Defense Infrastructure
Changes in Funding Priorities and Management Processes Needed to Improve Condition and Reduce Costs of Guard and Reserve Facilities Gao ID: GAO-03-516 May 15, 2003GAO prepared this report under its basic legislative responsibilities. Its objectives are threefold: (1) to examine the reserve forces' trends for facility maintenance and construction funding and the condition of their facilities, (2) to assess the likelihood that they will meet the Department of Defense's (DOD) objectives for improving facilities, and (3) to discuss the challenges in implementing two potential cost saving initiatives--joint construction projects and real property exchanges.
Funding for maintaining and constructing reserve component facilities has increased. Obligations for facility maintenance rose by about 70 percent from fiscal year 1998 to fiscal year 2002 and annual appropriations for military construction rose 49 percent from fiscal year 1998 to fiscal year 2003. Despite the increases, reserve components rated the condition of 64 percent of their facilities as inadequate, and GAO's visits to installations document the deteriorated condition of facilities. While GAO did not see any facilities that were not in use, the upcoming base realignment and closure round is expected to include an evaluation of reserve component facilities. The reserve components are unlikely to meet all of DOD's three objectives for improving facilities: achieve 100 percent sustainment funding starting in fiscal year 2004; reach a 67-year average recapitalization rate by fiscal year 2007; and improve the condition of facilities so that deficiencies have only a limited effect on mission performance by fiscal year 2010. Furthermore, some officials acknowledged that even when their components have expressed intent to meet DOD's objectives, their funding plans might include unrealistically high rates of increases during the out-years when compared to previous funding trends and against other defense priorities. The reserve components face challenges in implementing two potential cost saving initiatives--joint construction projects and real property exchanges. Reserve component officials said that funding joint construction projects--where two or more components share space requirements and build one facility--is difficult to coordinate. In addition, while Congress has provided the components with authority to exchange real property with other public or private entities in return for the construction of new facilities of equal or greater value--the Office of the Secretary of Defense has not provided overall direction for the program, thus risking the exchange of property that may be needed by other DOD components.
RecommendationsOur 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.
Director: Team: Phone:GAO-03-516, Defense Infrastructure: Changes in Funding Priorities and Management Processes Needed to Improve Condition and Reduce Costs of Guard and Reserve Facilities
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Guard and Reserve Facilities' which was released on May 15, 2003.
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Report to Congressional Committees:
May 2003:
Defense Infrastructure:
Changes in Funding Priorities and Management Processes Needed to
Improve Condition and Reduce Costs of Guard and Reserve Facilities:
GAO-03-516:
GAO Highlights:
Highlights of GAO-03-516, a report to Congressional Committees
Why GAO Did This Study:
GAO prepared this report under its basic legislative responsibilities.
Its objectives are threefold: (1) to examine the reserve forces‘
trends for facility maintenance and construction funding and the
condition of their facilities, (2) to assess the likelihood that they
will meet the Department of Defense‘s (DOD) objectives for improving
facilities, and (3) to discuss the challenges in implementing two
potential cost saving initiatives”joint construction projects and real
property exchanges.
What GAO Found:
Funding for maintaining and constructing reserve component facilities
has increased. Obligations for facility maintenance rose by about 70
percent from fiscal year 1998 to fiscal year 2002 and annual
appropriations for military construction rose 49 percent from fiscal
year 1998 to fiscal year 2003. Despite the increases, reserve
components rated the condition of 64 percent of their facilities as
inadequate, and GAO‘s visits to installations document the
deteriorated condition of facilities. While GAO did not see any
facilities that were not in use, the upcoming base realignment and
closure round is expected to include an evaluation of reserve
component facilities.
The reserve components are unlikely to meet all of DOD‘s three
objectives for improving facilities: achieve 100 percent sustainment
funding starting in fiscal year 2004; reach a 67-year average
recapitalization rate by fiscal year 2007; and improve the condition
of facilities so that deficiencies have only a limited effect on
mission performance by fiscal year 2010. Furthermore, some officials
acknowledged that even when their components have expressed intent to
meet DOD‘s objectives, their funding plans might include
unrealistically high rates of increases during the out-years when
compared to previous funding trends and against other defense
priorities.
The reserve components face challenges in implementing two potential
cost saving initiatives”joint construction projects and real property
exchanges. Reserve component officials said that funding joint
construction projects”where two or more components share space
requirements and build one facility”is difficult to coordinate. In
addition, while Congress has provided the components with authority to
exchange real property with other public or private entities in return
for the construction of new facilities of equal or greater value”the
Office of the Secretary of Defense has not provided overall direction
for the program, thus risking the exchange of property that may be
needed by other DOD components.
What GAO Recommends:
GAO is recommending that the Secretary of Defense direct the services
to review and reevaluate the priorities to sustain and improve the
condition of reserve facilities. GAO also recommends that the
Secretary direct the Deputy Under Secretary of Defense for
Installations and Environment to facilitate the coordination funding
for joint construction projects among active and reserve components,
and to establish a method to ensure that real property to be exchanged
is not needed by other DOD components. GAO is also suggesting that
Congress consider using DOD‘s newly established budget structure to
better coordinate and fund high priority joint construction projects.
In commenting on a draft of this report, DOD agreed with the
recommendations.
www.gao.gov/cgi-bin/getrpt?GAO-03-516.
To view the full product, including the scope
and methodology, click on the link above.
For more information, contact Barry W. Holman at (202) 512-8412 or
holmanb@gao.gov.
[End of section]
Letter:
Results in Brief:
Background:
While Funding Has Increased, Most Facilities Are Considered Inadequate:
Reserve Components Are Unlikely to Meet All of DOD's Objectives for
Improving Facilities:
Challenges Exist in Implementing Joint Construction Projects and Real
Property Exchanges:
Conclusions:
Recommendations for Executive Action:
Matter for Congressional Consideration:
Agency Comments and Our Evaluation:
Appendixes:
Appendix I: Scope and Methodology:
Appendix II: Comments from the Department of Defense:
Appendix III: GAO Contact and Staff Acknowledgments:
Tables Table 1: Number of Locations and Facilities by Reserve
Component as of September 30, 2002:
Table 2: Military Construction Backlog by Reserve Component,
Fiscal Years 1998 through 2001:
Table 3: Listing of Various Reserve Component Locations GAO
Visited:
Figures:
Figure 1: Requested, Congressionally Designated Initially, and
Reported Obligated Facility Maintenance Funding Levels
for the Reserve Components, Fiscal Years 1998 through 2002:
Figure 2: Requested and Appropriated Military Construction
Funding Levels for the Reserve Components, Fiscal Years
1998 through 2003:
Figure 3: Percent of Reserve Component Facilities Considered
Inadequate, Fiscal Years 1998 through 2003:
Figure 4: Typical Examples of Newly Constructed or Renovated
Facilities at Various Reserve Component Locations:
Figure 5: Typical Examples of Facility Improvements at Various
Reserve Component Locations:
Figure 6: Examples of Deteriorated Ramp, Runway, and Driveways
at Various Reserve Component Locations:
Figure 7: Examples of Damage at Various Reserve Component
Facilities:
Figure 8: Examples of Inadequate Space for Equipment at Various
Reserve Component Facilities:
Figure 9: Examples of Inadequate Storage Space at Various
Reserve Component Facilities:
Figure 10: Average Annual Sustainment Funding as a Percent of
Requirement by Reserve Component, Aggregate for
Fiscal Years 2003 through 2009:
Figure 11: Average Annual Recapitalization Rate by Reserve
Component, Aggregate for Fiscal Years 2003 through
2009:
Figure 12: Current and Projected Restoration and Modernization
Funding by Reserve Component, Fiscal Years 2003
through 2009:
Figure 13: Current and Proposed Fire Station at Parks Reserve
Forces Training Area, California, as of November 2002:
Abbreviation:
DOD: Department of Defense
Letter May 15, 2003:
Congressional Committees:
The Department of Defense's (DOD) six reserve components--Army National
Guard, Army Reserve, Naval Reserve, Marine Corps Reserve, Air National
Guard, and Air Force Reserve--operate and maintain more than 41,000
buildings and structures sited in about 5,000 locations in the United
States and its territories in which Congress provided about
$950 million in funds for fiscal year 2003. The number of reserve
facilities has grown by about one-third during the past 10 years,
primarily due to new mission requirements and the transfer of certain
active services' facilities from bases that were either closed or
realigned during the base closure process. While the number of
facilities has grown, the reserve components consider 64 percent of
their facilities to be inadequate. In the absence of proper
maintenance, these facilities deteriorate prematurely, which could
adversely affect missions supported by these facilities. Without
consistent periodic recapitalization, they can become obsolete and no
longer be cost-effectively renovated and must be replaced with new
construction if there is a continuing need.[Footnote 1] DOD and
Congress have recognized the need to fully fund maintenance and
recapitalization of facilities, as well as to reduce DOD's inventory of
facilities through an upcoming round of base realignments and closures
scheduled for fiscal year 2005.[Footnote 2]
In August 2001, DOD issued a facility strategic plan[Footnote 3] and
has recently established three objectives for improving its facilities:
achieve 100 percent sustainment funding starting in fiscal year
2004,[Footnote 4] achieve a 67-year average recapitalization rate by
fiscal year 2007,[Footnote 5] and improve the condition of facilities
so that deficiencies have only a limited effect on mission performance
by fiscal year 2010. In addition, as a way to achieve potential cost
savings, the reserve components have initiated joint military
construction projects, where two or more components combine their
space requirements into one facility. They also have participated in
real property exchanges, where they trade real property with other
public or private entities in return for the construction of new
facilities of equal or greater value.
We prepared this report under our basic legislative responsibilities as
authorized by 31 U.S.C. § 717 and are providing it to you because of
your Committee's oversight responsibilities for DOD's facilities. This
report on the reserve components (1) examines their funding trends for
facility maintenance and construction since fiscal year 1998 and the
condition of their facilities over this same time period, (2) assesses
the likelihood that they will meet DOD's objectives for improving
facilities, and (3) discusses the challenges in implementing two
potential cost saving initiatives--joint construction projects and real
property exchanges. This is one of several reviews that we have
completed or have underway examining various aspects of facility
conditions in DOD. For example, we recently reported that funding for
facility maintenance and military construction has fallen short of what
was needed to halt the deterioration of facilities used by the active
military services.[Footnote 6] Furthermore, we noted that there was a
lack of consistency in the active services' information on facility
conditions and that DOD's facilities strategic plan and three key
objectives to sustain and improve facilities have weaknesses that
affected their effectiveness. In addition, we are currently reviewing
the management of housing for unaccompanied personnel and the reserve
components' acquisition of facilities from prior base realignment and
closure actions.
In performing our work, we examined DOD's budget for facilities
maintenance and construction from fiscal years 1998 through 2002. We
performed our work at, and met with officials from, the Office of the
Assistant Secretary of Defense for Reserve Affairs and the headquarters
of the six reserve components--Army National Guard, Army Reserve
Command, Naval Reserve Forces Command, Marine Forces Reserve, Air
National Guard, and Air Force Reserve Command. We also visited 20 Army
National Guard, 11 Army Reserve, 9 Naval Reserve, 7 Marine Corps
Reserve, 5 Air National Guard, and 5 Air Force Reserve sites to discuss
these issues further and to tour various facilities to observe their
physical condition. We did not validate the reserve components'
requirements for facilities or reported requirements for the
sustainment of their facilities, nor did we validate their
recapitalization requirements. A more thorough description of our scope
and methodology is presented in appendix I.
Results in Brief:
Although funding for maintaining and constructing reserve component
facilities has increased since fiscal year 1998, reserve components
report that the condition of most of their facilities are inadequate
and that their construction backlog has increased to $12.2 billion.
