DOD has undergone four BRAC rounds since 1988 and is currently implementing its fifth round. For the most recent BRAC round—referred to in this report as the BRAC 2005 round—DOD applied legally mandated selection criteria that included four criteria related to military value as well as other criteria regarding costs and savings, economic impact to local communities, community support infrastructure, and environmental impact, as shown in figure 1. In applying these BRAC 2005 selection criteria, priority consideration was given to military value. In fact, as required by BRAC legislation, military value was the primary consideration for making BRAC recommendations, as reported by both DOD and the BRAC Commission. DOD also incorporated into its analytical process several key considerations required by BRAC legislation, including the use of certified data and basing its analysis on its 20-year force structure plan. In commenting on DOD’s BRAC process in July 2005, we reported that DOD established and generally followed a logical and reasoned process for formulating its list of BRAC recommendations. Using this analytical process, the Office of the Secretary of Defense (OSD) provided over 200 BRAC recommendations to the BRAC Commission for an independent assessment in May 2005. The BRAC Commission had the authority to change the Secretary’s recommendations if it determined that the Secretary deviated substantially from the legally mandated selection criteria and DOD’s force structure plan. After assessing OSD’s recommendations, the BRAC Commission stated that it rejected 13 recommendations in their entirety and significantly modified another 13. Ultimately, the BRAC Commission forwarded a list of 182 recommendations for base closure or realignment to the President for approval. The BRAC Commission’s recommendations were accepted in their entirety by the President and Congress and became effective November 9, 2005. The BRAC legislation requires DOD to complete recommendations for closing or realigning bases made in the BRAC 2005 round within a 6-year time frame ending September 15, 2011, 6 years from the date the President submitted to Congress his approval of the recommendations. To provide a framework for promoting consistency in estimating the costs and savings associated with various proposed BRAC recommendations, DOD used an estimation model, known as the Cost of Base Realignment Actions (COBRA). The COBRA model has been used in the base closure process since 1988. It provided important financial information to the selection process as decision makers weighed the financial implications for various BRAC actions along with military value and other selection criteria when arriving at final decisions regarding the suitability of BRAC recommendations. In addition, the department designed the model to calculate estimated costs and savings associated with actions that are necessary to implement BRAC recommendations over the 6-year implementation period and to calculate recurring costs or savings thereafter. As such, the BRAC Commission continued to use DOD’s COBRA model for making its cost and savings estimates. The COBRA model relies to a large extent on standard factors and averages but is not intended to—and consequently does not—represent budget-quality estimates. As a result, neither DOD’s or the BRAC Commission’s COBRA-generated estimates can be assumed to represent the actual completion costs that Congress will need to fund through appropriations or fully reflect the savings to be achieved after implementation. We have examined COBRA in the past and have found it to be a generally reasonable estimator for comparing potential costs and savings among candidate alternatives but have not considered it a tool for use in budgeting. In the intervening years, COBRA has been revised to address certain problems we and others have identified after each round. As with any model, the quality of the output is dependent on the quality of the input. For example, a DOD analyst could assume a building could be renovated to accommodate receiving personnel; however, when BRAC implementation began, site surveys showed that the building could not be renovated, thus requiring new construction that increased estimated costs. The model provides a standard quantitative approach to comparing estimated costs and savings across various proposed recommendations. In this and previous BRAC rounds, DOD subsequently developed budget- quality estimates once BRAC recommendations became effective. Thus, the BRAC Commission’s estimated implementation costs and savings were useful for comparing candidate recommendations and DOD has subsequently refined these estimates based on better information after conducting site surveys. BRAC legislation requires DOD to submit an annual schedule containing revised BRAC cost and savings estimates for each closure and realignment recommendation to Congress. To meet this legislative requirement, DOD presents its schedule in its annual BRAC budget submission to Congress. For BRAC 2005 recommendations, DOD’s first presentation of its cost and savings schedule was in its fiscal year 2007 budget submission to Congress in March 2006. However, the department stated in its submission that it did not have enough time to formulate a reasonable