As such, the BRAC Commission continued to use DOD’s  COBRA model for making its cost and savings estimates. Similarly, whereas the BRAC Commission  estimated that the implementation of the BRAC 2005 recommendations  would save DOD about $36 billion over a 20-year period ending in 2025,  BRAC implementation is now expected to save about $15 billion, a  decrease of 58 percent. DOD Plans to Spend More and Save Less Than Originally Estimated

Since the BRAC Commission issued its cost and savings projections in  2005, cost estimates to implement the BRAC 2005 recommendations have  increased from $21 billion to $31 billion (48 percent) compared to the  BRAC Commission’s reported estimates and net annual recurring savings  estimates have decreased from $4.2 billion to $4 billion (5 percent)  compared to the BRAC Commission’s reported estimates as shown in   table 1. Estimated One-time Costs Have Increased

Our analysis shows that estimated one-time costs to implement 33 BRAC  recommendations, representing nearly 1/5 of all the BRAC  recommendations for this round, increased by more than $50 million each  compared to the BRAC Commission’s estimates. DOD’s expected costs to implement 6 of these  recommendations increased by a total of about $4 billion. DOD Will Take Longer to Recoup Up-Front Costs Than the BRAC Commission Expected

DOD’s current estimates to implement the BRAC recommendations   show that it will take until 2017 for the department to recoup its up-front  costs—4 years longer than the BRAC Commission’s estimates indicated it  would take for DOD’s up-front investments to begin to pay back. Third,  environmental cleanup costs for BRAC implementation are preliminary  and are likely to increase. DOD is currently  estimating net savings of $116 million annually. This  amount includes $2.17 billion in eliminated overhead expenses such as the  costs no longer needed to operate and maintain closed or realigned bases  and reductions in civilian salaries, which will free up funds that DOD can  then use for other defense priorities. However, DOD’s annual recurring  savings estimate also includes $1.85 billion in military personnel  entitlements—such as salaries and housing allowances—for military  personnel DOD plans to shift to other positions but does not plan to  eliminate. While DOD disagrees with us, we do not believe that  transferring personnel to other locations produces tangible dollar savings  outside the military personnel accounts that DOD can use to fund other  defense priorities since these personnel will continue to receive salaries  and benefits. DOD Has Made Progress Implementing BRAC, but Several Challenges Increase Risk That All Recommendations Might Not be Completed by the Statutory Deadline

DOD has made progress implementing BRAC 2005, but faces a number of  synchronization and coordination challenges related to implementing  many BRAC recommendations. BRAC 2005, unlike prior BRAC rounds,  included more joint recommendations involving more than one military  component, thus creating challenges in achieving unity of effort among the  services and defense agencies. DOD Must Synchronize Personnel Movements with Construction Time Frames

Implementation challenges primarily stem from the complexity of  synchronizing the realignment of over 123,000 personnel with the  completion of over $21 billion in new construction or renovation projects. The time frames for completing many BRAC recommendations  are closely sequenced and scheduled to be completed in 2011 but any  significant changes in personnel movement schedules or construction  delays could jeopardize DOD’s ability to meet the statutory 2011 BRAC  deadline. Recommendation for Executive Action

To provide more transparency over DOD’s estimated annual recurring  savings from BRAC implementation, we recommend that the Secretary of  Defense direct the Under Secretary of Defense for Acquisition, Technology  and Logistics, in consultation with the Office of the Under Secretary of  Defense (Comptroller), to explain, in DOD’s BRAC budget submission to  Congress, the difference between annual recurring savings attributable to  military personnel entitlements and annual recurring savings that will  readily result in funds available for other defense priorities. Military Bases: Observations on DOD’s 2005 Base Realignment and  Closure Selection Process and Recommendations.
Why GAO Did This Study

The 2005 Base Realignment and Closure (BRAC) round is the biggest, most complex, and costliest ever. DOD viewed this round as a unique opportunity to reshape its installations, realign forces to meet its needs for the next 20 years, and achieve savings. To realize savings, DOD must first invest billions of dollars in facility construction, renovation, and other up-front expenses to implement the BRAC recommendations. However, recent increases in estimated cost have become a concern to some members of Congress. Under the Comptroller General's authority to conduct evaluations on his own initiative, GAO (1) compared the BRAC Commission's cost and savings estimates to DOD's current estimates, (2) assessed potential for change in DOD's current estimates, and (3) identified broad implementation challenges. GAO compared the BRAC Commission's estimates, which were the closest estimates available associated with final BRAC recommendations, to DOD's current estimates. GAO also visited 25 installations and major commands, and interviewed DOD officials.

What GAO Found

Since the BRAC Commission issued its cost and savings estimates in 2005, DOD plans to spend more and save less, and it will take longer than expected to recoup up-front costs. Compared to the BRAC Commission's estimates, DOD's cost estimates to implement BRAC recommendations increased from $21 billion to $31 billion (48 percent), and net annual recurring savings estimates decreased from $4.2 billion to $4 billion (5 percent). DOD's one-time cost estimates to implement over 30 of the 182 recommendations have increased more than $50 million each over the BRAC Commission's estimates, and DOD's cost estimates to complete 6 of these recommendations have increased by more than $500 million each. Moreover, GAO's analysis of DOD's current estimates shows that it will take until 2017 for DOD to recoup up-front costs to implement BRAC 2005--4 years longer than the BRAC Commission's estimates show. Similarly, the BRAC Commission estimated that BRAC 2005 implementation would save DOD about $36 billion over a 20-year period ending in 2025, whereas our analysis shows that BRAC implementation is now expected to save about 58 percent less, or about $15 billion. DOD's estimates to implement BRAC recommendations are likely to change further due to uncertainties surrounding implementation details and potential increases in military construction and environmental cleanup costs. Moreover, DOD may have overestimated annual recurring savings by about 46 percent or $1.85 billion. DOD's estimated annual recurring savings of about $4 billion includes $2.17 billion in eliminated overhead expenses, which will free up funds that DOD can then use for other priorities, but it also includes $1.85 billion in military personnel entitlements, such as salaries, for personnel DOD plans to transfer to other locations. While DOD disagrees, GAO does not believe transferring personnel produces tangible dollar savings since these personnel will continue to receive salaries and benefits. Because DOD's BRAC budget does not explain the difference between savings attributable to military personnel entitlements and savings that will make funds available for other uses, DOD is generating a false sense that all of its reported savings could be used to fund other defense priorities. DOD has made progress in planning for BRAC 2005 implementation, but several complex challenges to the implementation of those plans increase the risk that DOD might not meet the statutory September 2011 deadline. DOD faces a number of challenges to synchronize the realignment of over 123,000 personnel with the completion of over $21 billion in new construction or renovation projects by 2011. For example, the time frames for completing many BRAC recommendations are so closely sequenced and scheduled to be completed in 2011 that any significant changes in personnel movement schedules or construction delays could jeopardize DOD's ability to meet the statutory 2011 deadline. Additionally, BRAC 2005, unlike prior BRAC rounds, included more joint recommendations involving more than one military component, thus creating challenges in achieving unity of effort among the services and defense agencies.