Force Structure: Improved Cost Information and Analysis Needed to Guide Overseas Military Posture Decisions
Released: 2012-06-06T00:00:00


Highlights: section_title: Why GAO Did This Study
paragraphs: In January 2012, DOD issued new strategic guidance on defense budget priorities, indicating that it must rebalance its overseas force posture—including the forward stationing of Navy ships in Spain for ballistic missile defense and the reduction of U.S. Army forces in Europe—in the face of deficit reduction. Similarly, DOD reported in its 2011 Global Defense Posture Report to Congress that savings associated with permanently stationing forces in the United States rather than overseas are often offset by such factors as increased rotational costs. Based on direction from the Senate Armed Services Committee, GAO evaluated the extent to which DOD has (1) conducted analysis to support recent overseas posture decisions and (2) developed a process for making posture decisions that align with strategy and consider costs. GAO assessed two recent posture initiatives, DOD plans and guidance related to posture, and theater posture plans from each combatant command.

section_title: What GAO Found
paragraphs: Although the Department of Defense (DOD) has conducted some analysis to support two recent global posture decisions, the full cost implications of these decisions are unknown.

Forward deployment and permanent stationing of U.S. Navy ships in Rota . The Navy considered three options: (1) deploying ships to the region from U.S. bases, (2) forward stationing ships and crews overseas, and (3) deploying ships to the region and rotating crews from U.S. bases. The Navy concluded that forward stationing ships was the most efficient option, but GAO found that it did not fully consider the option to rotate crews from U.S. bases and, in a classified analysis, it used different assumptions for forward stationing versus deploying from the United States. These assumptions could affect the results of the analysis and have long-term cost implications. GAO’s Cost Estimating and Assessment Guide states that a business case or cost-benefit analysis finds the best value solution by presenting facts and supporting details among competing alternatives, including the life cycle costs and benefits, and sensitivity to changes in assumptions. Without an analysis that controls for differing assumptions or considers factors such as complete life cycle costs, the long-term costs associated with its decision to forward station ships will remain unknown.

Reduction of U.S. Army force structure in Europe . The planned reductions of U.S. Army forces in Europe will likely save money; however, decisions that could affect the extent of the savings are pending. For example, a 2010 Army analysis found $2 billion in savings over 10 years by returning forces from Germany, but assumed that new facilities estimated at $800 million would need to be built in the United States to house them. However, present planned reductions in overall Army end strength could eliminate the need for new construction. Further, DOD announced that it will rotate forces from the United States to Europe, but the nature of the rotations—which could include significant costs depending on their size and frequency—has not yet been defined. According to DOD officials, until such determinations are made, the savings to DOD will remain uncertain.

DOD has taken steps to align posture initiatives with strategy and cost, but continues to lack comprehensive and consistent cost estimates of initiatives. DOD’s evolving posture process links initiatives with defense goals. Stakeholders from key DOD entities prioritize the initiatives in a voting process based on strategic criteria; cost is discussed, but not voted on. Furthermore, combatant commands did not completely and consistently report cost data in their theater posture plans because of the lack of readily available cost information. GAO found two primary reasons for this: unclear roles and responsibilities of key DOD organizations that have access to the cost data needed to compile and report comprehensive cost estimates and lack of a standardized format to compile and report cost data from component commands. Until these cost data are comprehensively compiled and reported, DOD and congressional decision makers will be unable to assess the true cost of posture initiatives.

section_title: What GAO Recommends
paragraphs: GAO recommends that DOD conduct a comprehensive cost analysis associated with the Navy’s decision to station ships in Rota, assess options and costs related to rotating forces in Europe, and clarify roles and responsibilities of key entities to collect cost data on initiatives. DOD generally agreed with GAO’s recommendations and identified corrective actions, but additional steps are needed to fully address GAO’s recommendation that the Navy further assess options and costs for ballistic missile defense.

section_title: Letter
paragraphs: In January 2012, the Department of Defense (DOD) issued new strategic  guidance on defense budget priorities, indicating that it must rebalance its  forces overseas in the face of the approaching end of a decade of war, a  changing technological and geopolitical landscape, and the national  security imperative of deficit reduction. The same month, the  administration announced a renewed strategic focus on the Asia-Pacific  region and an adjustment of U.S. forces in Europe that included a  decrease in permanently stationed forces while increasing the forces  rotated temporarily to maintain presence and demonstrate commitment.  Previously, the 2010 Quadrennial Defense Review highlighted the  importance of periodically assessing and tailoring global defense posture  in light of continued globalization and enduring transnational threats.  These recent changes are the latest in DOD’s continuing efforts to do so.

GAO, Defense Management: Additional Cost Information and Stakeholder Input Needed  to Assess Military Posture in Europe, GAO-11-131 (Washington, D.C.: Feb. 3, 2011). decision makers in the executive branch and Congress. In many cases,  DOD has agreed with our recommendations and has taken actions to  implement them. A list of these related products is included at the end of  this report.

