DOD Has Not Fully Estimated the Cost of Posture Initiatives in South Korea or Provided an Analysis of Alternatives to Tour Normalization

DOD is currently transforming its military posture in South Korea through  a series of four interrelated posture initiatives, but has not estimated the  total costs involved, or provided an analysis of alternatives for one  initiative—tour normalization—that was initiated by the Commander,  USFK that potentially could affect tens of thousands of DOD personnel  and dependents and increase costs by billions of dollars. The largest of these four initiatives and the primary long-term  cost driver is tour normalization—extending the tour length of military  service members and moving thousands of their dependents from the  United States to South Korea. DOD Has Not Estimated the Cost of Posture Initiatives in Japan and Guam

DOD has embarked on a major realignment of U.S. military posture in  mainland Japan, Okinawa, and Guam, but has not developed  comprehensive cost estimates for these initiatives; as a result, DOD is  unable to ensure that all costs are fully accounted for or determine if  resources are adequate to support the program. However, USFJ officials were able to provide us with details from an  October 2006 Government of Japan budget estimate study for realignment  costs covering Japan’s fiscal years 2007 through 2014. In 2006, Japan estimated it would spend approximately $3.6 billion for this  initiative, but DOD has not estimated what its costs will be. Seeking more visibility into DOD posture initiative costs and funding  requirements, the Senate Appropriations Committee recently directed  DOD to provide comprehensive and routine updates on the status of  posture-restructuring initiatives in South Korea, Japan, Guam, and the  Northern Mariana Islands (see app. If fully responsive to the  committee’s reporting direction, DOD status updates should provide  needed transparency and visibility into the near- and long-term costs and  funding requirements associated with the transformation initiatives. DOD Lacks Comprehensive Cost Information Needed for Affordability Analysis

As discussed in our recent report on military posture in Europe, DOD  guidance does not require combatant commanders to include  comprehensive information on posture costs in their theater posture plan,  and as a result, DOD lacks critical information that could be used by  decision makers and congressional committees as they deliberate new  posture requirements and the associated allocation of resources. According to USFJ officials, in  Okinawa alone, Japan would build approximately 321 new buildings and  573 housing units, all of which will need to be furnished and equipped by  DOD. In total, from 2006 through 2010, the military services obligated  about $24.6 billion to build, operate, and maintain installations in Asia, of  which about $5.9 billion (24 percent) was for military construction and  family housing, and $18.7 billion (76 percent) was for operation and  maintenance of these installations (for a more detailed breakdown of costs  at installations in Asia see app. Ongoing Transformation Initiatives May Significantly Increase the Cost of DOD’s Posture in Asia

Data provided by the military services projects that they will require  approximately $5.2 billion per year through 2015, of which $2.3 billion   (45 percent) will be for military construction and family housing and   $2.9 billion per year (55 percent) will be for installation operations and  maintenance costs. Without a comprehensive estimate of  the total cost of posture—including existing facilities and infrastructure  that will not be affected by any new posture initiatives—and routine  reporting of those costs, DOD decision makers and congressional  committees will not have the full fiscal context they need to develop and  consider DOD’s funding requests for future posture initiatives. Identify and limit investments and other financial risks associated with  construction programs at Camp Humphreys—funded either by direct  appropriations or through alternative financing methods such as the  Humphreys Housing Opportunity Program—that are affected by  decisions related to tour normalization until a business case analysis  for the strategic objectives that have to this point driven the decision  to implement tour normalization in South Korea, is reviewed and the  most cost-effective approach is approved by the Secretary of Defense. In its response, DOD acknowledged that while USFK  has completed numerous analyses concerning tour normalization, DOD  agrees that there is value in conducting a business case analysis that  assesses alternatives to strategic objectives. DOD also agreed with our recommendations to develop annual cost  estimates for DOD posture in the U.S. Pacific Command area of  responsibility; provide these cost estimates to the Combatant Commander  in a time frame to support development of the annual theater posture plan;  and to provide these cost estimates to the Offices of the Under Secretary  of Defense (Comptroller) and the Under Secretary of Defense (Policy) to  support DOD-wide posture deliberations, affordability analyses and  reporting to Congress.
Why GAO Did This Study

The Department of Defense (DOD) is currently conducting the largest transformation of military posture in the Pacific region since the end of World War II. Transforming posture in Korea, Japan, and Guam will affect tens of thousands of military personnel and their families and require the construction of hundreds of new facilities and more than 3,500 housing units. GAO was asked to examine: (1) initiatives in Korea, their cost implications, and the basis for "tour normalization;" (2) initiatives in Japan and Guam and their cost implications; and (3) the extent to which DOD estimates the total cost of posture and addresses affordability issues. GAO assessed DOD policies and procedures, interviewed relevant DOD and State Department officials, and analyzed cost data from the military services

What GAO Found

DOD is transforming the facilities and infrastructure that support its posture in Asia without the benefit of comprehensive cost information or an analysis of alternatives that are essential to conducting affordability analysis. In South Korea, DOD is transforming its military posture through a series of four interrelated posture initiatives. GAO obtained DOD cost estimates that total $17.6 billion through 2020 for initiatives in South Korea, but DOD cost estimates are incomplete. One initiative, to extend the tour length of military service members and move thousands of dependents to South Korea--called "tour normalization"--could cost DOD $5 billion by 2020 and $22 billion or more through 2050, but this initiative was not supported by a business case analysis that would have considered alternative courses of action and their associated costs and benefits. As a result, DOD is unable to demonstrate that tour normalization is the most cost-effective approach to meeting its strategic objectives. This omission raises concerns about the investments being made in a $13 billion construction program at Camp Humphreys, where tour normalization is largely being implemented. DOD is also transforming its military posture in Japan, Okinawa, and Guam but has not estimated the total costs associated with these initiatives. Based on an October 2006 Government of Japan budget estimate study for realignment costs and limited cost information developed by DOD, GAO identified approximately $29.1 billion--primarily just construction costs--that is anticipated to be shared by the United States and Japan to implement these initiatives. DOD officials stated total cost estimates for its initiatives were not available because of the significant uncertainty surrounding initiativeimplementation schedules. The Senate Appropriations Committee recently directed DOD to provide annual status updates on posture initiatives in Korea, Japan, Guam, and the Northern Mariana Islands. If DOD is fully responsive to the Committee's reporting direction, these updates should provide needed visibility into initiative cost and funding requirements. DOD's posture planning guidance does not require the U.S. Pacific Command to include comprehensive cost data in its theater posture plan, and as a result, DOD lacks critical information that could be used by decision makers as they deliberate on posture requirements and affordability. GAO analysis shows that of the approximately $24.6 billion obligated by the military services to support installations in Asia from 2006 through 2010, approximately $18.7 billion (76 percent) was for operation and maintenance of these facilities. The services estimate that operation and maintenance costs would be about $2.9 billion per year through 2015. However, this estimate appears to be understated, and DOD's initiatives may significantly increase those costs. For example, DOD has yet to estimate costs associated with furnishing and equipping approximately 321 new buildings and 578 housing units in Okinawa. Without comprehensive and routine reporting of posture costs, DOD decision makers will not have the full fiscal context in which to develop posture plans and requirements, and congressional committees will lack a full understanding of the potential funding requirements associated with DOD budget requests.

What GAO Recommends

GAO recommends that DOD develop a business case analysis for its strategic objectives related to tour normalization in Korea, limit investments at Camp Humphreys until the business case is completed, and develop comprehensive cost estimates of posture in the Pacific. DOD generally agreed with GAO's recommendations, but it did not specify what corrective actions it would take or time frames for completion.