Environmental Cleanup: Defense Funding Allocation Process and Reported Funding Impacts
Published: 1998-11-16T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Pursuant to a congressional request, GAO provided information on: (1) the Department of Defense's (DOD) process for allocating approved environmental cleanup budgets when funds received are less than requested or budget rescissions occur; and (2) reported cleanup schedule delays due to lack of funding.
section_title: What GAO Found
paragraphs: GAO noted that: (1) DOD develops and allocates approved budgets through its departmentwide planning, programming, and budget process; (2) the components used DOD guidance to establish priorities and distribute funds to the various installations, but the impact of that guidance is not necessarily traceable to specific installations or sites; (3) during fiscal years (FY) 1993 to 1997, Congress took three actions that significantly affected funding for DOD cleanup activities; (4) in FY 1995, Congress appropriated $400 million less than DOD requested and then rescinded an additional $300 million of the amount appropriated; (5) Congress appropriated $200 million less than DOD had requested for FY 1996; (6) in each case, DOD components adjusted funding priorities in light of the congressional actions and DOD guidance; (7) while specific guidance varied, both written and verbal guidance encouraged priority for sites of high risk and discouraged cleanup studies that were not essential; (8) data contained in DOD's annual reports to Congress and in DOD components' records do not show a direct relationship between installations receiving less or more funding than planned and those reporting cleanup schedule delays due to funding; (9) for example, during FY 1995 and FY 1996, about half of the Army installations with the largest decreases in funding reported cleanup schedule delays--a frequency similar to Army installations with the largest increases in funding; (10) during this period, GAO also found that actual funding changes under the DOD process often varied from that initially envisioned because of such reasons as inherent uncertainty during cleanup planning; and (11) for example, DOD initially identified a potential decrease in funding for two sites at Dugway Proving Ground, Utah, whereas the Army allocated a slight overall funding increase to that installation, which has 205 cleanup sites.

section_title: Letter
paragraphs: You expressed concern that it is not clear how Department of Defense (DOD) initiatives to better target environmental cleanup funds have been affected by the availability of funds. In response to your request, we are providing information on (1) DOD’s process for allocating approved cleanup budgets when funds received are less than requested or budget rescissions occur and (2) reported cleanup schedule delays due to a lack of funding. We identified funding and schedule impact changes from 1993 to 1997, and we focused primarily on those changes occurring in fiscal years 1995 and 1996. During those 2 fiscal years, DOD’s approved budgets for environmental cleanup were less than requested and DOD reported an increased number of cleanup schedule delays due to funding in its annual reports. The scope and methodology of our work are detailed in appendix I.
subsections: section_title: Background
paragraphs: The Defense Environmental Restoration Program promotes and coordinates cleanup of hazardous substances associated with past DOD activities. Funding for cleanup at operational installations and formerly used defense sites has come from the Defense Environmental Restoration Account (DERA) since 1984. Cleanup associated with installations designated for closure or realignment has been funded through the Base Realignment and Closure (BRAC) process since 1991. Under its statutory reporting requirements, DOD annually reports to Congress by providing information on installation cleanup sites, including, for example, background, status, progress made, and cost incurred and remaining to complete cleanup. Since fiscal year 1993, the report has listed when installation cleanup activity schedules are impeded by a lack of funding.
The Deputy Under Secretary of Defense, Environmental Security, formulates policy and provides oversight for the Defense Environmental Restoration Program at operational and BRAC installations and formerly used defense sites. In fiscal year 1997, the centralized DERA was partitioned into five environmental restoration accounts: Army, Navy (including Marine Corps), Air Force, formerly used defense sites, and defense-wide. The components plan, program, and budget for the individual installation cleanup projects. The Army, as executive agent for DOD, implements the program at formerly used defense sites through the U.S. Army Corps of Engineers.
section_title: Process to Allocate Approved Budgets
paragraphs: DOD planning and budget guidance, as well as headquarters and component instructions, govern departmentwide planning, programming, and budgeting for the environmental restoration program. The Army, the Navy, and the Air Force headquarters allocate funds to intermediate commands, which ultimately allocate funds for cleanup at specific installations. Other defense components, such as the Defense Logistics Agency (DLA), directly allocate funds to specific locations for cleanups, and the Army Corps of Engineers executes funding for formerly used defense sites. The impact of overall planning and budget guidance is not necessarily traceable to specific installations or sites. The way components allocate funding is described in appendix II.
