To enable the Department of Defense (DOD) to close unneeded bases and realign others, the Congress enacted base realignment and closure (BRAC) legislation that instituted base closure rounds in 1988, 1991, 1993, and 1995. A special commission established for the 1988 round made recommendations to the Committees on Armed Services of the Senate and House of Representatives. For the 1991, 1993, and 1995 rounds, special BRAC Commissions were set up to recommend specific base realignments and closures to the president, who in turn sent the commissions’ recommendations and his approval to the Congress. The four commissions generated 499 recommendations—97 major closures and hundreds of smaller base realignments, closures, and other actions. Of the 499 recommendations, 451 required action; the other 48 were modified in some way by a later commission. DOD was required to complete its realignment and closure actions for the 1988 round by September 30, 1995, and for the 1991, 1993, and 1995 rounds within 6 years from the date the president forwarded the recommended actions to the Congress. Property disposal and environmental cleanup actions, however, were allowed to continue beyond the 6-year period. DOD reported that, as of September 30, 2001, it had taken all necessary actions to implement the recommendations of the BRAC Commissions for the four rounds. As a result of these actions, DOD estimates that it has reduced its domestic infrastructure by about 20 percent and saved billions of dollars in the process. DOD calculates its net savings by deducting the costs necessary to implement BRAC actions from the savings accrued by realigning or closing bases. These accrued savings include savings that occur during the budget year that a BRAC decision is implemented as well as the estimated cost avoidances during future years—costs that DOD would have incurred if BRAC actions had not taken place. Some of the savings are one-time (e.g., canceled military construction projects), but most represent an avoidance of recurring spending (e.g., personnel reductions). Eliminating or reducing recurring base support costs at closing and realigned bases is a major component of BRAC savings. Savings are realized through a number of actions, such as terminating physical security, fire protection, utilities, property maintenance, accounting, payroll, and a variety of other services that have associated costs linked specifically to base operations. Over time, the value of the recurring savings has become the largest and most important portion of BRAC’s overall savings. DOD reports these savings estimates to the Congress as part of its annual budget requests. The avoidance of other one-time, but not-yet-programmed, costs also may be significant over time, but they are not easily captured or reported. Once DOD no longer needs BRAC property, it is considered excess and is offered to other federal agencies. As shown in figure 1, any property that remains is then considered surplus and is disposed of through a variety of means—initially by transfers to states and local governments for public benefit purposes and, thereafter, for economic development purposes (commonly referred to as “economic development conveyances”) and negotiated or public sales. Under public benefit transfers, local redevelopment agencies can acquire property for such purposes as schools, parks, and airports for little or no cost. In 1993, BRAC legislation was amended to provide local redevelopment authorities with BRAC property at or below fair market value or without cost to promote economic recovery in areas affected by closures. DOD was required to transfer property for economic development to communities in rural areas at no cost. Later, these provisions were replaced with others that allowed no-cost property transfers to local redevelopment authorities for job generation or lease back to the federal government. Consequently, local redevelopment authorities have usually sought to obtain property at no cost and, failing that, pursue it through negotiated sales. The economic impact on communities near base realignments and closures has been a long-standing source of public anxiety. Because of this concern, DOD included “economic impact” as one of eight criteria that it used for making BRAC recommendations in the last three rounds. Although it did not play as large a role in initial BRAC deliberations as did other criteria and was not a key decision factor, “economic impact” was of such sufficient importance that DOD components were required to estimate the impact of their recommendations. We have reported on base closure implementation issues on several occasions. Although many of our reports have been limited in scope, focusing on concerns raised by individual members of Congress on closure-related actions at a specific location, our first comprehensive report addressing DOD-wide closure issues (e.g., the magnitude and precision of cost and savings estimates, the progress of environmental cleanup and property transfer, and the latter’s impact on communities and their recovery) was issued in December 1998. In that report, we concluded that the closure process was generating substantial