3. Investments Have Been Made to Improve Guam’s Public Infrastructure, but Deficiencies and Regulatory Compliance Issues Persist

While some investments have been made to improve Guam’s public  infrastructure in recent years, many deficiencies continue to exist. The  reliability, capacity utilization, and age of much of Guam’s public  infrastructure indicates a need for additional upgrades to ensure that  Guam can meet the demands of its current and future population,  regardless of how many Marines and dependents are moved to Guam. In addition,  some of Guam’s public infrastructure sectors, such as its Waterworks  Authority face issues complying with federal regulations. Other sectors,  such as the fire and police departments are experiencing shortages in  infrastructure, vehicles, and staffing. DOD Generally Provides Planning and Technical Assistance Support to Affected Communities While Public Infrastructure Projects Are Typically Funded by Other Federal Programs or the Communities

Historically, the majority of DOD’s support to defense-affected  communities has been to provide technical assistance and support  community planning and coordination efforts due to Base Realignment   However, OEA officials identified a few  and Closure (BRAC) decisions.examples in the past where DOD has provided direct funding to defense- affected communities to provide additional capacity specifically needed to  support DOD growth. However, in the case of Guam, some challenges  have been identified as affecting its ability to raise funds for such projects. Other Federal Funding Sources Have Been Used to Fund Guam Infrastructure Projects

According to OEA officials, DOD’s position is that local communities  should largely be responsible for obtaining funding for public  infrastructure requirements related to DOD basing decisions. However, the projects included in these  budget requests were validated based on the 2006 realignment plan, and  DOD has not revalidated public infrastructure requirements for Guam to  reflect the revised realignment plan or differentiated between  requirements to address long-standing conditions in Guam’s public  infrastructure and those specifically related to additional capacity for the  realignment. Even so, DOD has requested over  $400 million for Guam infrastructure projects in its budget requests for  fiscal years 2012 through 2014. Congress has restricted the use of funds until further  information is provided related to the realignment plan and imposed other  restrictions on use of the funding. However, it is unclear if other projects, such as the water and  wastewater improvements and the mental health facility, are still  necessary or necessary to the same extent given the significant reduction  in forces under the revised realignment plan and the as yet undetermined  location of the main Marine Corps installation on the island. However, this base handles all of its own wastewater needs  and gets its potable water from its own wells and the Fena Reservoir,  thus not requiring DOD to rely on the public water and wastewater  systems. DOD’s Cost Estimate to Improve Guam’s Water and Wastewater Infrastructure Is Not Reliable

The cost estimate, DOD has used to support its budget requests for water  and wastewater infrastructure projects on Guam, did not fully adhere to  best practices for developing a reliable cost estimate, which is at the core  of successfully managing a project within cost and affordability guidelines. In  assessing the estimate against best practices, we determined that this  estimate is not reliable because it does not include all relevant costs, is  based on limited data, and, as documented, lacks many of the key  characteristics to be considered a reliable cost estimate. Recommendations for Executive Action

To provide DOD and Congress with sufficient information regarding the  requirements and costs associated with DOD’s current Guam realignment  plans and the public infrastructure necessary to support that realignment,  we recommend that the Secretary of Defense direct the Department of  the Navy’s JGPO in concert with OEA take the following three actions:
Revalidate the need and scope of Guam public infrastructure projects  included in DOD budget requests based on the reduced number of  Marines and dependents DOD intends to relocate to Guam. DOD partially concurred with our third recommendation to fully  incorporate the best practices identified by GAO for developing high  quality cost estimates, as future cost estimates for Guam public  infrastructure projects are developed. For our third objective to assess DOD’s efforts to revalidate its public  infrastructure requirements under the revised realignment plan and  differentiate between requirements needed to address Guam’s existing  public infrastructure deficiencies and those related to the realignment, we  reviewed information on DOD and the Government of Guam’s planning  activities related to public infrastructure improvements needed to support  the revised realignment plan and compared this information to previous  public infrastructure lists developed by the Government of Guam, DOD,  and other federal entities to support the 2006 Roadmap realignment plan. characteristics representing practices that help ensure that a cost  estimate is (1) comprehensive, (2) well documented, (3) accurate, and (4)  credible.
Why GAO Did This Study

