DOD has implemented various reform initiatives in the past to achieve efficiencies and reduce costs. DOD’s quadrennial review is likely to identify additional plans and initiatives for reducing infrastructure costs. However, the total amount of actual savings is uncertain because DOD’s systems do not provide this information. Opportunities for Achieving Future Infrastructure Savings

As we recently reported, despite DOD’s initiatives, it is critical for DOD to further reduce infrastructure and support costs. While there are many opportunities to reduce this excess capacity and improve the cost-effectiveness of DOD support operations, DOD faces many challenges in doing so. Challenges DOD Faces as It Implements and Considers Proposals to Achieve Infrastructure Savings

Over the last several years, DOD has renewed its efforts to achieve infrastructure savings through the use of the A-76 process. We agree that substantial savings can be achieved by outsourcing and privatizing; consolidating similar functions to reduce excess capacity; reengineering remaining functions, processes, and organizations; more effectively using technology innovations; and through other initiatives.Our recent report on downsizing the defense infrastructure provides  13 options that could result in savings of about $11.8 billion from fiscal years 1997 to 2001. However, based on the lessons learned from past initiatives and principally our work on depot maintenance and base support operations, we are concerned that savings of the magnitude projected by DOD, the CORM, and the DSB may not be achievable. Last, as noted by DOD, the CORM, and DSB, a number of legislative requirements restrict or affect implementation of these proposals. Our work shows that while opportunities for savings exist, it is questionable whether they will be in the magnitude currently being projected. Privatize-in-place testing and evaluation facilities. The report also recommended a series of base realignment and closure reviews. We have found that outsourcing savings are dependent on or highly influenced by (1) the continual existence of a competitive commercial market; (2) the ability to clearly define the tasks to be done and measure performance; (3) the assumption that the private sector can do the required work more cost-effectively than a reengineered DOD activity; (4) the extent that commercial contracting and contract management practices can be applied to the outsourced activity; (5) the relative cost-effectiveness of the public activity being outsourced; and (6) the ability to reduce the existing public infrastructure and personnel costs associated with the outsourced activity. Also, 10 U.S.C. Conclusions

In conclusion, we agree with DOD that its infrastructure costs can and should be substantially reduced, and we believe that DOD should identify key functions and activities where it should focus to identify requirements—including core—and begin to reengineer those activities and functional areas that appear to offer the best opportunities for savings. However, breaking down cultural resistance to change, overcoming service parochialism, making decisions to eliminate cross functional stovepipes, and setting forth a clear framework for a reduced defense infrastructure are key to avoiding waste and inefficiency and generating the maximum savings from DOD’s infrastructure accounts. To do this, the Secretary of Defense and the service secretaries need to give greater structure to their efforts by developing an overall strategic plan that establishes time frames and identifies organizations and personnel responsible for accomplishing fiscal and operational goals. The Congress can then oversee the plan and allow the affected parties to see what is going to happen, and when.
Why GAO Did This Study

GAO discussed the Department of Defense's (DOD) goal to save billions of dollars by outsourcing work to the private sector and through other initiatives for activities which DOD generally refers to as its support infrastructure, focusing on: (1) DOD's past experience in achieving infrastructure savings; (2) key infrastructure areas that offer the greatest potential for savings; and (3) challenges DOD faces in reaching goals to reduce infrastructure in the future.

What GAO Found

GAO noted that: (1) GAO agrees with DOD and others that significant opportunities exist to reduce DOD's infrastructure and support costs; (2) however, GAO questions whether the magnitude of savings anticipated by DOD and others is attainable within the current strategy and force structure; (3) GAO's past and ongoing work shows that while DOD's past savings initiatives yielded significant savings, they often fell short of the initial goal; (4) while DOD has substantially reduced its infrastructure through the base realignment and closure process and significant savings will ultimately be achieved, savings will not be as great as initially estimated or achieved as quickly as initially hoped; (5) today's future years defense plan shows that, despite these initiatives, future infrastructure costs will only slightly decline as a relative percentage of DOD's budget; (6) because of GAO's concern about the waste and inefficiencies in DOD's support structure and operations, GAO has designated DOD's infrastructure as one of 24 high-risk areas that are vulnerable to waste and mismanagement within the federal government; (7) GAO believes that DOD could reap significant savings by: (a) reducing excess capacity in its testing and evaluation areas and its laboratories and centers; (b) reducing excess capacity within DOD's depot maintenance system; (c) reducing the costs of managing its $67-billion inventory, of which almost half is beyond war reserve and operating requirements; (d) reducing installation support costs; and (e) reducing training costs; (8) new ideas about reducing infrastructure costs have recently been proposed to DOD that focus largely on outsourcing and privatization to achieve savings; (9) GAO's analysis of such proposals shows that there is reason for caution about whether the magnitude of hoped for savings can be achieved; (10) there are also various legislative requirements that will restrict and otherwise affect DOD's ability to implement some proposed initiatives; (11) GAO thinks that DOD's effort to reduce costs and achieve savings is extremely important and encourages DOD to move forward as quickly as possible; (12) breaking down cultural resistance to change, overcoming service parochialism, and setting forth a clear framework for a reduced defense initiative are key to effectively implementing savings; and (13) DOD and the services need to give greater structure to their efforts by developing an overall strategic plan, which would provide a basis for the Congress to oversee DOD's plan and allow affected parties to see what is going to happen and when.