Defense Management: Further Analysis Needed to Identify Guam's Public Infrastructure Requirements and Costs for DOD's Realignment Plan
Published: 2013-12-17T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: In 2006, the United States and Japan planned to relocate 17,600 U.S. Marines and dependents from Japan to Guam. However, in 2012, representatives from the countries developed a revised plan under which 6,300 Marines and dependents would relocate to Guam.
The Conference Report accompanying the National Defense Authorization Act for Fiscal Year 2013 mandated that GAO evaluate what Guam public infrastructure projects are needed to support DOD's plans. This report (1) describes Guam's public infrastructure; (2) describes the types of assistance DOD generally provides and other funding sources that have been used to fund Guam projects; (3) assesses DOD's efforts to revalidate Guam projects under the revised realignment plan; and (4) assesses the cost estimate for Guam's public water and wastewater infrastructure improvements used to support DOD budget requests. To address these objectives, GAO reviewed policies, technical studies, and budget requests. GAO also interviewed DOD and other relevant federal officials as well as visited Guam and met with Guam officials.
section_title: What GAO Found
paragraphs: Some investments have been made to improve Guam's public infrastructure in recent years, but many deficiencies and regulatory compliance issues continue to exist. The reliability, capacity, and age of much of the public infrastructure--especially the island's utilities--indicate a need for additional upgrades to be able to meet current and future demands related to the realignment. Further, some infrastructure sectors, such as water and wastewater, face issues complying with federal regulations. Other sectors, such as the fire and police departments, are experiencing staffing and other shortages that affect their ability to serve Guam's current population.
The majority of the Department of Defense's (DOD) support to defense-affected communities has been historically to provide technical assistance and support community planning and coordination efforts. However, in a few instances DOD has provided public infrastructure funding to communities where proposed basing decisions would generate significant public infrastructure needs that the communities could not support. Generally, DOD's position is that communities should be largely responsible for obtaining funding for public infrastructure requirements related to DOD basing decisions. This funding can come from other federal programs or communities can raise the funds on their own. In the case of Guam, however, some challenges related to limited government revenues and debt capacity has been identified as affecting its ability to do so.
Despite the reduction of Marines and dependents relocating to Guam, DOD has not yet revalidated the public infrastructure requirements based on the revised realignment plan or differentiated between requirements needed to address long-standing conditions and those related to the realignment. This revalidation is not expected to be completed until 2015. Even so, DOD has requested over $400 million for Guam public infrastructure projects in its budget requests since fiscal year 2012. It is unclear if all of these projects are necessary to the same extent given the reduction in forces. For example, if DOD decides to locate the Marines on the naval base that handles all of its own water/wastewater needs, public water/wastewater improvements would not be needed to support the Marines. Congress has placed limitations on the use of funding, in part until certain information is provided related to the realignment. Without revalidating and differentiating between requirements, DOD cannot clearly identify what Guam public infrastructure requirements are needed to directly support the realignment.
The $1.3 billion cost estimate for improvements to Guam's water and wastewater systems that DOD has used to support budget requests for fiscal years 2013 and 2014 is not reliable. GAO assessed that the estimate minimally met the best practice criteria for three of the four key characteristics--comprehensive, well documented, and accurate--for a reliable cost estimate as identified in the GAO Cost Estimating and Assessment Guide and did not satisfy best practice criteria for the fourth characteristic of being credible. GAO determined that officials adhered to some best practices for a reliable estimate but did not, for example,
include all relevant costs,
sufficiently explain why certain assumptions and adjustments were made,
incorporate any actual costs or inflation adjustments, or
adequately address risk and uncertainty.
section_title: What GAO Recommends
paragraphs: GAO recommends that DOD take actions to revalidate public infrastructure needs on Guam based on the revised realignment size and ensure best practices are used to develop future cost estimates. DOD partially concurred with GAO's recommendations and identified future plans. However, GAO believes further opportunities exist as discussed in the report.

section_title: Letter
paragraphs: Given its strategic location, Guam serves as an important staging base  and operating location for mobilizing U.S. military forces and equipment  within Asia and the western Pacific. In May 2006, the Security  Consultative Committee issued the United States-Japan Roadmap for  Realignment Implementation (2006 Roadmap) under which the U.S.  government anticipated relocating some military forces and their  dependents from Okinawa, Japan, to Guam by 2014. At that time, the  plan was for approximately 8,600 Marines and 9,000 dependents to move  to Guam. The Department of Defense (DOD) previously estimated that at  least $1.3 billion was needed to improve Guam’s public infrastructure to  accommodate this relocation. Guam’s public infrastructure includes the  utilities, methods of transportation, equipment, or facilities under the  control of a public entity, such as a power authority, or local government  for use by the public to support the realignment of forces and  dependents. However, after 6 years of unsuccessful attempts to  implement the 2006 Roadmap, the Security Consultative Committee  announced in a joint statement in April 2012 a revised realignment plan  under which approximately 5,000 Marines and 1,300 dependents would  be moved to Guam—approximately 64 percent less than the original  plan. This revised realignment plan has prompted DOD to review the  actions previously planned for Guam under the 2006 Roadmap and their  effects on Guam, including those related to the island’s public  infrastructure.
We have previously reported on the challenges associated with Guam’s  public infrastructure and the realignment of U.S. forces. For example, we  found in 2009 that Guam’s public infrastructure would likely be  inadequate to meet the increased demand resulting from the original  2006 Roadmap realignment plan and that Guam would need to  significantly expand its existing public infrastructure for electric power  generation, potable water production, wastewater collection and  treatment, and solid waste collection and disposal to provide the needed  additional utility capacity. In that we report, we recommended that DOD  develop a comprehensive plan for DOD’s Guam utility development  efforts to be included with DOD’s comprehensive Guam master plan.  DOD concurred with the recommendation. As we found in May 2013,  however, DOD continues to lack an integrated master plan for its current  overall Asia posture realignment, including its current plans for Guam,  and has not updated its list of utilities and other public infrastructure  requirements for Guam. We, therefore, recommended that as the master  planning process continues over the next several years, DOD should  develop annual updates on the status of planning efforts for appropriate  congressional committees until such time as the master plans are  completed for each geographic segment of the realignment. These  updates should include, but not be limited to, providing congressional  committees with up-to-date information on the status of initiatives,  identified requirements and time frames, and any updated cost  information linked to specific facilities or projects. DOD concurred and  stated that it will provide updates through the completion of the master  planning process.
In addition, congressional committees have discussed the uncertainty  surrounding cost and schedule information regarding the realignment of  U.S. forces to Guam. With specific respect to Guam’s public  infrastructure, the Senate Armed Services Committee noted in 2012 that,  until provided with details to adequately assess the strategic impact,  feasibility, and affordability of realignment initiatives, it was unwilling to  authorize further obligations of funds for projects on Guam in support of  the relocation, to include investments proposed for public facility and  infrastructure requirements. In 2011 and 2013, Congress restricted the  use of certain DOD funds to support the realignment of Marines until DOD  provided to the congressional defense committees’ specified information  related to its plans to move units to Guam and its overall posture in the  Pacific. The restrictions also imposed limitations on the use of DOD  funds for the development of public infrastructure.
See H.R. Rep. No. 112-705, at 976. between requirements that address Guam’s current public infrastructure  needs and those related to the realignment; and (4) assess the extent to  which the cost estimate for Guam’s public water and wastewater  infrastructure improvements used to support DOD budget requests was  developed according to the characteristics of a reliable cost estimate.
For each of our objectives, we collected information by interviewing and  communicating with officials from the relevant offices within DOD, the  Department of the Interior, and other federal agencies that have been  assisting Guam to prepare for the realignment. We also conducted a site  visit in April 2013 to Guam, where we interviewed the Governor, Speaker  of the Guam Legislature, other Guam legislators, Guam Auditor General,  and various officials from 12 Government of Guam agencies and  departments representing the various public infrastructure sectors on  Guam likely to be affected by the realignment. The public infrastructure  sectors covered by our review were chosen based on inclusion in (1) prior  Government of Guam and DOD project lists developed for the 2006  Roadmap realignment plan, (2) DOD budget requests, (3) prior GAO  reports on the realignment of U.S. forces to Guam, and (4) federal agency  inspector general reports, as well as those sectors identified by  Government of Guam and DOD officials during our interviews. The  following eight sectors are included in our review: electric power, water  and wastewater, port, solid waste, public health, law enforcement, fire  department, and education infrastructure. The highways and other roads  sector is not included in our review because Government of Guam and  DOD officials did not identify it as a sector likely to be adversely affected  by the realignment since existing programs and agencies, such as the  Defense Access Roads and the Department of Transportation’s Federal  Highway Administration, are currently allocating funds for road and  highway improvements on Guam.
To describe the existing condition of Guam’s public infrastructure, we  reviewed federal inspector general reports, technical studies and  business case analyses, and questionnaires conducted by DOD for the  revised realignment plan. To describe the types of assistance DOD  generally has provided to defense-affected communities and the other  types of funding sources that have been used to fund Guam public  infrastructure projects, we reviewed past congressional hearings records,  DOD documents, and community impact analyses to determine previous  instances of DOD providing public infrastructure funding to communities  as well as Guam’s single audit report schedule of expenditures of federal  grant awards to identify examples of non-DOD, federal grant programs  from which the Government of Guam has received infrastructure funding.  To assess DOD’s efforts to revalidate public infrastructure requirements  under the revised realignment plan and differentiate between  requirements that address Guam’s current public infrastructure needs and  those related to the realignment, we reviewed information on DOD and  the Government of Guam’s planning activities related to public  infrastructure improvements needed to support the revised realignment  plan and compared this information to previous public infrastructure lists  developed by the Government of Guam, DOD, and other federal entities  to support the 2006 Roadmap realignment plan. To determine the extent  to which the cost estimate for Guam’s public water and wastewater  infrastructure improvements used by DOD to support its budget requests  was developed according to the characteristics of a reliable cost estimate,  we reviewed the cost estimating methodology and compared them to the  cost estimating guidance in GAO’s Cost Estimating and Assessment  Guide: Best Practices for Developing and Managing Capital Program  Costs. To determine the reliability of the numerical data provided to us  by DOD organizations for all of our objectives, we collected information  on how the data was collected, managed, and used through interviews of  relevant DOD and federal agency officials. By assessing this information  against GAO data quality standards, we determined that the data  presented in our findings were sufficiently reliable for the purposes of this  report. Appendix I provides a more detailed description of our scope and  methodology.
We conducted this performance audit from February 2013 through  December 2013, in accordance with generally accepted government  auditing standards. Those standards require that we plan and perform the  audit to obtain sufficient, appropriate evidence to provide a reasonable  basis for our findings and conclusions based on our audit objectives. We  believe the evidence obtained provides a reasonable basis for our  findings and conclusions based on our audit objectives.
subsections: section_title: Background
subsections: section_title: DOD’s Guam Realignment Plans
paragraphs: Since Guam became a territory in 1898, the United States has long  maintained a significant military presence on the island to support and  defend U.S. interests in the western Pacific Ocean region. Guam has  been the home to many different military units over the past 60 years and  was especially active during the Vietnam War as a way-station for U.S.  bombers. DOD currently controls about 27 percent of the island.  According to the 2010 U.S. Census, Guam had a population of 159,358,  an increase of 2.9 percent from the 2000 Census population of 154,805.  DOD estimates that there are at least 16,400 military members and their  dependents stationed on Guam. Most of the military members and  dependents are attached to one of the two major military installations on  the island: U.S. Naval Base Guam, located on the southwestern side of  the island at Apra Harbor, and Andersen Air Force Base in the north (see  figure 1).
