Military Base Realignments and Closures: DOD Faces Challenges in Implementing Recommendations on Time and Is Not Consistently Updating Savings Estimates
Published: 2009-01-30T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The 2005 Base Realignment and Closure (BRAC) round is the biggest, most complex, and costliest BRAC round ever. In addition to base closures, many recommendations involve realignments, such as returning forces to the United States from bases overseas and creating joint bases. However, anticipated savings remained an important consideration in justifying the need for the 2005 BRAC round. The House report on the National Defense Authorization Act for Fiscal Year 2008 directed GAO to monitor BRAC implementation. Therefore, GAO assessed (1) challenges that might affect timely completion of recommendations, (2) any changes in DOD's reported cost and savings estimates since fiscal year 2008, and (3) the potential for estimates to continue to change. To address these objectives, GAO reviewed documentation and interviewed officials in the Office of the Secretary of Defense (OSD), the services' BRAC offices, and the Army Corps of Engineers; visited installations implementing some of the more costly realignments or closures; and analyzed BRAC budget data for fiscal years 2008 and 2009.
section_title: What GAO Found
paragraphs: DOD has made progress in implementing the BRAC 2005 round but faces challenges in its ability to meet the September 15, 2011, statutory completion deadline. DOD expects almost half of the 800 defense locations implementing BRAC recommendations to complete their actions in 2011; however, about 230 of these almost 400 locations anticipate completion within the last 2 weeks of the deadline. Further, some of these locations involve some of the most costly and complex BRAC recommendations, which have already incurred some delays and thus have little leeway to meet the 2011 completion date if any further delays occur. Also, DOD must synchronize relocating about 123,000 personnel with an estimated $23 billion in facilities that are still being constructed or renovated, but some delays have left little time in DOD's plans to relocate these personnel by the deadline. Finally, delays in interdependent recommendations could have a cascading effect on other recommendations being completed on time. OSD recently issued guidance requiring the services and defense agencies to provide status briefings to improve oversight of issues affecting timely implementation of BRAC recommendations. However, this guidance did not establish a regular briefing schedule or require the services to provide information about possible mitigation measures for any BRAC recommendations at risk of not meeting the statutory deadline. DOD's fiscal year 2009 BRAC budget submission shows that DOD plans to spend more to implement recommendations and save slightly less compared to the 2008 BRAC budget. DOD's 2009 estimate of one-time costs to implement this BRAC round increased by $1.2 billion to about $32.4 billion. Net annual recurring savings estimates decreased by almost $13 million to about $4 billion. Also, GAO's calculations of net present value, which includes both expected cost and savings over a 20-year period ending in 2025 and takes into account the time value of money, show that implementing the 2005 BRAC recommendations is expected to save $13.7 billion. This compares to an estimated $15 billion in net present value savings based on last year's BRAC budget and the BRAC Commission's reported estimate of about $36 billion. Although DOD is about 3? years into the 6-year implementation period, the potential remains for BRAC cost estimates to continue to increase, but the potential for changes in savings estimates is unclear. Greater than expected inflation and increased market demands for construction materials could cause estimated construction costs to increase, although the extent of this increase is uncertain given today's economic market conditions. However, the potential for changes in savings estimates is unclear because BRAC headquarters officials at both the Army and the Air Force told us they do not plan to update their savings estimates regardless of factors that may cause those estimates to change, and OSD is not enforcing its own regulation requiring them to do so. Hence, congressional and defense decision makers could be left with an unrealistic sense of the savings this complex and costly BRAC round may actually produce, an issue that could be important in considering whether another round of BRAC may be warranted.

section_title: Letter
paragraphs: This dollar amount is based on DOD’s fiscal year 2009 budget submission to Congress to  pay for continuing implementation of recommendations from prior BRAC rounds   (BRAC 1988, 1991, 1993, and 1995). This amount does not include other BRAC associated  costs such as costs to complete environmental cleanup at BRAC bases in future years and  costs incurred by other DOD and federal agencies to provide assistance to communities  and individuals impacted by BRAC. DOD’s budget submission is reported in current dollars  (i.e., includes projected inflation).
The relocation of about 15,000 U.S. military personnel from various overseas locations to  the United States is included in the BRAC 2005 recommendations. DOD plans to relocate  the remaining military personnel in realignment actions not related to BRAC.
The Army is planning to increase its active-duty end strength by 65,000, and the Marine  Corps is planning to increase its active-duty end strength by 27,000 over the next several  years.
The Office of the Secretary of Defense (OSD) at the outset of BRAC 2005  indicated its intent to reshape DOD’s installations and realign DOD forces  to meet defense needs for the next 20 years. Moreover, both DOD and the  BRAC Commission reported that their primary consideration in making  recommendations for the BRAC 2005 round was military value. As such,  many of the BRAC 2005 recommendations involve complex realignments,  such as designating where military forces returning to the United States  from overseas bases would be located; establishing joint military medical  centers; creating joint bases; and reconfiguring the defense supply,  storage, and distribution network. DOD is required to implement all BRAC  2005 recommendations by September 15, 2011.
However, anticipated savings resulting from implementing  recommendations remained an important consideration in justifying the  need for the 2005 BRAC round. In 2001 testimony before Congress, the  Secretary of Defense stated that another BRAC round would generate  recurring savings the department could use for other defense programs,  and that the BRAC Commission expected that the round would save about   $36 billion over a 20-year period ending in 2025. Nonetheless, to realize  savings from BRAC, DOD must first invest billions of dollars in facility  construction, renovation, and other up-front expenses to implement the  BRAC recommendations to produce the projected savings that DOD could  then redirect to other priorities.
Because of concerns about the progress DOD is making in implementing  the BRAC 2005 recommendations, the House Armed Services Committee  report accompanying the National Defense Authorization Act for Fiscal  Year 2008 directed the Comptroller General to monitor the  implementation of recommendations for the 2005 round of closures and  realignments of military installations made pursuant to section 2914 of the  Defense Base Closure and Realignment Act of 1990. We prepared this  report to (1) assess the challenges DOD faces that might affect the  implementation of the BRAC recommendations by the statutory  completion deadline in 2011, (2) analyze how DOD’s reported cost and  savings estimates have changed in the fiscal year 2009 BRAC budget  request compared to the fiscal year 2008 budget request, and (3) evaluate  the potential for BRAC cost and savings estimates to continue to change as  DOD proceeds with BRAC implementation.
To address these objectives, we reviewed relevant documentation  including business plans, DOD presentations on BRAC implementation  status, and prior GAO reports, and interviewed officials in the Office of the  Deputy Under Secretary of Defense (Installations and Environment)  responsible for overseeing BRAC implementation and associated BRAC  implementation offices in the Army, the Navy, and the Air Force. To assess  the challenges DOD faces that might affect the implementation of the  BRAC recommendations by the statutory completion deadline in 2011, we  focused our work on recommendations that have significant actions such  as construction and movement of personnel scheduled to occur near the  statutory deadline. To analyze how DOD’s reported cost and savings  estimates have changed in the fiscal year 2009 BRAC budget submission  compared to the fiscal year 2008 budget submission, we obtained budget  data for both fiscal years and compared dollar amount differences for cost  and savings estimates for each BRAC recommendation. To calculate the  20-year net savings estimates, we used DOD’s fiscal year 2009 BRAC  budget data using the same methodology DOD used to report its estimate  to the BRAC Commission. Finally, to evaluate the potential for BRAC cost  and savings estimates to continue to change as the department proceeds  with BRAC implementation, we interviewed officials from the Office of the  Deputy Under Secretary of Defense (Installations and Environment)  responsible for overseeing BRAC implementation and associated BRAC  implementation offices for the service departments to discuss plans and  procedures for updating these estimates. Further details on our scope and  methodology can be found in appendix I.