Reported obligations for maintaining facilities increased about 70
percent, from $444 million to $750 million from fiscal year 1998 to
fiscal year 2002. In general, the increase in obligations resulted from
the components' higher annual funding requests, except in fiscal year
2000, and the movement of funds into facility maintenance from other
operating accounts at the end of each fiscal year. Similarly, annual
appropriations for military construction increased 49 percent, from
$461 million to $688 million from fiscal year 1998 to fiscal year
2003.[Footnote 7] Of these appropriations, more than half came from
add-ons by Congress. Even with these funding increases, reserve
components rated the condition of 64 percent of their facilities as
inadequate for fiscal year 2003. While deteriorated facilities are
common, there is a lack of consistency in the reserve components'
information on facility conditions, making it difficult to direct funds
to facilities where they are most needed and to accurately gauge
facility conditions.
The reserve components are unlikely to meet all of DOD's three
objectives for improving facilities. While reserve components plan to
meet some of the objectives from year to year, none are expecting
enough funds to consistently meet DOD's objective to fully fund
sustainment from fiscal years 2003 through 2009, and only the Marine
Corps Reserve and the Air National Guard are expecting to reach a 67-
year average recapitalization rate during this period. In addition, all
reserve components call for rapid increases in restoration and
modernization funding at some point during this period. Assuming that
all of the facilities are needed, reserve component officials also
estimate that it would cost $7.8 billion to achieve DOD's objective to
concentrate funding to eliminate the most significant facility
deficiencies by fiscal year 2010. However, some officials acknowledged
that even when their components have expressed their intent to meet
DOD's objectives, their funding plans might include unrealistically
high rates of increases during the out-years when compared to previous
funding trends and against other defense priorities.
The reserve components face challenges in implementing two potential
cost-saving initiatives: joint construction projects and real property
exchanges. First, the Office of the Assistant Secretary of Defense for
Reserve Affairs has estimated that joint construction projects could
save up to 20 percent over the cost of two separate projects; reserve
component officials said that the challenge to implementing these
projects is the difficulty in simultaneously programming them in each
of their respective budget requests. Recognizing this, in April 2001,
the Office of the Secretary of Defense established a separate budget
structure for funding joint use military construction projects, but it
has not yet programmed any funds for this purpose. As a result, many
joint construction projects that had the potential to generate future
cost savings might not be initiated. Second, while Congress has
provided the Secretary of Defense with authority to use real property
exchanges,[Footnote 8] the Office of the Secretary of Defense has not
provided overall direction for the program. Currently, only the Army
Reserve is using this authority and plans to use this authority to
recapitalize:
10 percent of its facilities. Officials from the other reserve
components said they were not aware of this authority and only now are
exploring its potential use. While the Army Reserve has issued guidance
and is gaining experience in implementing this authority, there is no
process for collecting and sharing lessons learned with other reserve
components. According to officials with the Office of the Secretary of
Defense Installation and Environment, the Office of the Assistant
Secretary of Defense for Reserve Affairs, and the active and reserve
components of the Army, there is no method to assure that real property
needed by other DOD components or for future missions is not being
exchanged. Although DOD provides little guidance for real property
exchanges, it does require the components to obtain the department's
approval when the real property being exchanged is valued at more than
$1 million or involves more than 1,000 acres.[Footnote 9] However, the
Army Reserve has interpreted this guidance to mean that it will notify
DOD if the value of the real property received exceeds the value of the
real property exchanged by $1 million, regardless if the real property
exchanged is worth several millions of dollars.
We are making several recommendations to address funding priorities and
management processes needed to improve the condition and reduce the
costs of the reserve components' facilities. To help promote increased
consideration of joint construction projects, we are also suggesting
that Congress may want to consider designating a portion of its
military construction appropriations for DOD's newly established budget
structure to fund joint use military construction projects. In
commenting on a draft of this report, DOD concurred with our
recommendations.
Background:
The six reserve components--Army National Guard, Army Reserve,
Naval Reserve, Marine Corps Reserve, Air National Guard, and Air Force
Reserve--are responsible for maintaining facilities in almost 5,000
different locations within the United States and its territories, with
an estimated plant replacement value of over $57 billion. These
facilities consist of readiness and reserve centers plus other
buildings and structures to equip, train, sustain, and deploy the
reserve forces. These facilities are typically used to train reserve
component members and units in classrooms and drill halls and to
conduct other tasks such as unit planning; record keeping; storing of
individual and unit equipment, weapons, and supplies; and maintaining
vehicles and aircraft. The number of reserve component facilities has
grown by 30 percent in the past decade, mostly due to new mission
requirements and the transfer of certain facilities from installations
that were either closed or realigned during the base closure process.
Table 1 shows the number of locations and facilities by reserve
component as of September 30, 2002.
Table 1: Number of Locations and Facilities by Reserve Component as of
September 30, 2002:
Reserve component: Army National Guard; Facility locations: 3,158;
Buildings and structures: 28,540; Readiness or reserve centers: 3,040.
Reserve component: Army Reserve; Facility locations: 1,178; Buildings
and structures: 4,475; Readiness or reserve centers: 742.
Reserve component: Naval Reserve; Facility locations: 181; Buildings
and structures: 1,178; Readiness or reserve centers: 153.
Reserve component: Marine Corps Reserve; Facility locations: 183;
Buildings and structures: 564; Readiness or reserve centers: 22.
Reserve component: Air National Guard; Facility locations: 176;
Buildings and structures: 5,231; Readiness or reserve centers: 0.
Reserve component: Air Force Reserve; Facility locations: 70; Buildings
and structures: 1,278; Readiness or reserve centers: 0.
Reserve component: Total; Facility locations: 4,946; Buildings and
structures: 41,266; Readiness or reserve centers: 3,957.
Source: Office of the Assistant Secretary of Defense (Reserve Affairs).
Note: Facility locations are counted as separate pieces of property;
the number of buildings and structures includes maintenance shops,
aircraft hangers, warehouses, equipment centers, and administrative
buildings that are separately listed on the reserve components' real
property database; and readiness and reserve centers are the number of
armories or centers where the reserve component unit drills.
[End of table]
With DOD's increased reliance on the reserve components and the
activation of about 224,500 reservists as of the end of April 2003, the
reserve components have increasingly become an important resource
in the implementation of DOD's national defense strategy. Increased
reliance on the reserve components to assume new missions, support
overseas deployments, and provide support for homeland defense has
highlighted the importance of adequate facilities to train reservists
for their operational missions.
Funding for Facilities:
Funding for sustaining and constructing facilities primarily comes from
two separate appropriations--operation and maintenance and military
construction. Operation and maintenance funds are used mostly to
support sustainment, which covers the day-to-day expense of routine
maintenance such as repairing or replacing broken windows, doors, or
restroom plumbing, as well as larger repair and maintenance projects
such as installing a new roof or air conditioning and heating systems.
Congress indicates how it expects these funds to be spent by
designating specific amounts at the subactivity group level such as for
facilities sustainment, restoration, and modernization activities
found in the operation and maintenance tables for each reserve
component included in the appropriations act's conference
report.[Footnote 10] Both the operation and maintenance and the
military construction appropriations can be used to fund facility
restoration and modernization activities. Restoration funds are used to
repair and replace items not considered routine, such as repairing or
replacing items damaged by inadequate sustainment, excessive age,
natural disaster, fire, accident, or other causes. Modernization funds
are used to alter or modernize facilities to meet new or higher
standards, accommodate new functions, or replace structural components.
In addition, construction of new facilities is mostly funded with the
military construction appropriation. Congress specifies the amounts and
the projects for which military construction appropriations are to be
used.
The reserve components compete for funds in the planning, programming,
and budgeting process with their active service counterparts for
operation and maintenance funding and military construction funding.
The Office of the Secretary of Defense (Comptroller) and the active
components review reserve component funding requirements and adjust the
budget request based on DOD and service programs and priorities. The
reserve components submit to Congress their own budget request
submission separately from the active services as part of the
President's budget submission. Congress makes appropriations for each
of the six reserve components in a separate operation and maintenance
appropriation and a separate military construction appropriation--
often adding construction projects to the appropriations. These
appropriated funds are then managed by each reserve component command
rather than by a centralized authority like the Office of the Assistant
Secretary of Defense for Reserve Affairs, which generally serves as a
liaison with the Office of the Secretary of Defense and provides policy
and advisor-type functions among the active and reserve components. The
Army has made recent changes to centralized facility management that
now includes the Army Reserve. However, it is too early to assess how
the management of sustainment, restoration, and modernization funds
will change. The Navy has regional programs to manage its active
installations and reserve component facilities and is moving toward a
more centralized management structure similar to the Army's facility
management program by October 2003.
In addition, individual states contribute funds to maintain Army
National Guard and Air National Guard facilities as outlined in
National Guard Bureau regulations.[Footnote 11] Funding for facility
maintenance of Army National Guard state-owned facilities is based on
cooperative agreements between the respective states and the federal
government and the type of facility involved. For example, the states
are typically expected to contribute to the cost of repairs at their
3,040 readiness centers--up to 50 percent of the cost for major
repairs, such as replacing roofs and air conditioning systems, and 100
percent of the cost for minor repairs, such as unclogging toilets and
painting walls. The states are also required to contribute up to 25
percent of the costs for both major and minor repairs to their
equipment maintenance shops, but they are not required to contribute to
facility maintenance of the Army National Guard's training centers,
local training areas, aviation support facilities, maneuver training
equipment sites, unit training equipment sites, and facilities for
civil support teams if weapons of mass destruction are used. Most of
the Air National Guard facilities are located at airports, which are
federally leased property, or are collocated on DOD installations.
Thus, states do not contribute to the cost of sustaining many of these
facilities.
Facility Strategic Plan and Objectives:
In August 2001, DOD issued a facility strategic plan that outlined four
long-term strategic goals for installations and facilities.[Footnote
12] The strategic goals are to (1) locate, size, and configure defense
installations and facilities to meet the requirements of today's and
tomorrow's force structures; (2) acquire and sustain defense
installations and facilities to provide mission-ready installations
with quality living and work environments; (3) leverage resources--
money, people, and equipment--to achieve the proper balance between
requirements and available funding; and (4) improve facility management
and planning by embracing best business practices and taking advantage
of modern asset-management techniques and performance-assessment
metrics. In addition to the broad goals set forth in the strategic
plan, DOD also established three key objectives to improve the
condition of facilities: (1) fully fund sustainment starting in fiscal
year 2004; (2) achieve an average recapitalization rate of 67 years by
fiscal year 2007; and (3) improve the condition of facilities so that
deficiencies have only a limited effect on mission performance by
fiscal year 2010.
In an attempt to standardize the rating of facilities across the
services and to provide Congress with a measure of facility conditions
and their ability to support military missions, DOD issued its first
Installations' Readiness Report in 1999. Within the report, the
services' major commands report on the condition of their facilities
using a scale of C-1 through C-4: C-1 facilities have only minor
deficiencies with negligible impact on capability to perform missions;
C-2 facilities have some deficiencies with limited impact on capability
to perform missions; C-3 facilities have significant deficiencies that
prevent performing some missions; and C-4 facilities have major
deficiencies that preclude satisfactory mission accomplishment.
According to DOD's guidance, the services could implement this
readiness reporting system without modifying their existing assessment
processes. As a result, all four services are using different systems
to assess facility conditions and develop C-ratings.
According to DOD, providing full sustainment funding is the most
cost-effective approach to managing facilities because it provides the
most performance over the longest period for the least investment.
Without adequate sustainment, the expected life of a facility is
reduced and facilities must be recapitalized sooner, although, even
with adequate sustainment, facilities eventually wear out or become
obsolete over time. An obsolete facility is one that is irrelevant to
present-day missions regardless of its condition; for example, a
maintenance shop built in the 1950s may be too narrow and small to
accommodate large tanks and vehicles. Once a facility reaches the end
of its expected service life, it must be recapitalized--that is,
replaced or extensively renovated or modernized. DOD estimates that an
average recapitalization rate of 67 years allows fully sustained
facilities to meet the department's requirements. Recapitalization
investments can also be made periodically throughout a facility's
service life, which extends service life and delays the need for
replacement. Moreover, even after recapitalization investments are
made, facility performance can rapidly decline in the absence of
adequate sustainment.
