While DOD has closed or realigned bases as recommended by the various  BRAC Commissions, other actions, such as the cleanup of environmentally  contaminated property and the subsequent transfer of unneeded property  to other users, were allowed to continue beyond the 6-year  implementation period for each round. These reports discussed the  magnitude and precision of cost and savings estimates, the progress of  environmental cleanup and property transfer, and the impact on  communities and their recovery. In our April 2002 report, we concluded that most (about 58 percent)  former unneeded base property had not yet been transferred to other  users, the closure process was generating substantial savings (about  $16.7 billion, although the savings estimates were imprecise), the total  expected environmental cleanup costs were still within range of the cost  estimates made in 1996, and most communities surrounding closed bases  were faring well economically in relation to key national economic  indicators. Most Unneeded BRAC Property Had Been Transferred

As of September 30, 2004, nearly 72 percent (364,000 acres) of the  approximately 504,000 acres of unneeded BRAC property from the prior  rounds had been transferred to other federal or nonfederal entities. When  leased land is added to this acreage, the amount of unneeded BRAC  property that is in reuse increases to 90 percent. 3). As  we have previously reported, however, the cost and savings projections  that DOD uses to estimate net savings are imprecise because the military  services have not regularly updated their savings projections and DOD’s  accounting systems do not track estimated savings. On the other hand, the estimated net  savings could be greater than DOD has reported because some costs  attributed to the closures, such as environmental cleanup, may have  occurred even if the bases remained open. BRAC Net Savings Estimates Remain Substantial

Our analysis of DOD data shows that the department had accrued an  estimated $28.9 billion in net savings or cost avoidances through fiscal  year 2003 for the four prior BRAC rounds. This amount represents an increase of approximately $486 million from  our prior reporting in 2002 and is attributable to inflation over that time  period. DOD expected to  spend an estimated $3.6 billion in fiscal year 2004 and beyond to complete  environmental cleanup on BRAC properties, bringing the total BRAC  environmental costs to $11.9 billion, which is still within prior estimates. Most Communities Have Recovered or Are Recovering from the Economic Impact of BRAC

Most communities have recovered or are recovering from the impact of  base closures, with more mixed results recently, allowing for some  negative impact from the national economic downturn of recent years. Moreover, recent economic data show that affected BRAC  communities are faring well when compared to national economic  indicators. 8). The other 6 locations had unemployment rates greater than the  U.S. rate. Appendix IV: Average Annual Real Per Capita Income Growth Rates of BRAC-Affected Areas Compared with the U.S. Average Rate

As figure 11 shows, 11 (46 percent) of the 24 BRAC-affected localities  situated west of the Mississippi River had average annual real per capita  income growth rates that were greater than the U.S. average growth rate of  2.2 percent during 1999 through 2001. Military Base Closures: Observations on Preparations for the Upcoming  Base Realignment and Closure Round.
Why GAO Did This Study

As the Department of Defense (DOD) prepares for the 2005 base realignment and closure (BRAC) round, questions continue to be raised about the transfer and environmental cleanup of unneeded property arising from the prior four BRAC rounds and their impact on cost and savings and on local economies. This report, which is being issued to the defense authorization committees that have oversight responsibility over defense infrastructure, describes DOD's progress in implementing prior BRAC postclosure actions. It addresses (1) the transfer of unneeded base property to other users, (2) the magnitude of the net savings accruing from the prior rounds, (3) estimated costs for environmental cleanup of BRAC property, and (4) the economic recovery of communities affected by base closures.

What GAO Found

As of September 30, 2004, DOD had transferred about 72 percent of 504,000 acres of unneeded BRAC property to other entities. This amount represents an increase over the 42 percent that GAO previously reported in April 2002 and is primarily attributable to two large property transfers. When leased acreage is added to the transferred property, the amount of unneeded BRAC property in reuse rises to 90 percent. Transfer of the remaining acreage has been delayed primarily because of environmental cleanup requirements. DOD data show that the department had generated an estimated $28.9 billion in net savings or cost avoidances from the prior BRAC rounds through fiscal year 2003 and expects to save about $7 billion each year thereafter. These savings reflect money that DOD would likely have spent to operate military bases had they remained open. Although the savings are substantial, GAO found that the estimates are imprecise because the military services have not updated them regularly despite GAO's prior reported concerns on this issue. This issue needs to be addressed in the 2005 round. Further, the estimates do not reflect all BRAC-related costs, such as $1.9 billion incurred by DOD and other federal agencies for redevelopment assistance. While estimated costs for environmental cleanup at BRAC sites remain within the range of prior estimates, these costs may increase if unknown or undetermined future cleanup liabilities, such as additional unexploded ordnance or other harmful contaminants, emerge. Through fiscal year 2003, DOD had spent about $8.3 billion on BRAC environmental cleanup. It expects to spend another $3.6 billion to complete the cleanup work. While most nearby communities have recovered or continue to recover from base closures, they, as well as other communities, have felt some impact from the recent economic downturn where the strength of the national, regional, or local economy can affect recovery efforts. Yet, key economic indicators--unemployment rates and average annual real per capita income growth rates--show that BRAC communities are generally faring well when compared with average U.S. rates. Of 62 communities that GAO studied, 69 percent had unemployment rates equal to or lower than the U.S. average and 48 percent had income growth rates higher than the national average.