BRAC budget and that the fiscal year 2007 BRAC budget submission contained significant funding shortfalls. DOD’s second presentation of its cost and savings schedule was its fiscal year 2008 BRAC budget submission to Congress in February 2007. For the BRAC 2005 round, the OSD BRAC Office—under the oversight of the Under Secretary of Defense for Acquisition, Technology and Logistics—has monitored the services’ and defense agencies’ implementation progress, analyzed budget justifications for significant differences in cost and savings estimates, and facilitated the resolution of any challenges that may impair the successful implementation of the recommendations within the 6-year completion period. To facilitate its oversight role, OSD required the military departments and certain defense agencies to submit a detailed business plan for each of their recommendations. These business plans include information such as a listing of all actions needed to implement each recommendation, schedules for personnel movements between installations, updated cost and savings estimates based on better and updated information, and implementation completion time frames. OSD’s general process for reviewing business plans is shown in figure 2. OSD BRAC officials consider their business plans to be living documents that will evolve over the course of the 6-year implementation period. Additionally, OSD’s General Counsel assesses whether the business plans meet the intent of the BRAC Commission’s recommendations. Compared to the BRAC Commission’s estimates, DOD plans to spend more and save less to implement BRAC recommendations than the BRAC Commission originally estimated, and it will take longer than expected for DOD to recoup its up-front costs. Since the BRAC Commission issued its cost and savings estimates in 2005, DOD’s reported estimates of the costs to implement about 180 BRAC recommendations have increased by $10 billion to about $31.2 billion while annual savings estimates have decreased by about $200 million—$4.2 billion to $4 billion. Moreover, our analysis of DOD’s current estimates shows that it will take until 2017 for the department to recoup its up-front costs to implement BRAC recommendations—4 years longer than the BRAC Commission’s estimates indicate this would happen. Similarly, whereas the BRAC Commission estimated that the implementation of the BRAC 2005 recommendations would save DOD about $36 billion over a 20-year period ending in 2025, BRAC implementation is now expected to save about $15 billion, a decrease of 58 percent. Since the BRAC Commission issued its cost and savings projections in 2005, cost estimates to implement the BRAC 2005 recommendations have increased from $21 billion to $31 billion (48 percent) compared to the BRAC Commission’s reported estimates and net annual recurring savings estimates have decreased from $4.2 billion to $4 billion (5 percent) compared to the BRAC Commission’s reported estimates as shown in table 1. A comparison of the BRAC Commission’s reported projections with DOD’s data shows that estimated implementation costs have increased by $10.1 billion or 48 percent and estimated net annual recurring savings have decreased by $212 million or 5 percent. However, another way to compare expected BRAC costs and saving is by omitting the effects of inflation. We found that using the same constant dollar basis as used by the BRAC Commission—meaning inflation is not considered—DOD’s estimated one- time costs to implement BRAC increased to about $28.6 billion or 36 percent in constant dollars and estimated net annual recurring savings decreased to about $3.4 billion or 20 percent in constant dollars compared to the BRAC Commission’s reported estimates. We found that estimated military construction costs accounted for about 64 percent of the increase in expected BRAC one-time costs. Specifically, the BRAC Commission estimated that to implement the BRAC recommendations, military construction costs would be about $13 billion, whereas DOD’s current estimates for military construction, without inflation, were about $20 billion. We estimated that inflation accounted for about 25 percent, or about $2.6 billion of the increase in expected one-time costs. This mostly occurred because the BRAC Commission presented its estimates using constant fiscal year 2005 dollars, which does not include the effects of projected inflation, whereas DOD’s budgeted estimates were presented in current (inflated) dollars because budget requests take into consideration projected inflation. Further, the BRAC Commission estimates did not include projected environmental cleanup costs for BRAC-affected bases, which is a consistent practice with past BRAC rounds because DOD is required to perform needed environmental cleanup on its property whether a base is closed, realigned, or remains open. Environmental cleanup added about 6 percent, or about $590 million in expected costs. Finally, other projected expenses such as operation and maintenance accounted for about 5 percent or about $500 million of the increase in expected costs. Because the BRAC Commission’s data do not include some specific budget categories that are used in the DOD BRAC budget, we could not make direct comparisons and precisely identify all estimated cost and savings changes.