Military Base Closures

The U.S. has invested more than $2 billion in military facilities in the Philippines. Under a military basing agreement, the United States is liable for certain costs when it leaves Clark Air Force Base and the Subic Bay Navy Facility. This report looks at (1) contract terminations costs and separation allowances for Filipino civilian employees and arrangements for covering these liabilities, (2) the U.S. investment in removable and nonremovable property on these bases and the effect of the basing agreement on this investment, and (3) the nature of any environmental damage and the U.S. obligation for any environmental cleanup or restoration.

GAO found that: (1) U.S. liabilities for separation allowances totalled approximately $71.3 million, as of March 31, 1991; (2) Air Force and Navy activities underfunded severance pay liabilities by $12.9 million; (3) with the exception of Navy industrial fund's $10.1-million liability, the Department of Defense (DOD) stated that it had sufficient resources available to cover the shortfall; (4) most activities had not set aside funds for the $15.5 million in sick and annual leave liabilities because, under DOD policy, those liabilities are not funded until they are ready to be paid; (5) U.S. liabilities for contract termination costs are estimated to be $3.7 million; (6) the United States has invested $2.199 billion in military facilities in the Philippines, and the Air Force plans to remove 75 percent of the removable property and declare the balance excess to U.S. requirements; and (7) the Air Force and Navy have identified significant environmental damage at the bases, basing agreement does not impose responsibility upon the United States.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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