DOD Infrastructure

In a September 1995 report (GAO/NSIAD-95-127), GAO evaluated the Defense Department's (DOD) justification and its cost analysis for consolidating more than 300 defense accounting centers into five large existing finance centers and 20 new sites called operating locations. GAO challenged the need for the 20 operating locations because (1) DOD's analysis showed that finance and accounting operations could be consolidated into as few as six; (2) some planned sites, particularly those located on closed or realigned military bases, would cost $173 million to renovate; and (3) DOD, in arriving at its decision, had not considered additional operating efficiencies expected from business process reengineering initiatives. DOD generally agreed with GAO's findings. This report raises an issue that, in GAO's view, warrants immediate attention: DOD is opening new finance and accounting centers even though its recent analysis shows that they are not needed.

GAO found that: (1) the Defense Finance and Accounting Service (DFAS) estimated that it needed 16 rather than 21 finance and accounting offices to support DOD finance and accounting operations; (2) by limiting the number of offices to 16, DOD could maintain its projected annual operating savings of $120 million and avoid spending $51 million in military construction costs; and (3) despite this analysis, DOD has continued with its plan to open 21 offices because it believes the Fiscal Year 1996 DOD Authorization Bill requires it to do so.

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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