In 2004, the U.S. Secretaries of State and Defense and the Japanese  Ministers of Foreign Affairs and Defense began a series of sustained  security consultations aimed at strengthening the U.S.-Japan security  alliance and better addressing the rapidly changing global security  environment. The resulting U.S.-Japan Defense Policy Review Initiative  established a framework for the future of the U.S. force structure in Japan  and facilitated a continuing presence for U.S. forces in the Pacific theater,  including the relocation of military units to Guam. The major realignment  initiatives of the Defense Policy Review Initiative were ultimately outlined  in May 2006 in a Security Consultative Committee document, the United  States-Japan Roadmap for Realignment Implementation (2006  Roadmap)—under which the United States anticipated relocating  approximately 8,000 Marines and their estimated 9,000 dependents from  Okinawa, Japan, to Guam by 2014. The 2006 Roadmap was  subsequently modified by the Security Consultative Committee in April  2012 and DOD’s current plan is to relocate approximately 5,000  personnel (mostly rotational) and 1,300 dependents to Guam as soon as  appropriate facilities are available to receive them. DOD is in the  process of determining what military and public infrastructure facilities and  live-fire training ranges are necessary to support the proposed reduced  realignment plan on Guam, as well as Tinian and Pagan—islands that are  part of the Commonwealth of the Northern Mariana Islands.
section_title: Guam Environmental Impact Statement
paragraphs: Before any Marines can relocate to Guam, DOD must examine the  environmental effects of its proposed actions, pursuant to the National  Environmental Policy Act of 1969. To address this requirement in the  past, DOD performed an environmental review of certain proposed  actions under the original 2006 realignment plan and released the Guam  and Commonwealth of the Northern Mariana Islands Military Relocation  Final Environmental Impact Statement (EIS) in July 2010. In  September 2010, the Department of the Navy announced in the Record  of Decision for the Guam and Commonwealth of the Northern Mariana  Islands Military Relocation that it would proceed with the Marine Corps  realignment, but it deferred the selection of a specific site for a live-fire  training range complex on Guam pending further study. In February  2012, the Department of the Navy gave notice that it intended to prepare  a supplemental EIS to evaluate locations for a live-fire training range  complex on Guam.  In October 2012, as a result of the announcement  of the revised realignment plan, the Department of the Navy gave notice  that it was planning to expand the scope of the ongoing supplemental EIS  to also evaluate potential environmental consequences from the  construction and operation of the main Marine installation. According to  DOD, the reduction in the number of Marines and dependents to be  relocated to Guam led to a reduction in the amount of land needed for the  main Marine installation area, enabling the Navy to identify and consider  other alternatives than it had previously analyzed for the 2010 EIS. The  expanded supplemental EIS is expected to have three major  components.  1.  Further evaluation of possible locations for the establishment of a  Marine Corps live-fire training range complex on Guam, to include  locations on Naval Computer and Telecommunications Station  Finegayan, Naval Magazine Guam, and the northwest part of  Andersen Air Force Base, among other locations.  2.  Determination of the potential environmental consequences of  constructing and operating a main Marine Corps installation at several   possible locations on Guam: Naval Base Guam, Naval Computer and  Telecommunications Station Finegayan, South Finegayan, federal  land in the village of Barrigada, and Andersen Air Force Base.  3.  Assessment of associated impacts to Guam’s public infrastructure.
According to Marine Corps officials, the supplemental EIS is expected to  be drafted by 2014, and DOD anticipates that a final decision on all  matters being evaluated will be released by 2015 via a record of decision.
section_title: Federal Framework for Assisting Guam in Preparing for the Realignment
paragraphs: Several federal agencies have been assisting the Government of Guam  in planning and preparing for the realignment of U.S. forces (see figure 2).
Within DOD, three organizations have been assisting Guam to prepare  for the military realignment.
The Office of Economic Adjustment (OEA) is a DOD field activity that  reports to the Deputy Under Secretary of Defense for Installations and  Environment, within the office of the Under Secretary of Defense for  Acquisition, Technology, and Logistics. The office facilitates DOD  resources in support of local programs and provides direct planning  and financial assistance to communities and states seeking  assistance to address the impacts of DOD’s actions. OEA’s  assistance to growth communities is primarily focused on assisting  them with organizing and planning for population growth because of  DOD activities, commonly referred to as “defense-affected”  communities.
The Joint Guam Program Office (JGPO) is the DOD office primarily  engaged in developing and implementing the military realignment  plans. JGPO is a Navy staff office under the direct oversight of the  Assistant Secretary of the Navy for Installations and Environment.  Specifically, JGPO is leading the coordinated planning efforts among  the DOD components and other stakeholders to consolidate, optimize,  and integrate the existing DOD infrastructure capabilities on Guam.  JGPO also leads the effort to develop the ongoing supplemental EIS.
The Naval Facilities Engineering Command contracts for the military  construction on Guam and, as the Navy’s primary facilities and utilities  engineering command, is also helping to prepare the supplemental  EIS.
The Secretary of the Interior has administrative responsibility for  coordinating federal policy for U.S. insular areas, including Guam,regarding all matters that do not fall within the programmatic responsibility  of another federal department or agency. Within the Department of the  Interior, the Office of Insular Affairs executes these responsibilities. Part  of the Office’s mission is to empower insular communities by improving  the quality of life, creating economic opportunity, and promoting efficient  and effective governance.
The Federal Regional Council—Region IX is a consortium of 19 federal  departments and agencies that oversee federal activities in four western  states and the Outer Pacific Islands including Guam. Federal Regional  Councils were established to provide a structure for interagency and  intergovernmental cooperation. Membership includes regional  representatives from the Departments of Agriculture, Commerce,  Education, Energy, Health and Human Services, Homeland Security,  Housing and Urban Development, Justice, Labor, the Interior,  Transportation, Veterans Affairs, and the Environmental Protection  Agency (EPA). The goal of the Federal Regional Council is for federal  departments in Region IX to work in a coordinated manner in order to  make federal programs more effective and efficient, through the  establishment of task forces and development of reports on issues of  concern in the region. The federal regional council meets monthly and  has six committees focused upon broad geographic areas and special  populations in the vast geographic area of Region IX. One of the  committees, the Outer Pacific Committee, contains the Guam Buildup  Committee/Task Force. The buildup task force’s mission is to help Guam  develop a financial assistance strategy and serve as a communication  liaison regarding local needs on Guam and federal budget decision- making.
section_title: Government of Guam Organization
paragraphs: Guam became a U.S. possession in 1898, initially placed under the  control of the U.S. Navy. The Guam Organic Act of 1950 conferred U.S.  citizenship on Guamanians and established the territory’s government.  Guam’s government is organized into three branches: executive,  legislative, and judicial. The executive branch is led by the territory’s  highest elected officials: the governor and lieutenant governor. These  officials implement Guam’s laws through the departments, bureaus,  agencies, and other entities that make up the executive branch of the  Government of Guam, such as the departments of public health and  social services and education. The legislative branch consists of a single  chamber legislature presently with 15 members who are elected for 2- year terms. The judiciary consists of the Superior Court of Guam and the  Supreme Court of Guam.
In addition, the following are several autonomous agencies related to  public infrastructure that function as part of the Government of Guam:
The Guam Power Authority manages the generation, transmission,  and distribution of electrical power on the island to include  engineering, operation, and maintenance activities.
The Guam Waterworks Authority manages the engineering, operation,  and maintenance of the public water and wastewater systems  including the sources, treatment, distribution, and storage.
The Port Authority of Guam operates and maintains the Port of Guam.
The Power and Waterworks authorities are governed by an elected, non- partisan, five-member Consolidated Commission on Utilities. The Port of  Guam is presided over by five board members appointed by the Governor  of Guam with the advice and consent of the legislature. Each of the  agencies collects fees for its services and is able to issue bonds based on  these fees and other revenue to finance infrastructure improvements.
section_title: Investments Have Been Made to Improve Guam’s Public Infrastructure, but Deficiencies and Regulatory Compliance Issues Persist
paragraphs: While some investments have been made to improve Guam’s public  infrastructure in recent years, many deficiencies continue to exist. The  reliability, capacity utilization, and age of much of Guam’s public  infrastructure indicates a need for additional upgrades to ensure that  Guam can meet the demands of its current and future population,  regardless of how many Marines and dependents are moved to Guam.  For example, existing utility systems—electric power generation, potable  water production, and wastewater collection and treatment—are largely  operating at or near their maximum capacities and will require  infrastructure improvements to meet any increase in demand. In addition,  some of Guam’s public infrastructure sectors, such as its Waterworks  Authority face issues complying with federal regulations. Other sectors,  such as the fire and police departments are experiencing shortages in  infrastructure, vehicles, and staffing. According to JGPO officials, they  intend to perform assessments to determine what improvements are  needed by Guam’s public infrastructure to support the current realignment  plan during DOD’s development of the supplemental EIS expected to be  completed by 2015. A discussion of DOD’s actions to assess Guam’s  public infrastructure is presented later in the report.
subsections: section_title: Electric Power
paragraphs: Guam’s electric power system has experienced reliability problems, which  have resulted in power outages, and is reliant on aging generators  approaching the end of their life expectancy. The Guam Power Authority  has made investments in its infrastructure to address some of these  reliability problems. For example, it secured $206.5 million in bond  financing in fiscal year 2010 to construct a new administration building  and to make various generation, transmission, and distribution facility  improvements. However, during our April 2013 visit to Guam, Power  Authority officials indicated that system reliability continues to be a major  concern because the Authority is not able to meet all of its operation and  maintenance needs and may not be able to invest in its generators at  appropriate levels due to diminished revenues. Officials also noted that  multiple improvements are needed to the Authority’s peaking and  emergency generators, but such improvements will have to be deferred  until revenues improve—which directly affects the Authority’s ability to  reduce customer outage duration and frequency. The electrical system’s  reliability and age have led to five island-wide power blackouts since  November 2010.
On November 3, 2010, a power outage occurred due to a line that fell  at a substation. This outage created a chain reaction that resulted in  an island-wide blackout. Power was fully restored after 7 hours.
On May 9, 2011, a power outage occurred due to a corroded static  line that fell on the switchyard. The result of the outage was an island- wide blackout. Power was fully restored after 5 hours.
On June 4, 2011, a power outage occurred due to a damaged control  air pipe at the Marianas Energy Company, an Independent Power  Producer which resulted in an island-wide blackout. Power was fully  restored after 2.5 hours.
On June 6, 2013, a power outage occurred due to a fault in the  system that originated within the Dededo combustion turbine. The  result of the outage was an island-wide blackout. Power was fully  restored within 6 hours.
On July 11, 2013, a power outage occurred due to a generator going  off line. The loss of this generator and subsequent issues with the  power generation system led to the outage. The result of the outage  was an island-wide blackout. Power was fully restored in about 6.5  hours.