Overall, we determined that the data for this report were sufficiently  reliable for comparing cost and savings estimates and identifying broad  implementation challenges. We conducted this performance audit from  February 2008 to December 2008 in accordance with generally accepted  government auditing standards. Those standards require that we plan and  perform the audit to obtain sufficient, appropriate evidence to provide a  reasonable basis for our findings and conclusions based on our audit  objectives. We believe that the evidence obtained provides a reasonable  basis for our findings and conclusions based on our audit objectives.
subsections: section_title: Background
paragraphs: DOD has undergone four BRAC rounds since 1988 and is currently  implementing its fifth round. In May 2005, the Secretary of Defense made  public more than 200 recommendations that DOD estimated would  generate net annual recurring savings of about $5.5 billion beginning in  fiscal year 2012. Ultimately, the BRAC Commission forwarded a list of   182 recommendations for base closure or realignment to the President for  approval and estimated that BRAC could save DOD annually about   $4.2 billion after the recommendations had been implemented. After the  BRAC Commission forwarded to the President its list of closure and  realignment recommendations, the President was required to review and  prepare a report approving or disapproving the BRAC Commission’s  recommendations by September 23, 2005. On September 15, 2005, the  President approved, and the recommendations were forwarded to  Congress, which had 45 legislative days or until adjournment of Congress  to enact a joint resolution disapproving of the recommendations on an  all-or-none basis; otherwise, the recommendations became effective.  The BRAC Commission’s recommendations were accepted in their entirety  by the President and not disapproved by Congress and became effective  November 9, 2005. The BRAC statute requires DOD to complete  recommendations for closing or realigning bases made in the BRAC 2005  round within a 6-year time frame ending September 15, 2011, 6 years from  the date the President submitted to Congress his approval of the  recommendations.
In making its 2005 realignment and closure proposals, DOD applied legally  mandated selection criteria that included military value as the primary  consideration, as well as expected costs and savings, economic impact to  local communities, community support infrastructure, and environmental  impact. Military value—which includes such considerations as an  installation’s current and future mission capabilities, condition, ability to  accommodate future needs, and cost of operations—was the primary  criteria for making recommendations as mandated by BRAC law and as  reported by both DOD and the Commission. Additionally, in establishing  goals for the 2005 BRAC round, the Secretary of Defense, in a November  15, 2002, memorandum initiating the round, expressed his interest in   (1) reducing excess infrastructure, which diverts scarce resources from  overall defense capability, and producing savings; (2) transforming DOD  by aligning the infrastructure with the defense strategy; and (3) fostering  jointness by examining and implementing opportunities for greater  jointness across DOD.
The 2005 round is unlike previous BRAC rounds because of OSD’s  emphasis on transformation and jointness, rather than just reducing  excess infrastructure. For example, as part of the Army’s efforts to  transform its forces, the Army included actions to relocate forces from  Europe and Korea to domestic installations, which were part of its larger  review of bases worldwide. The 2005 round also differs from previous  BRAC rounds in terms of the number of closure and realignment actions.  While the number of major closures and realignments is a little greater  than individual previous rounds, the number of minor closures and  realignments is significantly greater than those in all previous rounds  combined. DOD plans to execute over 800 closure and realignment  actions as part of the 2005 BRAC round, which is more than double the  number of actions completed in the prior four rounds combined. The large  increase in the number of minor closures and realignments is primarily  attributable to the more than 500 actions involving the Army National  Guard and Army Reserve, representing over 60 percent of the BRAC  actions.
To implement BRAC recommendations, DOD typically must incur various  up-front investment costs during the 6-year implementation period in  order to achieve long-term savings associated with the recommended  actions. Such costs generally include, for example, one-time costs for  actions such as military construction and personnel and equipment  movement, as well as recurring costs for increased operation and  maintenance of facilities and information systems. While savings from this  investment may begin to accrue over the implementation period,  additional savings typically occur annually on a longer-term basis beyond  the implementation period ending in fiscal year 2011. One-time savings  may include, for example, reduced costs associated with inventory  reduction or elimination of planned military construction. Recurring  savings may include for example, reduced sustainment costs associated  with maintaining less warehouse space. Net annual recurring savings after  the implementation period are calculated by subtracting the annual  recurring costs from the annual recurring savings. Expected 20-year  savings, also referred to as 20-year net present value savings, takes into  account all one-time and recurring costs and savings incurred over the  fiscal year 2006 through 2025 time period.
For the BRAC 2005 round, the OSD BRAC Office—under the oversight of  the Under Secretary of Defense (Acquisition, Technology and Logistics)— has monitored the services’ and defense agencies’ implementation  progress, analyzed budget justifications for significant differences in cost  and savings estimates, and facilitated the resolution of any challenges that  may impair the successful implementation of the recommendations within  the 6-year completion period. To facilitate its oversight role, OSD required  the military departments and certain defense agencies to submit a detailed  business plan for each of their recommendations. These business plans,  which are to be updated every 6 months, include information such as a  listing of all actions needed to implement each recommendation,  schedules for personnel movements between installations, updated cost  and savings estimates based on better and updated information, and  implementation completion time frames.
section_title: Challenges Increase the Risk That Some BRAC Recommendations Might Not Be Completed by the Statutory Deadline
paragraphs: DOD has made progress in implementing the BRAC 2005 round but faces  challenges in its ability to meet the September 15, 2011, statutory  completion deadline. DOD is more than halfway through the  implementation period for BRAC 2005 and has made progress thus far.  However, DOD faces several challenges to completing BRAC actions at  some locations on time. First, DOD expects almost half of the 800 defense  locations responsible for implementing BRAC to complete their  recommendations within months of the deadline, and about 230 of those  locations anticipate completion within the last 2 weeks of the  implementation period. Second, some of these locations, which involve  the most costly and complex recommendations, have already encountered  delays in their implementation schedules. Third, DOD must synchronize  relocating over an estimated 123,000 personnel with the construction or  renovation of facilities. Finally, delays in interdependent  recommendations could have a cascading effect on the timely completion  of related recommendations. OSD recently issued guidance requiring the  services and defense agencies to provide status briefings to improve  oversight of issues affecting timely implementation of BRAC  recommendations. However, this guidance did not establish a regular  briefing schedule as needed or require the services to provide information  about possible mitigation measures for any BRAC recommendations at  risk of not meeting the statutory deadline.
subsections: section_title: DOD Has Made Progress in Implementing BRAC
paragraphs: DOD is more than halfway through the implementation period for BRAC  2005 and has made steady progress thus far.  In June 2008, DOD reported  to Congress that 59 of 800 affected locations have completed their BRAC  actions associated with that location as of December 1, 2007. While much  remains to be done, DOD is awarding construction contracts, and DOD  officials told us that fiscal years 2008 and 2009 should be the years with  the greatest number of construction contract awards. Also, officials told us  that high rates of obligation for BRAC military construction funds in fiscal  year 2008 indicate that the services and defense agencies are generally  meeting schedules for awarding construction contracts.
