Defense Infrastructure
Long-term Challenges in Managing the Military Construction Program Gao ID: GAO-04-288 February 24, 2004The Department of Defense's (DOD) military construction program provides funding for construction projects in the United States and overseas, and funds most base realignment and closure costs. Recent Office of the Secretary of Defense (OSD) estimates indicate that it would cost as much as $164 billion to improve facilities to a level that would meet the department's goals. GAO was asked to report on the (1) steps OSD has taken to enhance program management, (2) process of prioritizing and resourcing military construction projects, and (3) advantages and disadvantages of increasing the current funding thresholds for constructing and repairing facilities.
Recognizing the need to halt the degradation of defense facilities, OSD took a number of steps to enhance the management of the military construction program by providing guidance through a facilities strategic plan and by standardizing practices through selected management tools. However, some of these tools are not completed, and others have weaknesses that further hinder efforts to improve facilities. OSD's strategic plan outlines long-term goals but lacks comprehensive information on the actions, time frames, responsibilities, and resources that are needed to meet DOD's vision for facilities. OSD has also established key financial objectives for the services to improve the condition of their facilities. Given competing funding pressures and that the process of realigning and closing bases to reduce excess infrastructure will take several years to accomplish, improvements in facilities will likely require much longer than suggested by OSD's objectives. DOD's process of prioritizing and resourcing military construction projects provides an important means of improving whole categories of facilities but can repeatedly postpone addressing important projects outside of those categories. If left unchecked without periodic reassessments, the process can continually defer projects important to installations' ability to accomplish their mission and improve servicemembers' quality of life. As much as 77 percent of military construction funds appropriated in any one year are distributed among specific areas of emphasis, such as housing, leaving a significantly smaller portion that is insufficient to repair the remaining categories of facilities. Some projects are not submitted for funding consideration because they do not fall within the specific areas of emphasis and thus are perceived as being highly unlikely to receive funding. Also, some high-cost priority projects are postponed for future years' funding because their addition would exceed the services' funding level established for that year. Congress may add projects during the appropriations process, addressing what it has considered as inadequate requests for funding. These projects may require adjustments in DOD's plans since they may not always align with DOD's short-term priorities. Increasing current funding thresholds for unspecified minor military construction projects would give DOD installations more flexibility, but might need to be balanced against reducing congressional oversight. Construction costs have increased as much as 41 percent since the thresholds were last adjusted upward. As a result, fewer projects that are smaller in scope can now be completed using these types of funds. Additionally, installation officials often scale back the scope of a project in order to meet the current thresholds, compromising design characteristics in the process. However, if the thresholds were increased, Congress could lose oversight of the additional projects funded under these thresholds because such construction projects are not specifically identified in the President's budget submissions. Yet, there are alternatives, such as coupling the increased thresholds with periodic reports on the usage of those funds.
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Report to the Subcommittee on Military Construction, Committee on
Appropriations, U.S. Senate:
United States General Accounting Office:
GAO:
February 2004:
Defense Infrastructure:
Long-term Challenges in Managing the Military Construction Program:
GAO-04-288:
GAO Highlights:
Highlights of GAO-04-288, a report to the Subcommittee on Military
Construction, Senate Committee on Appropriations
Why GAO Did This Study:
The Department of Defense‘s (DOD) military construction program
provides funding for construction projects in the United States and
overseas, and funds most base realignment and closure costs. Recent
Office of the Secretary of Defense (OSD) estimates indicate that it
would cost as much as $164 billion to improve facilities to a level
that would meet the department‘s goals. GAO was asked to report on the
(1) steps OSD has taken to enhance program management, (2) process of
prioritizing and resourcing military construction projects, and (3)
advantages and disadvantages of increasing the current funding
thresholds for constructing and repairing facilities.
What GAO Found:
Recognizing the need to halt the degradation of defense facilities,
OSD took a number of steps to enhance the management of the military
construction program by providing guidance through a facilities
strategic plan and by standardizing practices through selected
management tools. However, some of these tools are not completed, and
others have weaknesses that further hinder efforts to improve
facilities. OSD‘s strategic plan outlines long-term goals but lacks
comprehensive information on the actions, time frames,
responsibilities, and resources that are needed to meet DOD‘s vision
for facilities. OSD has also established key financial objectives for
the services to improve the condition of their facilities. Given
competing funding pressures and that the process of realigning and
closing bases to reduce excess infrastructure will take several years
to accomplish, improvements in facilities will likely require much
longer than suggested by OSD‘s objectives.
DOD‘s process of prioritizing and resourcing military construction
projects provides an important means of improving whole categories of
facilities but can repeatedly postpone addressing important projects
outside of those categories. If left unchecked without periodic
reassessments, the process can continually defer projects important to
installations‘ ability to accomplish their mission and improve
servicemembers‘ quality of life. As much as 77 percent of military
construction funds appropriated in any one year are distributed among
specific areas of emphasis, such as housing, leaving a significantly
smaller portion that is insufficient to repair the remaining
categories of facilities. Some projects are not submitted for funding
consideration because they do not fall within the specific areas of
emphasis and thus are perceived as being highly unlikely to receive
funding. Also, some high-cost priority projects are postponed for
future years‘ funding because their addition would exceed the
services‘ funding level established for that year. Congress may add
projects during the appropriations process, addressing what it has
considered as inadequate requests for funding. These projects may
require adjustments in DOD‘s plans since they may not always align
with DOD‘s short-term priorities.
Increasing current funding thresholds for unspecified minor military
construction projects would give DOD installations more flexibility,
but might need to be balanced against reducing congressional
oversight. Construction costs have increased as much as 41 percent
since the thresholds were last adjusted upward. As a result, fewer
projects that are smaller in scope can now be completed using these
types of funds. Additionally, installation officials often scale back
the scope of a project in order to meet the current thresholds,
compromising design characteristics in the process. However, if the
thresholds were increased, Congress could lose oversight of the
additional projects funded under these thresholds because such
construction projects are not specifically identified in the
President‘s budget submissions. Yet, there are alternatives, such as
coupling the increased thresholds with periodic reports on the usage
of those funds.
What GAO Recommends:
GAO recommends that OSD (1) complete the management tools for
standardizing construction practices and costs, (2) reevaluate the
time frames for completing the key objectives, and (3) develop a
mechanism for periodically reassessing military construction
priorities for facility categories that fall outside DOD‘s specific
areas of emphasis. GAO also suggests that Congress may wish to
consider the advantages and disadvantages of increasing the funding
thresholds for minor construction projects. In commenting on a draft
of this report, DOD agreed or partially agreed with the
recommendations and indicated that some actions are being taken to
address them.
www.gao.gov/cgi-bin/getrpt?GAO-04-288.
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]
Contents:
Letter:
Results in Brief:
Background:
Strategic Plan and Management Tools Weaknesses Limit Efforts to Improve
Facilities:
Prioritizing and Resourcing Process Serves an Important Function but
Has Limitations:
Increasing the Current Funding Thresholds Gives DOD Additional
Flexibility but Could Lessen Congressional Oversight:
Conclusions:
Recommendations for Executive Action:
Matters for Congressional Consideration:
Agency Comments and Our Evaluation:
Appendix I: Scope and Methodology:
Appendix II: Section 2805 of Title 10, United States Code (2003):
Appendix III: DOD's Prioritization and Resourcing Process for
Military Construction Projects:
Appendix IV; Services' Plans to Meet OSD's Three Key
Investment Objectives:
Appendix V: Comments from the Department of Defense:
Tables:
Table 1: Comparison of the Military Services' Priorities for Military
Construction Projects, Fiscal Year 2004:
Table 2: Comparison of the Military Services' Systems to Prioritize
Military Construction Projects, Fiscal Year 2004:
Table 3: Planned Status for Achieving OSD's Objective of Fully Funding
Sustainment by Military Service and DOD-wide, Fiscal Years 2004 through
2009:
Table 4: Planned Status for Achieving OSD's Objective of Attaining a
67-Year Recapitalization Rate by Military Service and DOD-wide, Fiscal
Years 2004 through 2009:
Figures:
Figure 1: Examples of Pre-World War II-Era Facilities:
Figure 2: Examples of Undersized or Inadequate Facilities:
Figure 3: Percent Distribution of Military Construction Funding by
Specific Area of Emphasis in the Military Construction Appropriation
Act for Fiscal Year 2004:
Figure 4: Summary of the Military Construction Process, Fiscal Year
2005:
Figure 5: Military Services' Planned Annual Restoration and
Modernization Funding, Fiscal Years 2004 through 2009:
Abbreviations:
DOD: Department of Defense:
OSD: Office of the Secretary of Defense:
United States General Accounting Office:
Washington, DC 20548:
February 24, 2004:
The Honorable Kay Bailey Hutchison:
Chairman:
The Honorable Dianne Feinstein:
Ranking Minority Member:
Subcommittee on Military Construction:
Committee on Appropriations:
United States Senate:
The Department of Defense's (DOD) military construction program
provides funding for construction projects in the United States and
overseas, and funds most base realignment and closure costs. In recent
years, military construction funding has averaged $8-10 billion per
year, but recent estimates from the Office of the Secretary of Defense
(OSD) indicate that it would cost between $62 billion and $164 billion
in total to adequately improve facilities to a level that would meet
the department's facility condition goals. DOD attributes this high
cost estimate to the fact that many DOD installations and facilities
have not been sufficiently maintained or renovated for many years.