The concerns expressed by Authority officials are consistent with the  findings of a 2012 Department of the Interior Inspector General report.  That report found that Guam is susceptible to power blackouts and noted  that about a quarter of the Power Authority’s generation units were  installed before 1976 (see figure 3 for a photograph of an electrical power  station location on Guam). The report concluded that if the Authority  should have to replace its entire aging infrastructure at the same time, it  would require a large financial investment.
The Power Authority provides all of the electricity on the island for both  the public and DOD, with DOD the Authority’s largest customer  accounting for 22 percent of the Authority’s fiscal year 2012 revenues. In  terms of infrastructure needed for the realignment, Guam Power Authority  officials told us that although the Authority has enough installed capacity  (i.e., capacity the generation units were built to produce) to meet DOD’s  realignment needs for electricity generation, some of the units are not  operational without major repairs or improvements which will likely have  to be made by the Authority. In addition, Authority officials told us  improvements to the transmission system, such as additional substations  and transmission lines, will need to be made to accommodate the revised  realignment plan and will likely need to be funded by DOD.
section_title: Water and Wastewater
paragraphs: Guam’s water and wastewater treatment systems have a number of  deficiencies as a result of natural disasters, poor maintenance, and  vandalism. Although the Guam Waterworks Authority invested more than  $158 million in improvements to its water and wastewater systems over  the last 10 years, the Authority continues to operate under an order  issued by the U.S. District Court for the District of Guam requiring various  treatment and infrastructure improvements because of issues related to  compliance with the Safe Drinking Water Act and the Clean Water Act.
Potable water: According to Waterworks officials, Guam’s potable  water system currently is in noncompliance with the Safe Drinking  Water Act. The unreliable drinking water distribution system has  historically resulted in bacterial contamination from sewage spills,  causing “boil water” notices to be sent to residents. According to a  2012 EPA report, in general, many of the potable water facilities on  the island are in poor operating condition as a result of minimal  preventative and corrective maintenance actions. For example, several of the finished water storage tanks do not provide many of the  normal functions of a well-designed and operated water system, and  most of the storage tanks are old and deteriorating, have openings  and/or leaks, and are susceptible to contamination. According to the  EPA, part of the water supply problem stems from some of the water  system’s old pipes. Distribution lines are repeatedly patched—with  some single lengths of pipe having up to 7 patches—instead of being  replaced. As a result of problems with distribution lines and  maintenance, among other issues, the EPA estimates the Water  Authority’s water loss rate is about 50 percent. According to EPA,  studies indicate that the national average water loss rate is about 14  percent.
Wastewater: According to the DOD Inspector General, Guam’s  existing wastewater plants do not meet primary treatment standards  and lack sufficient capacity due to poor conditions of the existing  assets. For example, the Northern District Wastewater Treatment  Plant (see figure 4) has a legacy of deferred maintenance and  minimal capital improvements that have caused the systems to slowly  deteriorate over the years. In addition to not meeting primary  treatment standards, according to the EPA, Guam’s wastewater  facilities, do not meet the requirements of its secondary treatment  permit. Since 1986, Guam has had variances under section 301(h)  of the Clean Water Act, allowing it to discharge primary treated  wastewater to Hagatna Bay and the Philippine Sea. However, in  November 2011, the EPA disallowed the variances and therefore  established full secondary treatment requirements at both the  Northern District wastewater treatment plant and the Hagatna plant in  the island’s central region. According to the Chairman of the Guam  Consolidated Commission on Utilities, achieving full secondary  treatment at both plants will require between $300 million and $500  million in infrastructure improvements and, if funded by Guam alone,  would necessitate rate increases that could potentially lead to average  monthly water bills of $250 by 2020—double what the average is now.  According to the Chairman, the Commission is currently negotiating  with EPA on timelines for achieving secondary treatment and hopes to  extend the timelines so as to allow more time to obtain additional  funding.
In terms of supporting the current military presence on Guam, the  Waterworks Authority provides wastewater services to Andersen Air  Force Base (including Northwest Field), Naval Computer and  Telecommunications Station– Guam, and South Finegayan Navy  housing. Naval Base Guam handles all of its own wastewater needs, and  both the Navy and Air Force get their potable water from their own wells  and the Fena Reservoir. Therefore, DOD only accounted for 2.2 percent  of the Authority’s fiscal year 2012 revenues. However, according to  representatives of Guam’s legislature and the Chairman of the  Consolidated Commission on Utilities, the Guam Waterworks Authority is  operating near capacity and cannot meet any surge in demand related to  the realignment without significant infrastructure improvements.
section_title: Port of Guam
paragraphs: According to the Port Authority of Guam and DOD officials, the Port of  Guam (see figure 5) is currently outdated, in need of repairs, and requires  expansion in order to support the realignment. Of particular concern is the  port wharf. A 2012 DOD inspector general report found that the structural  integrity of the commercial wharf, which includes the port’s six berths, is  damaged and at risk of failure. The current state of the wharf was caused  by a lack of adequate repairs to damages from earthquakes, corrosion,  and stresses from ships and cargo-handling equipment. There have been  multiple earthquakes in Guam, with the most devastating taking place in  August 1993. As a result of this earthquake, the island sustained massive  devastation with significant damage to one of the port’s berths, which  required major reconstruction. Although other port berths were also  damaged, they were not reconstructed. The DOD Inspector General also  found that there are multiple continuous defects that have been  documented in various reports and surveys performed on the structural  integrity of the wharf bulkhead at the Port—the bulkhead is the vertical  face (or wall) of the wharf along which ships are berthed. The report and  surveys indicate that the bulkhead was damaged both above and below  the water. On the facade, the sides and the surface show cracks and  separation, while underwater there is extensive damage to the concrete  bulkhead.
Both DOD and the Government of Guam have identified the Port of Guam  as a potential choke point as the realignment moves forward since all  materials needed for both military and public construction projects will be  transported to Guam by sea and enter through the Port. Port Authority  officials told us that the Port has not been modernized since it was  constructed in the 1960s and that, typically, most ports are modernized  every 20 years. According to Port Authority officials, to accommodate the  realignment, the Port requires building modifications, selected  modifications to yards where cargo is offloaded, and facility expansion, as  well as significant structural integrity improvements to the wharf. For  example, the port requires a lot of maintenance due to corrosive ocean  waters, typhoons, earthquakes, and years of maintenance neglect. Some  of the specific improvements identified include site expansion, utilities  upgrades, bulkhead fortification, and building renovations. In 2010, DOD  provided the Port $50 million in funding to begin some of these  improvements. According to DOD officials, this $50 million is the amount  needed to directly address the requirements of the realignment and will  be used for building modifications and modifications to the yard where  cargo is offloaded as well as expansion of selected port facilities.  In  addition, the Port Authority continues to seek non-federal funding sources  to allow for successful operations and execution of its mission. For  example, according to Port Authority officials, the Authority recently  obtained a $10 million commercial loan to address pier service life  extension, financial management system upgrades, and a cargo handling  crane purchase and has proposed a 5.65 percent tariff increase across  the board to increase revenues. However, according to Port Authority  officials, if future military activity requirements extend beyond the  Authority’s current planned upgrades, there may be a need for additional  federal support to accommodate the increased capacity requirements.
section_title: Solid Waste
paragraphs: According to OEA officials, Guam’s current landfill is environmentally- compliant with sufficient capacity to meet current solid waste disposal  needs and has sufficient expansion capacity to meet future needs related  to the realignment. Previously, the EPA found Guam’s public solid waste  operations to be in violation of the Clean Water Act as the Ordot Dump  facility, located in the center of the island, was discharging contaminants  into the Lonfit River. As a result of a lack of remediation and other actions  on the part of the Government of Guam in response to the contamination,  in March 2008, the U. S. District Court placed the public solid waste  operations under the control of an appointed receiver. Since the court  order, the receiver has opened a new public landfill and ceased  operations at the Ordot Dump facility. According to the Government of  Guam, the new landfill bans certain types of waste, including construction  and demolition waste. As a result, future organic and realignment solid  waste disposal needs will require the government to continue to develop  systems to handle landfill-banned waste and construct and open new  solid waste disposal areas at the landfill.
Historically, the Government of Guam and DOD used separate solid  waste facilities. The Government of Guam disposed of all civilian waste at  the Ordot Dump facility and DOD disposed of its solid waste in one of two  DOD-operated landfill sites—Andersen Air Force Base and Naval Base  Guam. However, the two DOD-operated landfill sites are almost at  capacity. DOD has begun sending its solid waste to the new public  landfill, paying the current rates set by the receiver.
section_title: Public Health
paragraphs: The Government of Guam reported, as part of the ongoing supplemental  EIS, that its public health system is undersized for the population it is to  serve and is experiencing staff shortages. The following are examples:
The Guam Memorial Hospital Authority, Guam’s only public civilian  hospital, is often over capacity and this is exacerbated by the fact that  it usually does not have enough nursing staff to operate all of its  available acute care beds. According to Guam Memorial Hospital  Authority officials’ response to a questionnaire conducted for the  supplemental EIS, Guam needs approximately 500 acute care beds to  fully meet the island’s needs using national hospital standards and the  Guam Memorial Hospital Authority provides the Guam community  with only 162 of those acute care beds. Therefore, according to these  officials, the shortage can only be addressed by either expanding the  existing Guam Memorial Hospital, building a much larger replacement  public civilian hospital, or through the building of a new private  hospital that is currently underway. Though there are no current plans  to build a new civilian public hospital at this time, the Guam Memorial  Hospital Authority is in the process of implementing its 2013 Strategic  Plan, which includes identifying the Authority’s future expansion  needs. The Government of Guam has tried to address some of the  hospital’s space issues. For example, in fiscal year 2009, it secured  $11 million in bond financing to fund certain infrastructure  improvements for the Guam Memorial Hospital Authority, including the  expansion and renovation of the emergency department and critical  care unit/Intensive care unit, the upgrading of its pharmacy  department, and the modernization of two hospital elevators.
Guam’s current mental health and substance abuse facility also faces  issues with meeting standards of care. In 2004, the U.S. District Court  issued a permanent injunction against Guam’s Department of Mental  Health and Substance Abuse and various Guam officials to address  deficiencies in the proper care for the mentally ill and developmentally  disabled to address violations of statutory and constitutional standards  of care. To achieve compliance with the injunction and address  continuing problems, the court appointed a federal management team  in 2010 and gave the team control over Guam’s mental health  agencies to remedy the deficiencies. According to Government of  Guam officials, as a result of the injunction, the Guam Behavioral  Health and Wellness Center had to hire additional staff and implement  several new substance abuse treatment programs. The officials  further explained that to fully implement the mandates of the  injunction, a new mental health facility will need to be constructed. On  August 22, 2012, the U.S. District Court established a transition period  for the return of duties and powers from the federal management  team.  In January 2013, the federal management team and Guam  Behavioral Health and Wellness Center officials presented a transition  plan to the court and control was transferred to the Guam Behavioral  Health and Wellness Center in February 2013.  According to  Government of Guam officials, the Guam Behavioral Health and  Wellness Center continues to report on a quarterly basis to the U.S.  District Court.