This was the first BRAC round in which DOD required the services and  defense agencies that implement the recommendations to prepare  business plans for approval by the OSD BRAC Office. These business plans  provide information on actions and time frames as well as cost and savings  to help guide implementation. Services and defense agencies responsible  for implementing BRAC recommendations were required to obtain  business plan approval before beginning implementation. Business plans  are updated twice a year, represent the most current information available  on each recommendation, and serve as a tool for DOD to oversee the  implementation of this BRAC round but do not include analysis of the  likelihood of completing the recommendation on time.
section_title: DOD Faces Several Challenges to Completing BRAC Actions at Some Locations on Time
paragraphs: DOD faces several challenges in its ability to implement this round   of BRAC by the September 15, 2011, statutory completion deadline.   By statute, DOD must complete the recommendations for closing or  realigning bases made in the BRAC 2005 round within 6 years from the  date the President submitted to Congress his approval of the BRAC  Commission’s recommendations. Although DOD has made implementation  progress in the last 3½ years since BRAC became effective, the department  still faces a number of challenges that could affect its ability to complete  all BRAC actions by the statutory deadline.
subsections: section_title: Many Defense Locations Are Expected to Complete BRAC within Months of the Statutory Deadline
paragraphs: As of June 2008, DOD reported to Congress that about half out of 800  defense locations that are affected by BRAC recommendations expect to  complete their BRAC-related actions within the last 9 months of the  statutory deadline of September 15, 2011. Further, our analysis of DOD’s  data shows that about 60 percent, or about 230, of these 400 locations  expect to complete their BRAC actions in September 2011—the last two  weeks before the statutory deadline. OSD BRAC officials told us some  locations might have reported completion dates near the end of the BRAC  deadline to allow extra time, although such a practice could represent  potentially inaccurate completion estimates. Still, we believe DOD’s data  provide an indicator of the number of locations that have little room for  delays in the BRAC completion schedule.
section_title: DOD Has Experienced Various Delays in the Implementation Schedule for Some of the Most Costly and Complex BRAC Recommendations
paragraphs: Some of the most costly and complex BRAC recommendations that DOD  has yet to fully implement have already incurred some setbacks in  implementation because of several reasons, including construction  problems, the requirement to study environmental impacts, and delays in  making decisions about site locations, awarding contracts and acquiring  land. According to our analysis, the recommendations discussed are  among the most costly, and represent about 30 percent of the total  estimated costs to implement this round of BRAC. Many of these  recommendations are also complex in that they involve movement of a  large number of personnel, large construction projects, and  synchronization with other recommendations. Some of the most costly  recommendations that have experienced delays are as follows:    Close National Geospatial-Intelligence Agency leased locations and  realign others to Fort Belvoir, Virginia. DOD officials told us that  construction of the National Geospatial-Intelligence Agency’s new   $1.5 billion building at Fort Belvoir is currently on schedule. However,  there is minimal schedule margin, and as a result, any unmitigated  disruptions can jeopardize maintaining the complex construction schedule  required to move 8,500 personnel by the statutory deadline. The estimated  cost to implement this recommendation is $2.4 billion according to DOD’s  fiscal year 2009 budget and the estimated completion date is September  2011.
Establish San Antonio Regional Medical Center and realign  enlisted medical training to Fort Sam Houston, Texas. As part of this  recommendation, DOD is realigning the inpatient medical function from  Lackland Air Force Base to Brooke Army Medical Center at Fort Sam  Houston. However, officials with the San Antonio Joint Program Office,  which was established to help implement the BRAC decisions affecting  San Antonio, told us that construction contract delays have left little time  in the implementation schedule to meet the statutory deadline. The  estimated cost to implement this recommendation is $1.7 billion,  according to DOD’s fiscal year 2009 budget, and the estimated completion  date is September 2011.
Realign Walter Reed Army Medical Center to Bethesda National  Naval Medical Center, Maryland. Tri-Care Management Activity  officials told us that although the implementation schedule for meeting the  deadline for this recommendation is on an accelerated track, it will still be  tight to meet the 2011 deadline. These officials told us it is taking  additional time to finalize the plans for building a world-class medical  center facility. According to DOD’s fiscal year 2009 budget, the estimated  cost to implement this recommendation is $1.6 billion, and the estimated  completion date is September 2011.
Realign Maneuver Training to Fort Benning, Georgia. Construction  delays to provide facilities associated with the realignment of the Army’s  Armor School at Fort Knox, Kentucky, with the Infantry School at Fort  Benning, Georgia, to create the new Maneuver Training Center have  occurred because of concerns about environmental disturbances to the  habitat of the Red-Cockaded Woodpecker at Fort Benning. According to  Army officials, these delays have left little, if any, time in the  implementation schedules to absorb further delays. The estimated cost to  implement this recommendation is $1.5 billion, according to DOD’s fiscal  year 2009 budget, and the estimated completion date is August 2011.
Co-locate miscellaneous OSD, defense agency, and field activity  leased locations in the District of Columbia Metropolitan Area.  Various delays in the process to select a permanent site for co-locating  about 6,400 personnel have slipped the time frame for starting the  implementation of this recommendation. The Army had originally planned  to relocate these agencies and activities to Fort Belvoir’s Engineering  Proving Ground, but in August 2007, announced it was considering a  nearby location belonging to the U.S. General Services Administration in  Springfield, Virginia. Then, in October 2007, the Army announced it was  also considering other sites in Northern Virginia, finally deciding on a site  in Alexandria, Virginia in September 2008. These delays, according to  Army BRAC officials, have significantly compressed the time available to  build new facilities and move thousands of personnel by the 2011 statutory  deadline. The estimated cost to implement this recommendation is  $1.2 billion according to DOD’s fiscal year 2009 budget, and the estimated  completion date is September 2011.
Close Fort McPherson, Georgia. The relocation of Headquarters U.S.
Army Forces Command and Headquarters U.S. Army Reserve Command to  Fort Bragg, North Carolina, because of the closure of Fort McPherson, has  experienced delays. The construction contract for building a new facility  for the commands was delayed by 3½ months while requirements for the  building were being refined and may jeopardize the Army’s ability to meet  the BRAC deadline. According to Forces Command officials, there will be  enough time to finish construction only if the Army encounters no further  significant complications during construction. The construction contract  was initially to be awarded in May 2008 but was delayed until September  2008, and the schedule to fully transfer Forces Command to Fort Bragg is  very tight. The estimated cost to implement this recommendation is   $798 million, according to DOD’s fiscal year 2009 budget, and the  estimated completion date is September 2011.
Realign Fort Bragg, North Carolina. Part of this recommendation  requires the relocation of the Army’s 7th Special Forces Group to Eglin Air  Force Base, Florida. However, delays resulting from concerns about the  noise from the Joint Strike Fighter aircraft, which will also be located at  Eglin, through the implementation of another BRAC recommendation,  have contributed to uncertainties on where to relocate the Special Forces  Group at Eglin. As a result, obtaining the required environmental impact  studies has taken longer than originally anticipated. As of December 2008,  the Army had not started construction of the needed facilities to relocate  over 2,200 military personnel from Fort Bragg to Eglin. Construction was  originally planned to start in October 2008. According to Special  Operations officials at Fort Bragg, the time frame to complete this move is  extremely tight because of these delays, and they expressed to us their  doubts about completing $200 million in construction on time in order to  move all military personnel by the deadline. The estimated cost to  implement this recommendation is $327 million, according to DOD’s fiscal  year 2009 budget, and the estimated completion date is September 2011.
In addition to the BRAC actions discussed, we also found other BRAC  actions that have experienced delays that could jeopardize DOD’s ability  to meet the statutory 2011 BRAC deadline. Although the individual  recommendations are not among the most costly to implement,  collectively they illustrate further challenges DOD faces as follows:    Realign Army reserve components and construct new Armed  Forces Reserve Centers. According to Army BRAC officials and our  analysis, time frames will be tight for completing some of the BRAC  recommendations involving building 125 new Armed Forces Reserve  Centers. According to Army officials, land still has not yet been acquired  for some of these reserve centers. Also, we have previously reported that  other BRAC funding priorities caused the Army to delay the start of   20 armed forces reserve projects, compressing the amount of time  available to construct the facilities and respond to any construction delays  that might arise. The Army rescheduled the start of these projects that it  had initially planned to begin construction in either fiscal year 2008 or  2009 to fiscal year 2010—the second to the last year of the BRAC statutory  completion period.