Use of Joint Construction Projects:
According to officials of the Office of the Assistant Secretary of
Defense for Reserve Affairs, joint construction is when two or more
components agree to consolidate space requirements and build one
facility to share instead of building separate facilities. The reserve
components are required by 10 U.S.C. § 18234 to pursue the joint use of
facilities by two or more components to the greatest extent
practicable. DOD implemented this statutory requirement by establishing
a Joint Service Reserve Component Facility Board in every state. Once a
year, these boards are expected to review all proposed military
construction projects and identify those for joint construction
potential. In April 2001, DOD created a budget structure for the
exclusive use of funding joint use military construction projects
between two or more service components, whether active, reserve,
or guard.
Use of Real Property Exchanges:
Real property exchange is a method the reserve components can use to
construct or renovate facilities in exchange for military-owned real
property. When most of the reserve components' infrastructure was built
prior to 1970, many facilities were originally located outside or near
metropolitan areas. However, these properties are now in prime
locations and are candidates for real property exchanges because of
urban growth and the various complexes--such as shopping centers,
commercial or industrial parks, and residential housing developments--
that surround the properties. The reserve components can use the
authority contained in 10 U.S.C. § 18233 to acquire real property from
a private or public entity in exchange for military-owned real
property. The reserve components can also seek a congressionally
directed exchange authority specific to an individual exchange project
that typically has been included in defense authorization,
appropriation, or military construction acts. Exchanging real property
with a private or public entity is a method of obtaining new facility
construction without the need for additional appropriated funds for
property acquisition.[Footnote 13]
Prior GAO Reports:
Since 1997,[Footnote 14] we have identified DOD infrastructure
management as a high-risk area and, as such, we have issued several
reports that address areas where DOD and the services could improve
their facilities management program. In 2001, we reported that DOD
needed to address facility requirements, recapitalization, and
maintenance and repair needs.[Footnote 15] In a January 2003 report, we
continued to identify DOD infrastructure management as a high-risk area
and to report that transforming DOD's support infrastructure remains a
long-term challenge.[Footnote 16] In addition, for the:
first time we added federal real property as a high-risk area due to
significant property repair and restoration needs, among other
reasons.[Footnote 17]
In February 2003, we reported that, while funding for facility
maintenance and military construction for active services' facilities
increased during the past few years, the amounts had fallen short of
what is needed to halt the deterioration of facilities used by the
active military forces.[Footnote 18] In addition, we found that there
was a lack of consistency in the services' information on facility
conditions, making it difficult for Congress, DOD, and the services to
direct funds to facilities where they are most needed and to measure
progress in improving facilities. We also reported that DOD's
facilities strategic plan and three key objectives for the services to
sustain and improve the condition of their facilities have weaknesses
that affect their effectiveness. We recommended that the Secretary of
Defense (1) direct the services to reassess their funding priorities
for facilities; (2) implement a consistent departmentwide process to
assess, rate, and validate facility conditions; (3) revise DOD's
facilities strategic plan to include information on specific actions,
time frames, responsibilities, and funding levels; (4) clarify DOD's
guidance by specifying the organizational level at which its facility
improvement objectives should be achieved; and (5) direct the services
to develop comprehensive performance plans to sustain and recapitalize
their facilities. In commenting on a draft of that report, DOD
concurred with our recommendations and outlined steps it was taking to
address our concerns.
While Funding Has Increased, Most Facilities Are Considered Inadequate:
While funding for maintaining and constructing reserve component
facilities has increased since fiscal year 1998, reserve components
report that most of their facilities are inadequate and that their
construction backlog had increased to $12.2 billion in fiscal year
2001. Reported obligations for facility maintenance increased about 70
percent from fiscal year 1998 to fiscal year 2002 and appropriations
for military construction increased about 49 percent from fiscal year
1998 to fiscal year 2003. Even with these increases in funding, reserve
components rated 64 percent of their facilities as inadequate for
fiscal year 2003. Our visits to 57 reserve components sites showed that
the condition of facilities ranged from good to inadequate, and we
observed unit inefficiencies and workarounds at some deteriorated
facilities.
Funding Increased for Facility Maintenance:
DOD's reported obligations for facility maintenance, funded with
operation and maintenance monies, show an increase between fiscal year
1998 and fiscal year 2002. Reported obligations for facility
maintenance increased about 70 percent, from $444 million to $750
million during this period. As figure 1 shows, the request for facility
maintenance also increased from $320 million to $705 million during the
same period, representing an increase of 120 percent.
Figure 1: Requested, Congressionally Designated Initially, and Reported
Obligated Facility Maintenance Funding Levels for the Reserve
Components, Fiscal Years 1998 through 2002:
[See PDF for image]
[A] In fiscal year 2000, Congress, in its conference report, moved funds
requested for quality of life enhancements into facility maintenance.
[B] The term "congressionally designated" refers to amounts set forth
at the budget activity, activity group, and subactivity group level in
an appropriation act's conference report. These recommended amounts are
not binding unless they are also incorporated directly or by reference
into an appropriation act or other statute.
[End of figure]
CDOD reported obligated amounts to Congress in its budget submissions.
In general, these funding increases resulted from two primary sources:
the reserve components' higher annual funding requests--except in
fiscal year 2000--and the movement of funds into facility maintenance
from other operation and maintenance accounts at the end of each fiscal
year. However, reserve officials said that even with these additional
funds, they are still not funding all of their facility maintenance
requirements. Reserve officials said that they have the flexibility to
move funds out of the facility maintenance accounts early in the fiscal
year and, as the year unfolds, move funds back into these accounts in
addition to other funds that were not executed in other operation and
maintenance accounts. It is difficult to determine what specific
accounts these funding increases came from because funds moved out of
one account cannot generally be traced directly to another account.
To prevent the movement of facility maintenance funds, the Army took
action to establish a new organization--the Installation Management
Agency--in October 2002. Reporting directly to the Army Assistant Chief
of Staff for Installation Management, the new agency will oversee and
manage all facility maintenance funds centrally as well as implement
consistent standards across the Army. It will also manage facility
funding for Army Reserve facilities but not the Army National Guard
because officials said the Installation Management Agency might
interfere with state rights. It is too early to assess the potential
success of the Army's facility management program.
Appropriations Increased for Military Construction:
During the same time period that the reserve components reported
obligations for facility maintenance increased, appropriations for
military construction also increased. From fiscal years 1998 through
2003, Congress consistently appropriated more military construction
funds than the reserve components requested by mostly appropriating
additional funds for projects already identified by the reserve
components for funding in the out-years. As shown in figure 2,
appropriations for military construction increased about 49 percent,
from $461 million to $688 million from fiscal year 1998 to fiscal year
2003. During this period, military construction appropriations peaked
at $954 million in fiscal year 2002.
Figure 2: Requested and Appropriated Military Construction Funding
Levels for the Reserve Components, Fiscal Years 1998 through 2003:
[See PDF for image]
Note: Obligated amounts for military construction are not shown because
such funds are available for obligation over a 5-year period. For
example, funds appropriated for military construction in fiscal year
1998 can be obligated through fiscal year 2002.
[A] Fiscal year 2003 requested and appropriated amounts include emergency
response funds.
[End of figure]
More than half of these aggregate appropriations came from add-ons by
Congress. Reserve component officials stated that DOD and the active
services have come to rely on these congressional increases while
requesting funding for other priorities within DOD's budgetary
constraints. For example, Congress appropriated additional funding for
48 more projects than what was in the reserve components' budget
request for fiscal year 2003. However, even with these congressional
increases, various reserve component officials said that many of their
construction projects go unfunded. As shown in table 2, the backlog of
military construction projects has increased from $7 billion to $12.2
billion from fiscal year 1998 to fiscal year 2001. However, if certain
active services' facilities from bases that were either closed or
realigned during the base closure process were transferred to the
reserve components, it could have a positive or negative impact on
reducing the backlog of military construction projects.
Table 2: Military Construction Backlog by Reserve Component, Fiscal
Years 1998 through 2001:
Dollars in billions.
Army National Guard; 1998: $2.5; 1999: $2.5; 2000: $5.5; 2001: $7.1.
Army Reserve; 1998: 1.9; 1999: 1.9; 2000: 2.1; 2001: 2.1.
Naval Reserve; 1998: 0.4; 1999: 0.4; 2000: 0.3; 2001: 0.3.
Marine Corps Reserve; 1998: 0.3; 1999: 0.1; 2000: 0.3; 2001: 0.3.
Air National Guard; 1998: 1.3; 1999: 1.2; 2000: 1.5; 2001: 1.7.
Air Force Reserve; 1998: 0.6; 1999: 0.6; 2000: 0. 6; 2001: 0.7.
Total; 1998: $7.0; 1999: $6.7; 2000: $10.3; 2001: $12.2.
Source: Office of the Assistant Secretary of Defense (Reserve Affairs).
Note: At the time of our review, data on the military construction
backlog had not been collected for fiscal year 2002.
[End of table]
Reserve Components Consider Many of Their Facilities to Be Inadequate:
While funds devoted to facility maintenance and military construction
have increased, the overall condition of facilities has not improved
significantly. At the beginning of fiscal year 2003, the reserve
components considered 64 percent of their buildings and structures to
be inadequate (see fig. 3).[Footnote 19] While deteriorated facilities
are common at many locations, reserve component officials have said
that the age and size of these facilities contribute to them being
inadequate because many facilities built in the 1950s and 1960s have
not been modernized or expanded to accommodate changes in missions and
equipment requirements.
Figure 3: Percent of Reserve Component Facilities Considered
Inadequate, Fiscal Years 1998 through 2003:
[See PDF for image]
Notes: According to reserve component officials, the variation from
fiscal years 2001 through 2003 is primarily the result of changes in
the procedures used to assess facility conditions such as weight
factors for individual facility components that can change the facility
condition assessment and not necessarily the result of a significant
change in facility conditions.
[End of figure]
Fiscal year 2003 data represents facility conditions as of September
30, 2002.
In our February 2003 report on the active services' facilities, we
noted there was a lack of consistency in the services' information on
facility conditions, making it difficult for Congress, DOD, and the
services to direct funds where they are most needed and to measure
progress in improving facilities.[Footnote 20] Our analysis showed
differences among the services in terms of facility raters and
procedures, assessment scopes and frequencies, appraisal scales, and
validation procedures, all of which result in inconsistencies and a
lack of comparability in the ratings. The reserve components follow the
policies and procedures directed by the active services in rating
facility conditions. Without a consistent cross-service system for
assessing facility conditions and developing ratings, DOD and the
reserve components cannot be assured that their funding decisions
effectively target facilities in greatest need and reported ratings
accurately measure progress in facility condition improvements. In our
prior report, we recommended that the Secretary of Defense instruct the
military services to implement a consistent departmentwide process to
assess and validate facility conditions. In commenting on a draft of
that report, DOD concurred with our recommendation and outlined steps
for implementing a departmentwide process.
Conditions of Reserve Components' Facilities We Visited Ranged from
Good to Inadequate:
During our visits to 57 reserve component sites across the country, we
observed a variety of conditions ranging from newly constructed
facilities that were in good condition to outdated and deteriorated
facilities that were inadequate and led to inefficiencies and
workarounds. While we did not see any facilities that were not in use
except those scheduled for demolition, the upcoming base realignment
and closure round is expected to evaluate the extent reserve component
facilities are utilized. Among the newly constructed or renovated
facilities we observed were a newly constructed air traffic control
tower; new reserve centers and fire stations; installed air
conditioning and heating units; replaced roofs, windows, and doors;
renovated restrooms, showers, and locker areas; and upgraded electrical
systems. Some examples of these facilities are shown in figure 4.
Figure 4: Typical Examples of Newly Constructed or Renovated Facilities
at Various Reserve Component Locations:
[See PDF for image]
[End of figure]
We also observed facilities--such as classrooms, restrooms, and
offices--that were being constructed or undergoing restoration and
repairs. We saw maintenance and repair activities in progress, such as
replacing roofs, remodeling office space, laying new floor tile,
maintaining heating units, and paving parking lots. Some of the
facility improvement projects we observed are shown in figure 5.