Defense facilities include buildings such as barracks, administrative
space, classrooms, hangars, warehouses, maintenance buildings,
churches, and child development centers, as well as nonbuildings such
as runways, roads, railroads, piers, and utility structures and
systems. Including family housing, DOD's facilities and structures
number more than 600,000, with a replacement value of about
$600 billion. In the absence of proper maintenance, referred to as
"sustainment" by DOD, these facilities deteriorate
prematurely.[Footnote 1] Without periodic recapitalization, facilities
can become obsolete and can no longer be cost-effectively renovated and
must be replaced with new construction.[Footnote 2] Consequently, DOD
and active military service officials report that some facilities are
in such a deteriorated condition that they adversely affect missions
supported by such facilities and negatively affect the quality of life
of military personnel and their families. DOD and Congress have
recognized the need to fully fund the maintenance and recapitalization
of facilities, as well as to reduce DOD's inventory of facilities
through an upcoming round of domestic base realignments and closures
authorized for fiscal year 2005.[Footnote 3] DOD is also reexamining
worldwide basing requirements, which could potentially lead to
significant changes in facility requirements over a period of years.
Military construction[Footnote 4] funds may be used for the restoration
and modernization[Footnote 5] of existing facilities or to fund the
construction of new buildings and other facilities, referred to by DOD
as "new footprint" projects. Operation and maintenance funds can also
be used to pay for restoration, modernization, and small construction
projects. However, operation and maintenance funds are used primarily
to support sustainment activities, which are designed to keep
facilities in good working order. Sustainment covers expenses for all
recurring maintenance costs and contracts, as well as for major repairs
of nonstructural facility components (e.g., replacing a roof or
repairing an air-conditioning system) that are expected to occur during
a facility's life. In 1982 Congress established maximum amounts of
funds that could be applied to unspecified minor military construction
projects and upwardly adjusted these amounts, or thresholds, through
1991 and 2001.[Footnote 6] Currently, an unspecified minor military
construction project is a military construction project that has an
approved cost estimate equal to or less than $1.5 million, or equal to
or less than $3 million if the project is intended solely to correct a
deficiency that threatens life, health, or safety. In addition to the
use of military construction funds for unspecified minor construction
projects, service Secretaries may use operation and maintenance funds
for such projects with estimated costs of not more than $750,000 for
any other unspecified minor military construction project or
$1.5 million to correct deficiencies threatening life, health, or
safety.
In 2003 we issued two reports on the funding and planning to improve
the condition of facilities for the active services and reserve
components.[Footnote 7] In those reports, we focused on issues
associated with the sustainment of facilities and reported that the
funding spent on facility sustainment had not been sufficient to halt
the deterioration of facilities. In response to your request, this
report discusses (1) the steps that OSD has taken to enhance the
management of the military construction program, (2) whether the
process by which military construction projects are prioritized and
resourced ensures that all categories of facilities that affect the
services' ability to accomplish their mission and improve quality of
life are reached, and (3) the advantages and disadvantages of
increasing the current funding thresholds for constructing and
repairing facilities. This report focuses on nonhousing issues
concerning military construction inside the United States and generally
does not address issues associated with military family housing and
overseas construction programs.[Footnote 8]
In conducting our review, we interviewed OSD and service officials to
obtain information related to OSD's roles, policies, directives,
procedures, and practices for managing the military construction
program and to assess the military construction prioritization and
programming process. We also visited 20 military installations and
eight major commands to observe the condition of the facilities, and to
discuss their role in the military construction program, the impact of
projects added by Congress during the appropriation process, and the
impact of legislative threshold levels for funding military
construction projects. We conducted our work from February through
November 2003 in accordance with generally accepted government auditing
standards. A more thorough description of our scope and methodology is
presented in appendix I.
Results in Brief:
Recognizing the need to halt the degradation of defense facilities, OSD
has taken a number of steps to enhance the management of the military
construction program by providing guidance through a facilities
strategic plan and by standardizing practices through selected
management tools. However, some of these tools are not completed, and
others have weaknesses that hinder DOD's efforts to sustain and
recapitalize facilities. In the 1990s the services did not allocate
full funding for their facilities--sustainment averaged about
75 percent of identified needs, and facilities recapitalization
averaged about 35 percent of the services' requirements--resulting in
too many deteriorated and obsolete facilities. Consequently, in recent
years, OSD has sought to strengthen its role in guiding and overseeing
facilities improvements. For example, OSD developed an installation
readiness reporting system in 1999 to provide a top-level assessment of
the condition of its facilities and to ascertain the effect that
facility conditions have on readiness. However, the system does not
provide consistent information between the services on the condition of
facilities. Another OSD management tool, a defense facilities strategic
plan,[Footnote 9] outlines long-term strategic goals for installations
and facilities. Yet, the plan, which is under revision, lacks
comprehensive information on the specific actions, time frames,
assigned responsibilities, and resources that are needed to meet DOD's
vision for facilities. OSD also developed an initial DOD-wide system to
calculate the recapitalization rate associated with given amounts of
military construction funding and to generate an annual funding
requirement for recapitalization.[Footnote 10] DOD plans to upgrade and
recalibrate this metric in the near future. Additionally, OSD
established three key objectives for the services to sustain and
improve the conditions of their facilities in its Defense Planning
Guidance for fiscal year 2004.[Footnote 11] Currently, these objectives
are to fully fund sustainment starting in fiscal year 2004, reach a 67-
year average recapitalization rate by fiscal year 2008, and improve the
condition of facilities so that deficiencies have only a limited effect
on mission performance by fiscal year 2010.[Footnote 12] However,
because of competing funding priorities and programs within the defense
budget, the services do not plan to meet OSD's facility objectives
within the expected time frames and, in those instances where the
services do indicate or intend to meet the objectives, their plans are
based on future funding that requires unrealistically high rates of
increase when compared with previous funding trends and when considered
against other defense priorities. Given DOD's competing funding
pressures and given that (1) the process of realigning and closing
bases to reduce DOD's excess infrastructure from the 2005 round of
closures and (2) a reexamination of worldwide basing requirements will
take several years to accomplish, improvements in facilities will
likely require much longer to accomplish than suggested by DOD's three
key objectives.
DOD's process of prioritizing and resourcing military construction
projects provides an important means of improving whole categories of
facilities but can repeatedly postpone addressing important projects
outside of those categories. If left unchecked without periodic
reassessments, the process can continually defer projects important to
installations' ability to accomplish their mission and improve
servicemembers' quality of life. As much as 77 percent of military
construction funds appropriated in any one year are distributed among
specific areas of emphasis, including housing, annual unspecified cost
estimates, and the services' major priorities. For example, OSD has
made the quality of housing--including military family housing and
barracks--one of the department's highest priorities, amounting to
approximately 54 percent of military construction funding appropriated
in fiscal year 2004. In addition, funding for annual unspecified costs-
-which includes base realignment and closure activities, the North
Atlantic Treaty Organization facility contribution, and facility
planning and design--was approximately 9 percent of the military
construction budget in fiscal year 2004.[Footnote 13] Funding for the
services' major priorities, such as physical fitness facilities and
aircraft hangars, was approximately 14 percent in fiscal year 2004. The
remaining 23 percent of military construction funding for installations
was insufficient to repair the remaining categories of facilities,
including those affecting the services' ability to accomplish their
mission and improve servicemembers' quality of life. For example, even
though installation and major command officials have a large list of
military construction projects in backlog, only a small fraction of
these projects are submitted for consideration each year. In practice,
installation officials often do not submit projects that do not
fall into the specific areas of emphasis and sometimes are directed by
the major commands to limit the number of projects that they can submit
for consideration. Furthermore, annually, some high-priority, high-
cost projects are postponed to future years because their addition to
the current year's military construction program causes an increase in
the total funding that exceeds the services' predetermined military
construction funding level for that funding year. Often, officials
would replace these high-cost projects with several lower-priority,
lower-cost projects to come as close as possible to, but not exceed,
this established funding level. In recent years, Congress has added
various military construction projects during the annual appropriations
process to address what it has considered as inadequate requests for
military construction funding. Funding of these projects may require
adjustments in DOD's plans since they may not always align with DOD's
short-term priorities.
Increasing current funding thresholds for using construction funds and
operation and maintenance funds for unspecified minor military
construction projects would give DOD more funding flexibility at the
installation level but might need to be balanced against reducing
congressional oversight of funding for the projects affected by these
thresholds. Construction costs have increased 41 percent since the
existing $1.5 million threshold for using unspecified minor
construction funds and 7 percent since the existing $750,000 threshold
for using operation and maintenance funds were last adjusted
respectively upward in 1991 and 2001. As a result, fewer projects that
are smaller in scope can now be completed using unspecified minor
military construction funds or operation and maintenance funds.
Additionally, some installation officials often scale back the scope of
a project in order to meet the current thresholds. In doing so,
however, they can compromise design characteristics with a facility
that lacks capacity for future growth, making it potentially inadequate
in future years. When projects are funded under the statutory
thresholds, they can be completed during the same year as identified
without seeking approval through the traditional, multiyear military
construction prioritization and resourcing process. As a result,
service and installation officials stated that the thresholds limit
their ability to quickly respond to unanticipated, urgent construction
requirements. If the thresholds were increased, Congress could lose
oversight of the additional projects funded under these thresholds
because such construction projects are not specifically identified in
the President's budget submissions. Yet, there are alternatives to
preserve oversight, such as coupling the increased thresholds with
periodic reports on the usage of those funds.
We recognize that fully reversing DOD's deteriorating infrastructure
may take many years to be realized. A key step in the process is
reducing excess infrastructure--as expected in the upcoming base
realignment and closure round--which would permit a greater
concentration of available resources on enduring facilities. Beyond
that, improvements can be made in various management tools and
processes for deciding military construction priorities. Accordingly,
we are making recommendations to (1) complete the management tools,
including the revision of the defense facilities strategic plan, for
standardizing military construction and costs and improving facilities;
(2) reevaluate the time frames for completing the three key objectives
to reflect that there are competing funding priorities and that the
process of realigning and closing domestic bases to reduce DOD's excess
infrastructure and realigning overseas facilities will take several
years to accomplish and could affect meeting facilities' investment
goals; and (3) develop a mechanism for periodically reassessing
military construction priorities for facility categories that fall
outside the department's specific areas of emphasis to ensure that the
risk of delaying proposed military construction projects with potential
operational and quality of life impacts is being given appropriate
consideration. We are also suggesting that Congress may wish to
consider the advantages and disadvantages of increasing the funding
thresholds for unspecified minor construction projects.