Relocate medical command headquarters. Tri-Care Management  Activity officials responsible for implementing this BRAC recommendation  told us they have had delays in deciding on the actual site to relocate  medical command headquarters in the Washington, D.C., area. Factors for  the delay include higher than expected cost estimates to renovate a  possible site in Maryland and that the current occupants of this site are not  expected to vacate the property until 2011, which would be too late to  meet the BRAC completion deadline. Anticipating that leasing a site might  be the only viable alternative, these officials told us that once a final  decision on a site was made, they would be in a more informed position to  state whether enough time will be available to move several thousand  personnel into a leased site by the BRAC deadline.
section_title: Synchronization of Personnel and Equipment Moves with Completion of Construction Projects Is a Challenge
paragraphs: DOD will face significant challenges in synchronizing the moves of all  personnel and equipment into their new locations. Specifically, DOD must  synchronize the relocation of over 123,000 personnel with the construction  of an estimated $23 billion in new or renovated facilities. However, delays  have left little time in the planning schedule to relocate these personnel by  the deadline. For example, the already tight construction schedule for the  new National Geospatial-Intelligence Agency building at Fort Belvoir has  created some risk for integrating construction activities with the  installation of information systems and the relocation of 8,500 agency  employees to the new location, according to Fort Belvoir BRAC officials.  Fort Belvoir officials also described for us the very complex and detailed  ongoing planning for integrating the movement of the numerous  organizations affected by another BRAC recommendation that seeks to  eliminate leased locations for various Army organizations and consolidate  them into two buildings on Fort Belvoir. The officials are conducting a  detailed review of the requirements for each organization to ensure that  there is enough space for everyone and to develop a schedule to move  these organizations into the facility. Complicating the development of this  schedule is that many of these organizations work with highly classified,  sensitive information and cannot operate outside secured space with  controlled access.
Other DOD initiatives outside BRAC will complicate the synchronizing of  schedules for moving of people and equipment associated with BRAC. For  example, the Army plans to increase the size of its active-duty force by  about 65,000 over the next several years. In addition, the repositioning of  forces currently stationed in Europe and the Army’s ongoing  reorganization to become a more modular, brigade-based force have  caused other movements and relocations that have to be integrated with  the BRAC implementation schedules. The military is also planning on  drawing down the level of troops in Iraq and returning some of these  forces to U.S. installations. The actions required to simultaneously  implement these initiatives with BRAC further complicate the integration  of moving schedules for people and equipment and raise the level of risk  for further schedule disruptions, which, in turn, raise the risk of BRAC  recommendations missing the statutory deadline.
section_title: Interdependence of Some Moves Creates Additional Challenges
paragraphs: Some BRAC locations are unable to begin renovation of buildings slated to  house realigning organizations until current tenants of these buildings  vacate, a situation that has delayed the beginning of implementation. For  example, as we have previously reported, as part of the BRAC  recommendation to close Fort Monmouth, New Jersey, personnel from the  Army’s Communications-Electronics Life Cycle Management Command  currently located at Fort Monmouth are relocating to Aberdeen Proving  Ground, Maryland. Army officials originally planned to renovate facilities  currently occupied by a training activity for some of these employees. The  training activity is scheduled to relocate to Fort Lee, Virginia, through  another BRAC action; however, Army officials said that the new facilities  for the training activity would not be complete as originally planned, a  setback that, in turn, would delay the renovation of the Aberdeen facilities  for the incoming employees. The delays in construction at Fort Lee  resulted in the Army having to plan to build a new facility, rather than  renovate an existing facility at Aberdeen Proving Ground at an additional  cost of $17 million, to avoid the risk that the facility renovations could not  completed in time for the personnel to relocate into renovated facilities at  Aberdeen.
According to a Fort Belvoir official, two buildings at the installation will be  used to house various Army organizations that are currently in leased  space and will be relocating to Fort Belvoir as directed in a BRAC  recommendation. However, the Army Materiel Command is still using the  two buildings pending its relocation to Huntsville, Alabama, as part of  another BRAC recommendation. To further complicate the situation, the  Army Materiel Command is hiring employees for a new organization, to be  called Army Contracting Command, which will also be housed in the two  buildings eventually planned to house the Army organizations that are  currently in leased space. Until Army Materiel Command and the newly  hired employees of Army Contracting Command move out of these  buildings, Fort Belvoir officials cannot begin renovating the building for its  new tenants. However, construction delays in Huntsville have caused the  Army Materiel Command to delay its move to the Huntsville area.  Furthermore, Fort Belvoir officials told us that a decision has not yet been  made on the location for the newly formed Army Contracting Command  and that if both this new command as well as the Army Materiel Command  do not vacate the two buildings in question by June 2011, it would be  nearly impossible to meet the statutory deadline. Again, this example  demonstrates that delays in interdependent recommendations could have  a cascading effect on other recommendations being completed on time.
section_title: OSD Recently Took Action to Obtain More Information on Issues That Could Affect Meeting the Statutory Deadline
paragraphs: As we concluded our fieldwork, the Deputy Under Secretary of Defense  (Installations and Environment) issued a memo dated November 21, 2008,  providing guidance that required the military services and defense  agencies to present periodic status briefings to OSD on implementation  progress “to ensure senior leadership is apprised of significant issues  impacting implementation of the BRAC recommendations” by the  September 15, 2011, deadline. According to this guidance, at a minimum,  the briefings are to include information on projected and actual  construction contract award dates and construction completion dates, as  well as BRAC actions completed. The requirement to provide these  briefings is applicable only to those recommendations that are expected to  have a one-time cost of $100 million or greater. The first round of such  briefings was conducted in the first two weeks of December 2008. We  believe that OSD should be commended for taking this positive step  toward enhancing its oversight of BRAC implementation. However, OSD  may still not be in a position to fully assist the services in taking mitigating  measures, if warranted, to better ensure all BRAC actions are completed  by the statutory deadline because the guidance does not establish a  regular briefing schedule or require the services to provide information  about possible mitigation measures.
First, the guidance does not require the briefings to be conducted on a  firm schedule for the duration of the implementation period. Unlike BRAC  business plans that are to be updated every 6 months, after an initial round  of briefings to be conducted in December 2008, the guidance requires only  periodic updates to status briefing “as necessary” and does not specify  who determines when such updates are deemed necessary. However,  given the large number of locations that expect to complete their BRAC  actions within months or weeks of the statutory deadline and the  possibility of delays where little leeway exists, OSD would benefit from  early warning and consistent monitoring of implementation challenges  that could put completion schedules at those locations at further risk.