Congressional committees have also taken several actions in recent  years that emphasize the need for DOD to consider fiscal constraints in  defense planning. For example, the Senate Armed Services Committee  report accompanying a proposed bill for the National Defense  Authorization Act for Fiscal Year 2012 directed DOD to update the  committee on its plans to implement GAO’s previous recommendations to  more accurately and comprehensively account for costs related to theater  posture plans. The committee report also directed GAO to assess the  methodology and assumptions behind the assertion DOD made in its  2011 Global Defense Posture Report to Congress that savings  associated with permanently stationing forces in the United States rather  than overseas are often offset by such factors as increased rotational  costs. Consequently, this report examines the extent to which DOD has  (1) conducted an analysis of costs and savings associated with recent  overseas posture decisions and (2) developed a process for making  decisions about global posture initiatives that align with strategy and  consider costs, as well as efforts made by combatant commands to  compile and report comprehensive cost data on both existing global  posture and new initiatives in their theater posture plans.

To determine the extent to which DOD conducted analysis of costs and  savings associated with recent overseas posture decisions, we reviewed  DOD documented cost data and collected additional information by  interviewing officials associated with two major global force posture  initiatives that DOD officials identified to support its conclusion that cost  savings associated with permanently stationing forces in the United  States rather than overseas are often offset by such factors as increased  rotational costs: the stationing of four Navy destroyers in Rota, Spain, to  provide ballistic missile defense for the region and the reduction of  permanently stationed Army forces in Europe. To determine the extent to  which DOD conducted analysis to support the decision to station four  Navy destroyers in Rota, Spain, we analyzed key documents and  briefings provided by the U.S. Navy, U.S. European Command, and  Naval Station Rota; conducted a site visit to Naval Station Rota; and  interviewed officials from the U.S. Navy, Office of the Chief of Naval  Operations; U.S. European Command; U.S. Navy Europe; and Naval  Station Rota. To determine the extent to which DOD conducted analysis  to support Army force structure reductions in Europe, we conducted a site  visit to Germany; reviewed key documents from U.S. European  Command and U.S. Army Europe that describe the status of planned  force structure changes in Europe, including U.S. European Command’s  2010 and 2011 theater posture plans; and interviewed officials from the  Office of the Secretary of Defense (OSD); OSD Cost Assessment and  Program Evaluation; Office of the Under Secretary of Defense  (Comptroller); Department of the Army, Program Assessment and  Evaluation Division; U.S. European Command; and U.S. Army Europe.  We also analyzed and assessed cost estimates for several courses of  action associated with the number of Army brigade combat teams in  Europe developed by the U.S. Army, Program Assessment and  Evaluation Division, against our cost estimating criteria to determine the  extent to which Army analysts employed best practices when developing  the estimates.

To determine the extent to which DOD has a process in place for making  decisions about global posture initiatives that aligns with strategy and  considers costs, including progress made by combatant commands to  compile and report comprehensive cost data on existing posture and new  initiatives in their theater posture plans, we evaluated core global posture  strategy documents, current and draft DOD guidance, and other  documentation we collected through interviews with officials from OSD;  the Joint Staff; U.S. European Command and its three service component  commands; U.S. Pacific Command; U.S. Africa Command; the four  service headquarters; OSD Cost Assessment and Program Evaluation;  the Office of the Under Secretary of Defense (Comptroller); and the Office  of Under Secretary of Defense for Acquisition, Technology and Logistics.  We also observed the Joint Staff’s November 2011 Posture Review  Seminar and analyzed and evaluated theater posture plans from 2010  and 2011 for each combatant command.

We conducted this performance audit between June 2011 and May 2012  in accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives. Appendix I provides a more  detailed description of our scope and methodology.
subsections: section_title: Background
paragraphs: DOD operates six geographic combatant commands, each with an  assigned area of responsibility (see fig. 1). Each geographic combatant  command carries out a variety of missions and activities, including  humanitarian assistance and combat operations, and assigns functions to  subordinate commanders. Each command is supported by a service  component command from each of the services and by a theater special  operations command. The Departments of the Army, Navy, and Air Force  have key roles in making decisions on where to locate their forces when  they are not otherwise employed or deployed by order of the Secretary of  Defense or assigned to a combatant command. In addition, the military  departments allocate budgetary resources to construct, maintain, and  repair buildings, structures, and utilities and to acquire the real property or  interests in real property necessary to carry out their responsibilities.  Together, the combatant commands and service component commands  develop theater posture plans that seek to prioritize force structure  changes and posture initiatives that will best meet national security and  strategic priorities for a given area of responsibility.

The process for assessing global posture initiatives is managed under the  framework of the Global Posture Executive Council, which consists of  representatives from the military services, the combatant commands, the  Joint Staff, and OSD. The purpose of the Global Posture Executive  Council includes facilitating senior leader posture decision making and  overseeing the assessment and implementation of posture plans. The  Principal Deputy Under Secretary of Defense for Policy and the Director,  Joint Staff, serve as co-chairmen of the council, and its membership  includes senior representatives from both offices, as well as  representatives from the Office of the Under Secretary of Defense for  Acquisition, Technology and Logistics; the Office of the Under Secretary  of Defense (Comptroller); OSD Cost Assessment and Program  Evaluation; the Joint Staff; the combatant commands; the services; and  others as needed. Subordinate to the Global Posture Executive Council is  the Global Posture Integration Team, which consists of representatives  from each military department who review posture initiatives from all  combatant commands’ theater posture plans included in the annual global  posture prioritization process. The prioritization process itself takes place  in a 3-day seminar held in or around November of each year during which  22 representatives from organizations that comprise the Global Posture  Executive Council come together to review the posture initiatives  proposed in each combatant command’s theater posture plan and  prioritize these initiatives based primarily on how they align with strategic  defense guidance. The prioritized initiatives are then provided to the  services to inform the development of their budgets.