In comments on a draft of this report, DOD concurred or partly
concurred with our recommendations. The department also provided
technical clarifications, which we incorporated as appropriate.
Background:
DOD manages the world's largest dedicated infrastructure, covering
more than 46,000 square miles of land and facilities worth more than
$600 billion. To enhance and maintain this infrastructure, two separate
defense appropriations are written annually: (1) military construction
appropriations dedicated to military construction and (2) national
defense appropriations, including operation and maintenance funding for
facility sustainment and minor construction.[Footnote 14] There are
also supplemental appropriations. The military construction
appropriations fund construction projects and some of the facility
sustainment, restoration, and modernization of the active Army, Navy
and Marine Corps, Air Force, and their reserve components;[Footnote 15]
additional defensewide construction; U.S. contributions to the North
Atlantic Treaty Organization security investment program;[Footnote 16]
and military family housing operation and construction. These military
construction appropriations also provide funding for base realignment
and closure activities, including the construction of new facilities
for transferred personnel and functions, and environmental cleanup at
closing sites. According to DOD, such costs are still being incurred
from prior base closure rounds and are likely to be significant for the
2005 round if a large number of closures and realignments are approved.
However, such costs may be viewed as a necessary upfront investment if
significant reductions in excess facilities are to be made. Over the
long term, such reductions could be key to rationalizing DOD's
facilities infrastructure and permitting a greater concentration of
available facilities funding to enduring facilities. In addition,
construction and sustainment of morale, welfare, and recreation-related
facilities are partially funded through proceeds of commissaries,
recreation user fees, and other nonappropriated income. At
installations located overseas, host-nation-funded construction
programs are often a part of the burden-sharing arrangement between the
United States and the host country and represent a large source of
major construction funds for these U.S. installations.[Footnote 17]
Sustainment, Restoration, and Modernization:
Operation and maintenance funds are used mostly to support facility
sustainment, which covers the day-to-day expenditures associated with
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. Both operation and maintenance funds and military construction
funds can be used to finance facility restoration and modernization
activities. Military construction and operation and maintenance funds
designated for facility restoration are used to repair and replace
items damaged by inadequate sustainment, excessive age, natural
disaster, fire, accident, or other nonroutine causes. Funds designated
for modernization are used to alter or modernize facilities to meet new
or higher standards, accommodate new functions, or replace structural
components. In addition, the construction of new facilities is mostly
funded with the military construction appropriations. Conference
reports accompanying military construction funding bills specify the
amounts and the projects for which military construction appropriations
are to be used.
According to DOD, providing funds for full sustainment 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, 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.
Military Construction Prioritization and Resourcing Process:
The process for identifying construction needs, obtaining military
construction funds, and completing a project typically lasts from 5 to
8 years. During this period, OSD and the services review each
construction project and request individual project funding approval
from Congress.
The DOD prioritization and resourcing process for military construction
projects flows from OSD's and the services' guidance. This guidance
describes OSD's objectives for improving facilities, identifies the
services' categories of facilities that would receive priority in
funding military construction projects, and assigns organizational
responsibilities for the process. On the basis of this guidance, each
installation identifies needed construction projects and develops the
description and justification for each project. Installation officials
are supposed to prioritize their projects and submit their highest
priorities to their respective major commands. Major commands verify
the various installation submissions, review and validate the cost
estimates, compile the installations' lists into one command list,
prioritize the command's list, and submit that list to the service
headquarters. In addition, a major command may add its own military
construction projects to its list.[Footnote 18] Similarly, the service
headquarters review and validate the cost estimates and compile the
major commands' lists into one service list. The service identifies
projects on the list that must be funded in the immediate fiscal year
and places those projects at the top of its priority list. Next, the
service assigns a numerical rating to the remaining projects that
reflects the projects' mission and impact. The projects with the
highest rating based on this scoring process are combined with the
"must-fund" projects to form the service's priority list of proposed
military construction projects. A similar process is used for military
construction projects planned for installations located overseas.
OSD reviews each of the services' submissions to ensure that the
projects comply with financial requirements and the department's
objectives and guidance, such as the 67-year average recapitalization
rate and the maximum, allowable military construction funding for the
budget year. The Office of the Under Secretary of Defense
(Comptroller),[Footnote 19] in conjunction with other OSD offices--such
as the Office of the Under Secretary of Defense for Acquisition,
Technology and Logistics[Footnote 20]--reviews proposed construction
projects to confirm and adjust requirements as necessary. The
Comptroller issues program budget decisions to the services, which
communicate his decision on projects. Once OSD has approved the
projects, it submits a listing of approved projects to the Office of
Management and Budget, which approves and submits the final
construction project budgets to Congress as part of DOD's overall
annual budget submission. The budget request for military construction
funding each fiscal year includes major construction, project planning
and design, and unspecified minor construction. Congress annually
specifies the amounts and the projects for which military construction
appropriations are to be used. A more thorough description of the
department's prioritization and resourcing process for military
construction projects is presented in appendix III.
Prior GAO Reports on DOD's Facilities Management Program:
We have conducted a number of reviews that identified areas in which
DOD and the services could improve their facilities management program.
Since 1997 we have identified DOD infrastructure management as a high-
risk area. In September 1999 we reported on the management of DOD's
facility maintenance and repair programs and recommended that the
Secretary of Defense (1) develop a way to link the department's needs
assessment with both resource allocations and tracking systems that
show whether high-priority needs are receiving funding, (2) establish
standardized condition assessment criteria, and (3) have the services
adopt a valid engineering-based assessment system for facilities
maintenance.[Footnote 21] In 2001 we reported that DOD needed to
develop a comprehensive long-range plan for its facilities
infrastructure that addresses facility requirements, recapitalization,
and maintenance and repair needs.[Footnote 22] In a June 2002 report,
we examined the condition of barracks used to house military recruits
in basic training and concluded that, to varying degrees, most barracks
were in significant need of repair, although some were in better
condition than others.[Footnote 23] In January 2003 we designated
federal real property governmentwide as a new high-risk area.[Footnote
24]
In February 2003 we reported that DOD's three objectives for
sustainment and improvement of facility conditions may not be
achievable because services do not propose to fully fund them or have
developed funding plans that have unrealistically high rates of
increase in the out-years when compared with previous funding levels
and against other defense priorities[Footnote 25]. We found that while
deteriorated facilities are common on many installations, there is 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. In reviewing a draft of this report,
officials clarified that mission impact, and not facility condition
alone, drives the allocation of funds to where they are most needed.
We also found that while the services had originally planned to fund
sustainment at no less than 78 percent of requirements in fiscal year
2002, officials determined that these levels of funding could not be
achieved if needs such as civilian pay, emergency needs, and "must-pay"
bills were to be funded. In May 2003 we reported that the reserve
components are unlikely to meet DOD's three objectives as wel[Footnote
26]l. Some officials acknowledged that even when their components have
expressed intent to meet DOD's objectives, their funding plans included
unrealistically high rates of increase during the out-years when
compared to previous funding trends and against other defense
priorities. We also concluded that the reserve components face
challenges in implementing two potential cost-saving initiatives--
joint construction projects and real property exchanges--and that OSD
has not provided overall direction for the program, thus risking the
exchange of property that may be needed by other DOD components.
Strategic Plan and Management Tools Weaknesses Limit Efforts to Improve
Facilities:
Recognizing the need to halt the degradation of defense facilities, OSD
has taken a number of steps to enhance the management of the military
construction program by providing guidance through a facilities
strategic plan and by standardizing practices via a number of selected
management tools. In the 1990s the services did not allocate full
funding for their facilities, resulting in too many deteriorated and
obsolete facilities. However, some of OSD's tools are not completed and
others have weaknesses that limit efforts to improve facilities. For
example, the installation readiness reporting system does not have
consistent information on the condition of facilities, the defense
facilities strategic plan lacks comprehensive information and is being
revised, and the recapitalization model to generate an annual
recapitalization requirement is not yet completed. Furthermore, the
services do not plan to meet OSD's key objectives for improving
facilities in the near future because of competing funding priorities
and programs within the defense budget. In those instances where
service officials have indicated their intent to meet the objectives in
future years, their plans are based on future funding that requires
unrealistically high rates of increase in appropriations when compared
with previous funding trends and when considered against other defense
priorities.
Underfunding of Sustainment and Recapitalization Led to Facility
Deterioration and Obsolescence:
DOD and service officials have said that past underfunding for
sustainment and recapitalization has led to the deterioration and
obsolescence of facilities used by the military services. In the 1990s
the services did not allocate full funding for their facilities--
sustainment averaged about 75 percent, and facilities recapitalization
averaged about 35 percent of the services' requirements--resulting in
too many deteriorated and obsolete facilities. For example, Army
officials have testified that available sustainment funding since the
early 1990s was approximately 60 percent of what was needed. Air Force
officials also testified that facility sustainment funding shortfalls
have hindered the service's efforts to sustain and operate Air Force
facilities and limited the Air Force to providing day-to-day
maintenance for facilities. Navy and Marine Corps officials also
testified that their services have consistently underfunded facility
sustainment. As a result of this underfunding, the services' repair
backlogs increased significantly, from $8.9 billion to $14.6 billion
during fiscal years 1992 through 1998. Also, 68 percent of DOD's
facility classes--which are groupings of like facilities, such as
operations and training, mobility, and supply--were rated C-3
(significant facility deficiencies that prevent it from performing some
missions) or C-4 (major facility deficiencies that preclude
satisfactory mission accomplishment) in fiscal year 2001--a slight
improvement from the 69 percent rate in 2000.