Second, OSD’s recent guidance does not require the services and defense  agencies to provide information about steps that could be taken to  mitigate the effects of the implementation challenges they identify. We  have advocated the use of a risk management approach to reduce, where  possible, the potential that an adverse event will occur, reducing  vulnerabilities as appropriate, and putting steps in place to reduce the  effects of any event that does occur. With information about mitigation  strategies that the services have developed or could develop, OSD BRAC  could be in a position to provide assistance and coordination that could  better enable the services and defense agencies to stay on schedule.
section_title: BRAC Implementation Cost Estimates Are Higher and Savings Estimates Are Lower Compared to Previous Fiscal Year
paragraphs: DOD’s BRAC fiscal year 2009 budget submission shows that DOD plans to  spend more and save less as compared to last year’s BRAC budget  submission to implement the recommendations. DOD’s 2009 estimated  one-time costs to implement this BRAC round increased by $1.2 billion.  Net annual recurring savings estimates decreased by almost $13 million.   In addition, our calculations show that expected savings over a 20-year  period ending in 2025 declined by $1.3 billion.
subsections: section_title: Estimated One-Time Costs Have Increased
paragraphs: DOD’s BRAC fiscal year 2009 budget submission shows that DOD plans to  spend more to implement its BRAC recommendations compared to last  year’s BRAC budget. Specifically, DOD’s cost estimates increased by   $1.2 billion in DOD’s 2009 budget to a total estimated cost of $32.4 billion  to implement this BRAC round. In September 2005, the BRAC Commission  originally estimated the costs to be about $21 billion. The overall estimated  cost increase of $1.2 billion is a cumulative cost increase because some  recommendations are expected to cost less while others could cost more.  Nonetheless, our analysis shows that $1.1 billion (93 percent) of the  estimated $1.2 billion increase occurred in six recommendations. For  example, the recommendation to realign the National Geospatial- Intelligence Agency to Fort Belvoir, Virginia, had the largest increase in  estimated costs— almost $350 million. Five other recommendations make  up the remaining majority of the estimated cost increase: 1) close Fort  McPherson, Georgia; 2) close Fort Monmouth, New Jersey; 3) establish a  regional medical center and realign medical training to Fort Sam Houston,  Texas; 4) consolidate depot-level reparable procurement management; and  5) realign to establish the Combat Service Support Center at Fort Lee,  Virginia. Table 1 shows the increase in cost estimates for these six  recommendations comparing fiscal year 2008 budgets to fiscal year   2009 budgets.
In addition, various cost categories that make up each recommendation’s  estimated costs have also experienced increases and decreases when  comparing DOD’s fiscal year 2008 budget to the fiscal year 2009 budget.  These cost categories are one-time costs for items and activities such as  construction, environmental clean-up, and operation and maintenance.  Our analysis of DOD’s budget data showed the largest estimated cost  increase occurred in the military construction cost category. For example,  estimated construction costs increased by nearly $1.5 billion; however,  this cost increase was offset by decreases in other cost categories as  shown in table 2.
The overall total increase of $1.2 billion does not include about   $416 million to accelerate and enhance the realignment and closure of  Walter Reed Army Medical Center in the District of Columbia and the  movement of its operations to the renovated Bethesda Naval Medical  Center, Maryland, and a new hospital at Fort Belvoir, Virginia. DOD  received these funds in its fiscal year 2008 supplemental request. OSD  BRAC officials told us that they intend to seek an additional $263 million  to complete the Walter Reed realignment, but these funds have not yet  been provided and are also not included in the overall total increase of  $1.2 billion. According to OSD BRAC officials, $416 million will be  reflected in the fiscal year 2010 President’s Budget, as will the additional  $263 million if these funds are provided to BRAC before the 2010 budget is  submitted to Congress sometime in early 2009.
In addition, our analysis of the 2005 BRAC round, based on DOD’s fiscal  year 2009 budget estimates, indicates that relatively few recommendations  are responsible for a majority of the expected cost. Specifically, we  determined that the planned implementation of 30 recommendations   (or about 16 percent of the total 182 recommendations) is expected to  account for about 72 percent of the expected one-time costs. (See app. II  for a listing of those BRAC recommendations DOD expects to cost the  most.)
section_title: Net Annual Recurring Savings Estimates Have Decreased
paragraphs: While estimated implementation costs have risen, overall estimated net  annual recurring savings have decreased slightly by about $13 million to  about $4 billion based on DOD’s approach to include savings from military  personnel who transferred or shifted from one location to another but  remained on the payroll. In September 2005, the BRAC Commission  originally estimated annual recurring savings to be about $4.2 billion. This  amount included the savings associated with military personnel  eliminations. Some recommendation savings estimates have decreased  while others have increased, but the cumulative effect is an overall  decrease in estimated annual recurring savings. For example, the largest  decrease in net annual recurring savings was about $84 million for the  recommendation to establish joint bases, which decreased from about  $116 million in savings in the fiscal year 2008 budget submission to   $32 million in the fiscal year 2009 budget submission. Discussions with  agency officials involved with implementing this recommendation indicate  that the savings could decrease further in the future. In contrast, the  largest increase in net annual recurring savings was about $58 million for  the recommendation to establish the San Antonio Regional Medical Center  and realigning enlisted medical training to Fort Sam Houston, Texas,  which increased from about $91 million in savings in the fiscal year 2008  budget submission to $149 million in the fiscal year 2009 budget  submission. OSD BRAC officials told us they expect 2012 to be the first  year to accrue the full amount of net annual recurring savings because  some recommendations are not expected to be completed until around the  September 15, 2011, deadline and significant savings generally do not  begin to accrue until implementation is complete.
section_title: Twenty-Year Savings Have Decreased
paragraphs: Given the cumulative increase in estimated one-time costs and decrease in  estimated net annual recurring savings, the estimated savings over a   20-year period ending in 2025, based on DOD’s fiscal year 2009 budget  submission, has also decreased. Our calculations show that the 20-year  savings declined almost 9 percent by $1.3 billion to about $13.7 billion,  compared to $15 billion that we estimated based on the fiscal year 2008  budget. In September 2005, the BRAC Commission estimated that DOD  would save about $36 billion over this 20-year period—the current  estimate is a reduction of about 62 percent from the BRAC Commission’s  reported estimates. Further, we determined that 30 recommendations  (about 16 percent of all 2005 BRAC recommendations) account for about   85 percent of the expected savings over a 20-year period. (See app. IV for a  listing of those BRAC recommendations DOD expects to save the most  over a 20-year period.) The decrease in 20-year savings is directly related  to the growth in estimated one-time cost and to the reduction in estimated  annual recurring savings.
As with annual recurring savings, the 20-year savings estimate of about  $13.7 billion includes the savings associated with the elimination of  military personnel. We have previously reported that military personnel  position eliminations are not a true source of savings since DOD intends to  reassign or shift personnel to other positions without reducing military  end strength associated with the corresponding BRAC recommendation.  DOD disagrees with our position.
In addition, our analysis shows the number of BRAC recommendations not  expected to achieve net savings over a 20 year period has continued to  increase since 2005. Specifically, based on the revised 20-year savings  estimates, 74 recommendations are not expected to result in a positive net  savings over 20 years, compared to 73 we identified in fiscal year 2008, and  30 estimated by the BRAC Commission in 2005. OSD BRAC officials told  us that, although the 20-year savings estimate is less than was estimated in  2005 by the BRAC Commission, the department expects the  implementation of this BRAC round to produce capabilities that will  enhance defense operations and management, despite less than  anticipated savings.
section_title: Cost Estimates Could Continue to Rise, but the Potential for Savings Estimates to Change Is Unclear
paragraphs: Although DOD is almost 3½ years into the 6-year implementation period  for this round of BRAC, cost estimates could potentially continue to  increase, but the potential for changes in savings estimates is less clear.  Cost estimates could increase because of inflation and increased demand  for construction in some areas, although changing market conditions that  existed at the time of our report could reverse these trends in DOD’s favor.  There is less visibility into potential changes in savings estimates because  some military services and defense agencies are not periodically updating  their BRAC savings estimates, and OSD is not enforcing its regulation  requiring them to do so.
subsections: section_title: Cost Estimates Could Continue to Rise
paragraphs: BRAC 2005 implementation costs have the potential to continue to  increase because of sharp increases in the prices of fuel and in  construction materials such as steel, concrete and copper during most of  2008. The one-time implementation cost estimates for BRAC 2005 rose by  about $1.2 billion from fiscal years 2008 to 2009 primarily because of  increases in the cost of military construction. The potential for additional  cost increases is particularly important to the Army, as it is expected to  incur the majority of the military construction costs related to base  closures and realignments. For example, our analysis of DOD’s fiscal year  2009 BRAC budget data shows that the Army’s estimated cost of about   $13 billion for BRAC military construction accounted for nearly 60 percent  of the total BRAC military construction estimate of about $22.8 billion.  Moreover, the factors that drove the military construction costs up in  fiscal year 2007 continued to exert upward pressure on prices through the  end of fiscal year 2008. According to the U.S. Army Corps of Engineers  officials, the prices of steel, concrete, and copper rose considerably from  2005 to 2008 because of worldwide demand. Our analysis of producer  price index data compiled by the Bureau of Labor Statistics found that the  price of steel rose by about 40 percent over that period. The price of  concrete rose by about 18 percent, while copper rose over 124 percent  from 2005 to 2008. In addition, fuel prices rose steadily from 2007 until  August 2008, when they started to drop.
