement medical center. The 86th MDG clinic  consists of 13 separate buildings. The remaining components that make  up the current 86th MDG clinic will be transferred to Ramstein Air Base.  According to 86th MDG officials, some of these buildings will remain in  use following completion of the replacement medical center, while others  will be demolished. However, it has not been decided how the remaining  clinic buildings will be used; the officials said that this decision will be  made by the installation commander at Ramstein Air Base. Since  demolition or continued use of the remaining facilities will require DOD  funding, these costs should be captured; they will help to show the full  cost impact of the replacement medical center project. Further, the cost  estimate contains minimal documentation of cost-influencing ground rules  and assumptions. DOD officials noted that some of the ground rules and  assumptions have been included in the technical baseline documentation.  However, we could not find a documented reference or link in the  technical baseline documentation we examined to specific cost elements  in the DD Form 1391. We also found no evidence of documentation of the  risks associated with assumptions, which should be traced to specific cost  elements.
A life cycle cost estimate should encompass all past (or sunk), present,  and future costs for every aspect of the program, regardless of funding  source, including all government and contractor costs. Without a full  accounting of life cycle costs, management will have difficulty  successfully planning program resource requirements and making wise  decisions about where to allocate resources. Cost estimates are typically  based on limited information and therefore need to be bound by the  constraints that make estimating possible. These constraints are usually  defined by ground rules and assumptions. However, because such  assumptions are best guesses, the risks associated with a change to any  of these assumptions must be identified and assessed. Many  assumptions profoundly influence cost; the subsequent rejection of even  a single assumption could invalidate many aspects of the cost estimate.  Unless ground rules and assumptions are clearly documented, a cost  estimate will not provide a basis for developing resolutions concerning  areas of potential risk. Furthermore, it will not be possible to reconstruct  the estimate when the original estimators are no longer available.
A well-documented cost estimate is essential if an effective independent  review is to ensure that it is valid. However, the documentation DOD  provided in support of its cost estimate did not clearly demonstrate how  facility requirements had been factored into cost elements.
DOD’s cost estimate lacked documentation that described, in detail, the  calculations performed and the estimating methodology used to derive  the cost for each element of the replacement medical center. None of the  documents provided to us included detailed documentation of how DOD  developed and refined the cost estimate. A complete documentation of  source data would include, for each line item in the cost estimate, a  reference to a specific data source or sources (including the document  and page number) used as the basis for each square footage and unit  cost amount. For example, the cost estimate contains line item estimates  for electricity, water/sewer/gas, steam/chilled water distribution, and storm  drainage. However, from the documentation provided, it is not possible to  determine how these requirements were used to develop cost estimates.
The technical baseline description and data in the technical baseline  documentation are spread across several documents, including the  Updated (FY10) Health Care Requirements Analysis report, Program for  Design, and a Planning Charrette Discussion. However, only the  Planning Charrette Discussion is referenced in the cost estimate on the  DD Form 1391. Moreover, we found minor differences between the  square footage requirements in the Program for Design and the cost  estimate as described on the DD Form 1391. For example, the Program  for Design reports a total gross square footage requirement of 1,293,409  and the cost estimate reports a total requirement of 1,340,731 square  feet. It was not possible to compare square footage amounts for various  components of the facility because of the differing levels of detail in the  Program for Design and the cost estimate. The difference in square  footage numbers between the Program for Design and the DD Form 1391  is not documented; therefore, the reasons for the difference are unclear.  Since the technical baseline is intended to serve as the basis for  developing a cost estimate, it should be discussed in the cost estimate  documentation.
Cost estimators should provide a briefing to management about how the  estimate was constructed—including specific details about the program’s  technical characteristics, assumptions, data, cost estimating  methodologies, sensitivity, risk, and uncertainty—so management can  gain confidence that the estimate is accurate, complete, and high in  quality. However, we found no documentation of a detailed review and  approval that included the estimate’s technical foundation, ground rules  and assumptions, estimating methods, data sources, sensitivity analysis,  risks and uncertainty, cost drivers, cost phasing, contingency reserves, or  affordability.
