Base Closures

Long and Costly Process of Reducing the Local National Work Force in Germany Gao ID: NSIAD-92-62 April 17, 1992

The United States is withdrawing its forces from Europe due to the diminished Soviet threat. As part of this move, the Army and Air Force plan to lay off more than 27,000 Germans they employ by the end of 1995. This report (1) identifies the U.S. military's basic severance pay liability according to international agreements, (2) evaluates the potential for other costs increasing that liability, and (3) determines whether the Army and Air Force have enough money to cover these liabilities. GAO recommends that the United States approach the German government about bearing the additional costs of local national termination arising from delays in base closures requested by the German government.

GAO found that: (1) in June 1991, the U.S. military's average severance pay liability under existing Tariff Agreement provisions was about $3,000 per person, or about $144 million, assuming that all 47,280 German employees of the U.S. military were eligible for full severance pay; (2) U.S. liability is not limited by Tariff Agreements and can be increased by German court decisions favoring terminated local nationals; (3) many local nationals won settlements averaging over $5,200 during recent base closures; (4) the United States has negotiated an agreement with the German labor unions on an indemnity plan that provides greater benefits, up to $4,400 per person, and reduces the probability that future terminations would be legally contested; (5) if employees still choose to litigate for higher settlements, the United States could request that the German government bear the additional costs, in conjunction with burden-sharing initiatives; (6) the German labor termination process is lengthy, and could cost the Army and Air Force up to $4.1 million in unearned salaries if the United States fails to consider this timing in making base closure announcements; and (7) neither the Army nor the Air Force budgeted or accounted for the cost of severing local national employees in Germany as it was being incurred.

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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