For fiscal year 1995, Congress appropriated $400 million less than DOD requested for cleanup at operational installations and formerly used defense sites and rescinded another $300 million from the amount that had been appropriated. For fiscal year 1996, Congress appropriated $200 million less than DOD requested. Table 1 shows fiscal years’ 1993 to 1997 DERA funding decreased from $1.638 billion to $1.314 billion.
subsections: section_title: Allocating Approved Budgets for Fiscal Years 1995 and 1996
paragraphs: For fiscal years 1995 and 1996, appropriations for DOD’s environmental cleanup program were less than requested. For fiscal year 1995, Environmental Security either provided written guidelines on how to determine which projects to fund or conferred with component officials verbally on how funds should be used. For fiscal year 1996, no guidance was given because the congressional appropriation specified distribution of funds among services.
subsections: section_title: Fiscal Year 1995 Allocation
paragraphs: Environmental Security’s November 1994 guidance to the defense components emphasized cleanup of sites that are the highest priority to stakeholders (those having interest in cleanup activities, such as the community surrounding the installation) and regulators’ considerations included by (1) involving stakeholders in decision-making, (2) taking interim remedial actions (early response action that is identified and implemented at any time during the study or design phases of cleanup) instead of continuing studies, (3) giving priority to higher relative risk sites, (4) deferring studies that are not essential for safety or compliance with agreements, (5) reviewing expense data, (6) considering innovative technologies and generic remedies, and (7) funding field locations according to their fair share. The guidance was not installation specific and service officials made the site decisions.
Environmental Security officials stated that they discussed guidance with the defense components on how to implement the rescission. Considerations addressed included not deobligating funds for site projects already underway, limiting medium or low relative risk site work, limiting studies while ensuring a proper mix of study and cleanup, and deferring projects scheduled to begin in the later months of the fiscal year. The officials stated that they were unable to issue written guidance because there was about a month between hearing about the proposed rescission and the actual rescission.
section_title: Fiscal Year 1996 Allocation
paragraphs: DOD’s fiscal year 1996 appropriations act stipulated how the $1.42 billion for environmental restoration was to be distributed to the components. Environmental Security officials stated that, as a consequence, no further guidance was provided to defense components regarding the funding change.
section_title: Reported Cleanup Schedule Delays Due to Funding
paragraphs: DOD’s annual reports to Congress for fiscal years 1995 and 1996 show that an increasing number of installations reported that their cleanup schedules were affected by fund limits. Some installations that received less funding than planned reported schedule delays, while others did not. However, some installations that received more funding than planned also reported unspecified schedule delays. Reported cleanup schedule delays increased from 6 in fiscal year 1993 to 204 and 481 in fiscal years 1995 and 1996, respectively. In fiscal year 1997, reported funding schedule delays decreased to 135. Installations with the largest budget increases and decreases reported schedule delays with about equal frequency, and not all of the installations with the largest decreases reported schedule delays due to funding.
subsections: section_title: DOD’s Annual Reports Cited Schedule Delays Due to Funding
paragraphs: Beginning in fiscal year 1993, DOD’s annual cleanup reports to Congress have identified installations where cleanup schedules were delayed by funding. Other causes for delays identified in the annual reports were technical, contracting, personnel, and regulatory. The reports further specified which of the four phases of cleanup (studies, interim actions, design, or actual cleanup) were affected. The greatest number of installations reporting cleanup schedule delays due to funding was in fiscal years 1995 and 1996. Figure 1 shows delays of cleanup schedules due to funding at installations, as reported by DOD, for fiscal years 1993-97.
Among the installations that reported cleanup delays caused by funding limitations were facilities that received some of the largest increases in funding as well as facilities that received less funding than planned. Twelve of 23 Army facilities with the greatest total decreases between budget requests and funding in 1995 and 1996 reported schedule delays in one or both years. However, 16 of 23 Army facilities with the largest increases in funding also reported schedule delays. None of the 16 facilities that reported schedule delays despite receiving more funding than originally planned identified specific delays in the annual reports. Some facilities—for example, White Sands Missile Range, New Mexico—reported that their ability to undertake certain future actions depended on the availability of funding.