In addition to these infrastructure challenges, officials identified a number  of challenges related to staffing. For example, Guam has experienced  difficulty in recruiting and retaining an adequate number of health care  personnel. According to the U.S. Department of Health and Human  Services, Guam has been designated as a medically underserved area.  Medically underserved areas are areas designated as having too few  primary care providers, high infant mortality, high poverty, and/or high  elderly population. Likewise, Guam also qualifies as a health professional  shortage area, which is a geographic area, population group, or health  care facility that has been designated by the federal government as  having a shortage of health professionals. According to Guam public  health officials, because of this designation, certain health professionals  (e.g., nurses, mid-level providers, chiropractors, health dentists, and  psychologists) can apply to work at Guam medical facilities and have the  federal government pay for relocation costs and school loans. Generally,  it is a 4-year program and people stay for the length of the term but then  move away, resulting in turnover that makes it difficult to provide stable  care. As we previously found, this is particularly true for insular areas  such as Guam because citizens of insular areas are free to migrate to the  United States, making it difficult to retain highly educated or skilled  workers.
Military personnel and their dependents generally do not use Guam’s  health facilities, other than the occasional emergency room visit.  However, the Government of Guam anticipates that any DOD civilian or  migrant and construction workers associated with the realignment would  use the facilities. Guam officials also told us that the island lacks a Center  for Disease Control and Prevention level 2 public health lab.Guam is expected to become a focal point for regional job seekers and  foreign construction workers under any realignment scenario, officials told  us the island must have the ability to test for and contain various  communicable diseases, due to this increase in migration. Government of  Guam officials told us, currently, the nearest lab is in Hawaii and many  times samples are spoiled and not testable by the time they arrive in  Hawaii from Guam.
section_title: Law Enforcement
paragraphs: The Guam Police Department is experiencing deficiencies in  infrastructure, vehicles, and staffing. In terms of infrastructure, according  to Police Department officials, although its four precinct buildings are in  good to fair condition, the Police Department does not have a permanent  headquarters building or location. The current police headquarters is  located on land owned by the Guam International Airport Authority, which  wants the Police Department to vacate the facilities so it can redevelop  the property. In addition, according to Guam officials, the adult corrections  facility is in poor physical condition, overcrowded, poorly designed, and  inefficient. The officials also noted that the judicial center needs at least  two additional courtrooms to support current needs and normal population  growth.
In addition to these infrastructure challenges, Police Department officials  identified a number of challenges in servicing the public because of  limited equipment and staffing. According to Guam Police Department  officials, the Guam Police Department does not have enough vehicles to  fully equip all shifts and have vehicles in reserve for downtime. Police  Department officials estimate they need 18 more patrol vehicles to  address the vehicle shortage. Likewise, Guam Police Department officials  estimated that they need about 160 additional officers to appropriately  serve the public. According to Guam Public Law, each village must have  a minimum of 2 police officers capable of patrolling and responding to  calls at all times, and 1 additional officer is required for each additional  2,000 residents for each shift. Therefore, according to the Department  of the Interior Inspector General, the Guam Police Department should  have 464 patrol officers to cover all of its precincts—it currently has 304.  According to Guam Police Department officials, the personnel shortfall  has caused the department to exceed its overtime budget annually due to  excessive overtime work needed to sustain its operations. More recently,  in a questionnaire conducted for the ongoing supplemental EIS, Police  Department officials stated that prolonged work hours and excessive  workload are causing fatigue and unhealthy physical conditions among  the personnel. To address its staffing shortage, the department is  currently deputizing civilians. According to Guam Police Department  Officials, the Guam Police Department is training these civilians and  giving them law enforcement authority to perform as police officers, but  without compensation. The program has over 100 volunteer members  and is increasing.
Military personnel, their dependents, and any contractor or construction  worker arriving on Guam because of the realignment would necessarily  need to rely on the Guam Police Department in case of emergencies. In  addition, any person—including military members and their dependents— who is cited or arrested by the Guam Police Department for violating local  laws off-base would be processed or prosecuted through Guam’s legal  system. As such, Police Department officials told us that any population  increase associated with the revised realignment plan would exacerbate  the current infrastructure, vehicle, and staffing challenges the department  is experiencing and could potentially create new ones as shifts in traffic  patterns and land use occur, for example, because of new commercial  development, and higher-density housing.
section_title: Fire Department
paragraphs: Like the Guam Police Department, Guam’s Fire Department is  experiencing deficiencies in infrastructure, vehicles, and staffing. In terms  of infrastructure, Fire Department officials told us that the department is  currently leasing office space as it does not have a permanent  headquarters location. In addition, according to a 2012 Department of the  Interior Inspector General report, the Guam Fire Department does not  have enough ambulances to service Guam and does not have any  reserve vehicles in its fleet. At the time of that report, the Fire  Department owned 15 ambulances, and of those, only 3 were in service.  Further, according to the report, there has been at least one documented  occasion in which the Fire Department had only 1 ambulance to service  the entire island. The report also noted that although the Fire Department  owns 12 fire trucks, none have ladders with high-rise capabilities to  service hotels and other high-rise structures on the island.
In addition to these infrastructure and equipment challenges, Fire  Department officials identified a number of challenges related to staffing.  For example, Fire Department officials told us that the department does  not have enough staff to meet its current needs and that its staffing  numbers have dropped below the National Fire Protection Association  safety standards which requires a minimum of four personnel on a fire  truck. The Fire Department currently has about 250 uniformed firefighters.  According to the Chief of the Fire Department, they require about 72  additional firefighters in order to satisfy the 5 to 6 on-duty personnel per  engine company standard of the National Fire Protection Association.
Officials stated that they are slowly trying to address their personnel  issues and have received funding from Government of Guam to hire more  firefighters. For example, in fiscal year 2013 the Government of Guam  provided the Fire Department approximately $1.8 million for hiring  personnel and the Fire Department added 28 new firefighter recruits.
Military personnel and their dependents living off base and any  contractors or construction workers associated with the realignment  would require the services of the Guam Fire Department for emergencies.  As such, like the Guam Police Department, Fire Department officials told  us that any population increase associated with the revised realignment  would exacerbate the current infrastructure, vehicles, and staffing  challenges the Fire Department is experiencing.
section_title: Education
paragraphs: The Guam Department of Education has been challenged in meeting its  requirements to effectively maintain its facilities with adequate staffing,  buses, and supplies, citing continuing budget constraints. In terms of  infrastructure, the Department of Education through a public/private  partnership constructed five new schools. Additionally, the Government of  Guam has secured funds for school infrastructure improvements through  bond financing. For example, the Government of Guam in fiscal year  2010 secured approximately $50 million in bond financing for the  construction of a new high school and in fiscal year 2007 secured  approximately $27 million in bond financing for school improvements  including Americans with Disabilities Act compliance, asbestos  abatement, security and fire alarm systems installation, and other  improvements. The Guam Department of Education also received $75.7  million in fiscal year 2010 through the American Recovery and  Reinvestment Act State Fiscal Stabilization Fund. The funding that was  received through the American Recovery and Reinvestment Act was  focused on improving the existing facilities. A significant portion of the  funding went to repairing all of the roofing at all of the schools, upgrading  electrical and fire alarm systems, replacing air conditioning units, and  renovating a middle school. The Army Corp of Engineers recently  completed a study commissioned by the Department of the Interior which  estimated $90 million in deferred maintenance costs. The Guam  Department of Education has been working with Guam’s Legislature and  Governor’s Office to identify funding sources to repair and renovate aging  school facilities.
Although efforts have been to improve the Department of Education’s  infrastructure, the department continues to face staffing challenges.
According to Department of Education officials, with an extremely limited  pool of applicants, the supply of fully certified, highly qualified teachers on  Guam continues to be an issue since teachers on the island can apply to  and be hired by the Department of Defense school system. In addition,  Guam officials also noted that the school system is experiencing a  shortage of school buses and that each of its buses averages five trips  per day to transport the island’s children to and from school. Generally,  children of military service members and DOD civilians attend DOD  schools, but it is anticipated that any children of temporary workers  associated with the realignment would attend Guam schools.
section_title: DOD Generally Provides Planning and Technical Assistance Support to Affected Communities While Public Infrastructure Projects Are Typically Funded by Other Federal Programs or the Communities
paragraphs: Historically, the majority of DOD’s support to defense-affected  communities has been to provide technical assistance and support  community planning and coordination efforts due to Base Realignment   However, OEA officials identified a few  and Closure (BRAC) decisions.examples in the past where DOD has provided direct funding to defense- affected communities to provide additional capacity specifically needed to  support DOD growth. DOD’s position has been that existing federal  programs should be leveraged as much as possible to pay for public  infrastructure needs and that local communities should largely be  responsible for obtaining funding for their public infrastructure  requirements. The Government of Guam has obtained non-DOD federal  funding for some public infrastructure projects through several federal  programs, such as a grant from the EPA to improve the water system. In  addition, local communities can also raise their own funds for public  infrastructure projects. However, in the case of Guam, some challenges  have been identified as affecting its ability to raise funds for such projects.
subsections: section_title: Majority of DOD Support to Communities Has Been for Planning and Technical Assistance Efforts, but Limited Direct Funding for Projects Has Been Made Available
paragraphs: OEA is the primary DOD office responsible for providing assistance to  communities, regions, and states affected by significant DOD program  changes. A majority of OEA’s support to defense-affected communities  has been for community planning and coordination efforts because of  BRAC decisions. For example, from 2005 through 2012, OEA provided  $76 million in grants to communities affected by BRAC decisions for  activities ranging from hiring planners and staff to developing land reuse  and redevelopment plans. Much of OEA’s assistance in the past was  directed toward communities that lost military and civilian personnel  because of the closure or major realignment of a base. However,  because the 2005 BRAC round and other DOD initiatives created  significant growth at many bases, OEA also has assisted defense- affected communities with growth planning. For example, one defense- affected community used OEA funding to hire personnel, maintain offices,  and conduct planning. Another community’s local redevelopment  authority used OEA funding to hire dedicated professional staff and  contract with a consultant to prepare a redevelopment plan. For each  community it assists, OEA assigns a project manager who can provide  assistance in a variety of ways. OEA can provide funds for hiring  consultants to assist in developing a reuse plan, information on federal  grant money or other available resources, and information on best  practices used by other closure communities. In addition, OEA’s website  provides reports containing lessons learned from other communities and  information on other available resources and OEA is currently developing  a community forum function on its website where community members  can exchange ideas and learn from each other’s experiences.
OEA has generally provided funding for technical assistance, but it also  has provided public infrastructure funding to local communities. For  example, OEA officials noted the public infrastructure funding associated  with the construction of Trident submarine bases at Bangor, Washington,  and Kings Bay, Georgia. In these two instances, DOD provided millions of  dollars in funding for public infrastructure projects to the local  communities surrounding Bangor and Kings Bay because DOD’s public  infrastructure needs would exceed those already in place and serving the  communities. During the 1970s, DOD decided to build submarine bases  at Bangor and Kings Bay and determined that the subsequent growth  would generate significant public infrastructure needs that the local  communities could not support. In both cases, the expansion of the bases  would require significant construction and result in the eventual influx of  significant amounts of personnel to the surrounding communities for  which the local governments’ public infrastructure was generally  inadequate. Congress authorized the Secretary of Defense to provide  financial assistance to the local communities for the costs of providing  increased municipal services and facilities. For both programs, DOD  assigned OEA with responsibility for program management. According to  congressional documents, DOD reported that it provided approximately  $55 million, in nominal dollars (i.e., not adjusted for inflation), to  communities surrounding Bangor for infrastructure improvements in  areas, such as water resources, schools, fire protection, parks, roads, law  and justice, social and health services, sewers, and libraries. According to  DOD documents, DOD reported providing approximately $48 million, in  nominal dollars, to communities surrounding Kings Bay for infrastructure  improvements similar to Bangor, such as utility systems, elementary  schools, a city hall, a fire station, and various public vehicles.