A hierarchy of national and defense guidance informs the development of  DOD’s global posture. The National Security Strategy, to be issued by the  President at the beginning of each new administration, and annually  thereafter, describes and discusses topics including worldwide interests,  goals, and objectives of the United States that are vital to its national  security. The Secretary of Defense then provides corresponding strategic  direction through the National Defense Strategy and Quadrennial  Defense Reviews. Furthermore, the Chairman of the Joint Chiefs of Staff  provides guidance to the military through the National Military Strategy.  On specific matters, such as global defense posture, DOD has also  developed new guidance in numerous documents, principally the 2010  Guidance for the Employment of the Force—which consolidates and  integrates planning guidance related to operations and other military  activities—and the 2010 Joint Strategic Capabilities Plan—which  implements the strategic policy direction provided in the Guidance for the  Employment of the Force. The Joint Strategic Capabilities Plan also tasks  combatant commanders to develop theater campaign, contingency, and  posture plans that are consistent with the Guidance for the Employment  of the Force.facilitate the development of operational and contingency plans, while the  theater posture plan provides an overview of posture requirements to  support those plans and identifies major ongoing and new posture  initiatives to address capability gaps, including current and planned  military construction requirements. Figure 2 illustrates the relationships  among these national and DOD strategic guidance documents.

section_title: The Cost Implications of Evolving Plans for Overseas Presence Are Uncertain
paragraphs: Although DOD has conducted some analysis to support recent global  defense posture decisions, the cost implications of these decisions are  unknown. In its 2011 Global Defense Posture Report to Congress, DOD  asserted that cost savings associated with permanently stationing forces  in the United States rather than overseas are offset by other factors, such  as increased costs to periodically rotate forces back to overseas  locations. To support this assertion, OSD identified two posture initiatives:  (1) the forward deployment and permanent stationing of U.S. Navy ships  in Rota, Spain, in support of ballistic missile defense and (2) the reduction  of U.S. Army force structure in Europe. Based on our review of the  analysis behind these two posture initiatives, we found that the analysis  supporting the first was incomplete and that any analysis of the second  cannot be completed until several basic decisions are made and  assumptions defined.
subsections: section_title: Decision to Forward Station Ships in Europe Could Allow the Navy to Provide Missile Defense with Fewer Ships, but the Long-Term Costs Are Not Well Defined
paragraphs: The Secretary of the Navy recently announced the permanent stationing  of four Aegis-equipped ships in Rota, Spain—two ships in fiscal year  2014 and the other two ships in fiscal year 2015—in order to more  efficiently address the operational requirements associated with the  President’s Phased Adaptive Approach for European ballistic missile  defense.

The Navy considered and compared three options in order to determine  the most appropriate way to address the operational requirements for  ballistic missile defense in Europe: (1) deploying ships to the region from  U.S. bases, (2) forward stationing ships and crews within the U.S.  European Command area of responsibility, and (3) deploying ships to the  region and rotating crews from U.S. bases. The Navy concluded that  forward stationing ships represented the most efficient and strategically  beneficial of the three options. We reviewed the Navy’s documentation  associated with the decision and found two key issues. First, the Navy did  not fully consider the rotational crewing option. Second, the Navy used  different operational assumptions for the remaining two options and did  not control for those differences prior to comparing the analytical results.

Limited analysis of the rotational crewing option. The Navy provided  little documentation for its analysis of the option to forward station  ships and rotate crews from U.S. bases—also known as rotational  crewing. This option avoids permanently relocating ship crews and  their families. Navy officials stated that rotational crewing was  undesirable because of its deleterious effect on crew efficiency and  morale. Our previous reports found that the Navy had not developed  comprehensive guidance for implementing rotational crewing  initiatives or a systemic approach for analyzing rotational crewing  alternatives and lessons learned. Moreover, as we reported in 2008,  initial Navy rotational crewing efforts had provided greater forward  presence for Navy ships by eliminating ship transits and maintaining  more on-station time in distant operating areas. Therefore, a  rotational crewing approach for this posture decision could potentially  provide a strategically effective and cost-effective option. However,  the Navy provided less analysis of this option than the other two  options, which may have prevented the Navy from determining the  potential operational value of this approach.

Different operational assumptions not controlled for in analysis of  alternatives. The Navy provided more documentation and analysis for  its comparison of the forward stationing option to the current approach  of U.S.-based deployments to the region. As a result of its analysis,  the Navy concluded that the forward stationing option requires  significantly fewer ships to meet European ballistic missile defense  mission requirements and therefore represents the more efficient and  cost-effective option. However, we found that the Navy applied  different assumptions to the two options and did not demonstrate that  it had controlled for those differences, both of which could affect the  outcome of the analysis. Further, Navy officials did not demonstrate  that they had considered the long-term life cycle effect and associated  costs for each forward deployed ship. Such factors may represent  significant costs, without which DOD may lack the comprehensive  analysis needed to determine the most efficient approach for meeting  ballistic missile defense mission requirements.