Table 2 identifies selected installations that reported schedule impacts caused by funding. The table includes installations receiving net funding of at least $9 million less than planned for fiscal years 1995 and 1996 combined and shows which of the four cleanup phases were reported to be affected.
DOD’s annual reports contain narratives of activity progress associated with a specific installation. Sometimes included in this description is reference to funding effects.
Examples of report narrative in fiscal year 1995 are:
Adak Naval Air Facility: “Several activities planned in  were deferred due to funding cutbacks, including IRAs [interim remedial action] at SWMUs . Removal Actions at two PCB  sites; and a basewide Remedial Investigation and Feasibility Study.”
Aberdeen Proving Ground: “Several activities were not completed or delayed because of funding cutbacks, including, the J-Field FS [feasibility study], RI  characterization activities at Canal Creek, and RI/FS  activities at the Westwood and Other Aberdeen Areas.”
Twin Cities Army Ammunition Plant: “Closure of the [Grenade Range and Outdoor Firing Range] areas was hindered as a result of funding cutbacks.”
However, not all installations that reported schedule delays due to funding provided a narrative reference to the effect in DOD’s annual reports. For example, although funding schedule delays were reported for Robins AFB and Oceana Naval Air Station as shown in table 2, no description of these delays were provided in narratives. Overall, of the 204 installations reporting a schedule delay due to funding in fiscal year 1995, 42 described the nature of the effect in the report’s progress narratives. In fiscal year 1996, 190 of 481 installations described the effect in narratives. In discussing these reports, DOD and service officials stated that there is no requirement to provide detailed narratives.
In discussing defensewide reports of funding impacts, an Environmental Security official noted that installations may be aware of some changes in funding planned and allocated by projects but not others. The official said his experience indicated that specific funding changes may sometimes be affected by other changes, especially among installations with similar priorities.
section_title: Funding at Installations Visited
paragraphs: Although DOD developed information on the effect of receiving less funding than it requested, the actual changes were often different than envisioned. Environmental Security officials prepared a May 1995 list that identified specific locations and sites that could be potentially affected by the $500 million in budget decreases. That list identified 5 programs and specific sites at 409 potentially affected locations. In discussing a draft of this report, DOD and service officials emphasized that variances should be expected in envisioned versus actual impacts in quick reaction responses such as the May 1995 list. Officials said this was especially true in this case because actual expenditures by mid-year would already have varied from plans available at headquarters.
The May 1995 list and our visits to locations selected from it indicated that as DOD components made specific decisions, the potential effects of receiving less than requested during fiscal years 1995 and 1996 did not always occur as initially envisioned by DOD and that the results of funding changes varied widely at the affected locations. For example:
Dugway Proving Ground, Utah, was identified to receive about $22 million less than requested, according to the list, for a medium relative risk priority site and a site not yet evaluated. However, Army records showed that the installation has 199 sites identified and actually received an increase of $631,000. An installation official stated that they were not aware of a potential reduction during that time period.
Dahlgren Naval Surface Warfare Center, Virginia, was identified to receive $1.6 million less than requested according to the list but received $9.5 million less according to Navy data. Command officials overseeing cleanup at the center stated that funding was reduced because its projects were not known to be executable. However, center officials stated that the projects had been delayed and that they knew of no impediments to beginning work on the affected sites if funds had been made available. Center officials also said that they did not provide input for DOD’s 1995 annual report and did not know why a funding impact was not reported.
The former Lake Ontario Ordnance Works, New York, was identified to receive about $10.9 million less than requested, according to the list. But Army officials responsible for the location said that the site was still in the design phase and that they knew of no plan to spend $10.9 million in fiscal years 1995 or 1996.