Additionally, in some instances, specific appropriations have been made  by Congress to OEA’s budget for public infrastructure improvements to  assist affected communities. For example, in 2011, Congress  appropriated $300 million for use by OEA for transportation infrastructure  improvements associated with medical facilities related to  recommendations of the BRAC Commission. Some of the communities  receiving funding were Montgomery County, Maryland, for the  construction of a pedestrian and bicycle underpass near the Walter Reed  National Military Medical Center and the City of San Antonio, Texas, for  the construction of a safer highway interchange near Brooke Army  Medical Center. In addition, also in 2011, Congress appropriated $500  million in funding for the construction, renovation, repair, or expansion of  public schools located on military installations to address capacity or  facility condition deficiencies. As implemented by OEA, these funds  were available for local educational agencies operating such public  schools.
section_title: Other Federal Funding Sources Have Been Used to Fund Guam Infrastructure Projects
paragraphs: According to OEA officials, DOD’s position is that local communities  should largely be responsible for obtaining funding for public  infrastructure requirements related to DOD basing decisions. This funding  can come from other, non-DOD federal programs, with DOD advocating  that existing federal programs should be leveraged as much as possible.  Along these lines, several federal agencies have existing programs that  have funded public infrastructure improvements on Guam in recent years.  For example, EPA, which assists Territories under its Environmental  Protection Consolidated Grants program, provided Guam with almost  $6.8 million in fiscal year 2012 to fund drinking water and wastewater  system improvements. The Department of the Interior’s Office of Insular  Affairs provided Guam with over $6 million in fiscal year 2013 in capital  improvement grants to fund a variety of infrastructure needs. Table 1  shows examples of public infrastructure programs for which Guam has  received funding from non-DOD federal programs in the last few years.
In addition to obtaining funding through non-DOD federal programs, local  communities can also raise their own funds for public infrastructure  projects. In the case of Guam, two key challenges have been identified as  affecting its ability to raise funds. Specifically, according to Government of  Guam officials, limited government revenues and limited debt capacity  due to its statutory debt limitation hinder its ability to finance its public  infrastructure projects. First, Guam has faced an operating deficit over the  past few years and current revenues are not sufficient to support  operational requirements. The Governor of Guam told us that without a  major increase in economic activity and the resulting increase in  revenues, the administration will be unable to address additional public  infrastructure requirements other than those necessary for basic  operations and debt service requirements. Government of Guam officials  explained that the major revenue challenges for the government are the  inability of taxpayers to pay taxes, the inability of the government to  access military bases to conduct random inspections to ensure military  contractors and vendors are in compliance with Guam’s tax laws, and the  large amount of DOD-controlled land on Guam that is not available for  economic development. Two Department of the Interior reports identified  that Guam’s operating revenues challenges are partly a result of poor tax   At the time of those reports, the Department of the  collection efforts.Interior estimated that persistent deficiencies in Guam’s tax collection  process were resulting in lost tax revenues of at least $23.5 million each  year. Guam officials told us that since those reports were issued they  have taken steps to address the findings in the reports and improve their  tax collection efforts but that the taxpayer’s inability to pay will always be  a challenge.
We have previously found that although communities near military growth  locations can face growth-related challenges in the short term, such as  challenges in providing additional infrastructure, they can expect to  realize economic benefits in the long term, such as increased revenue.  An increase in military and federal civilian employees on Guam stemming  from the realignment may be a potential source of additional revenue. For  instance, Guam receives federal income taxes paid by military and civilian  employees of the U.S. government stationed in Guam. Under section 30   the Internal Revenue  of the Organic Act of Guam and a related statute,Service reimburses Guam for the income taxes it collects from federal  civilian and military personnel assigned to Guam. The Internal Revenue  Service pays section 30 funding to Guam annually. The money  represents the income tax paid by federal employees and military service  members who work on Guam but not collected locally. This amounted to  $52 million in 2010, and this amount is expected to increase with the  realignment thereby providing the Government of Guam with increased  revenue. However, Guam officials told us they were concerned that since  the composition of the Marines to be relocated to Guam under the revised  realignment plan would be mostly rotational, they would not be  reimbursed for the income taxes since these personnel may be stationed  on Guam for less than 6 months. In response to these concerns, DOD  recently announced procedures to account for and reimburse to Guam  income tax paid by all U.S. Marines—whether part of a rotational unit or  permanently stationed on island. With DOD’s announcement, according  to Government of Guam officials, Marines stationed in Guam will be  included under section 30, regardless of how long they are on Guam,  thereby providing the Government of Guam with additional revenue.
The second challenge identified as affecting Guam’s ability to raise funds  is its statutory debt limitation. The Government of Guam’s ability to  borrow funds to help pay for public infrastructure projects and programs  related to the realignment may be constrained because of a statutory debt  limitation contained in the Organic Act of Guam, depending on the form  and terms of the prospective debt. Section 11 of the act places a  limitation on government borrowing, limiting Guam’s public indebtedness  to no more than 10 percent of the aggregate tax valuation of property on  Guam. However, not all government obligations are included in the debt  ceiling. For instance, section 11 of the Organic Act notes that bonds or  other obligations of the Government of Guam payable solely from  revenues derived from any public improvement or undertaking shall not  be considered public indebtedness as defined in the Organic Act of  Guam. As such, they would not be counted towards the government’s  statutory debt limitation. However, whether certain obligations fall into this  exception and should not be included in the Government of Guam’s debt  limit calculation has generally been a highly litigated issue and may be  determined on a case-by-case basis by the Guam courts.Government of Guam has determined and decided on the form and terms  of debt it plans to incur to help fund off-base projects and programs  related to the realignment, it is unknown what effect this debt limitation  provision will have on the ability of the Government of Guam to incur debt  for the purposes of the realignment.
Despite these challenges, the Government of Guam has been able to  obtain funding through issuing bonds in the past. For example, in  December 2011, the Government of Guam successfully issued $235  million in bonds to pay unpaid tax refunds and past due cost of living  allowances to certain retired government employees. These bonds were  financed from revenues generated from the island’s business privilege  tax. Further, in April 2011, the Government of Guam successfully sold  $90.7 million worth of bonds to construct a new Guam museum and for  other projects that benefit Guam’s tourism industry, such as the  restoration of a community center and bell tower and the construction of a  historic monument and plaza to commemorate Ferdinand Magellan’s visit  to Guam. These bonds were financed from revenues generated from  Guam’s hotel occupancy tax. These successful bond offerings  demonstrate that a market may exist among investors for the Government  of Guam’s debt, which could be a potential source of funding for its  necessary public infrastructure improvements. Further, Guam’s  autonomous government agencies related to public infrastructure— Power, Waterworks, and Port Authorities—have the ability to issue bonds  for infrastructure improvements. Bonds issued by autonomous agencies  are often backed by the agencies’ own revenue streams, such as  customer rates. Guam officials cautioned, however, there is a limit to how  much they can raise rates on their customers to increase revenue,  particularly since for some utilities, Guam already has relatively high rates  when compared to other insular areas and Hawaii. Like other bonds  issued by the Government of Guam, the determination of whether a bond  issued by one of these agencies would count against the Government of  Guam’s statutory debt ceiling also depends upon the form and terms of  the debt and can be a highly litigated issue.
section_title: DOD Has Not Revalidated Its Guam Public Infrastructure Requirements or Differentiated Between Requirements to Address Long- Standing Conditions and Those Related to the Revised Realignment Plan
paragraphs: DOD has requested funding from Congress for projects to improve  Guam’s public infrastructure. However, the projects included in these  budget requests were validated based on the 2006 realignment plan, and  DOD has not revalidated public infrastructure requirements for Guam to  reflect the revised realignment plan or differentiated between  requirements to address long-standing conditions in Guam’s public  infrastructure and those specifically related to additional capacity for the  realignment. According to DOD, a revised list of Guam public  infrastructure requirements and cost estimates based on the revised  realignment plan that calls for over 11,000 less people coming to Guam  than the previous plan will not be available until 2015 when DOD  completes the supplemental EIS. Even so, DOD has requested over  $400 million for Guam infrastructure projects in its budget requests for  fiscal years 2012 through 2014. However, since these projects were  originally validated on the basis of the 2006 realignment plan, it is  uncertain to what extent these projects are necessary or necessary to the  same extent given the significant reduction in forces associated with the  revised realignment plan and the fact that the potential effect has not  been revalidated. Congress has restricted the use of funds until further  information is provided related to the realignment plan and imposed other  restrictions on use of the funding. It is also unclear to what extent the  projects specified in DOD’s budget requests are required to address  additional capacity to accommodate the current realignment plan or to  address long-standing deficiencies in Guam’s infrastructure because  DOD has not clearly differentiated between these two types of  requirements.
subsections: section_title: An Updated List of Infrastructure Requirements for the Realignment Will Not Be Available Until after the Supplemental EIS
paragraphs: Although a list of public infrastructure projects was developed for the  2006 realignment plan for approximately 17,600 people relocating to  Guam, Joint Guam Program Office officials stated that a revised list of  Guam public infrastructure requirements and cost estimates based on the  current realignment plan for approximately 6,300 people will not be  available until sometime in 2015 when DOD completes the ongoing  supplemental EIS. In February 2010 after the original realignment plan  was announced, the Deputy Secretary of Defense chaired a meeting of  the Economic Adjustment Committee, the goal of which was to develop a  Guam public infrastructure funding plan for the original realignment.According to OEA officials the Economic Adjustment Committee divided  this task into a public infrastructure assessment team and a  socioeconomic project assessment team. The public infrastructure team  examined Guam’s water and wastewater system, port, solid waste, power  system, and roads. The socioeconomic project team examined health  care, education, cultural resources, emergency services, judicial services,  and other public infrastructure throughout the island. Input to the  assessments was initially provided by the Office of the Governor of  Guam, working with the territory’s executive departments, who proposed  specific projects within each infrastructure area for further consideration.  Finally, a team comprised of officials from federal agencies with purview  over one or more of the identified infrastructure areas validated the need,  scope, and funding required for each public infrastructure project.  Ultimately, the Economic Adjustment Committee developed a list of  validated projects needed to prepare Guam for the original realignment  plan and these projects were subsequently included in DOD’s budget  requests (see table 2). The Economic Adjustment Committee considered  other projects but did not include them on the validated list and, as a  result, the projects were not included in DOD budget requests.
section_title: DOD Has Requested Funding to Improve Guam’s Public Infrastructure
paragraphs: DOD has requested over $400 million to fund Guam public infrastructure  projects in DOD’s budget requests for fiscal years 2012 through 2014.  Because OEA is the primary DOD office responsible for providing  assistance to communities, regions, and states affected by significant  DOD program changes, DOD included these projects in OEA’s budget  requests. Table 2 provides additional details regarding the requests and  associated infrastructure projects and justifications.