DOD officials confirmed our conclusion that their cost estimating process  was not fully documented. They told us that they had developed  supporting facility costs using expert opinion and parametric models;  however, these were not listed in the cost estimate. According to DOD  officials, DOD guidance does not require detailed documentation as part  of the DD Form 1391 cost estimate. Under DOD’s cost methodology, as  the project design matures, so does the level of cost analysis. DOD  officials asserted that the current cost estimate is appropriate for the  current level of design. DOD officials acknowledged that better  documentation would have provided more support and information to the  various decision makers in the process and would be a good practice to  follow.
If the cost estimate for the replacement medical center does not include  detailed documentation, stakeholders cannot reasonably conclude that it  is reliable. In addition, DOD and Congress may not have the information  they need to make fully informed decisions about the facility. If a cost  estimate does not fully account for life cycle costs, management will have  difficulty successfully planning program resource requirements and  making wise decisions. Poorly documented cost estimates can cause a  program’s credibility to suffer, because the documentation cannot explain  the rationale of the methodology or the calculations underlying the cost  elements. Further, without clear technical baseline documentation, the  cost estimate will not be based on a comprehensive program description  and will lack specific information regarding technical and program risks.  Unless the cost estimate is fully documented, it cannot be reconciled with  an independent cost estimate.
section_title: Replacement Medical Center Expected to Be Part of Medical Campus, but Additional Cost Elements Have Yet to Be Determined
paragraphs: DOD officials told us that the replacement medical center will be a fully  functioning military treatment facility and not require any additional  support facilities to fulfill its mission of providing inpatient and outpatient  care. However, in the Strategic Concept of Operations section of the  Updated (FY10) Health Care Requirements Analysis report for the  replacement medical center, the center is described as being the hub of a  medical-services-related campus at Weilerbach Storage Area. The  medical campus is expected to be an integrated health care campus that  would include hospital and ancillary components as well as outpatient,  administrative, and educational components. The other facilities that DOD  expects to develop for this campus under separate military projects  include warrior transition unit facilities, medical transition detachment  housing, and possibly medical troop barracks, among other facilities.
At this time, DOD has not determined the additional costs for these  facilities, nor has it developed a time frame for their construction.  However, Army officials told us that plans for the campus concept are still  predecisional and that certain facilities would only be replicated at  Weilerbach Storage Area following the expiration of their useful life. For  instance, the child care center near the current LRMC will remain there  until it requires renovation or reconstruction. At that point, a similar facility  would be constructed at Weilerbach Storage Area to replace it, so that  staff working at the replacement medical center would not have to leave  the area for day care services for their children.
section_title: Conclusions
paragraphs: The need to replace the outdated LRMC and the 86th MDG clinic to  ensure that military servicemembers and their families receive the care  they deserve is widely recognized. A critical step toward meeting this goal  is the development of a credible and comprehensive assessment of the  facility requirements and the cost of the replacement medical center.  DOD’s evolving posture in Europe will likely have an impact on the size of  the beneficiary population served by the replacement medical center.  However, DOD’s current needs assessment contains inconsistencies and  errors in how it used patient workload and staffing data to determine  facility requirements, such as facility size. In several situations, DOD  officials adjusted the criteria being used but failed to document their  rationale or need for taking these steps. Moreover, the documentation  used to support the determination of the facility requirements does not  clearly describe the methodology or calculations used to develop the  requirements, and these requirements provided the basis for the cost  estimate. DOD officials have indicated that the issues GAO has identified  may not have a substantial impact on the size of the replacement medical  center, but they have not yet taken specific action to determine what the  individual or cumulative effects would be. DOD’s cost estimating  methodology substantially met many best practices criteria but was only  minimally documented. Congress has required the Secretary of Defense  recertify to the Appropriations Committees in writing that the replacement  medical center is properly sized and scoped to meet current and  projected health care requirements. With this recertification, DOD has an  opportunity to determine the impact the proposed posture changes will  have on the proposed facility requirements and revise its documentation  to provide clear support for how it developed its facility requirements.  Without clear documentation of how key requirements were developed  and how they factored into the development of facility requirements and  cost, DOD cannot fully demonstrate that the proposed replacement  medical center will provide adequate health care capacity at the current  estimated cost.