After these years of neglect, some important missions remain in pre-
World War II-era structures that were built for purposes other than
their current use and require more frequent restoration and
sustainment. (See fig. 1.) For example, the Army uses horse stables
constructed in 1934 as a vehicle maintenance shop at Fort Benning,
Georgia, and the Marine Corps uses deteriorated brick and steel hangars
constructed in 1935 to house helicopters at Marine Corps Air Station
Quantico, Virginia.
Figure 1: Examples of Pre-World War II-Era Facilities:
[See PDF for image]
[End of figure]
During our visits to installations, we found that the services also
sometimes work in maintenance facilities, training facilities, supply
and storage facilities, airfields, and deployment facilities that are
deteriorated and/or do not meet standards. Maintenance bays, runway
aprons, and other facilities are often undersized or inadequate for the
mission, as illustrated in figure 2.
Figure 2: Examples of Undersized or Inadequate Facilities:
[See PDF for image]
[End of figure]
Military services officials attributed this consistent underfunding to
constrained defense budgets and competing priorities. They also reflect
insufficient efforts to reduce excess facilities and concentrate
resources on enduring facilities. The services have also routinely
traded off infrastructure and modernization funding to shore up other
readiness activities. Past sustainment and military construction
funding levels allowed the services to provide only minimal day-to-day
critical maintenance of their facilities and infrastructure. While
installations continue to operate, local personnel and service members
are increasingly required to develop workarounds--or adjustments to
normal operating procedures to compensate for deteriorated or
inadequate facilities--which affected their operational efficiency.
This underfunding was recognized in the 1997 Quadrennial Defense Review
report,[Footnote 27] which noted that the department should "program
more accurately for the costs of operating the defense establishment."
However, as discussed below, this underfunding continues today.
OSD Took Steps to Provide a More Consistent Approach to Facilities,
but Some Steps Remain Incomplete:
Recognizing the need to halt the degradation of defense facilities, OSD
took a number of steps--such as developing an installation readiness
reporting system, a facilities strategic plan, and other management
tools--to help standardize the facility sustainment and
recapitalization process and to plan military construction projects;
however, some of these management tools are incomplete. Historically,
each service had established its own criteria for assessing the
condition of its properties and the urgency for repairs, prioritizing
maintenance needs, and deciding how much to allocate for maintenance
and military construction funding. At the same time, each service had
different standards for sustaining and recapitalizing facilities. As a
result, the services had created widely varying living and working
conditions.
In an attempt to provide Congress with a measure of facilities'
conditions and their ability to support military missions, DOD issued
its first installations' readiness report in 1999.[Footnote 28] DOD
developed the report to fulfill its reporting requirement to Congress
under section 117 of title 10 of the United States Code, which
specifies that DOD measure the capability of defense installations and
facilities to provide appropriate support to forces in the conduct of
their wartime missions. Within the report, each military facility falls
under one of nine facility classes, which are groupings of like
facilities, such as operations and training, mobility, and supply. The
services' major commands assign condition ratings to each facility
class 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 were permitted to report
readiness without modifying their existing assessment processes. As a
result, all four services are using different systems and criteria to
assess facility conditions and develop condition ratings. Consequently,
in February 2003 we reported that the services used different kinds of
facility raters and procedures, assessment scopes and frequencies,
appraisal scales, and validation procedures, all of which resulted in
inconsistencies and a lack of comparability in their ratings.[Footnote
29] Without a consistent cross-service system for assessing facility
conditions and developing ratings, DOD and the services cannot be
assured that their funding decisions effectively target facilities in
the greatest need and that the reported ratings accurately measured
progress in facility condition improvements. This system is currently
under review by the department.
OSD's first defense facilities strategic plan, published in August
2001,[Footnote 30] was the result of years of work with the services
and defense agencies to standardize and develop terminology, concepts,
and models, and to shape the information into an achievable long-range
plan. The vision set forth in the plan is to have installations and
facilities available when and where needed to effectively and
efficiently support missions. To achieve this vision, the strategic
plan outlines four long-term strategic goals. These 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. The plan is intended to provide a
unifying framework for the department in achieving these strategic
goals and identifies several key initiatives to achieve OSD's vision of
modern, cost-efficient installations and facilities supporting
operational readiness. However, in February 2003 we reported that the
plan lacked the comprehensive information that makes a strategic plan
useful and that most strategic plans encompass.[Footnote 31] For
example, it did not contain detailed information on (1) the specific
actions that are needed to achieve each of the four goals; (2) the
methods or processes that would be used to achieve each goal; (3) the
amount of funding or other resources needed to reach the goals; (4) the
time frames and milestones; (5) the assignment of responsibilities (in
other words, the entity accountable for completing each goal); and (6)
the performance measurement tools to use to determine the progress
being made toward each goal. At that time, we recommended that OSD
revise its defense facilities strategic plan to include detailed
information on specific actions, time frames, responsibilities, and
funding levels. OSD officials said the plan is being revised and is
expected to be completed in early 2004.
In 2001 OSD began using its initial facilities recapitalization metric,
which provides a uniform mechanism for tracking recapitalization
investments through the military construction accounts, augmented in
some cases with operation and maintenance funds or working capital
funds. Before that time, no single tool was employed DOD-wide to
calculate the recapitalization rate associated with programmed funding
levels. Each military service used its own metrics and accounting
constructs to perform these computations. Implementing the Secretary's
guidance required the development of a standard metric that would be
relatively transparent within the programming and budgeting process.
The metric considers the combined effect of construction and other
investments on the physical plant. The metric is computed by dividing
the recapitalizable plant replacement value by the total annual
restoration and modernization investment.[Footnote 32] However, OSD
officials plan to upgrade and recalibrate this metric and expect the
upgrade to be completed in late 2004. Once completed, effective use of
the tool will require a consistent level of funding each year to ensure
that the projected recapitalization rate is realized.
In addition to its strategic plan and newly developed management tools,
OSD has taken other steps to improve the management of its facilities,
enhance accountability, and better measure and track performances,
including the following:
* Facilities assessment database. In 1997 OSD created an integrated
facilities assessment database from the services' real property
database inventories. This database has transitioned into the source
database for other DOD-wide databases and management tools, including
the facilities sustainment model discussed below. It tracks key
facility inventory and cost data, including the quantity, type,
location, and status of buildings, structures, and all other military
facility assets. Although the database provides an informative picture
of the overall installation readiness levels organized by facility
categories within the major commands and individual installations, it
does not provide enough detail to determine the individual facility
deficiencies that generate the readiness ratings.
* Facilities pricing guide. In 1999 OSD issued its first defense
facilities cost factors handbook, now combined with the DOD Facilities
Pricing Guide.[Footnote 33] The purpose of the pricing guide is to
standardize the method by which the services determine the sustainment
and military construction costs of their facilities. The cost factors
are intended for macro-level analysis and planning, not for individual
projects. Where possible, the pricing guide uses commercial benchmark
costs to determine the annual cost per square foot (or similar unit of
measure) to sustain and construct each facility type. However, the
pricing guide does not take into account other factors affecting the
cost of military construction, such as regional economic conditions
that can affect construction cost significantly.
* Facilities sustainment model. In 1999 OSD developed the facilities
sustainment model, which estimates the annual sustainment cost
requirement, adjusted for area costs, for each service and defense
agency, on the basis of the number, type, location, and size of its
total inventory of facilities. The model generates an annual funding
requirement that would sustain DOD's facilities throughout the budget
year. As shown in appendix IV, however, the military services do not
plan to fully fund their sustainment requirements before fiscal year
2008. In addition, service officials expressed concern that the model
does not provide accurate sustainment funding at the installation
level--especially at installations with aging infrastructure that
require a large amount of sustainment funds to maintain.
* Unified facilities criteria. In 2001 OSD created a series of
documents, referred to as the "unified facilities criteria," to provide
facility planning, design, construction, sustainment, restoration, and
modernization criteria for DOD components. As of December 2003, only 71
of the required 161 documents had been issued on various construction
standards, such as energy conservation, structural design, fire
protection, and seismic design. The building and construction codes and
guidance established in these documents are designed to standardize and
streamline the process for developing, maintaining, and disseminating
criteria in support of the military construction program. For example,
as part of the unified facilities criteria, DOD Antiterrorism
Standards, DOD Instruction Number 2000.16, requires DOD components to
adopt and adhere to common criteria and minimum construction standards
to mitigate antiterrorism vulnerabilities and terrorist threats. OSD
plans to complete the unified facilities criteria in fiscal year 2009.
* Improved budgeting methods. In 2002 OSD replaced the operation and
maintenance-funded real property maintenance program with two distinct
activities and accounting structures for (1) sustainment and
(2) restoration and modernization, having already created a separate
structure for demolition and disposal in fiscal year 1999. By tracking
each element separately, it is now possible to link programs and
budgets directly to program objectives and to better track performance
relative to the objectives.