In response to DOD’s requests for Guam public infrastructure funding,  Congress has appropriated some funds, but it has placed limitations on  the use of the funds. For example, in 2011, Congress appropriated $33  million to DOD, acting through the OEA, to assist the civilian population of   However, this funding  Guam in response to the military realignment.was subject to restrictions on the expenditure of funds for military and  public infrastructure projects in Guam related to the realignment of Marine  Corps forces from Okinawa to Guam. The National Defense  Authorization Act for Fiscal Year 2013 contained similar restrictions, and  in the Consolidated and Further Continuing Appropriations Act, 2013,  Congress rescinded $21 million of the $33 million appropriated to DOD  for fiscal year 2012 for Guam. OEA requested $139.4 million for public  infrastructure projects on Guam for fiscal year 2013. Congress  appropriated $243.4 million for OEA for fiscal year 2013,no authorization for use of the funding for public infrastructure projects on  Guam. Consequently, according to an OEA official, because DOD did not  have the authority to spend the funds for Guam, $119.4 million was  reprogrammed in July 2013 to address shortcomings elsewhere in DOD.  As a result, these funds are no longer available to DOD for Guam public  infrastructure projects. These congressional actions have implications for  DOD’s fiscal year 2014 budget request. For example, in its fiscal year  2014 budget request, DOD requested $273.3 million to fund  improvements to the water treatment system on Guam. These funds were  intended to fund the second phase of those improvements, as DOD’s  expectation was that the $106.4 million requested for fiscal year 2013  would have funded the first phase. While DOD is awaiting congressional  action on its fiscal year 2014 budget request, it appears that DOD’s  request is in advance of need since there was no phase one of the water  and wastewater treatment funding and the funds were reprogrammed. As  of October 2014, bills pending in Congress varied on the extension of the  restriction on the use of funds for the realignment of Marines to Guam,  including the restriction related to public infrastructure. While the House   but provided  bill for the National Defense Authorization Act for Fiscal Year 2014 would  repeal the restriction from the previous year, the version of the bill  reported by the Senate Armed Services Committee included an extension  of the restriction on use of funds to implement the realignment and public  infrastructure funding.
section_title: DOD Has Not Revalidated the Guam Public Infrastructure Projects Included in Budget Requests or Differentiated Between Current Requirements and Those for the Realignment
paragraphs: DOD has not revalidated the projects identified in its budget requests to  reflect the smaller DOD population associated with the revised  realignment plan. As a result, it is unclear to what extent these projects  are still needed or are scoped appropriately, given the reduced numbers  of Marines slated to relocate to Guam. OEA said that some of these  projects, such as the artifact repository, should not be affected despite the  change in the realignment plans because it is needed to fulfill federal  historic preservation requirements and would be required under either  plan. However, it is unclear if other projects, such as the water and  wastewater improvements and the mental health facility, are still  necessary or necessary to the same extent given the significant reduction  in forces under the revised realignment plan and the as yet undetermined  location of the main Marine Corps installation on the island. According to  DOD officials, the projects initially validated by the Economic Adjustment  Committee for the 2006 realignment plan and included in DOD budget  requests will be reassessed based on the revised realignment plan as  part of the supplemental EIS process to be completed in 2015.
DOD also has not clearly differentiated between requirements to address  long-standing conditions in Guam’s public infrastructure and those to  address increased capacity to support the new realignment plan for most  sectors. As a result, it is unclear to what extent the public infrastructure  projects in DOD’s budget requests are needed to support the  realignment. For example, one of the possible locations for constructing  and operating the main Marine installation being considered under the  ongoing supplemental EIS is Naval Base Guam in the southern part of  the island. However, this base handles all of its own wastewater needs  and gets its potable water from its own wells and the Fena Reservoir,  thus not requiring DOD to rely on the public water and wastewater  systems. If this location is chosen, it would raise questions about the  funding DOD has requested for making improvements to the water and  wastewater treatment plant that DOD had justified by citing the need for  additional capacity to support the additional troops associated with the  realignment. Similarly, DOD has not estimated the extent to which the  mental health facility or school bus acquisition projects would actually be  used by personnel associated with the new realignment, none of whom  were on Guam in 2012 or will be on Guam in 2013 or 2014 even though  DOD cited the additional capacity associated with the realignment as a  basis for its budget request.
For the electricity sector, we found that DOD has taken steps to  differentiate between requirements related to the realignment and those  to address long-standing conditions. In February 2013, DOD asked the  Guam Power Authority to model what upgrades would be needed to meet  the increased demand associated with three of the possible five locations  for constructing and operating the main Marine Corps installation. The  Power Authority provided DOD with the specific electric transmission and  distribution improvements that would be needed and their estimated costs  which ranged from $25 million to $35 million depending on the location.  However, according to our discussions with Government of Guam and  DOD officials, DOD has not asked for similar analyses from other affected  Guam agencies or begun a comprehensive analysis across all public  infrastructure sectors to differentiate between requirements to address  existing conditions and what is needed specifically to address additional  capacity for the realignment.
The Joint Guam Program Office and Naval Facilities Engineering  Command officials told us that they are currently conducting assessments  to reexamine and revalidate the need, scope, and funding required for all  utilities and infrastructure projects during DOD’s development of the  supplemental EIS. However, they were uncertain regarding the degree to  which the supplemental EIS would fully differentiate between identifying  projects that address existing Guam conditions and additional capacity for  DOD requirements. Office of Management and Budget guidance  containing best practices for cost estimating in the context of capital  programming, which includes planning and budgeting, suggests that it is  a best practice to continuously update the cost estimating process, based  on the latest information available, to keep estimates current, accurate,  and valid. In addition, GAO’s Cost Estimating and Assessment Guide  states that cost estimates should have all cost inputs checked to verify  that they are as accurate as possible and that estimates should be   While we acknowledge that  updated to reflect changes in requirements.DOD has not completed the supplemental EIS and developed an updated  list of public infrastructure project requirements, DOD is requesting funds  for existing Guam public infrastructure projects in its budget requests that  DOD has not revalidated in light of changes to its realignment plans.  Moreover, DOD has not conducted a comprehensive analysis to  differentiate between requirements to address long-standing Guam public  infrastructure deficiencies and extra capacity to support the realignment.  Without such an analysis, DOD will not have the information to identify  accurately the costs directly attributable to the realignment and help  justify its budget requests to Congress to help pay for the portion of the  projects that are attributable to the extra capacity to support the  realignment. Both Guam and DOD officials also agreed that developing  this type of information would better determine what appropriate amount  of Guam public infrastructure improvements DOD should fund and those  Guam should fund. Without this information, DOD cannot fully inform  Congress of what funding is actually needed to fund public infrastructure  development to support the revised realignment plan.
section_title: DOD’s Cost Estimate to Improve Guam’s Water and Wastewater Infrastructure Is Not Reliable
paragraphs: The cost estimate, DOD has used to support its budget requests for water  and wastewater infrastructure projects on Guam, did not fully adhere to  best practices for developing a reliable cost estimate, which is at the core  of successfully managing a project within cost and affordability guidelines.  During the development of the EIS, DOD, the Guam Waterworks  Authority, and the EPA cooperated to identify and prioritize water and  wastewater projects island-wide that were necessary to support the 2006  Marine Corps realignment plan. As part of this effort, DOD (as the EIS  sponsor) paid for and EPA (as an EIS cooperating agency) managed a  contract with an environmental firm for the development of a refined  Guam water and wastewater infrastructure cost estimate. The contractor  updated the original 2010 estimate on several occasions with the latest  being in September 2012. That update indicates that approximately $1.3  billion in improvements are needed for Guam’s water and wastewater  infrastructure to address existing deficiencies, including out-of-compliance  facilities, as well as requirements to support the Marine Corps  realignment. DOD used this cost estimate to support its fiscal year 2013  and 2014 budget requests for Guam water and wastewater  improvements. However, when reviewing this cost estimate, we were  unable to determine which projects within the $1.3 billion estimate were  specifically for capacity increases due to the military realignment and  associated with the fiscal years 2013 and 2014 budget requests. In  assessing the estimate against best practices, we determined that this  estimate is not reliable because it does not include all relevant costs, is  based on limited data, and, as documented, lacks many of the key  characteristics to be considered a reliable cost estimate. In addition, we  found no evidence that actual costs were incorporated into the estimate  and that risk and uncertainty were adequately assessed in the estimate.
Office of Management and Budget (OMB) guidance containing best  practices for cost estimating in the context of capital programming notes  that a disciplined cost estimating process provides greater information  management support, more accurate and timely cost estimates and  improved risk assessments that will help to increase the credibility of  capital programming cost estimates. Among other things, OMB’s  guidance states that credible cost estimates are vital for sound  management decision making and for any program or capital project to  succeed. It further notes that early emphasis on cost estimating during  the planning phase is critical to successful life cycle management of a  program or project. Without such an estimate, agencies are at increased  risk of experiencing cost overruns, missed deadlines, and performance  shortfalls.
GAO-09-3SP. managing capital program costs. Such an estimate provides the basis for  informed investment decision making, realistic budget formulation, and  accountability for results. Furthermore, the guide indicates that these best  practices can be organized into the four characteristics of a reliable cost  estimate that management can use for making informed program and  budget decisions. Specifically, an estimate is considered comprehensive when it accounts for all possible costs associated  with a program, is structured in sufficient detail to ensure that costs  are neither omitted nor double counted, and documents all cost- influencing assumptions; well-documented when supporting documentation explains the  process, sources, and methods used to create the estimate, contains  the underlying data used to develop the estimate, and is adequately  reviewed and approved by management; accurate when it is not overly conservative or optimistic, is based on  an assessment of the costs most likely to be incurred, and is regularly  updated so that it always reflects the current status of the program;  and credible when any limitations of the analysis because of uncertainty  or sensitivity surrounding data or assumptions are discussed, the  estimate’s results are cross-checked, and an independent cost  estimate is conducted by a group outside the acquiring organization to  determine whether other estimating methods produce similar results.
Each of these four characteristics consists of several best practices (see  appendix II for a summary of these practices and our Cost Estimating and  Assessment Guide for more details on the individual best practices). We  evaluated the estimate against each of the individual best practices,  assigning a score on a scale of 1 to 5 to indicate the degree to which the  cost estimate met each best practice.
Not Met (1 point)—DOD provided no evidence that satisfies any  portion of the best practice criterion.
Minimally Met (2 points)—DOD provided evidence that satisfies a  small portion of the best practice criterion.
Partially Met (3 points)—DOD provided evidence that satisfies about  half of the best practice criterion.
Substantially Met (4 points)—DOD provided evidence that satisfies a  large portion of the best practice criterion.
Fully Met (5 points)—DOD provided complete evidence that satisfies  the entire best practice criterion.
We then determined the overall assessment rating for each of the four  characteristics by totaling the scores assigned to the individual best  practices within each characteristic to derive an average score for that  characteristic. The average scores fell into the following ranges:
Not Met = 0 to 1.4
Minimally Met = 1.5 to 2.4
Partially Met = 2.5 to 3.4
Substantially Met = 3.5 to 4.4
Fully Met = 4.5 to 5.0.
Best practices assessed as not applicable were not given a score and  were not included in our calculation of the overall assessment.