In 2006, the United States and Japan planned to relocate 17,600 U.S. Marines and dependents from Japan to Guam. However, in 2012, representatives from the countries developed a revised plan under which 6,300 Marines and dependents would relocate to Guam.
The Conference Report accompanying the National Defense Authorization Act for Fiscal Year 2013 mandated that GAO evaluate what Guam public infrastructure projects are needed to support DOD's plans. This report (1) describes Guam's public infrastructure; (2) describes the types of assistance DOD generally provides and other funding sources that have been used to fund Guam projects; (3) assesses DOD's efforts to revalidate Guam projects under the revised realignment plan; and (4) assesses the cost estimate for Guam's public water and wastewater infrastructure improvements used to support DOD budget requests. To address these objectives, GAO reviewed policies, technical studies, and budget requests. GAO also interviewed DOD and other relevant federal officials as well as visited Guam and met with Guam officials.

What GAO Found

Some investments have been made to improve Guam's public infrastructure in recent years, but many deficiencies and regulatory compliance issues continue to exist. The reliability, capacity, and age of much of the public infrastructure--especially the island's utilities--indicate a need for additional upgrades to be able to meet current and future demands related to the realignment. Further, some infrastructure sectors, such as water and wastewater, face issues complying with federal regulations. Other sectors, such as the fire and police departments, are experiencing staffing and other shortages that affect their ability to serve Guam's current population.
The majority of the Department of Defense's (DOD) support to defense-affected communities has been historically to provide technical assistance and support community planning and coordination efforts. However, in a few instances DOD has provided public infrastructure funding to communities where proposed basing decisions would generate significant public infrastructure needs that the communities could not support. Generally, DOD's position is that communities should be largely responsible for obtaining funding for public infrastructure requirements related to DOD basing decisions. This funding can come from other federal programs or communities can raise the funds on their own. In the case of Guam, however, some challenges related to limited government revenues and debt capacity has been identified as affecting its ability to do so.
Despite the reduction of Marines and dependents relocating to Guam, DOD has not yet revalidated the public infrastructure requirements based on the revised realignment plan or differentiated between requirements needed to address long-standing conditions and those related to the realignment. This revalidation is not expected to be completed until 2015. Even so, DOD has requested over $400 million for Guam public infrastructure projects in its budget requests since fiscal year 2012. It is unclear if all of these projects are necessary to the same extent given the reduction in forces. For example, if DOD decides to locate the Marines on the naval base that handles all of its own water/wastewater needs, public water/wastewater improvements would not be needed to support the Marines. Congress has placed limitations on the use of funding, in part until certain information is provided related to the realignment. Without revalidating and differentiating between requirements, DOD cannot clearly identify what Guam public infrastructure requirements are needed to directly support the realignment.
The $1.3 billion cost estimate for improvements to Guam's water and wastewater systems that DOD has used to support budget requests for fiscal years 2013 and 2014 is not reliable. GAO assessed that the estimate minimally met the best practice criteria for three of the four key characteristics--comprehensive, well documented, and accurate--for a reliable cost estimate as identified in the GAO Cost Estimating and Assessment Guide and did not satisfy best practice criteria for the fourth characteristic of being credible. GAO determined that officials adhered to some best practices for a reliable estimate but did not, for example,
include all relevant costs,
sufficiently explain why certain assumptions and adjustments were made,
incorporate any actual costs or inflation adjustments, or
adequately address risk and uncertainty.

What GAO Recommends

GAO recommends that DOD take actions to revalidate public infrastructure needs on Guam based on the revised realignment size and ensure best practices are used to develop future cost estimates. DOD partially concurred with GAO's recommendations and identified future plans. However, GAO believes further opportunities exist as discussed in the report.