OSD also developed and implemented the facilities demolition and
disposal program, by which the military services and defense agencies
have demolished more than 80 million square feet of excess and obsolete
facilities during fiscal years 1998 through 2003. The defense drawdown
had left many military bases with structures that the services no
longer need, are in poor condition, or have no remaining value. While
demolishing these structures entails up-front spending, it allows the
services to avoid sustainment, restoration, and modernization costs for
these facilities. Estimates by OSD suggest that demolition projects pay
for themselves in as little as 5 years. Notwithstanding these efforts,
OSD and service officials maintain that the department's inventory of
real property will still contain excess structures after the demolition
program is completed. One previous estimate by the department in 1998
indicated that it might have 20 to 25 percent excess capacity in
facilities. By closing some domestic installations and consolidating
overlapping activities within and across the services, OSD also intends
to gain efficiencies and further reduce its inventory of facilities
through the upcoming round of base realignments and closures authorized
to start in 2005 by Congress.[Footnote 34] The process of realigning
and closing bases, however, will take some years to accomplish and,
while it is expected to produce significant long-term savings, it has
typically required considerable up-front expenses. In addition, OSD and
the services are reexamining worldwide basing requirements, which could
potentially lead to significant changes in facility requirements over
the next several years. Over the long-term, the elimination of excess
facilities should permit a greater concentration of resources on
enduring facilities.
Finally, OSD established three key objectives for the services to
sustain and improve the conditions of their facilities in its Defense
Planning Guidance for fiscal year 2004. Currently, these objectives are
to fully fund sustainment starting in 2004, reach a 67-year average
recapitalization rate by fiscal year 2008, and improve the condition of
facilities so that deficiencies have only a limited effect on mission
performance by fiscal year 2010. While OSD has periodically revised
these investment objectives on the basis of the services' ability to
meet them, the military services do not plan to fund most objectives in
the near future because of competition for funds from other defense
programs and priorities. Also, even when service officials indicate an
intent to meet the objectives in future years, their funding plans
suggest that they are unlikely to do so, given their unrealistically
high rates of increase in the future when compared with previous
funding trends and when considered against other defense priorities and
programs, including the Global War on Terrorism, Operation Enduring
Freedom, and other ongoing efforts such as the Balkans, military
readiness, weapons procurement, and research and development. In
addition, earlier this year we reported that the reserve components
were unlikely to achieve OSD's investment objectives for improving
facilities.[Footnote 35] At that time, reserve component officials were
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, from past
experience. They also said that 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.
Given DOD's competing funding pressures and given that the process of
realigning and closing bases to reduce DOD's infrastructure will take
several years to accomplish, improvements in meeting facility
investment goals will likely require much longer than suggested by
OSD's three key objectives. A more thorough description of the
services' plans relative to OSD's three key investment objectives is
presented in appendix IV.
Prioritizing and Resourcing Process Serves an Important Function but
Has Limitations:
DOD's process of prioritizing and resourcing military construction
projects provides an important means of improving whole categories of
facilities but can repeatedly postpone addressing important projects
outside of those categories. If left unchecked without periodic
reassessments, the process can continually defer projects important to
installations' ability to accomplish their mission and improve
servicemembers' quality of life. As much as 77 percent of military
construction funds are distributed among specific areas of emphasis,
leaving a significantly small portion for individual installation
requirements that affect the services' ability to accomplish their
mission and improve servicemembers' quality of life. In addition,
installations and major commands do not submit many restoration and
modernization projects for funding consideration because the projects
do not fall within the specific areas of emphasis and thus are
perceived as being highly unlikely to receive funding. Also, some high-
cost priority projects are postponed for future years' funding because
their addition would exceed the services' military construction funding
level established for that budget year. Instead, they are replaced with
multiple lower-cost projects whose total costs better fit the
established funding level. Although Congress may add several projects
during the appropriations process each year, addressing what it has
considered as inadequate requests for military construction funding,
the adds may not always reach the services' and installations' highest
priorities.
Specific Areas of Emphasis Leave Little Funding for Other Facility
Needs:
Most of the military construction funds appropriated in any one year
are distributed among specific areas of emphasis, leaving a
significantly smaller portion for other facility categories--some that
affect mission operations and quality of life. OSD and the services
have three specific areas of emphasis: housing, other annual
unspecified costs, and the services' major priorities. About
$2.2 billion (23 percent) of the $9.3 billion appropriated in fiscal
year 2004 remains to fund installations' other military construction
needs--including some that affect the services' ability to accomplish
their mission and improve servicemembers' quality of life--after the
three areas of emphasis are addressed. (See fig. 3.):
Figure 3: Percent Distribution of Military Construction Funding by
Specific Area of Emphasis in the Military Construction Appropriation
Act for Fiscal Year 2004:
[See PDF for image]
[End of figure]
Overall funding for housing and barracks in the Military Construction
Appropriations Act, 2004[Footnote 36] was approximately $5 billion
(54 percent of the total amount appropriated). In its 2001 defense
facilities strategic plan, OSD made the quality of housing--military
family housing and barracks--one of the department's highest
priorities. At that time, DOD estimated that of the nearly 300,000
family housing units, two-thirds were in need of significant
restoration, modernization, or outright replacement. DOD estimated
that using traditional military construction to complete renovations
and replacements would cost $20 billion and take approximately
30 years. Funding for family housing is $3.9 billion in fiscal year
2004--$1.1 billion for family housing construction and privatization
and $2.8 billion for family housing operation and maintenance. Funding
for barracks is $1.2 billion in fiscal year 2004. Barracks are a high
DOD priority because the department plans to eliminate common bath and
shower facilities, or gang latrines, in barracks by 2008[Footnote 37].
In order to accomplish this objective, the services are not only
renovating existing barracks but building new ones as well. These
efforts are intended to improve the quality of life for junior service
members, which in turn may improve morale, retention, and operational
readiness.
Estimated funding for other annual unspecified costs--such as facility
planning and design, base realignment and closure activities, and the
North Atlantic Treaty Organization's security investment program--in
the Military Construction Appropriations Act, 2004,[Footnote 38] was
approximately $833 million (9 percent of the total amount
appropriated). These annual unspecified costs are not justified on the
basis of specific projects. For example, planning and design funds can
be used for future projects that have not yet been appropriated or for
completing the planning and design phase of appropriated projects. Base
realignment and closure funds in fiscal year 2004 are mainly to finance
environmental cleanup, caretaker, and property disposal activity costs.
Historically, these funds have supported a wide range of requirements,
ranging from a high of $3.9 billion in fiscal year 1996 to a low of
$370 million in fiscal year 2004. Minor military construction funds are
used for projects that fall under specific thresholds and are approved
internally by OSD and the services. Finally, funds for the North
Atlantic Treaty Organization's security investment program are for the
collective defense of the North Atlantic Treaty area.
Funding for the services' major priorities in the Military Construction
Appropriations Act, 2004,[Footnote 39] was approximately $1.3 billion
(14 percent of the total amount appropriated). Projects that fit within
the services' priorities are given a higher ranking and are more likely
to receive funding. The services' major priorities are unique to the
objectives of the services. Recently, the Army identified five
categories of priorities, which include training ranges, mobilization,
transformation, antiterrorism and force protection, and the Army's
focus facility strategy to address Army National Guard readiness
centers, Army Reserve centers, physical fitness facilities, trainee
barracks or complexes, general instruction classrooms, vehicle
maintenance and hardstand facilities, and chapels. Funding for these
projects was $741 million of the military construction funding
appropriated for fiscal year 2004. Funding for the Navy's major
priorities, such as piers and hangars, was $266 million of the military
construction funding appropriated for fiscal year 2004. Funding for the
Air Force's priorities--consisting of new mission requirements,
environmental compliance, and fitness centers--was $304 million of the
military construction funding appropriated for fiscal year 2004. The
Marine Corps does not have stated priorities for facilities--it is
small enough to review and prioritize all proposed military
construction projects submitted by its installations and commands.
While DOD's process of prioritizing and resourcing military
construction projects provides an important means of improving whole
categories of facilities, it can repeatedly postpone addressing
important projects outside of those categories. If left unchecked
periodically, the process can continually defer projects important to
installations' ability to accomplish their mission and improve
servicemembers' quality of life. The following are examples:
* Army officials told us that nearly all garrison projects at Aberdeen
Proving Ground, Maryland, have not received funding because these
projects are not considered a high enough priority. As a result, the
installation rated three of its five facility categories as having
significant deficiencies that limit it from performing some missions.
For example, a centralized information science and supercomputing
facility has been placed in the future years' defense plan and has been
delayed for 10 years. Currently, computers and personnel are dispersed
in several buildings, which significantly impairs operations and
lengthens completion timelines. Officials predict that with the growing
need for classified computer systems owing to such missions as
transformation and future combat system development, the current
facilities will be inadequate.
* A runway at Offutt Air Force Base, Nebraska, originally constructed
in 1944, has not received funding since fiscal year 2001, even with
Air Combat Command sponsorship, because it was not considered a high
enough priority to be included in the budget request. In 1999 a
recommendation was made to limit the runway to emergency use only.
Annual maintenance costs amount to over a reported $400,000, and are
rising. In addition, the Air Force's structural analysis indicates that
the Offut runway must be replaced in fiscal year 2005 or face a
significant chance of experiencing catastrophic failure resulting in
significant damage to aircraft and loss of personnel.
* A bridge on Cheatam Annex, Yorktown Naval Weapons Station, Virginia,
was found to be structurally unsound by the Navy and could not safely
support munitions vehicles. The installation has submitted bridge
replacement projects annually since 1996 but the project has not been
prioritized high enough to secure funding. In the meantime, munitions
trucks were required to detour 21 miles. By considering the bridge as
part of the entire road system, the station received approval to
finance the project with operation and maintenance funds in fiscal year
2003.
* Aircraft parking aprons at Langley Air Force Base, Virginia, failed
several inspections for safety in 1995, 1999, and 2002. Currently, its
poor condition requires constant foreign object damage inspections and
maintenance totaling 23,000 hours and at a reported $85,000 annually to
maintain its limited usability. While the installation has submitted
projects annually to repair the aprons, these projects have not been
funded because other projects were considered by the Air Force to be
higher in priority.