To be considered reliable, an estimate must substantially or fully meet all  four characteristics. We found that the water and wastewater cost  estimate for Guam did not meet one of the characteristics and only  minimally met the remaining three. As a result, we determined that the  estimate is not reliable. Table 3 provides a summary of the results of  GAO’s assessment of the Guam water and wastewater cost estimate  based on cost estimating best practices. See appendix II for our complete  analysis of the individual best practices for each of the characteristics.
OEA officials stated that the intent of the estimate was to develop a  preliminary rough-order-of-magnitude estimate in order to provide enough  information to get the budget process started for funding urgent Guam  water and wastewater improvements. The officials further stated that they  believe the estimate was sufficient for this purpose. In addition, according  to OEA and EPA officials, the cost estimate was not intended to represent  a “budget quality” life cycle cost estimate given the complexity of the  project and lack of documentation submitted by the Government of Guam  in developing the estimate. Nonetheless, DOD used this cost estimate to  support its fiscal year 2013 and 2014 budget requests for funding Guam  water and wastewater improvements.
In the future, as DOD updates its list of Guam public infrastructure project  requirements when the supplemental EIS is completed and develops the  associated cost estimates, it has the opportunity to ensure that the  estimates it is using more completely incorporate cost estimating best  practices, thereby improving the quality of the cost estimates and making  them easier to defend in future budgets and decision making. According  to documentation attached to DOD’s fiscal year 2013 budget, DOD  emphasized that it cannot continue the practice of starting programs that  prove to be unaffordable and according to our Cost Estimating and  Assessment Guide, whether or not a program is affordable depends a  great deal on the quality of its cost estimate. Without a reliable estimate  that is updated in response to program changes, Congress is hindered in  its ability to assess budgets and affordability. Also, without complete cost  estimates for the potential total financial commitment for operating and  maintaining Guam’s water and wastewater systems, Congress will not  have needed information to weigh the proposed cost of the Marine  realignment plans against other demands for resources.
section_title: Conclusions
paragraphs: Until DOD has the results of the supplemental EIS and issues a record of  decision, it is understandable that DOD will not be able to finalize  comprehensive public infrastructure requirements and cost estimates for  its planned realignment of Marines and dependents from Japan to Guam.  Nevertheless, in the interim, DOD through OEA has continued to request  funds for Guam public infrastructure projects without updating its  requirements based on the revised realignment plan that calls for a much  smaller Marine Corps presence in Guam than previously planned.  Furthermore, DOD and the Navy’s JGPO have not clearly identified which  Guam public infrastructure requirements and costs directly support the  additional capacity needed for the realignment and which address current  deficiencies. In addition, OEA did not fully incorporate cost estimating  best practices in developing its cost estimate for Guam’s water and  wastewater infrastructure projects that was used to support previous  budget requests. Our analysis of the cost estimate and its updates found  that the estimate satisfies a small portion of the best practice criteria and  thus is not a reliable estimate to support budget requests. Further, two  important points emerged: (1) the true cost of this water and wastewater  project is not known, and (2) it is unclear whether all of the underlying  improvements are needed to support the realignment.
Actions such as revalidating the original list of infrastructure projects,  conducting analyses that differentiate existing Guam public infrastructure  deficiencies from additional capacity needed to support the realignment,  and more fully incorporating cost estimating practices to help DOD  identify the costs directly attributable to the realignment would provide  DOD with the information it needs to support its Guam budget requests to  Congress. Without reliable cost estimates developed for the realignment  plan in a manner consistent with GAO’s cost estimating guide, DOD will  be hampered in achieving its affordability goal of not starting a program  without firm cost goals in place and may be seeking funds for public  infrastructure projects that may no longer be needed. Furthermore, the  credibility of DOD’s estimate will be questionable, and Congress cannot  be reasonably assured that it is sufficiently informed regarding the funding  that may be needed for Guam public infrastructure projects.
section_title: Recommendations for Executive Action
paragraphs: To provide DOD and Congress with sufficient information regarding the  requirements and costs associated with DOD’s current Guam realignment  plans and the public infrastructure necessary to support that realignment,  we recommend that the Secretary of Defense direct the Department of  the Navy’s JGPO in concert with OEA take the following three actions:
Revalidate the need and scope of Guam public infrastructure projects  included in DOD budget requests based on the reduced number of  Marines and dependents DOD intends to relocate to Guam.
Conduct a comprehensive analysis across all applicable public  infrastructure sectors to determine what infrastructure requirements  and costs are needed to address existing deficiencies in Guam’s  infrastructure and what requirements and costs are needed to directly  support the additional capacity needed to support the realignment,  and
As future cost estimates for Guam public infrastructure projects are  developed, fully incorporate the best practices identified by GAO for  developing high quality cost estimates.
section_title: Agency and Third Party Comments and Our Evaluation
paragraphs: We provided a draft of this report to DOD, the Department of the Interior,  EPA, and the Office of the Governor of Guam for review and comment. In  written comments, which are reprinted in their entirety in appendix III,  DOD partially concurred with our three recommendations.  DOD, the  Department of the Interior, EPA, and the Office of the Governor of Guam  provided technical comments that have been incorporated into this report  as appropriate.
DOD partially concurred with our first recommendation to revalidate the  need and scope of Guam public infrastructure projects included in DOD  budget requests. DOD concurred that the need and scope of additional,  realignment-related Guam public infrastructure projects will be revalidated  as necessary based on the results of the analysis in the ongoing  supplemental EIS. However, for the Guam wastewater public  infrastructure project, DOD commented that the requested funding is not  contingent upon the size of the realignment but rather represents funding  for improvements to address noncompliance with EPA regulations. As a  result, DOD concluded that the requests associated with the wastewater  treatment facilities do not warrant realignment-related revalidation.  We  disagree.  First, while DOD’s justifications for the wastewater treatment  funding cite the need for remedies and residents’ current needs, the  justifications also state that the funding and project is required to support  growth resulting from the military realignment. Given that the size of the  realignment has been reduced significantly, a revalidation of the  wastewater project remains warranted. Second, without a revalidation of  the wastewater project, it will continue to be unclear to what extent the  requested funds for the project are still necessary or necessary to the  same extent given the significant reduction in forces under the revised  realignment plan and the as yet undetermined location of the main Marine  Corps installation. Specifically, as discussed in the report, a possible  location for the main Marine installation is Naval Base Guam, which  handles its own wastewater needs and does not require DOD to rely on  the public wastewater system.  If this location is chosen, DOD would  appear to no longer have a basis for its cited need for additional  wastewater capacity to support the realignment as part of its budget  request justifications.
DOD stated that it partially concurred with our second recommendation to  conduct a comprehensive analysis across all applicable public  infrastructure sectors to determine what infrastructure requirements and  costs are needed to address long-standing deficiencies in Guam’s  infrastructure and which are needed to directly support the realignment.  DOD noted that a determination of realignment-related infrastructure  requirements and costs is an anticipated outcome of the supplemental  EIS. DOD’s comments, however, do not address whether it plans to  clearly differentiate between those infrastructure requirements and costs  needed to address existing deficiencies in Guam’s infrastructure and  those needed to directly support the additional capacity associated with  the realignment, as we specifically recommended.  Doing so is important,  because as explained in the report, clearly differentiating between  existing public infrastructure deficiencies and any additional capacity  needed to support the realignment would help DOD more accurately  identify the costs directly attributable to the realignment.  DOD’s analysis  would then provide congressional decision makers with information they  need to appropriately fund requests for public infrastructure projects on  Guam.
DOD partially concurred with our third recommendation to fully  incorporate the best practices identified by GAO for developing high  quality cost estimates, as future cost estimates for Guam public  infrastructure projects are developed. In response to this  recommendation, DOD stated that future realignment-related cost  estimates and budget submissions will be developed in accordance with  DOD’s Financial Management Regulation and that final engineering cost  estimates for specific projects will be developed in the normal course of  executing the fiscal year 2014 program. While budget submissions must  conform to DOD guidance, OMB guidance and our cost estimating and  assessment guide, which is a compilation of cost estimating best  practices from across industry and government, confirm that cost  estimates should conform to best practices and follow certain specific  steps to ensure that they are reliable and credible. Development of  reliable and credible cost estimates is important, whether as part of  budget submissions or in advance of those submissions. As discussed in  this report, our analysis of DOD’s cost estimate for Guam’s largest public  infrastructure project—the water and wastewater treatment facility— demonstrates that weaknesses exist in DOD’s cost estimating practices  that, if left unaddressed, increase the likelihood that costs will increase.  By not following best practices in preparing its cost estimate, DOD cannot  ensure that the estimate is reliable and credible. As DOD continues to  provide information to Congress regarding the realignment, we believe  DOD has the opportunity to improve the quality of its estimates by  applying cost estimating best practices in its approach. To better inform  the budget decisionmaking process of the likely costs, affordability, and  scheduling of funding needed to support the Guam realignment, DOD  should take every available opportunity to employ best practices and  provide Congress with the highest quality cost estimates possible.
We are sending copies of this report to appropriate congressional  committees; the Secretary of Defense; the Secretaries of the Army, Navy,  and Air Force; the Commandant of the Marine Corps; the Director, Office  of Management and Budget; and appropriate organizations. In addition,  this report will be available at no charge on our website at  http://www.gao.gov.
If you or your staff has any questions about this report, please contact me  at (202) 512- 5741 or ayersj@gao.gov. Contact points for our Offices of  Congressional Affairs and Public Affairs may be found on the last page of  this report. GAO staff who made major contributions to this report are  listed in appendix IV.
section_title: Appendix I: Scope and Methodology
paragraphs: To describe the existing condition of the public infrastructure on Guam,  we interviewed and collected information from various Department of  Defense (DOD) officials, including those in the
Office of the Under Secretary of Defense for Policy;
Office of Economic Adjustment (OEA), Office of the Under Secretary  of Defense for Acquisitions, Technology, and Logistics;
Naval Facilities Engineering Command;
Joint Region Marianas, Department of the Navy; and  Joint Guam Program Office, Department of the Navy.
We also interviewed other federal officials from the following offices and  agencies assisting Guam in preparing for the realignment:
Office of Management and Budget
Council on Environmental Quality
Department of the Interior’s Office of Insular Affairs
Environmental Protection Agency, Region IX
Department of Health and Human Services, Region IX.
We conducted a site visit to Guam in April 2013, where we met with officials in Guam’s Military Buildup Office.  the Governor of Guam,  the Speaker and other members of the Guam Legislature,  the Guam Auditor General, and  We also interviewed other Guam officials representing the following public  infrastructure sectors on Guam likely to be affected by the realignment:
Guam Waterworks Authority
Guam Power Authority
Consolidated Commission on Utilities
Guam Department of Public Works
Port Authority of Guam
Guam Department of Public Health and Social Services
Guam Environmental Protection Agency
Guam Fire Department
Guam Police Department
Guam Department of Education
Guam State Historic Preservation Office.
During our site visit to Guam, we toured Andersen Air Force Base and  some of the locations cited in documents related to the supplemental  Environmental Impact Statement (EIS) as possible locations for the  establishment of a main Marine Corps installation and Marine Corps live- fire training range complex on Guam. We also visited the Northern District  Wastewater Plant and Port of Guam which had been cited by DOD and  Government of Guam officials as two of the most critical infrastructure  sectors requiring improvements.