section_title: Recommendations for Executive Action
paragraphs: To ensure that the replacement medical center is appropriately sized to  meet the health care needs of beneficiaries in a cost-effective manner, we  recommend that as part of the facility’s recertification process, the  Secretary of Defense direct the Assistant Secretary of Defense (Health  Affairs) to take the following two actions: provide sufficient and clear documentation on how medical planners  applied DOD criteria to determine the facility’s requirements, including  how and why medical planners made adjustments to the criteria, and  correct any calculation errors and show what impact, if any, these  errors had on the sizing of the facility.
Furthermore, in light of recently announced posture changes and  potential adjustments that may need to be made in facility requirements  based on correcting identified calculation errors in the original  documentation, we recommend that the Secretary of Defense direct the  Assistant Secretary of Defense (Health Affairs) to revise the cost estimate  for the center, incorporating the best practices outlined in the GAO Cost  Estimating and Assessment Guide to   reflect these potential posture changes, update it with the revised calculations as part of the recertification more thoroughly document the data, assumptions, calculations, and  methodology used to develop specific cost elements.
section_title: Agency Comments and Our Evaluation
paragraphs: In written comments to a draft of this report, DOD agreed with our  conclusions and each of our recommendations. DOD stated that it  recently conducted a reassessment of the original $1.2 billion project  submitted in the Fiscal Year 2012 President’s Budget request that  responds to GAO’s recommendations by utilizing the most current data,  including recently announced force structure changes, and providing a  documented audit trail of how the size, scope, and cost of the alternatives  were developed. Although we are encouraged that DOD has performed a  reassessment, DOD did not make it available for our review.  DOD’s  comments noted that the reassessment will be provided once approved  by the Secretary of Defense. As a result, we are unable to confirm at this  time that these actions have been taken. Therefore, we believe our  recommendations are still appropriate until the reassessment is released  and documentation made available.
DOD also provided technical and clarifying comments, which we  incorporated as appropriate into this report. DOD’s comments are  reprinted in their entirety in appendix IV.
We are sending copies of this report to the interested congressional  committees, Secretary of Defense; the Secretaries of the Army and the  Air Force; and the Director of the Office of Management and Budget. In  addition, the report is available at no charge on the GAO website at  http://www.gao.gov.
If you or your staff have any questions about this report, please contact  us at (202) 512-7968 or mctiguej@gao.gov or (202) 512-7114 or  draperd@gao.gov. Contact points for our Offices of Congressional  Relations and Public Affairs may be found on the last page of this report.  GAO staff who made key contributions to this report are listed in   appendix V.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: To describe how DOD officials considered potential changes to DOD’s  posture in Europe—and their possible effect on the beneficiary  population—when developing facility requirements for the replacement  medical center, we obtained available posture planning documentation,  including population estimates, and compared it with the beneficiary  population data used in planning assumptions for the replacement  medical center. We also obtained and reviewed Health Care  Requirements Analysis documentation containing beneficiary population  information and requested and reviewed more recent updates of this  information. We met with officials from the Offices of the Assistant  Secretary of Defense (Health Affairs) and the Deputy Under Secretary of  Defense (Installations and Environment), U.S. European Command, U.S.  Army Europe, and U.S. Air Forces Europe to gain insight into possible  scenarios that are being considered for posture changes in Europe. In  addition we talked with some of the above individuals and met with  officials with the U.S. Army Corps of Engineers Europe and with the U.S.  Army Installation Command Europe to discuss how the location for the  replacement medical center was selected. We also discussed with some  of the officials above the steps they had taken to ensure reasonable  accuracy of DOD beneficiary data and determined that the data  specifically related to the proposed replacement medical center were  sufficiently reliable for the purposes of this report.