GAO’s Cost Estimating and Assessment Guide states that a business  case analysis or a cost-benefit analysis seeks to find the best value  solution by linking each alternative to how it satisfies a strategic objective.  This linkage is achieved by developing business cases that present facts  and supporting details among competing alternatives, including the life  cycle costs and quantifiable and nonquantifiable benefits. Specifically,  each alternative should identify (1) relative life cycle costs and benefits;  (2) methods and rationale for quantifying the life cycle costs and benefits;  (3) effect and value of cost, schedule, and performance trade-offs;   (4) sensitivity to changes in assumptions; and (5) risk factors. Finally, the  analysis should be unbiased, consider all possible alternatives, and be  rigorous enough that independent auditors can review it and clearly  understand why a particular alternative was chosen. DOD guidance  regarding economic analysis similarly encourages the use of sensitivity  analysis, a tool that can be used to determine the extent to which costs  and benefits change or are sensitive to changes in key factors; this  analysis can produce a range of costs and benefits that may provide a  better guide or indicator than a single estimate.

In contrast, the Navy’s choice to forward station ships in Europe was  informed by cost and strategic factors. The Navy considered a number of  basing options in or near the Mediterranean and developed a decision  matrix that included both strategic and cost factors, such as the proximity  of each site to the planned deployment regions and the amount of military  construction that would be required at each site to support the ships and  their crews. Based on these factors, Navy officials determined that Naval  Station Rota provided the best option. From a strategic and operational  perspective, Naval Station Rota provides the U.S. Navy with a large  maritime port and an associated airfield close to current and potential  future operating areas. Additionally, since it is a home port for the  Spanish Navy and currently houses Spanish military ships of similar size,  there is no need to expand the port pier space to accommodate the  incoming ships. Figure 3 shows the current port pier space.

While Naval Station Rota can accommodate the expanded mission, some  costs will be incurred. The infrastructure at Rota was initially designed to  accommodate a much larger contingent of military personnel and family  members than it does currently. Its capacity, according to Navy officials,  is sufficient to accommodate the personnel numbers expected once the  ships, their crews, and the crews’ families are stationed there. As such,  although some military construction will be required, less would be  required at Rota than at any of the other sites in the U.S. European  Command area of responsibility that were considered. Specifically, the  Navy estimated it would cost approximately $33 million for construction of  new facilities and upgrades to existing infrastructure. Further, Naval  Station Rota officials explained, and we observed, that the base currently  has sufficient galley, medical, and housing facilities and that there are no  plans to expand the physical footprint of on-base support infrastructure.  The Navy also considered estimated up-front and recurring increases in  operational and personnel expenses, including those for additional  support personnel and increased utilities costs. In total, the Navy  estimated that it would incur approximately $166 million in up-front  military construction, personnel, and maintenance costs; an annual  increase in operations and maintenance; and personnel costs of  approximately $179 million.

section_title: DOD Will Likely Save Money by Reducing Army Forces and Headquarters in Europe, but Amount of Savings Depends on Future Decisions
paragraphs: The 10-year time period identified in the analysis is fiscal years 2012 through 2021.

Although this decision pertains to a combatant command, funding for the installation  containing the  command’s headquarters is included in the Army’s budget. entire brigades was likely and that they were currently examining  options, including rotating smaller formations, such as companies or  battalion-sized elements. The potential rotations will likely have  implications on the final basing plan in Europe as well, as the Army  would likely want to maintain facilities in Europe for rotating forces.

Until the decisions outlined above are made—especially regarding the  plans to rotate forces back to Europe—the full extent of the savings that  will be realized in light of the Secretary of Defense’s January 2012  decision to reduce the size of permanently stationed U.S. Army forces in  Europe will remain uncertain. Based on previous GAO and Army analysis,  there is the potential for DOD to save considerably more than the   $2 billion originally estimated in light of DOD’s decision to remove the  brigades from the force structure. Looking forward, the decisions about  the size and frequency of Army rotations will be a key cost driver. Costs  will be incurred not only to pay for the rotations, but assumptions about  these rotations will also be used to decide which Army installations in  Europe to retain.

section_title: DOD Has Taken Steps to Align Posture Initiatives with Strategy and Cost but Continues to Lack Comprehensive and Consistent Cost Estimates of Initiatives
subsections: section_title: DOD’s Process to Prioritize Posture Initiatives Is Improving
paragraphs: In part to respond to previous GAO recommendations, DOD recognized  the need to prioritize initiatives to reflect strategic goals, has taken steps  to align posture initiatives with defense strategy, and has begun to gather  cost information. DOD’s evolving global defense posture process links  posture initiatives with defense goals and prioritizes those initiatives  based on strategic and implementation criteria. Strategic criteria are  defined by four focus areas: enabling crisis response, ensuring access for  global posture enablers, shaping and improving security cooperation, and  supporting contingencies and ongoing operations. Implementation criteria  include such factors as operational flexibility, operational management  and institutional provisions of the force, ease of implementation, and  international relations. Based on our observation of the process, all  posture initiatives submitted by combatant commands in their theater  posture plans are discussed and voted on within the framework of the  strategic and implementation criteria by 22 stakeholders from the Global  Posture Executive Council using electronic voting software displayed on a  projection screen. The result is a list of posture initiatives ranked in order  of strategic priority. During the process, the stakeholders also discuss the  approximate costs associated with each initiative, but cost is not  considered a key factor and is not voted on. According to DOD officials,  this is because costs are considered both before and after the  prioritization process (before by the combatant command and after by the  services in their budget processes) and because the costs associated  with an initiative are always discussed before voting takes place.

