DOD had inconsistent policies and practices for recovering costs from other responsible parties. Army Policies and Practices

The Army has no servicewide policy regarding cleanup cost sharing. However, the Navy has not initiated timely requests for cost sharing or followed up. For example, although Navy’s 1989 policy required officials to begin negotiation on cost-sharing arrangements at the two facilities we visited, the Navy has not initiated timely requests for contractor participation in the cleanup. DOD-Wide Policy Issues

Even though we recommended in 1992 and again in 1994 that DOD issue guidance to resolve disparities between DLA’s and the military services’ cleanup policies and procedures, DOD has not done so. However, the regulation only applies to costs incurred by contractors. Cleanup Estimates Improving, but Problems Remain

Following our July 1994 report that cleanup at GOCO plants would take longer and cost far more than DOD’s estimate, DOD increased its fiscal year 1993 estimate of $1.4 billion to $3.6 billion in fiscal year 1994. In addition, cleanup expenses not identified in either DOD or service component estimates included: $120 million to decontaminate and dispose of the chemical plant at the Newport Army Ammunition Plant; $6 million in cleanup costs for uranium-tipped bullets at the Lake City $4 million in 1983 and 1984, which was paid for cleanup costs at Air Force Plant 4 before DERA funds were available; $836,000 already spent on a cleanup study at the Navy’s Allegany Ballistics money paid to the Environmental Protection Agency (EPA) and state regulatory agencies for overseeing the cleanup at several sites (as an example, at the Fridley Naval Industrial Reserve Ordanance Plant, $481,000 was paid to EPA and $106,000 was paid to the state of Minnesota). DOD’s report for fiscal year 1995, dated May 15, 1996, showed that total cleanup cost estimates for GOCO facilities decreased from $3.6 billion to $3.3 billion, but it did not include cleanup costs for our 2 DLA case studies, or with 1 exception, any of the 21 DLA facilities reflected in prior DOD reports. DLA cleanup costs totaled $101 million in DOD’s fiscal  year 1994 report. Recommendations

To address the inconsistencies in cost-sharing approaches and the potential for disparate treatment of other responsible parties described in this and past reports, we recommend that the Secretary of Defense issue guidance to DOD components to resolve current disparities and to promote future consistent treatment of all parties in cost recovery decisions. So that sufficient data will be available for cost-sharing negotiations and program oversight, we also recommend that the Secretary direct the military services and DLA to: Identify, to the extent it has not already been done, whether parties other than the government were involved with any contamination, as part of environmental cleanup preliminary assessments at GOCO facilities. Provide consistent estimates, including all cleanup costs for DOD’s environmental reports to Congress, regardless of the source of funds. In the absence of guidance that explicitly addresses the sharing of DOD cleanup costs, the services and DLA have taken different approaches to deciding whether and when to seek contributions from contractors and other responsible parties. Agency Cost-Sharing Policy

The Defense Fuel Supply Center policy and practice have been to recover most cleanup costs for past contamination through a fuel surcharge assessed to its customers, rather than with DERA funds. Current operators are to be held responsible for a fuel spill if they are negligent in attending to a leak on the facility.
Why GAO Did This Study

Pursuant to a congressional request, GAO examined the Department of Defense's (DOD) policies and practices regarding cleanup of environmental contamination at government-owned, contractor-operated (GOCO) plants, as a followup to its previous reports that showed inconsistent policies and practices on cost sharing. GAO reviewed nine higher-cost case studies at the Defense Logistics Agency (DLA) and the military services to: (1) assess the consistency of cost-sharing practices across DOD; and (2) compare the service cleanup estimates against DOD's.

What GAO Found

GAO noted that: (1) the services' policies and practices for having contractors share cleanup costs still vary widely; (2) notwithstanding GAO's recommendations to do so, DOD has not given the services adequate guidance for making decisions on whether and when to seek recovery of environmental cleanup costs incurred by DOD from contractors and other parties at GOCO facilities; (3) the Army authorized indemnifying its operating contractors from cleanup costs at ammunition plants; (4) the Navy policy requires cost-recovery efforts, but has not initiated timely requests for cost sharing or followed up; (5) the Air Force is beginning to seek participation in cleanup costs from its operating contractors; (6) regarding cleanup at GOCO facilities GAO visited, DOD's fiscal year (FY) 1994 report to Congress included cleanup costs that were closer to the military services' supporting data than DOD's reported FY 1993 estimates; (7) DOD's estimates for cleaning up the 78 GOCO facilities increased from $1.4 billion in FY 1993 to $3.6 billion in 1994, but decreased somewhat to $3.3 billion in 1995; (8) although DOD and the services have addressed GAO's recommendations to improve cost information, their estimates of past and projected costs still differ, and not all costs were included; (9) for example, the 1995 estimate decreased in part because DOD excluded $19.1 million in unfunded Navy cleanup requirements that should have been reported, and DLA cleanup costs totalling $101 million in FY 1994 that would be funded by customer surcharges; (10) GAO also found many additional expenses that were not included in either DOD or service cost estimates; (11) because Superfund holds parties liable for the billions of dollars needed to remediate past contamination regardless of wrongdoing, it is important that DLA and the services deal with potentially responsible parties on the basis of consistent policy and accurate data; (12) however, the lack of DOD guidance on cost sharing has permitted inconsistencies in approaches to cost-sharing, and the potential for some parties to be held responsible for cleanup costs, while others in similar situations are not; and (13) if cost-sharing agreements are reached, omissions in historical information and cost data may inhibit the recovery of all appropriate costs.