To assess DOD’s process for determining facility requirements for the  replacement medical center to determine to what extent it incorporated  quality standards into its design and adhered to DOD guidance, we  obtained and reviewed documents detailing the process and any data  used in the development of the requirements for the replacement facility.  Specifically, we obtained and reviewed documentation used to develop  plans for the proposed replacement medical center, such as health care  requirements analyses and facility designs. We also reviewed relevant  documentation—including checklists—to determine whether DOD  included quality and environmentally friendly standards, such as world- class standards and Leadership in Energy and Environmental Design  (LEED) green building standards. We also identified key assumptions  used to determine facility requirements for the replacement medical  center and obtained and reviewed applicable legal and departmental  guidance, including DOD instructions and directives, and compared them  with the documented assumptions and methods used to develop the  facility’s requirements. Additionally, we reviewed their facility  requirements documentation for calculation errors and attempted to  duplicate their results. We also met with medical and construction  planners with the Office of the Assistant Secretary of Defense (Health  Affairs), the TRICARE Management Activity, U.S. Army Medical  Command, the Landstuhl Regional Medical Center (LRMC), the Air Force  Medical Support Agency, and the 86th Medical Group (MDG) to discuss  how they determined the size of the replacement medical center.
To review the process used to develop the cost estimate for the facility to  determine to what extent DOD followed established best practices for  developing its cost estimate, we obtained and reviewed available cost  estimates for the proposed replacement medical center as well as  supporting documentation that was used to determine overall costs. We  evaluated this information using GAO’s standardized methodology of cost  estimating best practices. For our reporting needs, we collapsed these  best practices into four general characteristics for sound cost estimating:  accurate, credible, comprehensive, and well documented. We determined  the overall assessment by rating whether DOD followed best practices  that make up each of the four characteristics. We assigned a number to  our ratings: not met = 1, minimally met = 2, partially met =3, substantially  met = 4, and met = 5. We took the average of the individual assessment  ratings to determine the overall rating for each of the four characteristics.  Criteria assessed as not applicable were not given a score and not  included in the overall assessment calculation. We met with officials from  the Office of the Assistant Secretary of Defense (Health Affairs), the  TRICARE Management Activity, Army Medical Command, the Air Force  Medical Support Agency, and the U.S. Army Corps of Engineers prior to  our evaluation to explain our approach for reviewing DOD’s cost  estimating process and to discuss project costs. We also met with these  officials to discuss the results of our evaluation. To determine the overall  costs of the replacement medical center, we obtained and reviewed  planning documents. We also met with officials from LRMC and 86th  MDG to discuss what the future plans are for the current facilities  following construction of the replacement medical center.
We conducted this performance audit from July 2011 through May 2012  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.
section_title: Appendix II: Catchment Area Populations by Beneficiary Category, Fiscal Years 2006 through 2011
section_title: Appendix III: Detailed Information on Each of the Cost Estimating Characteristics
paragraphs: The GAO Cost Estimating and Assessment Guide contains cost  estimating best practices that have been identified by GAO and cost  experts within organizations throughout the federal government and  industry. For our reporting needs, we collapsed these best practices into  four general characteristics of sound cost estimating: accuracy, credibility,  comprehensiveness, and well documented. Table 5 provides detailed  information on each of these cost estimating characteristics.
section_title: Appendix IV: Comments from the Department of Defense
section_title: Appendix V: GAO Contacts and Staff Acknowledgments
subsections: section_title: GAO Contacts
section_title: Staff Acknowledgments
paragraphs: In addition to the contacts named above, Laura Durland, Assistant  Director; Marcia Mann, Assistant Director; Josh Margraf; Jeff Mayhew;  and Richard Meeks made key contributions to this report. Joanne  Landesman assisted in the message and report development, Amie  Steele assisted in developing the report’s tables and graphics, Jennifer  Echard and Dave Brown provided methodological support, and Michael  Willems provided legal support.