Regarding your specific interest in the Badger Army Ammunition Plant, Wisconsin, DOD’s May 1995 list identified the plant to potentially receive about $1.3 million less than requested. DOD’s annual reports for fiscal years 1995 and 1996 indicated that the plant had schedule delays due to funding for projects in cleanup design and actual cleanup phases. Although plant officials told us that they did not receive the full amounts they had requested in fiscal years 1995 and 1996, they did not know of funding differences attributable to changes in actual funds versus requested funds made by Congress. Funding data for the plant varied by reporting source. For example, Environmental Security office data attributed $2.7 million of the President’s budget for fiscal year 1995 to the Badger plant, increasing to $6.5 million after the $300-million rescission. Army Environmental Center data initially attributed $17.2 million to the plant rather than $2.7 million, but showed a figure similar to Environmental Security’s figure after the rescission ($6.5 million).
At the times of our visits, Army, state, and contractor officials were working together to optimize results within available funds. For example, plant officials had proposed reducing ground water monitoring wells while increasing actual cleanup, such as for contaminated soil. Also, the Army Industrial Operations Command determined, subsequent to our visits, that the plant is excess to its production mission, requiring some additional demolition of the facilities.
section_title: Conclusions
paragraphs: DOD uses its planning, programming, and budgeting process for making funding decisions, and DOD components ultimately make site-specific decisions. When DOD received less funds than requested or rescissions occurred, Environmental Security provided written or oral guidance for DOD components’ actions. Cleanup schedule delays occurred at installations when the funding received was more or less than planned. Reports of cleanup schedule and other impacts varied according to individual project circumstances and were not clearly linked to installation planned and allocated funding levels.
section_title: Agency Comments
paragraphs: We requested comments on a draft of this product from the Secretary of Defense or his designee. An official of the Office of the Deputy Under Secretary of Defense for Environmental Security stated that DOD concurred with our presentation of the issues. Technical comments have been incorporated as appropriate.
As arranged with your office, we plan no further distribution of this letter until 30 days from its issue date, unless you publicly announce the letter’s contents earlier. At that time, we will make copies available to the appropriate congressional committees; the Secretaries of Defense, the Army, the Navy, and the Air Force; the Commandant, Marine Corps; the Directors, Defense Logistics Agency and Defense Special Weapons Agency; and other interested parties.
Please contact me on (202) 512-8412 if you have any questions about this report. Major contributors to this report are listed in appendix IV.
section_title: Scope and Methodology
paragraphs: To describe the Department of Defense’s (DOD) process for allocating funds, we reviewed DOD’s April 1994 management guidance that addressed how DOD handles funding responsibilities for the defense restoration program, and a March 1998 update to this guidance. In addition, we reviewed supplemental program guidance, DOD’s April 1996 defense instruction on the Defense Environmental Restoration Program, and components’ restoration guidance. We interviewed officials at the Environmental Security office, the Defense Logistics Agency (DLA), the Defense Special Weapons Agency, and the military services about the implementation of DOD’s guidance for allocating funds.
To identify reported schedule changes due to funding, we compared automated funding data obtained from the defense components showing planned and obligated cleanup funding by installation with automated information from DOD’s annual reports on cleanup schedules affected by funding. We discussed funding changes and effects with environmental and budget officials and compared what was reported for the installations in DOD’s annual reports for fiscal years 1995 and 1996 with command and installation records at the following selected commands and field installations.
Army Materiel Command, Alexandria, Virginia
Naval Facilities Engineering Command, Chesapeake Activity, Washington, D.C.
Naval Facilities Engineering Command, Atlantic Division, Norfolk, Virginia
Air Force Aeronautical Systems Center, Dayton, Ohio
DLA Defense Distribution Region East, New Cumberland, Pennsylvania
Dugway Proving Ground, Utah
Badger Army Ammunition Plant, Wisconsin
Dahlgren Naval Surface Warfare Center, Virginia
Yorktown Naval Weapons Station, Virginia
Camp Lejeune Marine Corps Base, North Carolina
Tinker Air Force Base, Oklahoma
Air Force Plant Number 4, Texas former Lake Ontario Ordnance Works, New York We conducted our review from March 1997 to July 1998 in accordance with generally accepted government auditing standards.
section_title: The Process by Which DOD Allocates Funding
paragraphs: Beginning in fiscal year 1997, with the devolvement of the Defense Environmental Restoration Account (DERA), the responsibility for planning, programming, and budgeting transferred from the Office of the Secretary of Defense to the individual military components. According to March 1998 management guidance for the Defense Environmental Restoration Program, the Office of the Under Secretary of Defense for Environmental Security formulates policy and provides oversight for the environmental restoration program at operational and Base Realignment and Closure installations and formerly used defense sites. The components, the Defense Logistics Agency (DLA), and the Defense Special Weapons Agency execute their own restoration programs.