For the purposes of our review, public infrastructure is defined as  including the utilities, methods of transportation, equipment, or facilities  under the control of a public entity, such as a power authority, or local  government for use by the public to support the realignment of forces and  dependents. The public infrastructure sectors covered by our review  were chosen based on inclusion in (1) prior Government of Guam and  DOD project lists developed for the 2006 Roadmap realignment plan, (2)  DOD budget requests, (3) prior GAO reports on the realignment of U.S.  forces to Guam, and (4) federal agency inspector general reports, as well  as those sectors identified during our interviews by Government of Guam  and DOD officials. The following eight sectors are included in our review:  electric power, water and wastewater, port, solid waste, public health, law  enforcement, fire department, and education infrastructure. The highways  and other roads sector is not included in our analysis because  Government of Guam and DOD officials did not identify it as a sector  likely to be adversely affected by the realignment since existing programs  and agencies, such as the Defense Access Roads and the Department  of Transportation’s Federal Highway Administration, are currently  allocating funds for road and highway improvements on Guam.
For our first objective regarding the existing condition of Guam’s public  infrastructure, we reviewed the original EIS, a DOD engineering review,  technical studies, and business case analyses and conducted interviews.  In addition, we reviewed inspector general reports prepared by the  Department of the Interior regarding the condition of specific sectors of  Guam’s public infrastructure. We reviewed these reports and determined  that their methodologies were sufficiently reliable for our purposes. We  corroborated the information contained in the inspector general reports by  interviewing Guam officials from the relevant public infrastructure sectors  to determine the extent to which the findings of the various reports  accurately portrayed the condition of Guam’s public infrastructure and  remained valid. We also reviewed the socioeconomic project needs  assessment worksheets developed by Guam and provided to the  Economic Adjustment Committee in 2010 as part of the Economic  Adjustment Committee’s efforts to develop a list of public infrastructure  requirements for the original realignment plan. Additionally, we reviewed  the completed supplemental EIS questionnaires administered by DOD to  Guam to obtain updated information regarding the state of Guam’s public  infrastructure and potential impact of the revised realignment plan.
For our second objective to describe the types of assistance DOD  generally has provided to defense-affected communities and the other  types of funding sources that have been used to fund Guam public  infrastructure projects, we interviewed OEA officials to identify the most  relevant historical examples similar to Guam and reviewed past  congressional hearings, DOD documents, and fiscal impact analyses to  determine previous instances of where DOD provided public  infrastructure funding to communities. To identify examples of non-DOD,  federal programs from which Guam has received public infrastructure  funding in the past, we interviewed OEA, Department of the Interior, and  Government of Guam officials and reviewed Guam’s Single Audit report  and Summary of Schedule of Expenditures of Federal Awards. To  determine Guam’s potential for raising additional revenue to fund  infrastructure projects, we interviewed Guam officials and reviewed the  Government of Guam’s 2014 executive budget request and long-term  debt abstract.
For our third objective to assess DOD’s efforts to revalidate its public  infrastructure requirements under the revised realignment plan and  differentiate between requirements needed to address Guam’s existing  public infrastructure deficiencies and those related to the realignment, we  reviewed information on DOD and the Government of Guam’s planning  activities related to public infrastructure improvements needed to support  the revised realignment plan and compared this information to previous  public infrastructure lists developed by the Government of Guam, DOD,  and other federal entities to support the 2006 Roadmap realignment plan.  We interviewed DOD officials regarding the extent to which DOD was  revalidating and differentiating between requirements as part of the  current supplemental EIS and also interviewed Government of Guam  officials from all the infrastructure sectors we reviewed to determine the  extent to which they had been contacted by DOD to update or  differentiate between requirements. We evaluated DOD’s efforts with  criteria established in our Cost Estimating and Assessment Guide: Best   and OMB  Practices for Developing and Managing Capital Program Costsguidance containing best practices for capital programming. To determine  how much DOD has requested to support public infrastructure projects on  Guam, we reviewed DOD budget materials and interviewed OEA officials  to determine what funding DOD has requested to support public  infrastructure projects on Guam related to the realignment, as well as  statutory restrictions on the use of these funds for these types of projects.
GAO-09-3SP. characteristics representing practices that help ensure that a cost  estimate is (1) comprehensive, (2) well documented, (3) accurate, and (4)  credible. Each of these four characteristics consists of several best  practices (see appendix II for a summary of these practices and our Cost  Estimating and Assessment Guide for more details on the individual best  practices). We evaluated the estimate against each of the individual best  practices, assigning a score on a scale of 1 to 5 to indicate the degree to  which the cost estimate met each best practice.
Not Met (1 point)— DOD provided no evidence that satisfies any  portion of the best practice criterion.
Minimally Met (2 points)—DOD provided evidence that satisfies a  small portion of the best practice criterion.
Partially Met (3 points)—DOD provided evidence that satisfies about  half of the best practice criterion.
Substantially Met (4 points)—DOD provided evidence that satisfies a  large portion of the best practice criterion.
Fully Met (5 points)—DOD provided complete evidence that satisfies  the entire best practice criterion.
We determined the overall assessment rating for each of the four  characteristics by totaling the scores assigned to the individual best  practices within each characteristic to derive an average score for that  characteristic. The average scores fell into the following ranges:
Not Met = 0 to 1.4
Minimally Met = 1.5 to 2.4
Partially Met = 2.5 to 3.4
Substantially Met = 3.5 to 4.4
Fully Met = 4.5 to 5.0.
Best practices assessed as not applicable were not given a score and  were not included in our calculation of the overall assessment.held detailed discussions with EPA and DOD officials and reviewed  program documentation to identify key factors that could affect the  potential total costs. We also met with these officials to discuss the results  of our evaluation.
We also  To determine the reliability of the numerical data provided to us by DOD,  other federal organizations, and by Government of Guam officials, we  collected information on how the data was collected, managed, and used  through interviews with relevant officials. By assessing this information  against GAO data quality standards, we determined that the data  presented in our findings were sufficiently reliable for the purposes of this  report.
We conducted this performance audit from February 2013 through  December 2013, in accordance with generally accepted government  auditing standards. Those standards require that we plan and perform the  audit to obtain sufficient, appropriate evidence to provide a reasonable  basis for our findings and conclusions based on our audit objectives. We  believe the evidence obtained provides a reasonable basis for our  findings and conclusions based on our audit objectives.
section_title: Appendix II: Detailed Assessment of the Guam Water and Wastewater Cost Estimate
paragraphs: This appendix provides the detailed results of our analysis of the cost  estimate that was used to support the Department of Defense’s (DOD)  budget requests for funding to improve Guam’s water and wastewater  systems. Specifically, we assessed the extent to which the cost estimate  followed the best practices of a reliable cost estimate as documented in  our 2009 Cost Estimating and Assessment Guide: Best Practices for  Developing and Managing Capital Program Costs. We reviewed the cost  estimate for the water and wastewater system and assessed each  individual best practice that comprises each of the four characteristics of  a reliable cost estimate as summarized in the report’s body and assigned  a score on a scale of 1 to 5 to indicate the degree to which the estimate  met each best practice.
Not Met (1 point)—DOD provided no evidence that satisfies any  portion of the best practice criterion.
Minimally Met (2 points)—DOD provided evidence that satisfies a  small portion of the best practice criterion.
Partially Met (3 points)—DOD provided evidence that satisfies about  half of the best practice criterion.
Substantially Met (4 points)—DOD provided evidence that satisfies a  large portion of the best practice criterion.
Fully Met (5 points)—DOD provided complete evidence that satisfies  the entire best practice criterion.
We determined the overall assessment rating for each characteristic by  totaling the scores assigned to the individual best practices within each  characteristic to derive an average score for that characteristic. The  average scores fell into the following ranges:
Not Met = 0 to 1.4
Minimally Met = 1.5 to 2.4
Partially Met = 2.5 to 3.4
Substantially Met = 3.5 to 4.4
Fully Met = 4.5 to 5.0.
Best practices assessed as not applicable were not given a score and  were not included in our calculation of the overall assessment.provides the detailed results of our analysis of the cost estimate.
section_title: Appendix III: Comments from the Department of Defense
section_title: Appendix IV: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, Laura Durland, Assistant  Director; Shawn Arbogast, Remmie Arnold, Grace Coleman, Tisha  Derricotte, Adam Hatton, Jim Manzo, Karen Richey, Ophelia Robinson,  Michael Shaughnessy, and Amie Steele made key contributions to this  report.
section_title: Related GAO Products
paragraphs: Defense Management: More Reliable Cost Estimates and Further  Planning Needed to Inform the Marine Corps Realignment Initiatives in  the Pacific.GAO-13-360. Washington, D.C.: June 11, 2013.
Force Structure: Improved Cost Information and Analysis Needed to  Guide Overseas Military Posture Decisions. GAO-12-711. Washington,  D.C.: June 6, 2012.
Military Buildup on Guam: Costs and Challenges in Meeting Construction  Timelines. GAO-11-459R. Washington, D.C.: June 27, 2011.
Defense Management: Comprehensive Cost Information and Analysis of  Alternatives Needed to Assess Military Posture in Asia. GAO-11-316.  Washington, D.C.: May 25, 2011.
Defense Infrastructure: The Navy Needs Better Documentation to  Support Its Proposed Military Treatment Facilities on Guam.   GAO-11-206. Washington, D.C.: April 5, 2011.
Defense Infrastructure: Guam Needs Timely Information from DOD to  Meet Challenges in Planning and Financing Off-Base Projects and  Programs to Support a Larger Military Presence. GAO-10-90R.  Washington, D.C.: November 13, 2009.
Defense Infrastructure: DOD Needs to Provide Updated Labor  Requirements to Help Guam Adequately Develop Its Labor Force for the  Military Buildup. GAO-10-72. Washington, D.C.: October 14, 2009.
Defense Infrastructure: Planning Challenges Could Increase Risks for  DOD in Providing Utility Services When Needed to Support the Military  Buildup on Guam. GAO-09-653. Washington, D.C.: June 30, 2009.
Defense Infrastructure: High-Level Leadership Needed to Help Guam  Address Challenges Caused by DOD-Related Growth. GAO-09-500R.  Washington, D.C.: April 9, 2009.
Defense Infrastructure: Opportunity to Improve the Timeliness of Future  Overseas Planning Reports and Factors Affecting the Master Planning  Effort for the Military Buildup on Guam. GAO-08-1005. Washington, D.C.:  September 17, 2008.
Defense Infrastructure: High-Level Leadership Needed to Help  Communities Address Challenges Caused by DOD-Related Growth.  GAO-08-665. Washington, D.C.: June 17, 2008.
Defense Infrastructure: Planning Efforts for the Proposed Military Buildup  on Guam Are in Their Initial Stages, with Many Challenges Yet to Be  Addressed. GAO-08-722T. Washington, D.C.: May 1, 2008.
Defense Infrastructure: Overseas Master Plans Are Improving, but DOD  Needs to Provide Congress Additional Information about the Military  Buildup on Guam. GAO-07-1015. Washington, D.C.: September 12,  2007.
U.S. Insular Areas: Economic, Fiscal, and Financial Accountability  Challenges. GAO-07-119. Washington, D.C.: Dec. 12, 2006.