Another factor that could drive up construction prices is the increased  demand for construction in some markets. Specifically, BRAC  implementing officials expressed concern that construction costs have the  potential to increase in areas already experiencing high commercial  construction demands such as the National Capital Region, Washington,  D.C., and San Antonio, Texas. Army Corps of Engineers officials told us  they are concerned about what effect construction demand might have on  bids given the sizable amount of construction to take place in a limited  amount of time to meet the BRAC statutory completion time frame.  Additionally, service officials at various installations expressed concern  about the potential for increases in construction costs because of ongoing  reconstruction because of damage caused by natural disasters such as  hurricanes and flooding, coupled with the large volume of anticipated  BRAC construction that could also affect bids.
Further, we reported in December 2007 that the inflation rates prescribed  by DOD and the Office of Management and Budget for developing BRAC  budget estimates had been lower than the actual rate of construction  inflation for the last several years; therefore, the use of these rates could  underestimate actual construction costs. To the extent that the actual rate  of inflation continues to exceed the budgeted rate as implementation  proceeds, and construction material costs are higher than anticipated,   U.S. Army Corps of Engineers officials have said that they would either  have to redirect funding from other sources to provide for construction  projects or resort to a reduction in the scope of some construction  projects.
Although the economy slowed down and fuel prices began to drop in   mid-to-late 2008, several bids for construction contracts that had been  advertised prior to these events have come in at levels higher than  programmed by the U.S. Army Corps of Engineers. For example, the  construction bids to build a general instruction complex associated with  the BRAC recommendation to create a Maneuver Center at Fort Benning,  Georgia, were $16 million over budgeted amounts. In another case, the  estimate for building a defense media center is currently $65 million, while  the programmed amount is $44 million—a difference of $21 million.  Although bids have been above budgeted amounts for some projects,   the difference has been offset to some extent by other bids that had come  in under budgeted amounts for other projects.
Furthermore, as a result of the increasing construction prices, higher than  expected construction bids, and revisions to facility designs and scope, the  Army identified a potential BRAC cost increase of approximately   $2.6 billion, with military construction accounting for about $1.4 billion  and various operation and maintenance costs accounting for the remaining  $1.2 billion. In the summer of 2008, Army officials told us that a high-level  meeting was held with Army leadership, known as the Stationing Senior  Review Group, to discuss ways to resolve the potential BRAC cost  increases. Subsequently, the Army’s Office of the Assistant Chief of Staff  for Installation Management made clear in an August 2008 memorandum  that further growth in BRAC 2005 implementation must be avoided. BRAC  officials told us that the results of these discussions on potential cost  increases would be reflected in the fiscal year 2010 budget submission to  Congress. DOD expects the release of the fiscal year 2010 BRAC budget  submission to be after the issuance of this report; thus, we are unable to  comment on Army’s recent actions to contain further cost growth related  to it base closures and realignments.
We believe that if the escalating pressures on the cost of construction  continue, DOD may have difficulty in completing planned construction  projects within currently estimated amounts in the BRAC accounts.  However, at the time we concluded our fieldwork in December 2008,   the U.S. economy had begun to experience a slowdown. Fuel prices, for  example, had dropped precipitously compared to where they had been  earlier in the year. The price of copper and concrete had also begun to  decline, but prices of these two commodities nonetheless remained above  2007 levels. A continued reduction in commodities prices and further  downturn in the U.S. economy could work in DOD’s favor to reduce the  price of future construction contracts.
section_title: Potential for Savings Estimates to Change Is Unclear
paragraphs: For the current BRAC round, the potential for savings estimates to change  is unclear because some military services are not updating their savings  estimates as required by DOD regulation. DOD’s Financial Management  Regulation for BRAC appropriations has instructed the services and  defense agencies to update estimates in their annual budget submissions  since at least June 1998. Specifically, the regulation requires that budget  justification books include exhibits reporting savings estimates for the  BRAC 2005 round that are based on the best projection of what savings  will actually accrue from approved realignments and closures. Further,   the regulation states that prior year estimated savings must be updated to  reflect actual savings, when available.
Our prior and current work shows that some of the military services have  not updated their savings estimates periodically, thereby contributing to  unrealistic BRAC net savings estimates. Specifically, our analysis shows  that some of the defense agencies and the Navy updated savings estimates  for some of their recommendations. For example, on the one hand,  officials responsible for implementing two BRAC recommendations  associated with substantial expected savings—establishing naval fleet  readiness centers at multiple installations across the country and  realigning medical care and training in San Antonio, Texas—told us they  updated their savings estimates in the fiscal year 2009 BRAC budget based  on maturing implementation plans. On the other hand, BRAC  implementing officials for the Army and the Air Force told us they do not  plan to update their savings estimates and will continue to report the same  savings estimates reported to Congress in February 2007 despite any  revisions in implementation details or completion schedules that could  cause savings estimates to change. Army and Air Force officials told us  that, since the savings reported to Congress had already been “taken” from  their budgets, there was no incentive to update those estimates. Thus,  Army and Air Force officials told us that they do not plan to update  savings estimates for the remainder of BRAC implementation, despite the  requirement in DOD’s Financial Management Regulation to do so.  However, outdated savings estimates undermine the ability of Congress to  monitor savings, a key indicator of success in BRAC implementation.
The issue of updating BRAC savings estimates is not new. We have  previously reported that the military services, despite DOD guidance  directing them to update savings estimates (for prior BRAC rounds) in  their annual budget submissions, had not periodically updated these  estimates, thereby contributing to imprecision and a lack of transparency  in overall BRAC estimated net savings figures. Service officials have  acknowledged that updating savings has not been a high priority and that  instead, they have focused their resources on developing cost estimates  for the annual budget submission. However, OSD BRAC and OSD  Comptroller officials told us that they believe savings estimates should be  updated based on evolving implementation plans.
In addition, our analysis of DOD’s fiscal year 2009 budget estimates for   the 2005 BRAC round indicates that a majority of the expected savings   are related to the implementation of a small percentage of  recommendations. Specifically, we determined that the planned  implementation of 24 recommendations (about 13 percent of all 2005  BRAC recommendations) accounts for about 80 percent, or nearly   $3.2 billion, of the estimated net annual recurring savings. (See fig. 1.)  A list of these recommendations can be found in appendix III.