section_title: Combatant Commands Reported Some Cost Data in Their 2011 Theater Posture Plans, but Gaps Remain
paragraphs: Although the geographic combatant commands are responsible for  reporting cost data on existing global posture, we found that the  combatant commands did not completely and consistently report cost  data in their 2011 theater posture plans. Our prior work has  demonstrated, however, that comprehensive cost information is a key  component in enabling decision makers to set funding priorities, develop  annual budget requests, and evaluate resource requirements at key  decision points. Specifically, GAO previously recommended that DOD  should compile and report comprehensive cost data in the combatant  commands’ theater posture plans.to this recommendation, DOD revised an enclosure in the 2010 Joint  Strategic Capabilities Plan to direct the combatant commands to include  the following cost data on current posture in their theater posture plans:   DOD officials told us that in response ongoing, current year, and 5-year planned posture initiatives listed by host nation participation (when appropriate).  title and cost;  full project costs, that is, construction costs plus furniture, fixtures,  equipment, and any operation and maintenance costs;  implementation progress (when appropriate); and  Despite this guidance, our review of the 2011 theater posture plans  submitted by the five geographic combatant commands found that though  all of them partially complied with the revised guidance, none met all the  requirements. For example, some theater posture plans included  current year cost data but no cost data for the out years. Additionally,  some theater posture plans did not report key cost data, such as military  construction costs or operation and maintenance costs. Three of the five  posture plans did not include implementation progress for each initiative  and did not indicate why this information was not included.

Additionally, DOD published supplemental guidance in early 2011 that  directs the combatant commands to provide initiative summary sheets for  each new posture initiative in their 2011 theater posture plans. These  summary sheets are used to inform the prioritization process and include  several elements, such as approximate costs broken out by fiscal year  and host nation funding (if known), for each posture initiative. However,  we found that cost data were not consistently reported in the initiative  summary sheets for new posture initiatives as accurately as possible.  Therefore, cost data for new posture initiatives may not be able to be  accurately compared during the prioritization process. DOD officials told  us that in the months between issuance of the theater posture plans and  the prioritization process, combatant commands have the opportunity to  provide updated cost information for new initiatives.

Based on our analysis as well as remarks from DOD officials involved in  the process, there are two reasons that combatant commands have not  been able to accurately and consistently report cost information for their  posture initiatives. The first is the lack of clarity about roles and  responsibilities. Joint doctrine discussing the components of a joint force  notes the responsibility of service component commanders to develop  program and budget requests that comply with combatant commander  guidance on warfighting requirements and priorities. In addition, the  doctrine states that component commanders will provide a copy of the  program submission to the combatant commander prior to forwarding it to  the service headquarters, and will keep the combatant commander  informed of the status of combatant command requirements while service  programs are under development. However, according to OSD officials,  the combatant commands did not have access to comprehensive cost  data that they were required to compile and report because some of the  data are compiled by service component commands and the military  departments. Officials we interviewed from three combatant commands  echoed this sentiment, explaining that while the combatant command is  responsible for developing mission requirements for its respective region,  it is the military departments that are responsible for developing the  budgets that fund initiatives meant to address mission requirements. OSD  officials told us that in order to address this lack of clarity over roles and  responsibilities, OSD has drafted a DOD instruction outlining the U.S.  global defense posture process, which includes specific guidance to the  combatant commands and military departments on providing cost data  associated with new posture initiatives. Additionally, OSD officials told us  that they are in the process of promulgating a data call to issue to the  military departments and combatant commands to facilitate determination  of the cost of current overseas posture. Key OSD organizations involved  in these efforts include OSD Cost Assessment and Program Evaluation;  the Office of the Under Secretary of Defense for Policy; the Office of the  Under Secretary of Defense (Comptroller); and the Office of the Under  Secretary of Defense for Acquisition, Technology and Logistics. We were  unable to evaluate the instruction, however, because it was under  continuous revision and had not been finalized during the time of our  review.

The second reason that combatant commands have not been able to  accurately and consistently report cost information for their posture  initiatives is the lack of a standardized format with which to report the  information. Current DOD guidance does not provide a standardized  format for the combatant commands to use when requesting information  from service component commands, in order to consistently report the  required cost data for each posture initiative. Accordingly, officials from  U.S. Army Europe and U.S. Air Force Europe stated, for example, that  requests for cost data are either too broad or too vague and that fulfilling  these data requests is labor intensive. Without a standardized format for  reporting cost information associated with each global posture initiative,  decision makers on the Global Posture Executive Council cannot  accurately consider and compare costs associated with different  initiatives.

section_title: Conclusions
paragraphs: By asserting that cost savings associated with decreasing overseas  presence are often offset through costs incurred and operational impacts  elsewhere, DOD has tempered expectations for savings associated with  such reductions. However, in an increasingly constrained budget era,  DOD and congressional decision makers need precise estimates so that  they can more readily balance resources against strategic requirements.  To this end, estimates associated with global posture decisions should be  backed by rigorous analysis based on information that is as complete and  comprehensive as possible. The potential costs or cost savings that may  arise from recent posture decisions in the U.S. European Command area  of responsibility will remain uncertain without additional analysis.  Specifically, the decision to forward station Aegis-equipped ships at Naval  Station Rota may allow the Navy to meet the ballistic mission with fewer  ships overall but could cost DOD approximately $1 billion over a 5-year  period. And, until a more rigorous analysis of the decision is conducted,  the costs of the other options considered will remain unknown. Further,  costs and cost savings associated with the decision to reduce Army  forces in Europe and adjust the Army’s basing footprint in the region will  remain unknown until options related to rotational forces and their  associated costs are identified and assessed.

