The Cost Implications of Evolving Plans for Overseas Presence Are Uncertain

Although DOD has conducted some analysis to support recent global  defense posture decisions, the cost implications of these decisions are  unknown. In its 2011 Global Defense Posture Report to Congress, DOD  asserted that cost savings associated with permanently stationing forces  in the United States rather than overseas are offset by other factors, such  as increased costs to periodically rotate forces back to overseas  locations. To support this assertion, OSD identified two posture initiatives:  (1) the forward deployment and permanent stationing of U.S. Navy ships  in Rota, Spain, in support of ballistic missile defense and (2) the reduction  of U.S. Army force structure in Europe. The Navy considered and compared three options in order to determine  the most appropriate way to address the operational requirements for  ballistic missile defense in Europe: (1) deploying ships to the region from  U.S. bases, (2) forward stationing ships and crews within the U.S.  European Command area of responsibility, and (3) deploying ships to the  region and rotating crews from U.S. bases. The Navy concluded that  forward stationing ships represented the most efficient and strategically  beneficial of the three options. First, the Navy did  not fully consider the rotational crewing option. GAO’s Cost Estimating and Assessment Guide states that a business  case analysis or a cost-benefit analysis seeks to find the best value  solution by linking each alternative to how it satisfies a strategic objective. This linkage is achieved by developing business cases that present facts  and supporting details among competing alternatives, including the life  cycle costs and quantifiable and nonquantifiable benefits. DOD Will Likely Save Money by Reducing Army Forces and Headquarters in Europe, but Amount of Savings Depends on Future Decisions

The 10-year time period identified in the analysis is fiscal years 2012 through 2021. Until the decisions outlined above are made—especially regarding the  plans to rotate forces back to Europe—the full extent of the savings that  will be realized in light of the Secretary of Defense’s January 2012  decision to reduce the size of permanently stationed U.S. Army forces in  Europe will remain uncertain. DOD Has Taken Steps to Align Posture Initiatives with Strategy and Cost but Continues to Lack Comprehensive and Consistent Cost Estimates of Initiatives

		DOD’s Process to Prioritize Posture Initiatives Is Improving

In part to respond to previous GAO recommendations, DOD recognized  the need to prioritize initiatives to reflect strategic goals, has taken steps  to align posture initiatives with defense strategy, and has begun to gather  cost information. Combatant Commands Reported Some Cost Data in Their 2011 Theater Posture Plans, but Gaps Remain

Although the geographic combatant commands are responsible for  reporting cost data on existing global posture, we found that the  combatant commands did not completely and consistently report cost  data in their 2011 theater posture plans. Further,  costs and cost savings associated with the decision to reduce Army  forces in Europe and adjust the Army’s basing footprint in the region will  remain unknown until options related to rotational forces and their  associated costs are identified and assessed. Lacking this information,  department and congressional decision makers will be unable to  adequately assess the true cost of global posture initiatives in the future. In response to our recommendation that the Secretary of Defense direct  the Secretary of the Navy to conduct a comprehensive analysis for each  course of action the Navy has considered to address mission  requirements for ballistic missile defense in the Mediterranean, that  compares all options the Navy considered and either applies consistent  operational assumptions or controls for different operational assumptions  and includes the long-term life cycle costs and annual operating costs  associated with forward stationing, DOD partially concurred, but did not  identify additional actions to address the recommendation. Additionally, we found that the Navy did not  control for the different assumptions used to develop the ship number  requirements associated with the forward stationing and U.S.-based  deployment approaches, which could have altered the results of the  analysis and could represent significant long-term costs. Based on our  findings and our cost estimating guide that states that a credible business  case analysis should include life cycle costs as well as quantifiable and  nonquantifiable benefits, we maintain that the Navy, DOD, and Congress  would benefit from additional analysis in order to develop a more  comprehensive cost estimate associated with the decision to forward  station ships in Rota. To determine the extent to which DOD developed a process for making  decisions about global posture initiatives that aligns with strategy and  considers costs, as well as efforts made by combatant commands to  compile and report comprehensive cost data on existing global posture  and new posture initiatives in their theater posture plans, we evaluated  core global posture strategy documents; current and draft DOD guidance;  and other documentation we collected through interviewing with officials  from OSD, the Joint Staff, U.S. European Command and its three service  component commands, U.S. Pacific Command, U.S. Africa Command,  the four military service headquarters, OSD, OSD Cost Assessment and  Program Evaluation, the Office of the Under Secretary of Defense for  Policy, the Office of the Under Secretary of Defense (Comptroller), and  the Office of Under Secretary of Defense for Acquisition, Technology and  Logistics.
Why GAO Did This Study