Since DOD promoted the latest round of BRAC partly on the premise that  it would save money, we believe that imprecise savings estimates could  diminish public trust in the BRAC process. Furthermore, without updated  BRAC savings estimates, as required in DOD’s own Financial Management  Regulation, DOD decision makers and Congress may be left with an  unrealistic sense of the savings this complex and costly BRAC round may  actually produce, a situation that could be used to justify another round of  BRAC in the future.
section_title: Conclusions
paragraphs: Given the exceptional size, complexity, and cost of the 2005 BRAC round,  the challenges to successfully implementing recommendations at over   800 locations—while simultaneously undergoing extensive force structure  transformations—within the congressionally mandated 6-year  implementation period are similarly unprecedented. Complete and timely  information about the obstacles the services and defense agencies are  facing and any possible mitigation measures for those recommendations  that are at risk could enhance the management and oversight ability of the  OSD BRAC office. Although OSD has recently asked the services and  defense agencies to inform it of significant issues affecting implementation  of BRAC recommendations by the statutory deadline, its November 2008  guidance does not specify a further schedule for briefings. Given the tight  time frames for completing some recommendations and the complexity of  the challenges some recommendations face, OSD may not have enough  advance warning to effectively help the services and defense agencies  overcome challenges that could threaten their ability to complete some of  the hundreds of actions planned to take place within weeks of the  congressionally mandated BRAC deadline. Furthermore, if the services  and defense agencies provided OSD with information about possible  measures that could be taken to mitigate those challenges on a regular and  known schedule, OSD could more effectively reallocate resources, realign  priorities, and coordinate joint solutions as warranted.
Anticipated savings was an important consideration in justifying the need  for the 2005 BRAC round. Before DOD can realize substantial savings from  this large and complex BRAC round that it could redirect to other  priorities, the department must first invest billions of dollars in facility  construction, renovation, and other up-front expenses. As the cost of  implementing BRAC 2005 recommendations increases, it is important for  decision makers to maintain clear visibility over the evolving potential for  savings as a result of the BRAC process. Updated savings estimates will  add specificity to DOD’s assessment of how much money will become  available for other purposes and help avoid unnecessary appropriations  from Congress. Moreover, without more precise savings estimates through  the end of the current round’s implementation period, Congress and DOD  will lack an important perspective about BRAC results that could inform  decisions about any future BRAC rounds. In addition, more precise  estimates are important to preserving public confidence in the BRAC  program. Finally, the periodic updating of savings estimates is a good  financial management practice that could strengthen DOD’s budgeting  process by helping to ensure that the department relies on realistic  assumptions in formulating its budgets.
section_title: Recommendations for Executive Action
paragraphs: To enhance OSD’s role in overseeing the implementation of BRAC 2005  recommendations and managing challenges that could impact DOD’s  ability to achieve full BRAC implementation by the statutory deadline, we  recommend that the Secretary of Defense direct the Under Secretary of  Defense (Acquisition, Technology and Logistics) to modify the recently  issued guidance on the status of BRAC implementation to    establish a briefing schedule with briefings as frequently as OSD deems  necessary to manage the risk that a particular recommendation may not  meet the statutory deadline, but as a minimum, at 6-month intervals,  through the rest of the BRAC 2005 implementation period, a schedule that  would enable DOD to continually assess and respond to the challenges  identified by the services and defense agencies that could preclude  recommendation completion by September 15, 2011, and   require the services and defense agencies to provide information on  possible mitigation measures to reduce the effects of those challenges.
To ensure that BRAC savings estimates are based on the best projection of  what savings will actually accrue from approved realignments and  closures, we recommend that the Secretary of Defense direct the Under  Secretary of Defense (Acquisition, Technology and Logistics); the Under  Secretary of Defense (Comptroller); and the military service secretaries to  take steps to improve compliance with DOD’s regulation requiring updated  BRAC savings estimates.
section_title: Agency Comments and Our Evaluation
paragraphs: In written comments on a draft of our report, DOD concurred with all  three of our recommendations. DOD noted that BRAC business managers  have and will continue to provide briefings on the status of  implementation actions associated with recommendations exceeding   $100 million, and that these briefings provide a forum for BRAC business  managers to explain their actions to mitigate challenges. In addition, DOD  agreed that updating savings estimates on a regular basis is essential. The  department stated that it is emphasizing savings updates during its  briefings and in all future business plan approval documentation. DOD’s  written comments are reprinted in appendix V. DOD also provided  technical comments, which we have incorporated into this report as  appropriate.
We are sending copies of this report to interested congressional  committees; the Secretary of Defense; the secretaries of the Army, Navy,  and Air Force; Commandant of the Marine Corps; and the Director, Office  of Management and Budget. In addition, the report will be available at no  charge on GAO’s Web site at http://www.gao.gov.
If you or your staff have any questions concerning this report, please  contact me on (202) 512-4523 or by e-mail at leporeb@gao.gov. Contact  points for our Offices of Congressional Relations and Public Affairs are on  the last page of this report. GAO staff who made major contributions to  this report are listed in appendix VI.
section_title: Appendix I: Scope and Methodology
paragraphs: We reviewed the Defense Base Closure and Realignment Commission’s  182 recommendations to realign and close military bases as presented in  its September 2005 report to the President. We reviewed relevant  documentation and interviewed officials in the Office of the Deputy Under  Secretary of Defense (Installations and Environment) responsible for  overseeing BRAC implementation and associated BRAC implementation  offices in the Army, the Navy, and the Air Force. Given the unprecedented  number of BRAC 2005 closures and realignments, we generally focused  our analysis on those recommendations that DOD either expects to cost  the most or save the most.
To assess the challenges DOD faces that might affect the implementation  of the BRAC recommendations by the statutory completion deadline of  September 15, 2011, we reviewed relevant documentation including BRAC  business plans, DOD presentations on BRAC implementation status, and  prior GAO reports.  We also interviewed officials in the Office of the  Deputy Under Secretary of Defense (Installations and Environment) and  associated BRAC offices, commands, and defense agencies that were  implementing some of the complex or most costly BRAC realignments or  closures to obtain the perspective of officials directly involved in BRAC  implementation planning and execution. We also selected some of these  installations or commands because they were responsible for  implementing recommendations with a significant number of actions such  as the completion of construction and movement of personnel expected to  occur near the statutory deadline. At these locations, we discussed the  specific challenges associated with implementing BRAC  recommendations. In addition, we used DOD’s annual report to Congress  to identify estimated completion dates. Finally, we reviewed OSD’s  November 21, 2008, memo to the services and defense agencies  responsible for implementing BRAC recommendations and assessed  OSD’s requirements for briefings on the status of BRAC implementation.
To assess changes in DOD’s reported cost and saving estimates since the  fiscal year 2008 budget submission, we compared the fiscal year 2009  BRAC budget submission to the fiscal year 2008 budget submission.   We used DOD’s BRAC budget submissions because these documents are  the most authoritative information that is publicly available for comparing  BRAC cost and savings estimates and because these submissions are the  basis on which DOD seeks appropriations from the Congress. We then  calculated dollar-amount differences for cost estimates and noted those  recommendations that have increased the most in expected costs. To  assess changes in DOD’s estimate of net annual recurring savings, we used  OSD’s data provided to us for estimated savings in fiscal year 2012—the  year after OSD expects all recommendations to be completed—because  this data more fully captured these savings. We used OSD’s data for fiscal  year 2008 and fiscal year 2009 to make comparisons. In addition, to  determine expected 20-year savings—also known as the 20-year net  present value—we used the same formulas and assumptions as DOD and  the BRAC Commission used to calculate these savings. Specifically, we  used DOD’s BRAC fiscal year 2009 budget data for expected costs and  savings to implement each recommendation for fiscal years 2006 through  2011. We also used data that the OSD BRAC office provided us for  expected net annual recurring savings after the completion of each  recommendation for fiscal years 2012 to 2025. We then converted these  data to fiscal year constant 2005 dollars using DOD price indexes to  distinguish real changes from changes because of inflation. We used fiscal  year 2005 dollars to calculate 20-year savings because the BRAC  Commission also used fiscal year 2005 dollars for this calculation.  Applying the same formulas and assumptions as used by the BRAC  Commission, we used a 2.8 percent discount rate to calculate the  accumulated net present value of expected 20-year savings.