Figure 5: Typical Examples of Facility Improvements at Various Reserve
Component Locations:
[See PDF for image]
[End of figure]
In contrast, we observed many facilities that were degraded and
deteriorated, such as cracked building foundations and walls; crumbling
taxiways and driveways; water damaged walls, ceilings, and aircraft
parking ramps; inadequate electrical power systems; poor heating,
ventilation, and air conditioning systems; peeling lead paint; and
leaking roofs. Some examples of a deteriorated ramp, runway, and
driveways that we observed are shown in figure 6.
Figure 6: Examples of Deteriorated Ramp, Runway, and Driveways at
Various Reserve Component Locations:
[See PDF for image]
[End of figure]
At Dobbins Air Force Base, Georgia, we observed a C-130 parking ramp
that sustained water damage as pictured in figure 6. With limited funds
to repair the ramp for an estimated cost of $40,000, base officials
concentrated on higher-priority items, leaving the ramp problem
unresolved for about a year. DOD officials stated they intend to repair
the ramp with unobligated funds available at year-end. At Grissom Air
Reserve Base, Indiana, Air Force Reserve officials told us that the
condition of the taxiways is so deteriorated in spots that pilots must
taxi further distances up the runway to avoid damaging their aircraft,
as also pictured in figure 6. Officials told us that when they acquired
the property through the base realignment and closure process, they
were not familiar with managing runways and thus the runways
deteriorated faster because of base maintenance inexperience. At the
Marine Corps Reserve Center in Detroit, Michigan, the driveway leading
into the facility had several large potholes with cracked and missing
pavement. Officials told us that due to other priorities, funds were
not available to fix the driveway, leaving the problem unresolved.
While at the Army National Guard Maneuver Training Center, Fort
Pickett, Virginia, we saw a washed-out, deteriorated driveway that
officials said had existed for years and occurred because of inadequate
water drainage that resulted in land erosion. At this location, we saw
other washed-out driveways, walkways, and stairs due to inadequate
water drainage.
We also noted facility damage at various facilities that were in use,
such as broken windows, cracks in walls and floors, crumbling floor and
ceiling tiles, peeling lead paint, and leaky roofs. Officials told us
that, although several self-help projects have been done to improve the
condition of these facilities, renovations are still needed. Some
examples of damage to facilities that we observed are shown in figure
7.
Figure 7: Examples of Damage at Various Reserve Component Facilities:
[See PDF for image]
[End of figure]
During our visits to selected sites, we were told about and observed
examples of inadequate space for equipment at various reserve component
facilities, as shown in figure 8.
Figure 8: Examples of Inadequate Space for Equipment at Various Reserve
Component Facilities:
[See PDF for image]
[End of figure]
As shown in figure 8, hangers at Robins Air Force Base, Georgia, and at
Grissom Air Reserve Base, Indiana, were too small to hold an entire C-
5 and KC-135 aircraft, respectively. Maintenance work on the hydraulics
gear located on the aircraft's tail must be done in an enclosed space.
To work on the hydraulics gear, engineers at Robins Air Force Base
designed and built an extension that is large enough to enclose the
aircraft's tail and that can be rolled up next to the hangar. At the
National Guard Training Center, Fort Indiantown Gap, we saw heavy
earth-moving vehicles that could not fit into maintenance bays that
were built during World War II. As a result, vehicle maintenance and
training must be done outdoors, which creates unsafe working conditions
during the winter because of the snow and ice. Also at the National
Guard Training Center, Fort Indiantown Gap, Pennsylvania, we saw a
helicopter maintenance facility that could hold four of the unit's
older 2-rotor blade helicopters but only one of the unit's newer 4-
rotor blade helicopters in the same space. Maintenance officials told
us that the inadequate space requires a constant workaround effort to
contend with various sizes of the aircraft to maximize facility usage.
For example, it now takes them longer to conduct maintenance because
they take the rotor blades off the newer helicopters in order to fit
more helicopters into the maintenance hanger.
At other locations, we saw overcrowded and outdated supply and storage
areas, as shown in figure 9.
Figure 9: Examples of Inadequate Storage Space at Various Reserve
Component Facilities:
[See PDF for image]
[End of figure]
As shown in figure 9, we saw a small arms vault used by an Army
National Guard military police unit that no longer stored all of the
required weapons at one location with the unit. According to unit
officials, members of the police unit are required to travel to several
different storage locations to obtain all of their required equipment.
Consequently, they noted that if the police unit had to rapidly respond
to an emergency, such as a terrorist attack, the unit would not have
immediate access to all of its weapons and the response time would be
longer. At an Armed Forces Reserve Center in California, additional
secured storage containers were built to store controlled unit
equipment in the drill hall area. Subsequently, a Marine Corps Reserve
unit that shares this facility with the Army Reserve stopped drilling
in this space because it could no longer accommodate the 100 personnel
unit. While at a Marine Corps Reserve facility in Michigan, officials
told us that the overcrowded vehicle maintenance bay lacks adequate
space for its purpose as well as office space for maintaining required
maintenance records. At an Army National Guard facility in California,
the unit was forced to store crates of packed camouflage netting
outdoors due to a lack of covered storage space. When the crates became
wet, $50,000 worth of packed netting subsequently rotted.
It is difficult to quantify the effect of deteriorated facilities on
mission readiness, but we observed that deteriorated facilities could
create operating inefficiencies. This was also recognized in the Air
Force's Facility Investment Plan, which states that degraded facilities
create inefficiencies, workarounds, and higher costs to meet mission
readiness.[Footnote 21] It also noted that the higher costs created by
these inefficiencies have often been borne by military and civilian
personnel who are willing to devote extra time and effort to their
tasks and who endure disruptive work schedules and difficult working
conditions.
It is also difficult to quantify the states' role in funding portions
of facility maintenance on the overall condition of Army National Guard
facilities given the absence of a central data source for this
information. However, at some locations we visited, Army Guard
officials told us that certain types of facilities are better
maintained than others where the federal percentage of funding is
higher relative to others where it is less based on the cooperative
agreement.[Footnote 22] For example, Army National Guard officials told
us that usually their vehicle maintenance shops are consistently in
better shape than their readiness centers because maintenance shops can
receive up to 75 percent federal funding for repairs whereas readiness
centers can receive up to 50 percent federal funding for repairs. Also,
facilities for the Army National Guard training centers and areas are
usually in better shape than maintenance shops and readiness centers
because they are 100 percent federally supported for facility repairs.
However, National Guard Bureau officials told us it was difficult to
provide us with information on the states' share of facility funding
because, depending on the cooperative agreement between the state and
the federal government, cost data will vary from state to state and by
facility type. Also, as noted, data on state contributions are not
aggregated at a central location.
Reserve Components Are Unlikely to Meet All of DOD's Objectives for
Improving Facilities:
Similar to the situation we found with the active services, the reserve
components are unlikely to meet all of DOD's three objectives for
improving facilities: achieve 100 percent sustainment funding starting
in fiscal year 2004; reach a 67-year average recapitalization rate by
fiscal year 2007; and improve the condition of facilities so that
deficiencies have only a limited effect on mission performance by
fiscal year 2010. While we did not see any facilities that were not in
use, except those scheduled for demolition, the upcoming base
realignment and closure round is expected to evaluate the extent
reserve component facilities are utilized. At the same time, reserve
component officials are concerned that the components may not receive
significant funding increases for facility recapitalization activities
in the out-years because the reserve components are considered a low
priority based on prior experiences. They also said that the reserve
components do not compete well with their active counterparts and
facilities generally do not compete well with other DOD programs and
priorities when formulating budget requests.
Reserve Components Do Not Plan to Consistently Meet DOD's Objective to
Fully Fund Facility Sustainment:
None of the reserve components are projecting enough funds to
consistently meet DOD's objective to fully fund facility sustainment
requirements during fiscal years 2003 through 2009. To stop the further
deterioration of facilities, DOD issued budget planning guidance
instructing the services to fund their sustainment requirements at
100 percent starting in fiscal year 2004. According to DOD, fully
funding sustainment is the most cost-effective approach to managing
facilities because it provides the most performance over the longest
period of time for the least investment. However, average planned
sustainment funding from fiscal years 2003 through 2009 by the reserve
components ranges from 61 percent to 99 percent (see fig. 10).
Figure 10: Average Annual Sustainment Funding as a Percent of
Requirement by Reserve Component, Aggregate for Fiscal Years 2003
through 2009:
[See PDF for image]
[A] Marine Corps Reserve sustainment funding covers fiscal years 2004
through 2009. In fiscal year 2003, DOD used a new model to calculate
facilities sustainment requirements that DOD intended to be applied to
a large population of facilities. Instead, the model incorporated the
Marine Corps Reserve's smaller sustainment requirements in with its
active service's requirements for fiscal year 2003.
[End of figure]
As shown in figure 10, the Air Force Reserve plans to fund more of its
sustainment requirements than any of the other reserve components.
While it is also the only component expressing the intent to meet DOD's
objective in fiscal years 2004 and 2005, available data suggest it will
not reach that goal in the other out-years. The Air Force Reserve is
expecting to decrease its sustainment funding to 88 percent and 86
percent in fiscal years 2006 and 2007, respectively, then increase
funding to 91 percent in fiscal years 2008 and 2009. None of the other
reserve components, however, plan to meet DOD's fully fund sustainment
objective during fiscal years 2004 through 2009, as the following
examples show:
* The Army National Guard expects to fund its sustainment requirements
at 93 percent in fiscal year 2004, decrease funding to 74 percent in
fiscal year 2005, and then gradually increase funding to 94 percent by
fiscal year 2009.
* The Army Reserve plans to follow a funding pattern similar to the
Army Guard for future funding of its sustainment requirement. It plans
to fund at 93 percent in fiscal year 2004, decrease funding to 72
percent in fiscal year 2005, then increase funding to 96 percent of its
sustainment requirements by fiscal year 2007, and then stay at 96
percent for fiscal years 2008 and 2009.
* The Naval Reserve plans to fund its sustainment requirements at
89 percent in fiscal year 2004, then gradually decrease sustainment
funding each fiscal year until fiscal year 2007 when it expects to fund
its sustainment requirements at 69 percent. After which, it plans to
increase funding to 77 percent the next fiscal year and then decrease
funding to 76 percent for fiscal year 2009.
* The Marine Corps Reserve intends to fund its sustainment requirements
at 69 percent starting in fiscal year 2004, then decrease funding to
64 percent in fiscal year 2005, and then decrease funding again to
57 percent of its sustainment requirements in fiscal year 2007. In
fiscal years 2008 and 2009, it expects a slight increase in funding to
58 percent of sustainment requirements.
* The Air National Guard plans to fund sustainment at 81 and 82
percent, respectively, in fiscal years 2004 and 2005, then increase
funding to
91 percent of its sustainment requirement during fiscal years 2006 to
2008, and then increase funding slightly to 92 percent in fiscal year
2009.
Most Reserve Components Are Unlikely to Achieve a 67-Year Average
Recapitalization Rate:
Averaging the projected restoration and modernization funding during
fiscal years 2003 through 2009, four of the six reserve components will
not meet DOD's objective to achieve a 67-year average recapitalization
rate. Facilities must be replaced or extensively renovated or
modernized once they reach the end of their expected service life if
they are to continue to provide adequate performance. DOD estimates
that an average recapitalization rate of 67 years allows fully
sustained facilities to meet this requirement, and recapitalization
rates higher than 67 years means it will take longer to recapitalize
facilities. The recapitalization rate is based on funding to restore
and modernize facilities and is defined as the number of years it would
take to restore or replace facilities at a given level of investment.
Only the Marine Corps Reserve and the Air National Guard are planning
to reach the 67-year average recapitalization rate. Overall, the
average projected recapitalization rate by the reserve components
ranges from 21 years to 183 years during fiscal years 2003 through 2009
(see fig. 11).