savings, although the savings estimates were imprecise; most former base property was still awaiting transfer to other users; and most communities surrounding closed bases were faring well economically in relation to national economic indicators. Subsequent reports issued in July and August 2001 updated closure-related implementation data and reaffirmed the primary results of our prior work. In our July 2001 report, for example, we noted that DOD’s net BRAC savings estimates, while imprecise, had not only remained substantial but also were higher than projected earlier. In August 2001, we reported that most BRAC-affected communities were continuing to recover from the impact of base closures and were doing well economically in terms of key U.S. economic indicators. Furthermore, we noted that while progress was being made, over one-half of unneeded former base property had not yet been transferred. Through fiscal year 2001, financial data show that DOD generated an estimated $16.7 billion in net BRAC savings from the four rounds, an increase of $2.5 billion from its fiscal year 1999 estimate, and expects additional annual recurring savings of $6.6 billion beginning in fiscal year 2002, an increase of $1 billion. Although they have fluctuated over time, as projected costs and savings arising from the BRAC actions have changed, the net savings estimates have remained substantial. In addition to our analyses, studies by other federal agencies, such as the Congressional Budget Office (CBO), the DOD Inspector General, and the Army Audit Agency, have shown that BRAC savings are real and substantial. However, because they are based on cost and savings projections that are not precise, net savings should be viewed as a rough approximation of the likely savings. The estimates are imprecise because the military services have not regularly updated their savings projections. Furthermore, DOD has not incorporated into its estimates all costs, including reported cumulative federal government expenditures of about $1.5 billion incurred by agencies to assist communities affected by the BRAC process. On the other hand, estimated net savings could be viewed as greater than reported by DOD if one considers, for example, that many environmental-related costs attributed to the closures would have likely occurred, but probably at a slower pace, even if the bases had remained open. Also, closures avoid future, but not yet programmed, recapitalization costs on unneeded facilities. DOD’s fiscal year 2002 budget request and supporting data show that BRAC net savings estimates have increased in recent years. DOD data show savings estimates of about $16.7 billion through fiscal year 2001—an increase of about $2.5 billion from that reported in the fiscal year 1999 budget request. As figure 2 shows, DOD’s data indicate that, in 1998, the cumulative net savings estimates surpassed the costs incurred to implement BRAC actions, and the net savings have grown from that point. In preparing net savings estimates, DOD deducts the costs of implementing BRAC actions for the four closure rounds (e.g., personnel and equipment relocation and environmental cleanup) from the estimated savings (e.g., cost avoidances such as base operational costs that would have occurred without BRAC action) to project net savings. Table 1 summarizes the cost and savings estimates through fiscal year 2001 for the four BRAC rounds as presented in the budget-related documentation for fiscal years 1999 and 2002. As table 1 illustrates, our comparative analysis of BRAC budget submissions and supporting data for fiscal years 1999 and 2002 shows that the estimated net savings increase of $2.5 billion through 2001 was due to a combination of decreased costs ($909 million) and increased savings ($1,613 million) estimates. A significant portion of the estimated cost reduction resulted from delays in planned environmental cleanup through 2001, leading to a decrease of $379 million in reported environmental costs during that time period. However, expected environmental costs beyond 2001 are now $3.5 billion rather than the $2.4 billion estimate reported in fiscal year 1999. At the same time, our analysis shows that overall environmental costs remain within the range of prior program estimates that we reported on in 1996.A significant portion of the increased savings estimate is attributable to (1) an underreporting of $925 million in savings accrued from the 1991 closure round and (2) the inclusion of a $381 million savings estimate for two Air Force bases—McClellan Air Force Base, California, and Kelly Air Force Base, Texas—which was not included in the fiscal year 1999 submission. Additional details regarding the increase in projected net savings through fiscal year 2001 and the rationale for revisions are included in appendix II. In addition to the revisions made to cost and savings estimates through fiscal year 2001, DOD revised its annual recurring savings estimate for fiscal years 2002 and beyond. DOD’s data now show that DOD will accrue an expected $6.6 billion in annual recurring savings for the four BRAC rounds—an increase of approximately $1 billion from its fiscal year 1999 estimate.