Environmental Security’s April 1994 guidance for the execution of the Defense Environmental Restoration Programs of fiscal years 1994-95 and development of the program for fiscal year 1996 directed defense components to submit funding requirements to Environmental Security, which would transfer funding to military component appropriation accounts like operations and maintenance. Furthermore, the guidance states that the risk to human health and the environment presented by a site should be the main factor in determining priority and be considered in scheduling site cleanup with regulatory agencies. Although the previously single DERA was devolved to five separate accounts, Environmental Security is still involved in setting policy and oversight for component execution of DOD’s cleanup program.
The Assistant Secretary of the Army for Installations, Logistics, and Environment, through the Deputy Assistant Secretary of the Army for Environment, Safety, and Occupational Health, is responsible for policy on all Army environmental programs. The Assistant Chief of Staff for Installation Management, through the Director of Environmental Programs, oversees the Army’s environmental program. The U.S. Army Environmental Center, as the program manager, develops the budget and workplan and coordinates program activities and requirements with the major Army commands. Before fiscal year 1997, the Army Environmental Center allocated funds to the installations, but that function is now the responsibility of the major commands. Army officials indicated that, before allocating funds to major commands for program execution, funding is first set aside for priority installations, program management, defensewide programs, and certain sites with either medium or low relative risk.
The Assistant Secretary of the Navy for Installations and Environment is responsible for the Navy program and coordinates Navy and Marine Corps policy. The Chief of Naval Operations establishes policy, directs and monitors the program, and coordinates sites with the Marine Corps. The Naval Facilities Engineering Command executes the Navy and the Marine Corps programs, provides technical support, develops and supports resource requests and programs, and manages funds allocated for program execution. The command implements the program through its engineering field divisions and activities, which are responsible for executing the program at the installation level. These field divisions and activities provide information for the Navy, manage and administer cleanup contracts, coordinate and negotiate remediation agreements with regulators, develop and perform site-specific projects in coordination with installations, track project progress, and provide technical and financial oversight.
The Deputy Assistant Secretary of the Air Force for Environmental, Safety and Occupational Health, is responsible for interpreting and disseminating environmental guidance, and overseeing the development and dissemination of Air Force restoration policy and program guidance. The Air Force Civil Engineer has overall responsibility for the Air Force program and oversees the related policy and guidance. The Civil Engineer develops Air Force policy and guidance, develops Air Force goals, submits the budget, and monitors its execution. Air Force major commands are responsible for providing guidance to their installations, validating and programming funding requirements, and executing the program. The Civil Engineer allocates funds to Air Force commands, which allocate funds to their installations.
DLA and the Defense Special Weapons Agency both centrally manage funding of their installations. Environmental Security determines how much funding each agency will receive based on cleanup requirements submitted to support their budget requests. Funding plans are developed by the agencies for executing cleanup. DLA uses the Army Corps of Engineers to implement and oversee cleanup operations at its installations.
The Army serves as the executive agent for formerly used defense sites, and its program is executed by the Army Corps of Engineers. Corps districts implement and oversee projects. Corps officials stated that the Corps consolidates and prioritizes requirements workplans, which are provided to the Army for approval. Environmental Security programs and budgets funding to the Army, which then provides funds to the Corps, for formerly used defense sites. Corps districts allocate funds for site cleanup and oversee action. Because of the devolvement of DERA, a separate environmental restoration account exists for the formerly used defense sites program.
section_title: Defense Environmental Restoration Account Funding for Fiscal Years 1995 and 1996 by Defense Component
section_title: Major Contributors to This Report
subsections: section_title: National Security and International Affairs Division, Washington, D.C.
section_title: Office of the General Counsel, Washington, D.C.
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