Figure 11: Average Annual Recapitalization Rate by Reserve Component,
Aggregate for Fiscal Years 2003 through 2009:
[See PDF for image]
[End of figure]
During the period depicted above, each reserve component's average
recapitalization rate varies widely from year to year. For example,
the:
* Army National Guard is expecting to achieve a recapitalization year
rate ranging from 388 years in fiscal year 2004 to 101 years in fiscal
year 2009--short of DOD's objective in every year.
* Army Reserve is expecting to achieve a recapitalization year rate
ranging from 152 years in fiscal year 2004 to 41 years in fiscal year
2009--meeting DOD's objective in fiscal years 2008 and 2009.
* Naval Reserve is expecting to achieve a recapitalization year rate
ranging from 515 years in fiscal year 2007 to 59 years in fiscal year
2003--meeting DOD's objective only in fiscal year 2003.
* Marine Corps Reserve is expecting to achieve a recapitalization year
rate ranging from 895 years in fiscal year 2006 to 5 years in fiscal
year 2003--meeting DOD's objective in fiscal years 2003, 2004, 2007,
and 2008.
* Air National Guard is expecting to achieve a recapitalization year
rate ranging from 170 years in fiscal year 2004 to 31 years in fiscal
year 2008--meeting DOD's objective in fiscal years 2006 through 2009.
* Air Force Reserve is expecting to achieve a recapitalization year
rate ranging from 197 years in fiscal year 2003 to 50 years in fiscal
year 2006--meeting DOD's objective in fiscal years 2006 and 2007.
To achieve these recapitalization rates, all of the reserve components
call for rapid increases in restoration and modernization funding at
some point during fiscal years 2003 through 2009 (see fig. 12).
However, according to reserve component officials, they are concerned
that the components may not receive significant funding increases for
facility recapitalization activities in the out-years because the
reserve components are considered a low priority, based on past
experience. They also said the reserve components do not compete well
with the active services and facilities generally do not compete well
with other DOD programs and priorities during the budgeting process.
Further, reserve component officials told us that they doubt that
funding increases of the size indicated in figure 12 will occur given
the low funding levels in the past and the uncertainty of future
funding priorities.
Figure 12: Current and Projected Restoration and Modernization Funding
by Reserve Component, Fiscal Years 2003 through 2009:
[See PDF for image]
[End of figure]
Officials told us that, historically, budget plans for maintaining real
property have had more dollars programmed in the out-years than were
submitted in budget requests to Congress. As shown in figure 12, this
may be the case with respect to most reserve components expecting
significant funding increases to restore and modernize their
facilities. For example, in constant fiscal year 2003 dollars, the:
* Army National Guard is expecting a 283 percent funding increase from
$76 million to $291 million from fiscal year 2004 to fiscal year 2009,
* Army Reserve is anticipating a 268 percent funding increase from
$67 million to $247 million from fiscal year 2004 to fiscal year 2009,
* Naval Reserve is expecting a 532 percent funding increase from
$6 million to $40 million from fiscal year 2004 to fiscal year 2009,
* Air National Guard is expecting nearly a 200 percent funding increase
from $91 million to $272 million from fiscal year 2005 to fiscal year
2006 and a 422 percent funding increase from $62 million to $325
million from fiscal year 2004 to fiscal year 2009, and:
* Air Force Reserve is anticipating a 188 percent funding increase from
$31 million to $90 million from fiscal year 2004 to fiscal year 2006.
Fully Eliminating the Most Deteriorated Facilities by Fiscal Year 2010
Is Likely to Be a Challenge:
As with DOD's 67-year average recapitalization rate, eliminating the
most deteriorated reserve component facilities requires funding that
the components are unlikely to obtain. To improve the overall condition
of facilities, the reserve components estimate that it would cost $7.8
billion to achieve DOD's objective to concentrate funding to eliminate
C-3 and C-4 facility ratings by fiscal year 2010. This amount would be
enough to bring all facilities up to the minimal C-2 level or improve
the condition of facilities so that deficiencies have only a limited
effect on mission performance in DOD's rating system. However, as shown
in figure 12, collectively these funding increases remain unrealistic
when compared to prior funding levels, the disproportionate reliance on
high levels of funding in the out-years, and the need for funds for
other defense priorities. Further, officials of the Army National
Guard, the Army Reserve, the Air Force Reserve, and the Air National
Guard said that they expect to meet DOD's objective to eliminate
facilities rated C-3 and C-4 by 2010, but only if expected restoration
and modernization funding levels stay on target. However, they said the
expected out-year amounts are generally reduced when the out-years get
closer to the budget year because expected funds are likely to be
budgeted for other DOD program priorities. A Naval Reserve official
told us they are uncertain about funding increases because, starting in
October 2003, facility funds will be managed by its active counterpart
as part of a Navywide reorganization to streamline facility management.
The Marine Corps Reserve officials said that they do not expect to
eliminate their most deteriorated facilities by fiscal year 2010 but
plan to meet this DOD objective in fiscal year 2013.
Challenges Exist in Implementing Joint Construction Projects and Real
Property Exchanges:
The reserve components have made use of two approaches--joint
construction projects and real property exchanges--to achieve improved
facilities and potential cost savings; however, the reserve components
face challenges in implementing the approaches. The Office of the
Assistant Secretary of Defense for Reserve Affairs estimated that joint
construction projects could save up to 20 percent of the total cost of
two separate projects. However, reserve component officials told us
that a major challenge to implementing joint construction projects
involved achieving effective coordination among the components to
simultaneously program the projects in their respective budget
requests. Concerning real property exchanges, Congress has provided the
reserve components with authority to use real property exchanges, but
the overall program direction is limited.
Challenges in Implementing Joint Construction Projects:
The reserve components stated that the funding for joint construction
projects--where two or more components share space requirements and
build one facility--is difficult to coordinate. Although Congress, the
Assistant Secretary of Defense for Reserve Affairs, and the six reserve
commands have all acknowledged the economic advantages to constructing
more facilities jointly and have expressed a desire to achieve more
joint construction projects, few projects have actually resulted. For
example, reserve components' data show that a little more than 1
percent of the 41,266 reserve facilities are considered joint
facilities.[Footnote 23] Reserve officials said that joint construction
projects require the reserve components to simultaneously program the
projects in their budget requests, but that the various service
component priorities made this difficult to accomplish.
The reserve components are required by 10 U.S.C. § 18234 to pursue the
joint use of facilities to the greatest extent practicable. This
statutory requirement was implemented by establishing a Joint Service
Reserve Component Facility Board in every state.[Footnote 24] These
boards are expected to meet at least once a year to validate future
military construction projects and recommend specific projects for
joint construction. According to the Office of the Assistant Secretary
of Defense for Reserve Affairs, these boards did a good job of
identifying joint projects. Of 714 projects, 101 were identified by the
boards as having joint construction potential in 2002.
Joint construction of military facilities offers opportunities to
achieve cost savings and efficiencies through sharing of common space-
-as much as
20 percent savings according to an estimate provided by the Office of
the Assistant Secretary of Defense for Reserve Affairs. These dollar
savings would be achieved as a result of reduced construction
requirements as well as reduced costs to design and construct a
project. Furthermore, the savings typically continue after a joint
project is completed due to reduced requirements to sustain joint
common areas, such as administrative space, classrooms, dining
facilities, restrooms, medical examination rooms, drill halls, and
assembly areas. Joint construction among reserve components also
increases a facility's utilization because they can alternate drill
weekends and use a single facility more often than two separate
buildings. For example:
* A joint Armed Forces Reserve Center at Gray, Tennessee, which
combined construction projects for the Army Reserve, the Army National
Guard, and the Marine Corps Reserve into a single facility project, as
reported by DOD, saved millions of dollars by not constructing three
separate facilities.[Footnote 25]
* At Sand Springs, Oklahoma, the Army National Guard and the Army
Reserve estimated that if they constructed their facilities separately,
it would cost almost $21 million. However, by jointly constructing a
single facility, they expect the cost to be about $13.4 million,
resulting in an anticipated savings of $7.3 million, or 35 percent.
This savings only included lower construction and contract design and
planning costs--not anticipated savings from reduced sustainment costs.
Officials at all of the reserve components said that the principal
challenge to implementing joint construction projects was the lack of
funding coordination between the components. These officials stated
that it was difficult for the components to simultaneously program the
joint projects in their respective budget requests because of different
service component priorities. For example, most joint construction
projects identified by the Joint Service Reserve Component Facility
Boards do not have funds programmed because, according to reserve
component officials, the reserve components' projects do not compete
well when they are assessed along with the active services'
construction projects during the budget process. As a consequence,
reserve projects tend to be lower on the active services' list of
priorities for military construction funds, making the simultaneous
funding from two or more reserve components difficult to achieve. For
example, several joint construction projects, such as those in Augusta,
Georgia, Mobile, Alabama, and Kansas City, Kansas, were not initiated
because the different reserve components could not coordinate the
funding. Often, while one reserve component might be able to program
the funds it needs for a joint construction project, the other
component involved cannot get funds programmed into its budget, or the
funds are programmed so far into the future that the project is
unlikely to be completed.
Not only is funding for joint construction projects difficult to
coordinate between different reserve components, such as the Naval
Reserve and the Air Force Reserve, it is also difficult to coordinate
the funding between two components within the same service, such as the
Army National Guard and the Army Reserve. For example, at Moreno
Valley, California, the Army National Guard and the Army Reserve wanted
to construct a joint facility reviewed by the California Joint Service
Reserve Component Facility Board, but the Army National Guard obtained
funds for the project in fiscal year 2003 whereas the Army Reserve
planned to request funds in fiscal year 2007. The Army National Guard
will be proceeding with its construction plans unilaterally because it
needs the facility now to activate a new unit. The Army Reserve is
negotiating with the Naval Reserve and the Marine Corps Reserve about
jointly constructing a facility at Moreno Valley.
In April 2001, the Office of the Secretary of Defense established a
separate budget structure for funding joint construction projects, but
it has not yet programmed any funds for this purpose.[Footnote 26]
According to DOD officials, the services are reluctant to fund joint
projects using the newly created budget structure because of concerns
that their budgets will be reduced elsewhere.
Challenges in Implementing Real Property Exchanges:
Congress has provided the reserve components with authority to
participate in real property exchanges, but DOD has provided little
overall direction for the real property exchange program. The Army
Reserve is using its real property exchange authority the most and is
planning on using this authority to recapitalize 10 percent of its
facilities involving real property valued at hundreds of millions of
dollars. Having the potential to avoid military construction costs, the
other reserve components are just now exploring its use. However, a
process to collect and share the Army Reserve's lessons learned with
other reserve components does not exist. Further, DOD does not have a
method to ensure that real property needed by other DOD components or
for future missions is not being given up, nor does it have assurances
that the reserve components are seeking its approval for exchanges
valued at more than $1 million, as called for in DOD
instruction.[Footnote 27]
Congress Has Provided Authority for Real Property Exchanges, but DOD
Has Not Provided Overall Direction:
Congress has provided the reserve components with authority to use real
property exchanges as contained in 10 U.S.C. § 18233; to date, only the
Army Reserve is making use of the authority. Other reserve components
have indicated they are only now exploring using it. At the same time,
the Office of the Secretary of Defense has not provided overall
direction for the real property exchange program.[Footnote 28]
Specifically, DOD and reserve component officials could not direct us
to any comprehensive guidance on real property exchanges except for
guidance prepared by the Army:
Reserve.[Footnote 29] DOD officials told us they delegated authority to
acquire and manage facilities to the service secretaries and the
reserve components.[Footnote 30] An official in the Office of the
Secretary of Defense said DOD does not always provide written direction
for all congressional authorities the military departments use and is
not planning on developing policy for exchanges conducted under 10
U.S.C. § 18233 because of concerns that DOD might be micromanaging the
reserve components. On the other hand, we believe that some oversight
might be beneficial in ensuring lessons learned are captured and shared
across the reserve components.