To assess the reliability of DOD’s BRAC cost and savings data, we tested  computer-generated data for errors, reviewed relevant documentation,   and discussed data quality control procedures with OSD BRAC officials.  We determined that the data were sufficiently reliable for the purposes of  making cost and savings comparisons for BRAC recommendations. We  generally reported these estimated cost and savings in current dollars and  not constant dollars except where noted.
Finally, to evaluate the potential for BRAC cost and savings estimates to  continue to change as the department proceeds with BRAC  implementation, we interviewed officials from the Office of the Deputy  Under Secretary of Defense (Installations and Environment), who are  responsible for overseeing the implementation of BRAC recommendations  and from associated BRAC implementation offices in the Army, Navy, and  Air Force to discuss plans and procedures for updating these estimates.  We also discussed plans and procedures for updating estimates with the  Office of the Under Secretary of Defense (Comptroller). In addition, we  discussed BRAC construction cost estimates with the U.S. Army Corps of  Engineers because of its major role in planning and executing military  construction projects. Further, we discussed cost and savings assumptions  with officials from the military services responsible for implementing  certain recommendations to better understand the potential for changes to  cost and savings estimates.
To obtain the perspective of installation and command officials directly  involved in BRAC implementation planning and execution, we visited   12 installations, commands, or defense agencies affected by BRAC. We  selected these installations and commands because they were among the  closures or realignments that DOD projected to have significant costs or  savings and to obtain a command-level perspective about BRAC  implementation. Installations, commands, and defense agencies we visited  are    Army Forces Command, Fort McPherson, Georgia;    Army Special Operations Command, Fort Bragg, North Carolina;    Army Installation Management Command regions at Fort McPherson,  Georgia; Fort Monroe, Virginia; and Fort Sam Houston, Texas;    Army Training and Doctrine Command, Fort Monroe, Virginia;    Garrison, Fort Belvoir, Virginia;    Garrison, Fort Bliss, Texas;    Garrison, Fort Sam Houston, Texas;    Air Force’s Air Education and Training Command, Randolph Air Force    Tri-Care Management Activity, Falls Church, Virginia;    National Geospatial-Intelligence Agency, Fort Belvoir, Virginia;    Naval Air Systems Command, Arlington, Virginia; and    U.S. Army Corps of Engineers, Washington, D.C.
Overall, we determined that the data for this report were sufficiently  reliable for comparing cost and savings estimates and identifying broad  implementation challenges. We conducted this performance audit from  February 2008 to December 2008 in accordance with generally accepted  government auditing standards. Those standards require that we plan and  perform the audit to obtain sufficient, appropriate evidence to provide a  reasonable basis for our findings and conclusions based on our audit  objectives. We believe that the evidence obtained provides a reasonable  basis for our findings and conclusions based on our audit objectives.
section_title: Appendix II: BRAC Recommendations DOD Expects to Cost the Most
paragraphs: Appendix II lists BRAC recommendations that the DOD expects to cost  the most to implement based on its fiscal year 2009 budget submission to  Congress. DOD expects 30 recommendations (16 percent of the   182 recommendations) to generate about 72 percent of the one-time costs  to implement BRAC recommendations during fiscal years 2006 through  September 15, 2011, as shown in table 3.
section_title: Appendix III: BRAC Recommendations DOD Expects to Save the Most Annually
paragraphs: Appendix III lists individual BRAC recommendations that DOD expects to  save the most annually after it has implemented the recommendations  based on its fiscal year 2009 budget submission. DOD expects   24 recommendations (13 percent of the 182 recommendations) to generate  more than 80 percent of the net annual recurring savings as shown in   table 4.
section_title: Appendix IV: BRAC Recommendations DOD Expects to Save the Most over a 20-year Period
paragraphs: Appendix IV lists individual BRAC recommendations that DOD expects to  save the most over a 20-year period. DOD expects 30 recommendations  (16 percent) to generate more than 85 percent of the 20-year savings as  shown in table 5.
section_title: Appendix V: Comments from the Department of Defense
section_title: Appendix VI: GAO Contact and Staff Acknowledgments
subsections: section_title: Acknowledgments
paragraphs: In addition to the individual named above, Laura Talbott, Assistant  Director; Vijay Barnabas; John Beauchamp; Susan Ditto; Gregory  Marchand; Richard Meeks; and Charles Perdue made key contributions to  this report.
section_title: Related GAO Products
paragraphs: Military Base Realignments and Closures: Army Is Developing Plans to  Transfer Functions from Fort Monmouth, New Jersey, to Aberdeen  Proving Ground, Maryland, but Challenges Remain. GAO-08-1010R.  Washington, D.C.: August 13, 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: DOD Funding for Infrastructure and Road  Improvements Surrounding Growth Installations. GAO-08-602R.  Washington, D.C.: April 1, 2008.
Defense Infrastructure: Army and Marine Corps Grow the Force  Construction Projects Generally Support the Initiative. GAO-08-375.  Washington, D.C.: March 6, 2008.
Military Base Realignments and Closures: Higher Costs and Lower  Savings Projected for Implementing Two Key Supply-Related BRAC  Recommendations. GAO-08-315. Washington, D.C.: March 5, 2008.
Defense Infrastructure: Realignment of Air Force Special Operations  Command Units to Cannon Air Force Base, New Mexico. GAO-08-244R.  Washington, D.C.: January 18, 2008.
Military Base Realignments and Closures: Estimated Costs Have  Increased and Estimated Savings Have Decreased. GAO-08-341T.  Washington, D.C.: December 12, 2007.
Military Base Realignments and Closures: Cost Estimates Have  Increased and Are Likely to Continue to Evolve. GAO-08-159. Washington,  D.C.: December 11, 2007.
Military Base Realignments and Closures: Impact of Terminating,  Relocating, or Outsourcing the Services of the Armed Forces Institute of  Pathology. GAO-08-20. Washington, D.C.: November 9, 2007.
Military Base Realignments and Closures: Transfer of Supply, Storage,  and Distribution Functions from Military Services to Defense Logistics  Agency. GAO-08-121R. Washington, D.C.: October 26, 2007.
Defense Infrastructure: Challenges Increase Risks for Providing Timely  Infrastructure Support for Army Installations Expecting Substantial  Personnel Growth. GAO-07-1007. Washington, D.C.: September 13, 2007.
Military Base Realignments and Closures: Plan Needed to Monitor  Challenges for Completing More Than 100 Armed Forces Reserve  Centers. GAO-07-1040. Washington, D.C.: September 13, 2007.
Military Base Realignments and Closures: Observations Related to the  2005 Round. GAO-07-1203R. Washington, D.C.: September 6, 2007.
Military Base Closures: Projected Savings from Fleet Readiness Centers  Are Likely Overstated and Actions Needed to Track Actual Savings and  Overcome Certain Challenges. GAO-07-304. Washington, D.C.: June 29,  2007.
Military Base Closures: Management Strategy Needed to Mitigate  Challenges and Improve Communication to Help Ensure Timely  Implementation of Air National Guard Recommendations. GAO-07-641.  Washington, D.C.: May 16, 2007.
Military Base Closures: Opportunities Exist to Improve Environmental  Cleanup Cost Reporting and to Expedite Transfer of Unneeded Property.  GAO-07-166. Washington, D.C.: January 30, 2007.
Military Bases: Observations on DOD’s 2005 Base Realignment and  Closure Selection Process and Recommendations. GAO-05-905.  Washington, D.C.: July 18, 2005.
Military Bases: Analysis of DOD’s 2005 Selection Process and  Recommendations for Base Closures and Realignments. GAO-05-785.  Washington, D.C.: July 1, 2005.