Challenges Increase the Risk That Some BRAC Recommendations Might Not Be Completed by the Statutory Deadline

DOD has made progress in implementing the BRAC 2005 round but faces  challenges in its ability to meet the September 15, 2011, statutory  completion deadline. First, DOD expects almost half of the 800 defense  locations responsible for implementing BRAC to complete their  recommendations within months of the deadline, and about 230 of those  locations anticipate completion within the last 2 weeks of the  implementation period. Second, some of these locations, which involve  the most costly and complex recommendations, have already encountered  delays in their implementation schedules. Finally, delays in interdependent  recommendations could have a cascading effect on the timely completion  of related recommendations. OSD recently issued guidance requiring the  services and defense agencies to provide status briefings to improve  oversight of issues affecting timely implementation of BRAC  recommendations. However, this guidance did not establish a regular  briefing schedule as needed or require the services to provide information  about possible mitigation measures for any BRAC recommendations at  risk of not meeting the statutory deadline. Specifically, DOD must  synchronize the relocation of over 123,000 personnel with the construction  of an estimated $23 billion in new or renovated facilities. However, delays  have left little time in the planning schedule to relocate these personnel by  the deadline. BRAC Implementation Cost Estimates Are Higher and Savings Estimates Are Lower Compared to Previous Fiscal Year

DOD’s BRAC fiscal year 2009 budget submission shows that DOD plans to  spend more and save less as compared to last year’s BRAC budget  submission to implement the recommendations. Net annual recurring savings estimates decreased by almost $13 million. Specifically, DOD’s cost estimates increased by   $1.2 billion in DOD’s 2009 budget to a total estimated cost of $32.4 billion  to implement this BRAC round. Twenty-Year Savings Have Decreased

Given the cumulative increase in estimated one-time costs and decrease in  estimated net annual recurring savings, the estimated savings over a   20-year period ending in 2025, based on DOD’s fiscal year 2009 budget  submission, has also decreased. Cost Estimates Could Continue to Rise, but the Potential for Savings Estimates to Change Is Unclear

Although DOD is almost 3½ years into the 6-year implementation period  for this round of BRAC, cost estimates could potentially continue to  increase, but the potential for changes in savings estimates is less clear. There is less visibility into potential changes in savings estimates because  some military services and defense agencies are not periodically updating  their BRAC savings estimates, and OSD is not enforcing its regulation  requiring them to do so. The potential for additional  cost increases is particularly important to the Army, as it is expected to  incur the majority of the military construction costs related to base  closures and realignments. On the other hand, BRAC  implementing officials for the Army and the Air Force told us they do not  plan to update their savings estimates and will continue to report the same  savings estimates reported to Congress in February 2007 despite any  revisions in implementation details or completion schedules that could  cause savings estimates to change. 1.) Furthermore, without updated  BRAC savings estimates, as required in DOD’s own Financial Management  Regulation, DOD decision makers and Congress may be left with an  unrealistic sense of the savings this complex and costly BRAC round may  actually produce, a situation that could be used to justify another round of  BRAC in the future. Anticipated savings was an important consideration in justifying the need  for the 2005 BRAC round. Recommendations for Executive Action

To enhance OSD’s role in overseeing the implementation of BRAC 2005  recommendations and managing challenges that could impact DOD’s  ability to achieve full BRAC implementation by the statutory deadline, we  recommend that the Secretary of Defense direct the Under Secretary of  Defense (Acquisition, Technology and Logistics) to modify the recently  issued guidance on the status of BRAC implementation to    establish a briefing schedule with briefings as frequently as OSD deems  necessary to manage the risk that a particular recommendation may not  meet the statutory deadline, but as a minimum, at 6-month intervals,  through the rest of the BRAC 2005 implementation period, a schedule that  would enable DOD to continually assess and respond to the challenges  identified by the services and defense agencies that could preclude  recommendation completion by September 15, 2011, and   require the services and defense agencies to provide information on  possible mitigation measures to reduce the effects of those challenges. Military Base Realignments and Closures: Observations Related to the  2005 Round.
Why GAO Did This Study

The 2005 Base Realignment and Closure (BRAC) round is the biggest, most complex, and costliest BRAC round ever. In addition to base closures, many recommendations involve realignments, such as returning forces to the United States from bases overseas and creating joint bases. However, anticipated savings remained an important consideration in justifying the need for the 2005 BRAC round. The House report on the National Defense Authorization Act for Fiscal Year 2008 directed GAO to monitor BRAC implementation. Therefore, GAO assessed (1) challenges that might affect timely completion of recommendations, (2) any changes in DOD's reported cost and savings estimates since fiscal year 2008, and (3) the potential for estimates to continue to change. To address these objectives, GAO reviewed documentation and interviewed officials in the Office of the Secretary of Defense (OSD), the services' BRAC offices, and the Army Corps of Engineers; visited installations implementing some of the more costly realignments or closures; and analyzed BRAC budget data for fiscal years 2008 and 2009.

What GAO Found

DOD has made progress in implementing the BRAC 2005 round but faces challenges in its ability to meet the September 15, 2011, statutory completion deadline. DOD expects almost half of the 800 defense locations implementing BRAC recommendations to complete their actions in 2011; however, about 230 of these almost 400 locations anticipate completion within the last 2 weeks of the deadline. Further, some of these locations involve some of the most costly and complex BRAC recommendations, which have already incurred some delays and thus have little leeway to meet the 2011 completion date if any further delays occur. Also, DOD must synchronize relocating about 123,000 personnel with an estimated $23 billion in facilities that are still being constructed or renovated, but some delays have left little time in DOD's plans to relocate these personnel by the deadline. Finally, delays in interdependent recommendations could have a cascading effect on other recommendations being completed on time. OSD recently issued guidance requiring the services and defense agencies to provide status briefings to improve oversight of issues affecting timely implementation of BRAC recommendations. However, this guidance did not establish a regular briefing schedule or require the services to provide information about possible mitigation measures for any BRAC recommendations at risk of not meeting the statutory deadline. DOD's fiscal year 2009 BRAC budget submission shows that DOD plans to spend more to implement recommendations and save slightly less compared to the 2008 BRAC budget. DOD's 2009 estimate of one-time costs to implement this BRAC round increased by $1.2 billion to about $32.4 billion. Net annual recurring savings estimates decreased by almost $13 million to about $4 billion. Also, GAO's calculations of net present value, which includes both expected cost and savings over a 20-year period ending in 2025 and takes into account the time value of money, show that implementing the 2005 BRAC recommendations is expected to save $13.7 billion. This compares to an estimated $15 billion in net present value savings based on last year's BRAC budget and the BRAC Commission's reported estimate of about $36 billion. Although DOD is about 3? years into the 6-year implementation period, the potential remains for BRAC cost estimates to continue to increase, but the potential for changes in savings estimates is unclear. Greater than expected inflation and increased market demands for construction materials could cause estimated construction costs to increase, although the extent of this increase is uncertain given today's economic market conditions. However, the potential for changes in savings estimates is unclear because BRAC headquarters officials at both the Army and the Air Force told us they do not plan to update their savings estimates regardless of factors that may cause those estimates to change, and OSD is not enforcing its own regulation requiring them to do so. Hence, congressional and defense decision makers could be left with an unrealistic sense of the savings this complex and costly BRAC round may actually produce, an issue that could be important in considering whether another round of BRAC may be warranted.