Army Reserve Plans to Increase Its Use of Exchange Authority:
Using the exchange authority, the Army Reserve plans to identify
80 real property exchanges in order to recapitalize 10 percent of its
facilities over the next 8 years. The Army Reserve has already
identified about $500 million in potential exchange projects and has
signed exchange agreements for four projects, as of February 2003. In
contrast, officials from the other reserve components said they were
not aware of this congressional authority and are only now exploring
its use.
At Parks Reserve Forces Training Area, California, the Army Reserve
signed an exchange agreement with a private land developer in October
2002 for about 11 acres at the training area in exchange for
construction of a fire station. The developer wanted the land to
construct an access road into its new housing development. In exchange
for the property, appraised at $1.8 million, the Army Reserve will
receive a new fire station valued at $3.9 million. Figure 13 shows the
fire station scheduled for replacement and an architectural drawing of
the proposed new fire station.
Figure 13: Current and Proposed Fire Station at Parks Reserve Forces
Training Area, California, as of November 2002:
[See PDF for image]
[End of figure]
A description of the three other Army Reserve projects follows:
* At East Windsor, Connecticut, the Army Reserve exchanged about
6 acres of its property with a local automobile wholesaler that wanted
the land to facilitate its operations. In exchange for the property,
the Reserve received almost 8 acres of land contiguous to the Army
Reserve Center as well as a maintenance bay and paving, landscaping,
and fencing improvements. The Reserve exchanged land appraised at
$270,000 for other land and improvements valued at $450,000. The deed
exchange occurred in January 2003.
* At Fort Snelling, Minnesota, the Army Reserve exchanged about 7 acres
of its property with the Minnesota Department of Transportation and the
Metropolitan Council for constructing a highway interchange and
expanding a light rail train system. In exchange for the property
appraised at $2 million, the Army Reserve received a 38,000-square foot
addition to its permanent facility worth about $5.1 million. The bill
of sale occurred in November 2002.
* Also at Fort Snelling, the Army Reserve exchanged about 11 acres of
its property with the Metropolitan Airport Commission in order to
expand the runway at the Minneapolis-St. Paul International Airport. In
exchange for the property appraised at $1.4 million, the Reserve will
receive a newly constructed maintenance facility in St. Joseph,
Minnesota, valued at $1.7 million. The exchange agreement was signed
August 2002.
Lessons Learned Not Being Captured:
While the Army Reserve is gaining experience in implementing the
authority to conduct real property exchanges, it has not established a
process for collecting and sharing its lessons learned with other
reserve components. One such lesson regards the appraisal value of real
property being considered in an exchange. The Army Reserve's policy
requires it to obtain no less than the fair market value for the real
property to be exchanged. In obtaining fair market value, there are
multiple methods to appraise real property, and appraisals can
fluctuate greatly depending on the approach used by an appraiser. For
example, the exchange at Parks Reserve Forces Training Area,
California, included land that was initially valued at $75,500 by the
developer based on the land's condition at that time, which the
appraiser considered to be agricultural. However, the appraised value
significantly underestimated the fair market value because the
appraiser did not consider the potential best use of the property by
the developer and the value and use of land nearby. The Army Corps of
Engineers reappraised the land, taking into consideration these
factors. This new appraisal puts the value of the land at $1.8 million.
In addition, the Army Reserve expects to gain additional experience as
it begins to actively solicit public or private interest in exchange
projects. Previously, the Army Reserve would only start an exchange
project when a private or public entity approached it with an offer to
exchange real property. However, officials told us that they are now
taking a more proactive approach by advertising the availability of
property and obtaining best financial offers for consideration. For
example, the Army Reserve is considering a process to request price
proposals from public or private entities to exchange 187 acres at
Parks Reserve Training Area, in return for renovating about 40
buildings, also at Parks. The value of this land was estimated to be at
$200 million to $300 million at the time of our review.
Navy Reserve officials said they will need to look to the Army Reserve
as a guide as the Navy Reserve plans to implement the exchange program
using the exchange authority and considers whether to implement a
competitive approach to its exchanges. The Navy Reserve has begun to
assess the potential for exchanges at its 181 sites in anticipation
that it may identify
20 to 30 real property exchange projects in the near future. In
addition, these officials said that the Navy Reserve is interested in
the competitive exchange approach and will be looking for lessons
learned from the Army Reserve. Officials of the other four reserve
components said they do not plan to use this authority for their
exchange projects.
No Method to Ensure That Needed Property Is Not Being Exchanged by the
Reserve Components:
According to officials of the Office of the Secretary of Defense
Installations and Environment, the Office of the Assistant Secretary of
Defense for Reserve Affairs, the Army, and the Army Reserve, there is
no method to ensure that real property needed by other DOD components
or for future missions is not being exchanged by the reserve
components. DOD officials told us that because the department has
delegated authority to manage facilities to the service secretaries,
they do not oversee exchanges by the reserve components. As such, the
Department of the Army provides oversight for Army Reserve real
property exchanges by determining that each exchange is within the
proper authority, approving each exchange at the concept stage and
again at the execution stage, and conducting the required notification
to Congress. However, neither the Army nor the Army Reserve determines
if the land to be exchanged is needed (1) by the other reserve
components or the active services or (2) for future missions. Several
reserve component officials stated they believe that the Joint Service
Reserve Component Facility Boards, as discussed earlier in this report,
could serve in this role.
Although DOD requires approval of high value exchanges involving
property valued at more than $1 million or 1,000 acres, the Army
Reserve has interpreted DOD's guidance to only apply to an exchange
where the difference in the value of the property exchanged exceeds $1
million.[Footnote 31] As such, Army Reserve officials said that they
notify DOD of an exchange only if the value of the real property
received exceeds the value of the real property exchanged by $1
million. In practice, the Army Reserve has not been seeking DOD's
approval of its exchanges. For example, the Army Reserve would notify
DOD of the exchange if land valued at $50 million was exchanged for
recapitalized facilities valued at more than $51 million because the
net value was more than $1 million. The Army Reserve would not, on the
other hand, notify DOD if the exchanged land valued at
$50 million was exchanged for recapitalized facilities also valued at
$50 million because the net value was zero. As a result, DOD is not
aware of the Army Reserve's high value exchanges, which can involve
many millions of dollars in real property.
Conclusions:
Despite recent efforts to have the military services increase their
sustainment funding, DOD did not make sustaining and improving reserve
component facilities a funding priority prior to fiscal year 2004
because of other defense programs and emerging requirements. While DOD
has issued guidance emphasizing the need to improve funding of
sustainment and recapitalization of facilities, funding trends and
priorities create an uncertain picture regarding the extent to which
facility improvements and achievement of DOD's objectives are likely to
be realized. Continuation of this trend will make it difficult for
reserve components to meet all of DOD's objectives for sustaining and
improving facilities, which may lead to further deterioration of
facilities and increase the use of workarounds to meet mission
requirements. However, the upcoming base realignment and closure round,
which is expected to evaluate the extent reserve component facilities
are utilized, could affect the reserve components' expected need for
facilities and their plans to met DOD's objectives.
Even though the reserve components are not likely to consistently meet
DOD's objectives, they have initiated joint construction projects to
achieve potential cost savings and have participated in real property
exchanges to replace older buildings--a practice that can serve to
better leverage the use of available resources than otherwise would
have occurred. However, without better funding coordination for joint
construction projects or utilization of DOD's newly established budget
structure for joint use military construction projects, many projects
that have the potential to generate future cost savings might not be
initiated. In addition, the reserve components can also participate in
real property exchanges to replace older facilities. Without procedures
in place for cross service coordination as the number and size of
projects grow, the reserve components risk exchanging real property
that is needed by other DOD components or for future missions. Although
DOD's guidance requires approval of exchanges where the real property
is valued at more than $1 million, the Army Reserve only notifies DOD
of exchanges where the net value exceeds $1 million. Thus, DOD is not
always aware nor approves of exchanges involving high value property.
While the Army Reserve is expanding its program under the authority to
conduct real property exchanges and is using competitive offers to
exchange property, there is no method to capture lessons learned and to
share them with the other reserve components. As a result, the other
reserve components may incur unnecessary costs when they initiate
exchanges without the benefit of the Army Reserve's experience.
Recommendations for Executive Action:
We recommend that the Secretary of Defense direct the secretaries of
the military departments, in consultation with their respective reserve
components, to periodically review and reevaluate the priorities given
to sustaining and improving the condition of reserve components'
facilities if the reserve components are expected to meet DOD's
objectives for improving facilities. In addition, we recommend that the
Secretary of Defense direct the Deputy Under Secretary of Defense for
Installations and Environment, in consultation with the reserve
components and the active services, to:
* facilitate the coordination among the reserve components and their
service counterparts for programming identified military joint
construction projects in their future budgets;
* examine ways to employ the budget structure DOD established for
funding high priority joint construction projects;
* establish a method to ensure that real property to be exchanged is
not needed by the other reserve components or the active services or
for future missions; and:
* clarify DOD's guidance requiring approval of exchanges when the real
property is valued at more than $1 million.
Finally, we recommend that the Secretary of Defense direct the Office
of the Assistant Secretary of Defense for Reserve Affairs to monitor
the Army Reserve's experience with implementing the authority to
conduct real property exchanges and assist it in capturing lessons
learned for the benefit of other reserve components, especially as the
Army Reserve expands its use of a more competitive process.
Matter for Congressional Consideration:
To further encourage the use and funding of joint construction
projects, Congress may want to consider designating a portion of its
military construction appropriations for DOD's newly established budget
structure to fund joint use military construction projects.
Agency Comments and Our Evaluation:
In commenting on a draft of this report, the Assistant Secretary of
Defense for Reserve Affairs concurred with our recommendations and
indicated that actions were underway or planned to deal with our
recommendations. In commenting on our recommendation for the services
to review and reevaluate the priorities to sustain and improve the
condition of reserve facilities, DOD stated it has implemented our
recommendation and has directed the services to fund sustainment at 100
percent in fiscal year 2006 and achieve a 67-year recapitalization rate
in fiscal year 2008. However, as we pointed out in the report,
achieving these goals call for rapid increases in restoration and
modernization funding that are unlikely when compared to prior funding
trends and with the need to fund other defense priorities and programs.
Similarly, the Assistant Secretary of Defense for Reserve Affairs noted
that a key component of the budget process is setting priorities and
accepting risks in certain areas and that DOD has accepted various
infrastructure risks during the budget process. He also acknowledged
that reserve components have more requirements than requested funds and
that they do not expect to meet DOD's objective of a 67-year
recapitalization rate, even with increases in obligations and
congressional add-ons. Accordingly, we believe that this issue requires
continued reevaluation and have modified this recommendation to reflect
the need to periodically reassess the priorities given to sustaining
and improving the condition of reserve components' facilities. DOD's
comments are included in appendix II of this report.
:
We are sending copies of this report to the Secretaries of Defense, the
Army, the Navy, and the Air Force; the Commandant of the Marine Corps;
and the Director, Office of Management and Budget. We will also make
copies available to others upon request. In addition, the report is
available at no charge on GAO's Web site at www.gao.gov.
Please contact me on (202) 512-8412 if you or your staff have any
questions regarding this report. Key contributors to this report are
listed in
appendix III.