At a department wide level, DOD has taken positive steps to develop a  process for prioritizing posture initiatives. Currently, the process  considers, but is not driven by, cost. However, it remains essential that  comprehensive cost information for each initiative be compiled and  reported so that once initiatives are proposed, they can be adequately  prioritized, resourced, and approved. The current process is hampered by  the inconsistency with which cost data are reported; the lack of clarity on  the roles and responsibilities of key OSD organizations, military  departments, combatant commands, and service component commands  in helping to develop these cost estimates; and the lack of any  standardized template with which to report them. Lacking this information,  department and congressional decision makers will be unable to  adequately assess the true cost of global posture initiatives in the future.

section_title: Recommendations for Executive Action
paragraphs: To identify future funding requirements and improve the posture planning  process, we recommend that the Secretary of Defense take the following  three actions:

Direct the Secretary of the Navy to conduct a comprehensive analysis  for each course of action the Navy has considered to address mission  requirements for ballistic missile defense in the Mediterranean that  compares all options the Navy considered and either applies  consistent operational assumptions or controls for different  operational assumptions and includes the long-term life cycle costs  and annual operating costs associated with forward stationing.

Direct the Secretary of the Army to identify and assess options to  rotate forces in Europe and their associated costs, including the  impacts on future basing in Europe.

Clarify the roles and responsibilities of key OSD organizations, the  military departments, and the service component commands, and  establish a standardized reporting format to include in applicable  guidance for key DOD organizations to use to ensure that cost  information is consistently summarized and reported to inform the  posture planning process.

section_title: Agency Comments and Our Evaluation
paragraphs: In written comments on a draft of this report, DOD generally agreed with  our recommendations and has already initiated certain actions to address  them. DOD’s response acknowledged that conducting analysis prior to  making posture decisions is important, and that the actions it has taken or  plans to take should provide a greater understanding of the global  defense posture process and its consideration of costs. However, we  believe some additional steps are warranted in order to fully address our  recommendations.

In response to our recommendation that the Secretary of Defense direct  the Secretary of the Navy to conduct a comprehensive analysis for each  course of action the Navy has considered to address mission  requirements for ballistic missile defense in the Mediterranean, that  compares all options the Navy considered and either applies consistent  operational assumptions or controls for different operational assumptions  and includes the long-term life cycle costs and annual operating costs  associated with forward stationing, DOD partially concurred, but did not  identify additional actions to address the recommendation. Specifically,  DOD agreed that analysis should be conducted prior to making posture  decisions, but does not agree that additional analysis is needed to  support the decision to forward station four ships in Rota, Spain. As  discussed in this report, we acknowledge that the Navy conducted some  analysis to support this decision, including the development and  consideration of some estimated costs, but we found the analysis  inconsistent and incomplete. For example, while the Navy initially stated  that it considered rotational crewing as an option, we found its analysis  was limited when compared to the other options. In its written comments,  DOD identified concerns with this approach, including increased stress on  the crews; however, the analysis supporting the decision did not include a  discussion of these issues. Additionally, we found that the Navy did not  control for the different assumptions used to develop the ship number  requirements associated with the forward stationing and U.S.-based  deployment approaches, which could have altered the results of the  analysis and could represent significant long-term costs. If the Navy  maintains that forward stationing is the most effective and efficient means  to meet the ballistic missile defense requirement in Europe, DOD would  still benefit from determining the life cycle costs associated with the  decision in order to determine its true long-term costs, which could be  significant. While DOD provided onetime capital costs and average yearly  operations and maintenance costs for this option, it remains unclear  whether these are long-term life cycle cost estimates. Based on our  findings and our cost estimating guide that states that a credible business  case analysis should include life cycle costs as well as quantifiable and  nonquantifiable benefits, we maintain that the Navy, DOD, and Congress  would benefit from additional analysis in order to develop a more  comprehensive cost estimate associated with the decision to forward  station ships in Rota.

DOD agreed with our recommendation that the Secretary of Defense  direct the Secretary of the Army to identify and assess options to rotate  forces in Europe and their associated costs, including the impacts on  future basing in Europe, and stated that certain actions are ongoing.  Specifically, the Army is currently working with U.S. European Command  and various Army components to identify and assess options for rotating  personnel and equipment through Europe for training and exercises with  allies and partners. If fully implemented, we believe DOD’s actions should  meet the intent of our recommendation.

DOD also agreed with our recommendation to clarify the roles and  responsibilities of key OSD organizations, the military departments, and  the service component commands, and establish a standardized  reporting format that will be included in applicable guidance for key DOD  organizations to use to ensure that cost information is consistently  summarized and reported to inform the posture planning process, and  stated that certain actions are under way to address these matters. For  example, DOD stated that the department is in the final stages of  approving an instruction on the U.S. Global Defense Posture Process that  will document roles, responsibilities, and requirements for global posture  planning for key OSD organizations, the Joint Staff, the military  departments, and the combatant commands. The instruction will  institutionalize the Global Posture Integration Team and Global Posture  Executive Council to provide formal oversight of global posture  management. Additionally, DOD is in the process of issuing a data call to  the military departments and combatant commands to help determine the  existing infrastructure costs at enduring overseas installations. Lastly,  DOD stated that the Joint Staff issued supplemental Theater Posture Plan  guidance to the combatant commands in February 2012, including  standardized reporting criteria (e.g., estimated costs) for future posture  initiatives. If they are fully implemented, we believe DOD’s actions should  meet the intent of our recommendation.