In January 2012, DOD issued new strategic guidance on defense budget priorities, indicating that it must rebalance its overseas force postureincluding the forward stationing of Navy ships in Spain for ballistic missile defense and the reduction of U.S. Army forces in Europein the face of deficit reduction. Similarly, DOD reported in its 2011 Global Defense Posture Report to Congress that savings associated with permanently stationing forces in the United States rather than overseas are often offset by such factors as increased rotational costs. Based on direction from the Senate Armed Services Committee, GAO evaluated the extent to which DOD has (1) conducted analysis to support recent overseas posture decisions and (2) developed a process for making posture decisions that align with strategy and consider costs. GAO assessed two recent posture initiatives, DOD plans and guidance related to posture, and theater posture plans from each combatant command.

What GAO Found

Although the Department of Defense (DOD) has conducted some analysis to support two recent global posture decisions, the full cost implications of these decisions are unknown.
Forward deployment and permanent stationing of U.S. Navy ships in Rota . The Navy considered three options: (1) deploying ships to the region from U.S. bases, (2) forward stationing ships and crews overseas, and (3) deploying ships to the region and rotating crews from U.S. bases. The Navy concluded that forward stationing ships was the most efficient option, but GAO found that it did not fully consider the option to rotate crews from U.S. bases and, in a classified analysis, it used different assumptions for forward stationing versus deploying from the United States. These assumptions could affect the results of the analysis and have long-term cost implications. GAOs Cost Estimating and Assessment Guide states that a business case or cost-benefit analysis finds the best value solution by presenting facts and supporting details among competing alternatives, including the life cycle costs and benefits, and sensitivity to changes in assumptions. Without an analysis that controls for differing assumptions or considers factors such as complete life cycle costs, the long-term costs associated with its decision to forward station ships will remain unknown.
Reduction of U.S. Army force structure in Europe . The planned reductions of U.S. Army forces in Europe will likely save money; however, decisions that could affect the extent of the savings are pending. For example, a 2010 Army analysis found $2 billion in savings over 10 years by returning forces from Germany, but assumed that new facilities estimated at $800 million would need to be built in the United States to house them. However, present planned reductions in overall Army end strength could eliminate the need for new construction. Further, DOD announced that it will rotate forces from the United States to Europe, but the nature of the rotationswhich could include significant costs depending on their size and frequencyhas not yet been defined. According to DOD officials, until such determinations are made, the savings to DOD will remain uncertain.
DOD has taken steps to align posture initiatives with strategy and cost, but continues to lack comprehensive and consistent cost estimates of initiatives. DODs evolving posture process links initiatives with defense goals. Stakeholders from key DOD entities prioritize the initiatives in a voting process based on strategic criteria; cost is discussed, but not voted on. Furthermore, combatant commands did not completely and consistently report cost data in their theater posture plans because of the lack of readily available cost information. GAO found two primary reasons for this: unclear roles and responsibilities of key DOD organizations that have access to the cost data needed to compile and report comprehensive cost estimates and lack of a standardized format to compile and report cost data from component commands. Until these cost data are comprehensively compiled and reported, DOD and congressional decision makers will be unable to assess the true cost of posture initiatives.

What GAO Recommends

GAO recommends that DOD conduct a comprehensive cost analysis associated with the Navys decision to station ships in Rota, assess options and costs related to rotating forces in Europe, and clarify roles and responsibilities of key entities to collect cost data on initiatives. DOD generally agreed with GAOs recommendations and identified corrective actions, but additional steps are needed to fully address GAOs recommendation that the Navy further assess options and costs for ballistic missile defense.