[See PDF for image]
[End of figure]
Barry W. Holman, Director
Defense Capabilities and Management:
Signed by Barry W. Holman:
List of Congressional Committees:
The Honorable John Warner
Chairman
The Honorable Carl Levin
Ranking Minority Member
Committee on Armed Services
United States Senate:
The Honorable Ted Stevens
Chairman
The Honorable Daniel K. Inouye
Ranking Minority Member
Subcommittee on Defense
Committee on Appropriations
United States Senate:
The Honorable Kay Bailey Hutchison
Chairman
The Honorable Dianne Feinstein
Ranking Minority Member
Subcommittee on Military Construction
Committee on Appropriations
United States Senate:
The Honorable Duncan Hunter
Chairman
The Honorable Ike Skelton
Ranking Minority Member
Committee on Armed Services
House of Representatives:
The Honorable Jerry Lewis
Chairman
The Honorable John P. Murtha
Ranking Minority Member
Subcommittee on Defense
Committee on Appropriations
House of Representatives:
The Honorable Joe Knollenberg
Chairman
The Honorable Chet Edwards
Ranking Minority Member
Subcommittee on Military Construction
Committee on Appropriations
House of Representatives:
[End of section]
Appendixes:
Appendix I: Scope and Methodology:
We prepared this report under our basic legislative responsibilities as
authorized by 31 U.S.C. § 717. We performed our work at, and met with
officials from, the Office of the Assistant Secretary of Defense for
Reserve Affairs; the Army National Guard; the Air National Guard; and
the headquarters of the Army Reserve Command, Naval Reserve Forces
Command, Marine Forces Reserve, and Air Force Reserve Command. We also
visited 20 Army National Guard, 11 Army Reserve, 9 Naval Reserve,
7 Marine Corps Reserve, 5 Air National Guard, and 5 Air Force Reserve
sites, as shown in table 3. During our visits, we toured various
facilities to observe their physical condition. We discussed funding
trends, systems for assessing facility conditions, and plans for
improving facilities to include the funding for joint construction
projects and the participation in real property exchanges. Our review
covered only those facilities funded by operation and maintenance and
military construction funds and not by other sources, such as revolving
and management funds, military family housing and overseas facilities
funds, and defense health program funds for hospitals and medical
clinics.
Table 3: Listing of Various Reserve Component Locations GAO Visited:
Reserve component: Army National Guard; Facility or installation: Army
National Guard; Location: Arlington, Virginia.
Facility or installation: National Guard Training Center at Fort
Indiantown Gap; Location: Annville, Pennsylvania.
Facility or installation: Army National Guard Maneuver Training Center
at Fort Pickett; Location: Blackstone, Virginia.
Facility or installation: Harrisburg Military Post; Location:
Harrisburg, Pennsylvania.
Facility or installation: Readiness Center; Location: Detroit,
Michigan.
Facility or installation: Readiness Center; Location: Grand
Prairie, Texas.
Facility or installation: Readiness Center; Location: Concord,
California.
Facility or installation: Readiness Center; Location: Hershey,
Pennsylvania.
Facility or installation: Readiness Center; Location: Lebanon,
Pennsylvania.
Facility or installation: Readiness Center; Location: Moreno
Valley, California.
Facility or installation: Readiness Center; Location: Norfolk,
Virginia.
Facility or installation: Readiness Center; Location:
Pittsburg, California.
Facility or installation: Readiness Center; Location:
Portsmouth, Virginia.
Facility or installation: Readiness Center; Location:
Richmond, California.
Facility or installation: Readiness Center; Location: Suffolk,
Virginia.
Facility or installation: Readiness Center; Location: Taylor,
Michigan.
Facility or installation: Readiness Center; Location: Vallejo,
California.
Facility or installation: Readiness Center; Location: Virginia
Beach, Virginia.
Facility or installation: Readiness Center at Cobb Park;
Location: Fort Worth, Texas.
Facility or installation: Readiness Center at Sandage;
Location: Fort Worth, Texas.
Facility or installation: Readiness Center at Shoreview;
Location: Fort Worth, Texas.
Reserve component: Army Reserve; Facility or installation: Army Reserve
Command; Location: Atlanta, Georgia.
Facility or installation: Armed Forces Reserve Center;
Location: Concord, California.
Facility or installation: Armed Forces Reserve Center;
Location: Southfield, Michigan.
Facility or installation: Armed Forces Reserve Center;
Location: Harrisburg, Pennsylvania.
Facility or installation: Reserve Center; Location: Moreno
Valley, California.
Facility or installation: Reserve Center; Location: Grand
Prairie, Texas.
Facility or installation: Reserve Center at East Point;
Location: Atlanta, Georgia.
Facility or installation: Reserve Center at Forest Park;
Location: Atlanta, Georgia.
Facility or installation: Reserve Center at Fort Indiantown Gap;
[Empty]; Location: Annville, Pennsylvania.
Facility or installation: Reserve Center at Fort Pickett;
Location: Blackstone, Virginia.
Facility or installation: Army Reserve at Selfridge Air National Guard
Base; Location: Mount Clemens, Michigan.
Facility or installation: Parks Reserve Forces Training Area;
Location: Dublin, California.
Reserve component: Naval Reserve; Facility or installation: Naval
Reserve Forces Command; Location: New Orleans, Louisiana.
Facility or installation: Naval Air Reserve Activity at Selfridge Air
National Guard Base; Location: Mount Clemens, Michigan.
Facility or installation: Naval Air Station Joint Reserve Base;
[Empty]; Location: Fort Worth, Texas.
Facility or installation: Naval Air Station Joint Reserve Base;
[Empty]; Location: New Orleans, Louisiana.
Facility or installation: Naval and Marine Corps Reserve Center;
[Empty]; Location: Alameda, California.
Facility or installation: Naval and Marine Corps Reserve Center;
[Empty]; Location: Harrisburg, Pennsylvania.
Facility or installation: Naval and Marine Corps Reserve Center;
[Empty]; Location: Moreno Valley, California.
Facility or installation: Naval Reserve Center; Location:
Southfield, Michigan.
Facility or installation: Naval Reserve Center Detroit at Selfridge Air
National Guard Base; Location: Mount Clemens, Michigan.
Facility or installation: Naval Support Activity; Location:
New Orleans, Louisiana.
Reserve component: Marine Corps Reserve; Facility or installation:
Marine Forces Reserve; Location: New Orleans, Louisiana.
Facility or installation: Armed Forces Reserve Center;
Location: Concord, California.
Facility or installation: Armed Forces Reserve Center;
Location: Grand Prairie, Texas.
Facility or installation: Marine Corps Reserve Center;
Location: Detroit, Michigan.
Facility or installation: Marine Corps Reserve Center;
Location: Newport News, Virginia.
Facility or installation: Marine Corps Reserve Center at Naval Air
Station Joint Reserve Base; Location: Fort Worth, Texas.
Facility or installation: Marine Corps Reserve Center at Selfridge Air
National Guard Base; Location: Mount Clemens, Michigan.
Facility or installation: Naval and Marine Corps Reserve Center;
[Empty]; Location: Harrisburg, Pennsylvania.
Reserve component: Air National Guard; Facility or installation: Air
National Guard at Andrews Air Force Base; Location: Camp
Springs, Maryland.
Facility or installation: Air National Guard at Fort Indiantown Gap;
[Empty]; Location: Annville, Pennsylvania.
Facility or installation: Air National Guard at Harrisburg
International Airport; Location: Harrisburg, Pennsylvania.
Facility or installation: Air National Guard at March Air Reserve Base;
[Empty]; Location: Riverside, California.
Facility or installation: Air National Guard at Naval Air Station Joint
Reserve Base; Location: Fort Worth, Texas.
Facility or installation: Selfridge Air National Guard Base;
Location: Mount Clemens, Michigan.
Reserve component: Air Force Reserve; Facility or installation: Air
Force Reserve Command at Robins Air Force Base; Location:
Macon, Georgia.
Facility or installation: Air Force Reserve at Naval Air Station Joint
Reserve Base; Location: Fort Worth, Texas.
Facility or installation: Air Force Reserve at Selfridge Air National
Guard Base; Location: Mount Clemens, Michigan.
Facility or installation: Dobbins Air Reserve Base; Location:
Marietta, Georgia.
Facility or installation: Grissom Air Reserve Base; Location:
Peru, Indiana.
Facility or installation: March Air Reserve Base; Location:
Riverside, California.
Source: GAO.
[End of table]
To examine the reserve components' funding trends for facility
maintenance and construction since fiscal year 1998 and the condition
of the components' facilities over this same time period, we analyzed
the reserve components' budgets for operation and maintenance funding
and military construction funding and the military construction
backlogs and visited 57 reserve locations. For facility maintenance, we
analyzed budget data from the reserve components' sustainment,
restoration, and modernization subactivity group in their operation and
maintenance appropriations. We compared the amounts that the reserve
components requested in their budget submissions with the amounts that
Congress designated in conference reports for the Department of Defense
(DOD) appropriation acts and with the amounts the reserve components
reported as obligated in their budget submissions for fiscal years 1998
through 2002. We also looked at the reserve components' military
construction budget requests and congressional designations for fiscal
years 1998 through 2003. For military construction, we compared the
amounts that the reserve components requested in budget submissions
with amounts that Congress designated in its conference reports for DOD
military construction appropriation acts. We discussed amount
differences for operation and maintenance and military construction
with DOD and reserve component officials to obtain a better
understanding about overall fund movements. We did not review the
obligated amounts for military construction because such funds are
available for obligation over a 5-year period and cannot easily be tied
back to the year requested.
To determine the impact of historical and current funding on the
condition of reserve facilities, the factors that have led to the
deterioration of facility conditions, and the effect of deteriorated
facilities, we met with officials from the Army National Guard; U.S.
Army Reserve Command; Commander, Naval Reserve Forces; Marine Forces
Reserve Command; Air Force Reserve Command; and the Air National Guard.
To view the condition of facilities firsthand, we visited 57 reserve
locations across the country. Given the large number of reserve
component facilities to select from, we relied on suggestions from
reserve component officials. We visited facilities that ranged from
good to poor condition for the six reserve components throughout the
United States. During our visits, we met with the facilities' occupants
and took pictures to document facility conditions. The conditions we
observed at these 57 locations might not be representative of
conditions at other reserve facilities. We did not examine the
individual states' required share of the costs for major repairs to
Army National Guard facilities. However, we obtained an understanding
of how state funding differs according to the type of facility needing
repair, such as a readiness center, a maintenance shop, or a training
facility. Officials with the National Guard Bureau told us that
specific data on facility maintenance contributions were retained by
the states and were not readily available. This was not a limitation
with the Air National Guard because many of its facilities are located
at airports, which are federally leased property. Thus, states do not
contribute to the cost of maintaining these facilities.
To assess the likelihood that the reserve components will meet DOD's
three objectives for improving facilities, we examined the reserve
components' current and projected funding plans for sustaining,
recapitalizing, restoring, and modernizing facilities to determine
whether these plans would allow them to meet DOD's objectives by
specified deadlines. We did not validate the reserve components'
reported requirements for the sustainment and recapitalization of their
facilities.
To identify challenges in implementing two potential cost saving
initiatives--joint construction projects and real property exchanges--
we met with officials at the reserve components' headquarters and
discussed the benefits and challenges of the initiatives. To determine
the challenges faced with implementing joint construction projects, we
met with officials at the Office of the Assistant Secretary of Defense
for Reserve Affairs and the headquarters of the six reserve components
and contacted the Office of the Under Secretary of Defense
(Comptroller). We examined the funding provisions available to
implement joint construction projects and discussed with officials the
challenges in implementing these funding provisions for joint
construction projects. To assess the reserve components' participation
in real property exchanges, we reviewed
10 U.S.C. § 18233 authorizing such exchanges and related guidance and
regulations associated with these exchanges. We met with officials from
DOD's Office of the Deputy Under Secretary of Defense for Installations
and Environment, the Office of the Assistant Secretary of Defense for
Reserve Affairs, the Army's offices of the Assistant Secretary for
Installations and Environment and the Army Reserve, and the Army Corps
of Engineers to understand real property exchanges.
In performing this review, we used the same accounting records and
financial reports DOD and reserve components use to manage and justify
budgets for their facilities. We did not independently determine the
reliability of the reported financial information. However, in our
recent audit of the federal government's financial statements,
including DOD's and the reserve components' statements, we questioned
the reliability of reported financial information because not all
obligations and expenditures are recorded to specific financial
accounts.[Footnote 32] In addition, we did not validate DOD's reported
requirements for the sustainment of its facilities, nor did we validate
its facility inventory database.