Installations and Major Commands Submit a Small Percentage of the
Identified Military Construction Projects Each Year:
Every year, the number of military construction projects forwarded by
installations and major commands to the next higher level for funding
consideration is a small percentage of their identified requirements--
including those that affect the services' ability to accomplish their
mission and improve servicemembers' quality of life. Also, even though
installation officials have dozens of unfunded military construction
projects in backlog, one as many as 10 years old, they submit only a
small portion of these projects for funding consideration, knowing that
only a limited number would get funded. For example, Marine Corps Camp
Pendleton, California, submitted 5 projects for funding consideration
in fiscal year 2004 even though it had identified 30 projects for the
installation. In some instances, the major commands directed
installations to limit the number of projects submitted for funding
consideration. For example, Army instructions for submitting
unspecified minor military construction projects dictate that the
installation management agency can submit only up to 14 projects. It
also notes that because of limited funding, only the top-priority
projects are likely to receive funding. Other requests to limit the
number of projects submitted for funding consideration appear to be
based on unwritten guidance, which assumes that there would be only a
very limited amount of military construction funding available to
fulfill requirements.
Furthermore, after compiling and prioritizing the installations' lists
of projects, major commands submit a small percentage of the
installations' projects to the services. For example, the Air Force's
Air Combat Command submitted 10 projects for funding consideration in
fiscal year 2004 even though its subordinate installations had
submitted 100 projects for funding consideration. Often, it uses a
rule-of-thumb that about half of its submissions to the Air Force would
be forwarded to OSD. In practice, DOD and the active services have come
to rely on additional funding provided by Congress beyond the
department's budget request to meet reserve component requirements
while requesting funding for other priorities within DOD's budgetary
constraints. Reserve component officials said they submit fewer
military construction projects than their requirements, choosing to
depend on the congressional adds. However, reserve component officials
said many of their identified construction projects still go unfunded.
High Cost Projects Are Postponed to Future Years:
Some high-cost, high-priority military construction projects are
postponed to future years' funding plans because the projects' cost
would push the cumulative amount of funding over the services' military
construction funding level established for that budget year. Often,
officials would replace these high-cost projects with several lower-
priority, lower-cost projects to come as close as possible to, but not
exceed, the established funding level. For example, at Fort
Leavenworth, Kansas, a high-priority project to renovate an instruction
facility was delayed twice in the 2002 and 2003 fiscal year budgets and
moved to fiscal year 2005 because its estimated cost exceeded the
Army's military construction funding level established for the earlier
fiscal years. By delaying the project, the estimated cost for the
project increased from $75 million to $79 million during this period.
At the Naval Submarine Base New London, Connecticut, the Navy delayed
replacing a pier from fiscal year 2004 to fiscal year 2005 because of
the project's high cost.
Congressional Adds Address Long-term Service Needs but May Require
Adjustments in DOD Planning:
Congress may add various projects during the appropriations process,
addressing what it has considered as inadequate requests for military
construction funding. Funding of these projects generally address long-
term service and installation needs but may require adjustments in
DOD's plans since they may not always align with DOD's short-term
priorities.
For example, Congress added 123 and 120 projects in fiscal years 2003
and 2004, respectively, that were in addition to the 366 and 280
projects that DOD requested during the same periods. According to DOD
officials, while projects that are added by Congress during the
appropriation process may match long-term military construction
requirements they may not always address the services' highest
priorities for the affected appropriation year and require adjustments.
The following examples illustrate this point:
* In fiscal year 2003, Congress moved up and appropriated military
construction funds for an Army National Guard readiness center
originally programmed for fiscal year 2007.
* In fiscal year 2003, Congress moved up and appropriated military
construction funds for a Navy fire station originally planned for
fiscal year 2007.
* In fiscal year 2004, Congress moved up and appropriated military
construction funds for a Marine Corps ground combat training range that
was originally programmed for fiscal year 2009. This project was added
ahead of some other Marine Corps projects already programmed for
construction in earlier fiscal years.
* In fiscal year 2002, Congress moved up and appropriated military
construction funds for an Army maneuver area training equipment site
that was not in the Army's future years defense plan.
* In fiscal year 2002, Congress added 21 Air Force projects that were
not in the Air Force's near-term integrated priority list. In addition,
during fiscal year 2003, Congress added 25 projects that did not appear
in the Air Force integrated priority list. However, Air Force officials
indicated that many of the projects were in the Air Force's long-term
plan.
Increasing the Current Funding Thresholds Gives DOD Additional
Flexibility but Could Lessen Congressional Oversight:
Increasing current funding thresholds for using construction funds
and operation and maintenance funds for unspecified minor military
construction projects would give DOD installation officials more
funding flexibility but might need to be balanced against reducing
congressional oversight of projects affected by these thresholds.
Construction costs have increased 41 percent since the $1.5 million
threshold for using unspecified minor construction funds was last
adjusted upward in 1991 and 7 percent since the $750,000 threshold for
using operation and maintenance funds was last adjusted upward in 2001.
As a result, fewer projects that are smaller in scope can now be
completed using these funds. Additionally, installation officials
sometimes scale back the scope of a project in order to meet the
current thresholds. In doing so, however, they can compromise the
design characteristics of a facility that lacks capacity for future
growth, making the facility potentially inadequate in future years.
When projects are funded under the statutory thresholds, they can be
completed during the same year as identified without seeking approval
through the traditional, multiyear military construction
prioritization and resourcing process. As a result, service and
installation officials stated that the thresholds limit their ability
to quickly respond to unanticipated, urgent requirements. However,
increasing these thresholds could reduce congressional oversight of the
projects affected by these thresholds, unless offset by other means,
such as coupling the increased thresholds with periodic reports on the
usage of those funds.
Congress established maximum amounts of funds applicable to unspecified
minor military construction projects in 1982 and upwardly adjusted
these amounts, or thresholds, through 2001. Currently, an unspecified
minor military construction project is a military construction project
that has an approved cost equal to or less than $1.5 million. Such a
project can have an approved cost equal to or less than $3 million if
the project is intended solely to correct a deficiency that threatens
life, health, or safety. Generally, as long as the minor construction
project's cost estimates are below $750,000, no advance service
Secretary's approval and congressional notification are required.
Otherwise, the project may then be carried out only after the end of a
21-day period after notification is received by Congress. In addition
to the authorized use of military construction appropriations for
unspecified minor projects, service Secretaries may use appropriated
operation and maintenance funds for such projects estimated to cost not
more than $1.5 million to correct deficiencies threatening life,
health, or safety and $750,000 for any other unspecified minor military
construction project.
Existing $1.5 Million Unspecified Minor Construction Fund Threshold
Limits the Size and Scope of Projects:
The existing $1.5 million and $3 million cost estimate thresholds for
using unspecified minor construction funds limit the size and scope of
facilities to be constructed. (See appendix II for section 2805(a)(1)
of Title 10, United States Code.) When projects are funded with
unspecified minor military construction funds under these thresholds,
they can be completed during the same year as identified without
seeking approval through the traditional, multiyear military
construction prioritization and resourcing process. However, because of
the 41 percent increase in construction costs since 1991, when the
threshold was last changed, fewer projects can now use minor military
construction funds. Moreover, the scope of the projects that can be
funded in this way is smaller than in 1991. Increasing the thresholds
for minor construction projects would allow DOD components to respond
more quickly to urgent, unanticipated requirements without seeking
approval through the traditional, multiyear military construction
prioritization and resourcing process. Depending on the size of an
increase in the thresholds, OSD officials state that about 20 to
30 projects could be affected annually and would reduce the number
of projects requiring approval through the traditional, multiyear
military process. The number of projects eligible for funding would
still be contingent upon the total amount of military construction
funds appropriated by Congress for unspecified minor military
construction, regardless of the threshold being increased.
Increasing the funding thresholds for using unspecified minor military
construction funds would help installations quickly respond to a
greater number of smaller military construction projects that could
also address priority needs. For example, officials at Fort McPherson,
Georgia--intending to stay below the $3 million threshold for using
unspecified minor military construction funds for projects involving
life-, health-, or safety-threatening deficiencies--estimated the cost
to construct an installation gate entrance at $2.85 million in fiscal
year 2003. This project was identified as urgent because of force
protection reasons, making the higher funding threshold of $3 million
for unspecified minor military construction funds applicable. However,
because contractor bids for constructing the project were in excess of
$3 million, officials could not use unspecified minor construction
funds. Instead, officials used emergency supplemental funds already
allocated for another installation gate project. This resulted in
deferring the other gate project to fiscal year 2004. In another
example, Naval Station Bremerton, Washington, officials modified part
of a former coal storage facility to accommodate space suitable for
housing computer equipment to respond quickly to unanticipated and
urgent requirements. In an effort to remain under the $1.5 million
threshold, they incorporated the minimum requirements for the building-
-such as replacing flooring, securing unneeded exterior access, and
including mechanical and electrical utility service--at a cost of
$1.49 million. While officials told us the facility meets the bare
minimum requirements, they stated that had the threshold been higher or
the budget process faster, the project would have included better
flooring, better climate control, and better ventilation. As a result,
the existing facility lacks capacity for future growth, making it
potentially inadequate in future years. Similarly, at Scott Air Force
Base, Illinois, officials reduced the scope for a medical supply
warehouse project from $2 million to $1.5 million by reducing the
overall facility's square footage from 10,000 to 8,600 feet to meet the
current $1.5 million threshold for unspecified minor military
construction.
Unspecified minor military construction projects funded with military
construction funds are included only in the department's annual review
process and are not individually submitted to Congress for review and
funding. Congress provides a lump sum amount for each of the services
to execute such unspecified minor military construction projects. If
the thresholds were increased, Congress could lose some oversight of
those additional projects funded with unspecified minor military
construction funds. Nevertheless, there are alternative oversight
measures in addition to the 21-day notification and waiting period that
could be employed to minimize the loss of oversight, such as a
requirement for DOD to periodically report on the status of such
projects.
