In the late 1980s, changes in the national security environment resulted in a Defense infrastructure with more bases than the Department of Defense (DOD) needed. To enable DOD to close unneeded bases and realign others, Congress enacted base closure and realignment (BRAC) legislation that instituted base closure rounds in 1988, 1991, 1993, and 1995. For the 1991, 1993, and 1995 rounds, special BRAC Commissions were established to recommend specific base closures and realignments to the President, who, in turn sent the Commissions' recommendations and his approval to Congress. A special commission was also established for the 1988 round that made recommendations to the Committees on Armed Services of the Senate and House of Representatives. For the 1988 round, legislation required DOD to complete its closure and realignment actions by September 30, 1995. For the 1991, 1993, and 1995 rounds, legislation required DOD to complete all closures and realignments within 6 years from the date the President forwarded the recommended actions to the Congress. BRAC has afforded DOD the opportunity to reduce its infrastructure and free funds for high priority programs such as weapons modernization and force readiness. As the closure authority for the last round expires in fiscal year 2001, DOD has reported reducing its domestic infrastructure by about 20 percent and saving billions of dollars that would otherwise have been spent supporting unneeded infrastructure. In essence, reported savings include both distinct savings that actually occur during the budget year or years a BRAC decision is implemented and 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, such as canceled military construction projects. The vast majority of BRAC savings represent a permanent and recurring avoidance of spending that would otherwise occur, such as for personnel. Over time, the value of the recurring savings is the largest and most important portion of overall BRAC savings. DOD reports its BRAC cost and savings estimates to the Congress on a routine basis as part of its annual budget requests. In preparing the estimates, DOD guidance to the military services and defense agencies states that the estimates are to be based on the best projection of what savings will actually accrue from approved realignments and closures. In this regard, prior year estimated savings are required to be updated to reflect actual savings when available. The Congress recognized that an up-front investment was necessary to achieve BRAC savings and established two accounts to fund certain implementation costs. These costs included (1) relocating personnel and equipment from closing to gaining bases, (2) constructing new facilities at gaining bases to accommodate organizations transferred from closing bases, and (3) remedying environmental problems on closing bases. DOD, in its annual budget request, provides the Congress with estimated cost data relative to the implementation of each BRAC round. For the most part, these estimated costs are routinely updated as they are recorded on an ongoing basis in DOD's financial accounting systems. Since we last reported on this issue in December 1998, DOD has increased its net savings estimate for the four BRAC rounds. DOD now estimates a net savings of about $15.5 billion through fiscal year 2001, an increase of $1.3 billion from the previously reported $14.2 billion. DOD data suggest that cumulative savings began to surpass cumulative costs in fiscal year 1998. The increase in net savings is attributable to a combination of lower estimated costs and greater estimated savings, as reported in DOD's fiscal year 2001 budget request and documentation. Overall, DOD has reduced its cost estimates from fiscal year 1999 to fiscal year 2001 for implementing BRAC by about $723 million and increased its savings estimates by about $610 million, resulting in a net savings increase of $1.3 billion. Table 1 summarizes the cumulative cost and savings estimates through fiscal year 2001 for the four BRAC rounds as reflected in DOD's fiscal years 1999 and 2001 BRAC budget requests and documentation, along with associated changes in the various costs and savings categories. In addition to the estimates shown in table 1, DOD now reports annual estimated recurring savings of $6.1 billion beyond fiscal year 2001, an increase from approximately $5.6 billion that DOD reported in fiscal year 1999. As shown in table 1, the cost estimates for implementing the four BRAC rounds have decreased by about $723 million from $22.9 billion to $22.2 billion with most of the decrease, or about $359 million, attributable to lower reported environmental restoration costs through fiscal year 2001. Our analysis of the data shows that most, or about $313 million, of the environmental cost reduction occurred in the Navy BRAC account. Some of this can be attributed to shifting planned actions to future years. Further, estimated revenues generated from actions—such as land sales, property leases, and other reimbursements—have increased by $180 million to $300 million, thereby increasing the offset to BRAC program cost estimates. According to the Air Force, its increased