The department also provided a number of general and technical  comments that we considered and incorporated, as appropriate. A  complete copy of DODs written comments is reprinted in appendix II.

We are sending a copy of this report to the Secretary of Defense; the  Secretary of the Navy; and the Secretary of the Army. In addition, the  report is available at no charge on the GAO website at  http://www.gao.gov.

If you or your staff have any questions about this report, please contact  me at (404) 679-1816 or pendletonj@gao.gov. Contact points for our  Offices of Congressional Relations and Public Affairs may be found on  the last page of this report. GAO staff who made key contributions to this  report are listed in appendix III.

section_title: Appendix I: Scope and Methodology
paragraphs: To determine the extent to which the Department of Defense (DOD)  conducted analysis of costs and savings associated with recent overseas  posture decisions, we reviewed DOD documented cost data and collected  additional information by interviewing officials associated with two major  global force posture initiatives: the stationing of four Navy destroyers in  Rota, Spain, to provide ballistic missile defense for the region and the  reduction of permanently stationed Army forces in Europe. To determine  the extent to which DOD conducted analysis to support the decision to  station four Navy destroyers in Rota, Spain, we analyzed key documents  and briefings provided by the U.S. Navy, U.S. European Command, and  Naval Station Rota in order to assess assumptions, courses of action  considered, and cost estimates. We conducted a site visit to Naval  Station Rota to observe existing capabilities and needs for military  construction projects identified by the Navy. We also collected information  by interviewing officials from the U.S. Navy, Office of the Chief of Naval  Operations; U.S. European Command; U.S. Navy Europe; and Naval  Station Rota. To determine the extent to which DOD conducted analysis  to support force structure reduction of Army brigade combat teams in  Europe, we reviewed key documents from U.S European Command and  U.S. Army Europe describing the status of planned force structure  changes in Europe, including the 2010 and 2011 theater posture plans for  U.S. European Command’s area of responsibility. We also collected  information by interviewing officials from Office of the Secretary of  Defense (OSD), OSD Cost Assessment and Program Evaluation; the  Office of the Under Secretary of Defense for Policy; the Office of the  Under Secretary of Defense (Comptroller); Department of the Army,  Program Assessment and Evaluation Division; U.S. European Command;  and U.S. Army Europe. We analyzed and assessed cost estimates for  multiple courses of action associated with the number of brigade combat  teams in Europe developed by the U.S. Army, Program Assessment and  Evaluation Division, against GAO’s cost estimating criteria to determine  the extent to which Army analysts employed best practices when  developing the estimates.

To determine the extent to which DOD developed a process for making  decisions about global posture initiatives that aligns with strategy and  considers costs, as well as efforts made by combatant commands to  compile and report comprehensive cost data on existing global posture  and new posture initiatives in their theater posture plans, we evaluated  core global posture strategy documents; current and draft DOD guidance;  and other documentation we collected through interviewing with officials  from OSD, the Joint Staff, U.S. European Command and its three service  component commands, U.S. Pacific Command, U.S. Africa Command,  the four military service headquarters, OSD, OSD Cost Assessment and  Program Evaluation, the Office of the Under Secretary of Defense for  Policy, the Office of the Under Secretary of Defense (Comptroller), and  the Office of Under Secretary of Defense for Acquisition, Technology and  Logistics. To determine the extent to which DOD’s global posture process  includes a consideration of cost, we observed the Joint Staff’s November  2011 Posture Review Seminar at which officials employed the Global  Posture Initiative and Project Prioritization Process to rank posture  initiatives identified in the combatant commands’ respective theater  posture plans. We also analyzed and evaluated theater posture plans  from 2010 and 2011 for each combatant command to determine the  extent to which the plans included comprehensive cost data for each  posture initiative. To identify potential challenges associated with the  combatant commands’ directive to compile and report comprehensive  cost data, we collected information through interviews with officials from  U.S. European Command and its service component commands, U.S.  Pacific Command, and U.S. Africa Command.

We conducted this performance audit between June 2011 and May 2012  in accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.

section_title: Appendix II: Comments from the Department of Defense

section_title: Appendix III: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact

section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, Guy LoFaro, Assistant Director;  Robert L. Repasky, Assistant Director; Jennifer Echard; Joanne  Landesman; Stephanie Moriarty; Charles Perdue; Carol Petersen;  Courtney Reid, Analyst in Charge; Michael Shaughnessy; and Grant  Sutton made key contributions to this report.

section_title: Related GAO Products
paragraphs: Defense Management: Additional Cost Information and Stakeholder Input  Needed to Assess Military Posture in Europe. GAO-11-131. Washington,  D.C.: February 3, 2011.

Defense Planning: DOD Needs to Review the Costs and Benefits of  Basing Alternatives for Army Forces in Europe. GAO-10-745R.  Washington, D.C.: September 13, 2010.

Defense Infrastructure: Guam Needs Timely Information from DOD to  Meet Challenges in Planning and Financing Off-Base Projects and  Programs to Support a Larger Military Presence. GAO-10-90R.  Washington, D.C.: November 13, 2009.