Existing $750,000 Operation and Maintenance Fund Threshold Also Limits
Project Size and Scope:
The existing $750,000 and $1.5 million thresholds for using operation
and maintenance funds limit the size and scope of facilities to be
constructed with this type of fund. (See appendix II for section
2805(a)(1) of Title 10, United States Code.) When projects are funded
with operation and maintenance funds under these thresholds, they can
be completed during the same year as identified without seeking
approval through the traditional, multiyear military construction
prioritization and resourcing process. Military construction costs have
increased 7 percent since these thresholds were last changed in 2001.
According to installation officials, very few restoration and
modernization projects can be completed for less than $750,000. Also,
OSD reported that an increase in the existing thresholds would allow
DOD components to respond to unforeseen requirements with more properly
sized and scoped facilities, reducing the recapitalization rate faster
by allowing more projects to be funded with operation and maintenance
funds instead of using the traditional, multiyear military construction
process. Still, since operation and maintenance funds are limited in
terms of the amount allocated to each installation, service officials
would have to weigh the alternatives of using the funds--either for
minor construction projects, sustainment, or base operations support.
Increasing the funding thresholds for using operation and maintenance
funds for unspecified minor military construction projects would allow
installations to respond more effectively to urgent and unforeseen
minor projects. For example, at Fort Rucker, Alabama, operation and
maintenance funds were used to build a storage facility to support the
aviation museum in fiscal year 2002 because the project could not
compete well with higher-priority operational projects during the
annual budget process. To accommodate the $750,000 operation and
maintenance fund threshold, officials downsized the facility from a
20,000-square-foot requirement to an 8,000-square-foot, bare-minimum
storage facility with no heating or air conditioning, no finished space
for offices or storage, no brick exterior, and limited phone service.
Installation officials stated that the reduction in space requirements
limits future storage needs but accommodates immediate requirements. In
another example, Scott Air Force Base, Illinois, officials reduced the
scope of a communications equipment warehouse project from a cost
estimate of $1.1 million to $750,000 in order to use operation and
maintenance funding in fiscal year 2004. To achieve this reduction,
officials eliminated a paved road to the facility, reduced the
warehouse space by 12 percent from the initial 5,350 square feet, and
reduced office space by half. Also at Scott Air Force Base, officials
reduced the estimated cost for an addition to the Airman Leadership
School from $1.0 million to $750,000 in order to use operation and
maintenance funds in fiscal year 2003. To achieve this reduction,
officials reduced the finished area of the facility and eliminated
showers in two bathrooms and landscaping. At Langley Air Force Base,
Virginia, officials decided to reduce facility design requirements for
an avionics building to stay below the $750,000 threshold for using
operation and maintenance funds for minor construction. In doing so,
according to one installation official, interior features were
eliminated to the point that the structure will be little more than "a
climate-controlled shell.":
Unspecified minor military construction projects funded with operation
and maintenance funds can be executed within the year that the project
is identified without congressional notice or review. Congress
established a $200,000 threshold for using operation and maintenance
funding for unspecified minor military construction projects in 1986.
It increased this threshold to $300,000 in 1991, to $500,000 in 1996,
and to $750,000 in 2001--the last time the thresholds were changed. If
the thresholds were increased, Congress might lose some oversight of
those projects funded with operation and maintenance funds falling
under the increased thresholds because they are not specifically
identified in the President's budget submissions. Usually, major
command and installation officials determine how to use operation and
maintenance funds for unspecified minor military construction projects,
which are not individually presented in the President's budget
submission. Again, however, Congress could restore some oversight by
using other means of monitoring, such as annual reporting.
Conclusions:
While OSD has sought to adopt various management tools and objectives
for standardizing military construction and costs and improving
facilities, some are not completed and others have weaknesses, which if
improved upon over time could help strengthen the management of DOD
facilities. However, because of competing priorities, DOD is not likely
to realize its investment objectives for facilities in the near term.
More specifically, the services do not propose to fully fund all of
OSD's objectives for improving facilities or, in some instances, the
services have developed funding plans that have unrealistically high
rates of increase in the out-years compared with previous funding
trends and other defense priorities. The base realignment and closure
round authorized for fiscal year 2005, while it carries with it a
significant up-front investment cost to implement realignment and
closure decisions, offers an important opportunity to reduce excess
facilities and achieve greater efficiencies in sustaining
and recapitalizing the remaining facilities if sufficient funding
levels are maintained into the future. Additionally, DOD is reexamining
its worldwide basing requirements, which could potentially lead to
significant changes in facility requirements over the next several
years. As these decisions are implemented over the next several years,
this should permit DOD and the services to increasingly concentrate
future resources on enduring facilities. Because of DOD's approach to
assigning priority to proposed projects in special areas of emphasis
and since certain categories of facilities continue to receive little
or no military construction funding, it is not clear to what extent DOD
has a mechanism for periodically reassessing military construction
priorities to ensure that the risk of delaying proposed military
construction projects that fall outside the specific areas of emphasis
are being given appropriate consideration. Under the current process of
prioritizing and resourcing military construction projects, those
facilities--including both mission performance and quality of life
facilities--not in the specific areas of emphasis may not always
receive military construction funding for long periods of time even if
their deterioration is significant. Unless DOD has a mechanism for
periodically reassessing military construction priorities for facility
categories that fall outside the department's specific areas
of emphasis to ensure that the risk of delaying proposed military
construction projects is being given appropriate consideration, certain
categories of deteriorated and inadequate facilities will continue to
receive no military construction funding year after year. Consequently,
neglected facilities will continue to deteriorate over time, affecting
the services' ability to accomplish their mission and improve
servicemembers' quality of life.
While there are several advantages to increasing the funding thresholds
for selected minor construction projects, these actions would also have
to be balanced against the potential for reducing congressional
oversight of those projects affected by the thresholds. Yet, changing
the thresholds would increase installations' flexibility to address
more of their facility problems quicker. The existing thresholds may
not provide the funding levels needed on the basis of current
construction costs. Lacking higher thresholds, installations will
continue to use the multiyear prioritization and resourcing process for
relatively inexpensive, minor military construction projects.
Alternatives, such as a reporting requirement, could ensure some
continued congressional oversight of those projects affected by easing
the funding thresholds for unspecified minor construction projects.
Recommendations for Executive Action:
To help strengthen OSD's management and improve the condition of DOD
facilities, we recommend that the Secretary of Defense direct the Under
Secretary of Defense for Acquisition, Technology, and Logistics to take
the following three actions:
* complete the department's management tools, including the revision of
defense facilities strategic plan, to provide a more consistent
approach to managing facilities and planning construction projects and
costs;
* reevaluate the time frames for completing the three key objectives to
reflect that there are competing funding priorities and that the
process of realigning and closing domestic bases to reduce DOD's excess
infrastructure and realigning overseas facilities will take several
years to accomplish and could affect meeting facilities' investment
goals; and:
* develop a mechanism for periodically reassessing military
construction priorities for facility categories that fall outside the
department's specific areas of emphasis to ensure that the risk of
delaying proposed military construction projects with potential
operational and quality of life impacts are being given appropriate
consideration.
Matters for Congressional Consideration:
Congress may wish to consider the advantages and disadvantages of
increasing the military construction funding thresholds and operation
and maintenance funding thresholds for unspecified minor military
construction projects.
Agency Comments and Our Evaluation:
In commenting on a draft of this report, the Principal Assistant Deputy
Under Secretary of Defense (Installations and Environment) concurred or
partially concurred with our recommendations and indicated some actions
that are being taken to address them. DOD's comments are included in
this report in appendix V. DOD also provided technical changes, which
we incorporated as appropriate, including adjustments in values
associated with selected areas of emphasis in military construction.
We are sending copies of this report to the appropriate congressional
committees, as well as 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 will be
available at no charge on GAO's Web site at http://www.gao.gov.
Please contact me at (202) 512-8412, or my Assistant Director, Mark
Little, at (202) 512-4673 if you or your staff have any questions
regarding this report. Robert B. Brown, Daniel Chen, J. Andrew Walker,
R.K. Wild, and Jay Willer were major contributors to this report.
Signed by:
Barry W. Holman, Director:
Defense Capabilities and Management:
[End of section]
Appendix I: Scope and Methodology:
To assess the steps that the Office of the Secretary of Defense (OSD)
has taken to enhance the management of the military construction
program, we met with officials of OSD, military services, National
Guard and Reserves, the Defense Logistics Agency, Tricare Management
Activity, Department of Defense Education Activity, Central Command,
Special Operations Command, Naval Sea Systems Command, Naval Facilities
Engineering Command, U.S. Army Corps of Engineers, and the U.S. Army
Installation Management Agency. At each organization, we discussed
OSD's role in managing elements of the military construction program,
OSD's management tools to standardize military construction and costs,
and OSD's objectives for improving facilities. We also examined key
documents related to OSD's efforts to standardize military construction
and costs: the defense facilities strategic plan, installation
readiness reporting system, facilities assessment database, facilities
pricing guide, facilities sustainment model, recapitalization rate
process, unified facilities criteria, and improved budgeting methods.