revenues resulted from the reporting of reimbursements received from the city of Chicago, Illinois, for the cost of moving an Air National Guard unit from O'Hare International Airport to Scott Air Force Base, Illinois, and from increased proceeds from land sales and property leases. In addition to reductions in estimated costs, DOD is reporting over $610 million in additional estimated savings through 2001 in its closure accounts. Our analysis shows that more than half, or $381 million, of the $610 million increase in savings shown in table 1 is attributable to Air Force operation and maintenance. Air Force officials told us that the savings increase was attributable to actions at two bases—McClellan Air Force Base, California, and Kelly Air Force Base, Texas. While the Air Force did not provide an estimate for savings at these two bases in its fiscal year 1999 budget request because of uncertainties regarding the performance of the bases' workloads, it reported a $381 million savings estimate in its fiscal year 2001 budget request. Further, an additional $101 million in increased savings is due primarily to inflationary adjustments in the estimated post-implementation savings for the 1988, 1991, and 1993 rounds through fiscal year 2001. Post-implementation savings for the 1995 round do not begin accruing until fiscal year 2002. In addition to the revisions made to the cost and savings estimates through fiscal year 2001, DOD has also revised its annual recurring savings estimate for fiscal years 2002 and beyond. DOD is now projecting annual recurring savings of $6.1 billion for the four BRAC rounds, an increase of approximately $500 million from the $5.6 billion DOD reported in fiscal year 1999. Our analysis shows that the increase is attributable equally to an increase in the BRAC 1995 round savings estimate and to a reported increase in prior rounds' recurring savings caused by using an inflation factor to convert them into current year dollars. Our prior work, along with work by others including the Congressional Budget Office, the DOD Inspector General, and the Army Audit Agency, has shown that BRAC savings are real and substantial, and are related to cost reductions in key operational areas as a result of BRAC actions. At the same time, limitations have existed in DOD's efforts to track actual costs and savings over time, which limits the precision of its net savings estimate. Audits of BRAC financial records have shown that BRAC has enabled DOD to save billions of dollars, primarily through the (1) overall elimination or reduction of base support costs at specific installations, (2) elimination or reduction of military and civilian personnel costs, and (3) cancellation of military construction and family housing projects at closed or realigned bases. Our prior work as well as work of others has shown that eliminating or reducing base support costs at closed or realigned bases is a major contributor to generating 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. For example, as stated in an April 1996 report, our analysis of the operation and maintenance costs at eight closing installations from the 1988 and 1991 rounds indicated that base support costs had been reduced and that annual recurring savings would be substantial—about $213 million—after initial costs were recouped. DOD Inspector General and Army Audit Agency reports have also shown base support reductions at closing and realigning facilities as real and substantial, although not precise. The DOD Inspector General, in affirming savings for a sample of bases in the 1993 BRAC round, consistently found that the services had significantly reduced their operating budgets because of the closure process. The elimination or reduction of military and civilian personnel at closed or realigned bases is also a major contributor to generating savings. In an April 1998 report, DOD estimated that about 39,800 military personnel and about 71,000 civilian positions had been eliminated by BRAC, resulting in an overall recurring savings of about $5.8 billion annually. While we were not able to precisely reconcile these estimated reductions with actual BRAC-related end strength reductions in the services, we reported that the large number of personnel reductions was a significant contributor to the substantial savings achieved through BRAC. DOD Inspector General and Army Audit Agency reports have validated personnel savings at various BRAC locations, although the savings estimates were not well documented in many cases. In other cases, the personnel reductions were greater than estimated. For example, in a review of nine 1995 BRAC bases, the Army Audit Agency found that, in contrast to no savings being identified for the elimination of civilian personnel authorizations at tenant activities providing support to BRAC bases, over $13 million in net recurring savings had accrued. Additionally, the cancellation of planned military construction of facilities and family housing at closed or realigned bases contributes to the savings generated from BRAC. Prior DOD Inspector General and Army Audit Agency reports have affirmed savings attributable to such cancellations.