Ballistic Missile Defense: Actions Needed to Improve Planning and  Information on Construction and Support Costs for Proposed European  Sites. GAO-09-771. Washington, D.C.: August 6, 2009.

Force Structure: Actions Needed to Improve DOD’s Ability to Manage,  Assess, and Report on Global Defense Posture Initiatives. GAO-09-706R.  Washington, D.C.: July 2, 2009.

Defense Logistics: Navy Needs to Develop and Implement a Plan to  Ensure That Voyage Repairs Are Available to Ships Operating near  Guam when Needed. GAO-08-427. Washington, D.C.: May 12, 2008.

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.

Defense Infrastructure: Overseas Master Plans Are Improving, but DOD  Needs to Provide Congress Additional Information about the Military  Buildup on Guam. GAO-07-1015. Washington, D.C.: September 12, 2007.

Defense Management: Comprehensive Strategy and Annual Reporting  Are Needed to Measure Progress and Costs of DOD’s Global Posture  Restructuring. GAO-06-852. Washington, D.C.: September 13, 2006.

Opportunities Exist to Improve Future Comprehensive Master Plans for  Changing U.S. Defense Infrastructure Overseas. GAO-05-680R.  Washington, D.C.: June 27, 2005.


Question-summary annotations: questions: question: What options did the Navy consider for deployment of U.S. Navy ships?
answer: The Navy considered three options: (1) deploying ships to the region from U.S. bases, (2) forward stationing ships and crews overseas, and (3) deploying ships to the region and rotating crews from U.S. bases.
child_questions: question: What issues did GAO find with the Navy's decisionmaking process?
answer: The Navy concluded that forward stationing ships was the most efficient option, but GAO found that it did not fully consider the option to rotate crews from U.S. bases and, in a classified analysis, it used different assumptions for forward stationing versus deploying from the United States.
child_questions: question: What effects could such assumptions have?
answer: These assumptions could affect the results of the analysis and have long-term cost implications.

question: What does GAO’s Cost Estimating and Assessment Guide state?
answer: GAO’s Cost Estimating and Assessment Guide states that a business case or cost-benefit analysis finds the best value solution by presenting facts and supporting details among competing alternatives, including the life cycle costs and benefits, and sensitivity to changes in assumptions.
child_questions: question: What issues might an incomplete analysis raise?
answer: Without an analysis that controls for differing assumptions or considers factors such as complete life cycle costs, the long-term costs associated with its decision to forward station ships will remain unknown.

questions: question: What are the planned reductions of U.S. Army forces in Europe likely to do?
answer: The planned reductions of U.S. Army forces in Europe will likely save money; however, decisions that could affect the extent of the savings are pending. For example, a 2010 Army analysis found $2 billion in savings over 10 years by returning forces from Germany, but assumed that new facilities estimated at $800 million would need to be built in the United States to house them.
child_questions: question: What could eliminate the need for new construction?
answer: However, present planned reductions in overall Army end strength could eliminate the need for new construction.

question: What did DOD announce regarding rotating forces?
answer: Further, DOD announced that it will rotate forces from the United States to Europe, but the nature of the rotations—which could include significant costs depending on their size and frequency—has not yet been defined.
child_questions: question: How is this lack of definition an issue?
answer: According to DOD officials, until such determinations are made, the savings to DOD will remain uncertain.

questions: question: What does DOD lack despite taking steps to align posture initiatives with strategy and cost?
answer: DOD has taken steps to align posture initiatives with strategy and cost, but continues to lack comprehensive and consistent cost estimates of initiatives.
child_questions: question: What does DOD's posture process link initiatives with?
answer: DOD’s evolving posture process links initiatives with defense goals.

question: How do stakeholders prioritize initiatives?
answer: Stakeholders from key DOD entities prioritize the initiatives in a voting process based on strategic criteria; cost is discussed, but not voted on.

question: What issues did combatant commands have with cost reporting?
answer: Furthermore, combatant commands did not completely and consistently report cost data in their theater posture plans because of the lack of readily available cost information.
child_questions: question: What reasons did GAO find for this?
answer: GAO found two primary reasons for this: unclear roles and responsibilities of key DOD organizations that have access to the cost data needed to compile and report comprehensive cost estimates and lack of a standardized format to compile and report cost data from component commands.

question: Why is this lack of data an issue?
answer: Until these cost data are comprehensively compiled and reported, DOD and congressional decision makers will be unable to assess the true cost of posture initiatives.

questions: question: What guidance did DOD issue in January 2012?
answer: In January 2012, DOD issued new strategic guidance on defense budget priorities, indicating that it must rebalance its overseas force posture—including the forward stationing of Navy ships in Spain for ballistic missile defense and the reduction of U.S. Army forces in Europe—in the face of deficit reduction.
child_questions: question: How was this demonstrated by its 2011 Global Defense Posture Report?
answer: Similarly, DOD reported in its 2011 Global Defense Posture Report to Congress that savings associated with permanently stationing forces in the United States rather than overseas are often offset by such factors as increased rotational costs.

question: What did GAO evaluate regarding the DOD?
answer: Based on direction from the Senate Armed Services Committee, GAO evaluated the extent to which DOD has (1) conducted analysis to support recent overseas posture decisions and (2) developed a process for making posture decisions that align with strategy and consider costs.
child_questions: question: How did GAO evaluate this?
answer: GAO assessed two recent posture initiatives, DOD plans and guidance related to posture, and theater posture plans from each combatant command.