We conducted our work from May 2002 through February 2003 in accordance
with generally accepted government auditing standards.
[End of section]
Appendix II: Comments from the Department of Defense:
[See PDF for image]
[End of figure]
[See PDF for image]
[End of figure]
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[End of figure]
[End of section]
Appendix III GAO Contact and Staff Acknowledgments:
GAO Contact:
ASSISTANT SECRETARY OF DEFENSE 1500 DEFENSE PENTAGON WASHINGTON, DC
20301-1500:
RESERVE AFFAIRS:
22 APR 2003:
Mr. Barry W. Holman:
Director, Defense Capabilities and Management U.S. General Accounting
Office:
441 G Street, N.W. Washington, D.C. 20548:
Mr. Holman:
This is the Department of Defense (DoD) response to the GAO draft
report, GAO-03-516, "DEFENSE INFRASTRUCTURE: Changes in Funding
Priorities and Management Processes Needed to Improve Condition and
Reduce the Costs of Guard and Reserve Facilities," dated March 21, 2003
(GAO Code 350199).
A key component of the budget process is setting priorities and
accepting risk in certain areas. Department of Defense has accepted
various infrastructure risks as reflected in the Budget Process and
acknowledged more validated requirements than requested. Yet, even
with:
increases in obligations and Congressional adds, the Reserve components
do not meet the new Defense Department's objectives of a 67-year
recapitalization rate referenced in this GAO Report. In addition, the
report emphasizes the need to assess and validate the condition of
facilities, which the Department has focused on as one of the major
issues for accountability of facility sustainment, restoration, and
modernization. This is expected to be accomplished by the September
2004 implementation date.
The report identifies two potential cost saving initiatives the Reserve
components are pursuing as ways to reduce Military Construction costs:
1) joint construction projects; and 2) real property exchanges. Joint
construction is the planning, design, and construction of one facility
that meets the requirements of two or more components, regardless of
Service, and eliminates construction of another facility. The real
property exchange identifies valuable DoD property desired by the
community that can be exchanged for suitable property and a new
replacement facility for the affected Reserve component. We will
continue to develop and improve these processes to better identify,
coordinate, and fund joint construction projects as well as to ensure
that real property exchanges are completed in accordance with DoD
policy.
I concur with the recommendations as stated, and will work to resolve
other issues addressed within this report.
Sincerely,
T.F. Hall:
Signed by T.F. Hall
GAO CODE 350199/GAO-03-516:
"DEFEENSE INFRASTRUCTURE: CHANGES IN FUNDING PRIORITIES AND MANAGEMENT
PROCESSES NEEDED TO IMPROVE CONDITION AND REDUCE THE COSTS OF GUARD AND
RESERVE FACILITIES":
DEPARTMENT OF DEFENSE COMMENTS TO THE RECOMMENDATIONS:
RECOMMENDATION 1: The GAO recommended that the Secretary of Defense
direct The Secretaries of the Military Departments, in consultation
with their respective Reserve components, to review and reevaluate the
priorities given to sustaining and improving the condition of the
Reserve components' facilities if the Reserve Components are expected
to meet DoD's objectives for improving facilities. (Page 48-49/Draft
Report).
DoD RESPONSE: Concur.
DoD has already implemented this recommendation. In January 2003, we
completed the FY04 program-budget review. OSD directed the Services and
Defense Agencies to provide adequate funding to achieve a sustainment
rate of 93% in FY04, with a plan to achieve 100% sustainment in FY06.
In addition, the Department plans on funding that achieves a 67-year
recapitalization rate DoD-wide by FY08. To achieve 67-year
recapitalization for the Reserve components, the Department has
programmed significant funding in the out years to buy back their
facility deficit and to improve the quality of their existing
facilities.
RECOMMENDATION 2: The GAO recommended that the Secretary of Defense
direct the Deputy Under Secretary of Defense for Installations and
Environment, in consultation with the Reserve components and the active
Services to facilitate the coordination among the Reserve components
and their Service counterparts for programming identified military
joint construction projects in their future budgets. (Page 49/Draft
Report).
DoD RESPONSE: Concur.
RECOMMENDATION 3: The GAO recommended that the Secretary of Defense
direct the Deputy Under Secretary of Defense for Installations and
Environment, in consultation with the Reserve components and the active
Services to examine ways to employ the budget structure DoD established
for funding high priority joint construction projects. (Page 49/Draft
Report).
DoD RESPONSE: Concur.
RECOMMENDATION 4: The GAO recommended that the Secretary of Defense
direct the Deputy Under Secretary of Defense for Installations and
Environment, in consultation with the Reserve components and the active
Services to establish a method to ensure that real property to be
exchanged is not needed by the other reserve components or the active
Services or for future missions. (Page 49/Draft Report).
DoD RESPONSE: Concur.
RECOMMENDATION 5: The GAO recommended that the Secretary of Defense
direct the Deputy Under Secretary of Defense for Installations and
Environment, in consultation with the Reserve Components and the active
Services to clarify DoD's guidance requiring approval of exchanges when
the real property is valued at more than $1 million.
DoD RESPONSE: Concur.
Both the DoD Instruction 1225.8 and SECDEF new policy, provides for the
"purchase or annual lease price exceeds 1 million dollars." SECDEF new
policy guidance, "Land Acquisition and Leasing of Office Space in the
United States" dated Nov 17, 2002 that provides the review process on
real estate acquisition, concerning real property that exceed $1M and/
or 1,000 acres.
RECOMMENDATION 6: The GAO recommended that the Secretary of Defense
direct the Office of the Assistant Secretary of Defense for Reserve
Affairs to monitor the Army Reserve's experience with implementing the
authority to conduct real property exchanges and assist it in capturing
lessons learned for the benefit of other Reserve Components, especially
as the Army Reserve expands its use of a more competitive process.
(Page 49/Draft Report).
DoD RESPONSE: Concur:
DASD/RA (Materiel & Facilities) will work with the Army Reserve to
capture lessons learned. A policy memo was issued on April 7, 2003,
"Reserve Components Military Construction Reprogramming and Real
Property Exchanges Requests" in addressing this issue. The memo
highlights the ASD/RA responsibility of overall supervision as outlined
in DoD Directive 5125.1 and requires the Services to coordinate such
actions prior to official notification.
Mark A. Little (202) 512-4673:
Acknowledgments:
In addition to the individual named above, Janine Cantin,
George Duncan, Oscar Mardis, Malvern Saavedra, Laura Talbott,
and R.K. Wild made key contributions to this report.
(350199):
:
FOOTNOTES
[1] Recapitalization includes major renovation or reconstruction
activities (including facility replacements) needed to keep facilities
modern and efficient in an environment of changing standards and
missions.
[2] As authorized by Congress in 2001, DOD intends to reduce its
inventory of facilities by closing some installations and by
consolidating overlapping activities within and across the services
through a round of base realignments and closures in fiscal year 2005.
DOD officials have testified that 20 to 25 percent of DOD's
infrastructure capacity is not needed to meet current mission
requirements. Accordingly, as a result of the round of base
realignments and closures in fiscal year 2005, DOD and the reserve
components will have to adjust their facility maintenance and
recapitalization plans.
[3] U.S. Department of Defense, Defense Installations 2001: The
Framework for Readiness in the 21ST Century (Washington, D.C.: August
2001).
[4] Sustainment funding provides resources primarily from operation and
maintenance funds for recurring maintenance and repair activities
necessary to keep an inventory of facilities in good working order.
[5] The recapitalization rate is calculated by dividing recapitalizable
plant replacement value by the total of restoration and modernization
funding. The recapitalizable plant replacement value, as defined by
DOD, is the cost of replacing an existing facility with a facility of
the same size at the same location, using today's building standards.
[6] U.S. General Accounting Office, Defense Infrastructure: Changes in
Funding Priorities and Strategic Planning Needed to Improve the
Condition of Military Facilities, GAO-03-274 (Washington, D.C.: Feb.
19, 2003).
[7] During this period, military construction appropriations peaked at
$954 million in fiscal year 2002.
[8] See 10 U.S.C. § 18233. The Secretary of Defense may delegate this
authority to any department, agency, or officer of DOD.
[9] DOD Instruction 1225.8, Programs and Procedures for Reserve
Component Facilities and Unit Stationing, enclosure 3, para. E3.1.2.9,
September 6, 2001.
[10] DOD financial management regulations, which reflect agreements
between DOD and congressional authorization and appropriations
committees, provide general guidelines for various reprogramming
actions. For example, congressional notification was required for
operation and maintenance reprogramming actions of $15 million or more
in fiscal year 2002. These DOD regulations also limit the amount of
operation and maintenance funds that can be used for new construction
and the alteration or conversion of existing facilities: a maximum of
$750,000 per project or up to $1.5 million if the project is designed
to correct a deficiency that threatens life, health, or safety. See DOD
Financial Management Regulation 7000.14-R, Budget Formulation and
Presentation, vol. 2B, ch. 8, sec. 080201, June 2002.
[11] Departments of the Army and the Air Force, National Guard Bureau,
Grants and Cooperative Agreements, NGR 5-1/ANGI 63-101 (Washington,
D.C.: July 7, 2000).
[12] U.S. Department of Defense, Defense Installations 2001: The
Framework for Readiness in the 21ST Century (Washington, D.C.: Aug.
2001).
[13] At the request of the Chairman, Committee on the Budget, United
States Senate, we are identifying capital financing approaches that
depart from a long-standing budget concept calling for the budget to
include the full range of federal activities. Real property exchanges
are one such approach.
[14] U.S. General Accounting Office, High-Risk Series, GAO/HR-97-7
(Washington, D.C.: February 1997).
[15] U.S. General Accounting Office, High-Risk Series: An Update, GAO-
01-263 (Washington, D.C.: January 2001).
[16] U.S. General Accounting Office, Major Management Challenges and
Program Risks: Department of Defense, GAO-03-98 (Washington, D.C.:
January 2003).
[17] U.S. General Accounting Office, High-Risk Series: Federal Real
Property, GAO-03-122 (Washington, D.C.: January 2003).
[18] See GAO-03-274.
[19] This percentage compares with 68 percent of active component
facilities reported as inadequate in fiscal year 2001.
[20] See GAO-03-274.
[21] U.S. Department of the Air Force, United States Air Force
Facilities Investment Plan (Washington, D.C.: Aug. 14, 2002).
[22] Departments of the Army and the Air Force, National Guard Bureau,
Grants and Cooperative Agreements, NGR 5-1/ANGI 63-101 (Washington,
D.C.: July 7, 2000).
[23] According to officials in the Office of the Assistant Secretary of
Defense for Reserve Affairs, the exact number of jointly constructed
facilities is not known because of varied interpretations of the
definition of jointness by the reserve components, but they suggested
it might even be lower than 1 percent.
[24] DOD Directive 1225.7, Reserve Component Facilities Programs and
Unit Stationing, June 6, 2001, and DOD Instruction 1225.8, Programs and
Procedures for Reserve Component Facilities and Unit Stationing,
enclosure 3, para. E3.1.2.9, September 6, 2001.
[25] See DOD's Defense Installations 2001: The Framework for Readiness
in the 21ST Century (Washington, D.C.: August 2001).
[26] DOD established a new program element in its Future Years Defense
Program structure for its Program Objective Memorandum 2003-2007 to
fund joint use military construction projects.
[27] DOD Instruction 1225.8, Program and Procedures for Reserve
Component Facilities and Unit Stationing, enclosure 3, para. E3.1.2.9,
September 6, 2001.
[28] In addition to this authority, individual legislative provisions
may authorize real property exchanges affecting specific reserve
component locations.
[29] Army Regulation 140-483, Army Reserve Land and Facilities
Management, July 30, 1994.
[30] DOD Directive 5100.10, Delegation of Authority With Respect to
Reserve Forces Facilities, March 16, 1972.
[31] DOD Instruction 1225.8, Programs and Procedures for Reserve
Component Facilities and Unit Stationing, September 6, 2001.
[32] GAO-03-98.
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