To view the condition of facilities and new military construction
projects first hand, we visited and met with officials from 20
installations across the country: Aberdeen Proving Ground, Maryland;
Fort Belvoir, Virginia; Fort Benning, Georgia; Fort Lewis, Washington;
Fort Stewart, Georgia; Naval Air Station Whidbey Island, Washington;
Naval Shipyard Puget Sound, Washington; Naval Station Coronado,
California; Naval Station Everett, Washington; Naval Station Bremerton,
Washington; Naval Station San Diego, California; Naval Station Norfolk,
Virginia; Naval Submarine Base Bangor, Washington; Naval Weapons
Station Yorktown, Virginia; Marine Corps Base Quantico, Virginia;
Marine Corps Base Camp Pendleton, California; Andrews Air Force Base,
Maryland; MacDill Air Force Base, Florida; Langley Air Force Base,
Virginia; and McChord Air Force Base, Washington. We selected these
installations because they represent a range of facility conditions,
missions, major commands, and geographic locations. During our visits,
we met with the facilities' occupants and obtained pictures that
document facility conditions. To assess the likelihood that the
military services will meet OSD's three objectives for improving
facilities, we examined the services' current and projected funding
plans for sustaining, restoring, and modernizing facilities to
determine whether these plans would allow them to meet OSD's objectives
by specified deadlines. We also compared the services' prior
obligations for sustainment, restoration, and modernization with their
future funding projections designed to reach OSD's objectives to
determine whether the services' plans to address these issues are
credible and realistic. We did not validate the services' reported
sustainment or recapitalization requirements.
To determine whether the process by which military construction
projects are prioritized and resourced ensures that all categories of
facilities that affect the services' ability to accomplish their
mission and improve quality of life are reached, we spoke with
officials of the military services' headquarters, National Guard and
Reserves headquarters, the Defense Logistics Agency, Tricare Management
Activity, Department of Defense Education Activity, Central Command,
Special Operations Command, Naval Sea Systems Command, Naval Facilities
Engineering Command, Army Corps of Engineers, the U.S. Army
Installation Management Agency, and Air Mobility Command, and visited
Aberdeen Proving Ground, Maryland; Fort Belvoir, Virginia; Fort
Benning, Georgia; Fort Lewis, Washington; Fort Stewart, Georgia; Naval
Air Station Whidbey Island, Washington; Naval Shipyard Puget Sound,
Washington; Naval Station Coronado, California; Naval Station Everett,
Washington; Naval Station Bremerton, Washington; Naval Station San
Diego, California; Naval Station Norfolk, Virginia; Naval Submarine
Base Bangor, Washington; Marine Corps Base Quantico, Virginia; Marine
Corps Base Camp Pendleton, California; Andrews Air Force Base,
Maryland; MacDill Air Force Base, Florida; Langley Air Force Base,
Virginia; and McChord Air Force Base, Washington. At each command or
installation, we discussed the process by which military construction
projects are prioritized and resourced and how significant facility
needs are addressed during the process. Using budget data for fiscal
years 1995 through 2004, we determined the impact of funding military
family housing and barracks, annual unspecified cost estimates, and the
services' major priorities on the amount of military construction funds
remaining for individual installation needs. To determine whether the
services' and installations' priority projects receive funding, we
compared installations' and services' project priority lists for fiscal
years 2002 and 2003 with the (1) list of projects approved by each
service, (2) list of projects that accompanied the President's budget
submission, and (3) list of projects that were approved and funded by
Congress. During our visits to installations, we identified unfunded
critical military construction projects, the reasons why they were not
funded, and the effects of not funding these projects. Finally, we
identified the number of military construction projects added during
the annual appropriations process and compared these adds with the
installations' and services' priorities for military construction.
To assess the advantages and disadvantages of changing existing funding
and approval thresholds for constructing and repairing facilities, we
met with officials of OSD and the military services. At each
organization, we discussed the appropriateness of existing funding
thresholds for unspecified minor construction projects, the
effectiveness of the requirement for initiating congressional
notification for reprogramming military construction funds, and the
department's legislative proposals to increase the funding and approval
thresholds and to change the notification requirement. We also reviewed
the proposed legislative language and justification. To discuss the
advantages and disadvantages of changing current funding and approval
thresholds for constructing and repairing facilities at the
installation level, we visited and met with officials from Aberdeen
Proving Ground, Maryland; Fort Belvoir, Virginia; Fort Benning,
Georgia; Fort Lewis, Washington; Fort Stewart, Georgia; Naval Air
Station Whidbey Island, Washington; Naval Shipyard Puget Sound,
Washington; Naval Station Coronado, California; Naval Station Everett,
Washington; Naval Station Bremerton, Washington; Naval Station San
Diego, California; Naval Station Norfolk, Virginia; Naval Submarine
Base Bangor, Washington; Marine Corps Base Quantico, Virginia; Marine
Corps Base Camp Pendleton, California; Andrews Air Force Base,
Maryland; MacDill Air Force Base, Florida; Langley Air Force Base,
Virginia; and McChord Air Force Base, Washington. In addition, we
documented the increase in construction costs since fiscal year 1982
according to the national income and product account tables for
military structures, Bureau of Economic Analysis, Department of
Commerce, and through discussions with OSD, service headquarters, and
installation officials, and determined the effect of this increase on
the ability of local and regional facility managers to execute
unspecified minor construction projects under existing thresholds. We
also interviewed officials at OSD, the services' headquarters, and
installations to identify the impact of the waiting period and
notification requirement for reprogramming military construction funds
while facility managers wait for congressional approval.
In addition, our review focused on nonhousing issues concerning
military construction inside the United States and generally did not
address issues associated with military family housing and overseas
construction programs. These facilities ranged from administrative
offices, airfields and terminals, and piers to classrooms and other
training buildings, water treatment plants, warehouses, barracks, and
child development centers. 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 the defense health
program (hospitals and medical clinics).
In performing this review, we used the same accounting records and
financial reports that the Department of Defense (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. We conducted our work from February through
November 2003 in accordance with generally accepted government auditing
standards.
[End of section]
Appendix II: Section 2805 of Title 10, United States Code (2003):
Section 2805 of Title 10, United States Code (unspecified minor
construction), states:
"(a)(1) Except as provided in paragraph (2), within an amount equal to
125 percent of the amount authorized by law for such purpose, the
Secretary concerned may carry out unspecified minor military
construction projects not otherwise authorized by law. An unspecified
minor military construction project is a military construction project
that has an approved cost equal to or less than $1,500,000. However, if
the military construction project is intended solely to correct a
deficiency that is life-threatening, health-threatening, or safety-
threatening, an unspecified minor military construction project may
have an approved cost equal to or less than $3,000,000.
(2) A Secretary may not use more than $5,000,000 for exercise-related
unspecified minor military construction projects coordinated or
directed by the Joint Chiefs of Staff outside the United States during
any fiscal year.
(b)(1) An unspecified minor military construction project costing more
than $750,000 may not be carried out under this section unless approved
in advance by the Secretary concerned. This paragraph shall apply even
though the project is to be carried out using funds made available to
enhance the deployment and mobility of military forces and supplies.
(2) When a decision is made to carry out an unspecified minor military
construction project to which paragraph (1) is applicable, the
Secretary concerned shall notify in writing the appropriate committees
of Congress of that decision, of the justification for the project, and
of the estimated cost of the project. The project may then be carried
out only after the end of the 21-day period beginning on the date the
notification is received by the committees.
(c)(1) Except as provided in paragraphs (2) and (3), the Secretary
concerned may spend from appropriations available for operation and
maintenance amounts necessary to carry out an unspecified minor
military construction project costing not more than--:
(A) $1,500,000, in the case of an unspecified minor military
construction project intended solely to correct a deficiency that is
life-threatening, health-threatening, or safety-threatening; or:
(B) $750,000, in the case of any other unspecified minor military
construction project.
(2) The authority provided in paragraph (1) may not be used with
respect to any exercise-related unspecified minor military
construction project coordinated or directed by the Joint Chiefs of
Staff outside the United States.
(3) The limitations specified in paragraph (1) shall not apply to an
unspecified minor military construction project if the project is to be
carried out using funds made available to enhance the deployment and
mobility of military forces and supplies.
(d) Military family housing projects for construction of new housing
units may not be carried out under the authority of this section.":
[End of section]
Appendix III: DOD's Prioritization and Resourcing Process for
Military Construction Projects:
Military construction appropriations are one of several annual pieces
of legislation that provide DOD with funding for national defense.
Other major appropriations legislation includes the defense
appropriations bill, which provides funds for all nonconstruction
military activities of DOD and constitutes more than 90 percent of
national-security-related spending, and the energy and water
development appropriations bill, which provides funding for atomic
energy defense activities of the Department of Energy and for civil
projects carried out by the U.S. Army Corps of Engineers. Another
source of military construction funding is supplemental appropriations.
Military construction appropriations are the major, but not the sole,
source of funds for facility investments by the military services and
defense agencies. Defense appropriations provide some funds for
facility sustainment in operation and maintenance and minor
construction accounts. In addition, funds for construction and
maintenance of morale, welfare, and recreation-related facilities are
partially provided through proceeds of commissaries, recreation user
fees, and other nonappropriated income. Because of the long-term nature
of construction projects, military construction funds can generally be
obligated for up to 5 fiscal years, reflecting the long-term nature of
capital building programs.
The DOD prioritization and resourcing process for military construction
projects flows from OSD and service guidance. This guidance describes
OSD's objectives for improving facilities, identifies the services'
categories of facilities that will receive priority in funding military
construction projects, and assigns organizational responsibilities for
the process. The program also involves a sequence of reviews by
installations, major commands, the office of the Secretary of the
military services, OSD, the Office of Management and Budget, and
Congress. (See fig. 4.) During even years, the services, DOD, and the
President submit a 2-year military construction budget to Congress.
Typically, Congress will authorize and appropriate funds for only the
first year of that budget. To update and adjust the second year's
budget, as necessary, an amended budget review is conducted in the odd
year. It is important to note that project identification, master
planning, and programming activities are not to be paid for with
military construction funds--these costs are normally met with
operation and maintenance funds.
Figure 4: Summary of the Military Construction Process, Fiscal Year
2005:
[See PDF for image]
Note: While the figure indicates that the process takes 5 years, in
practice it can typically last up to 8 years or more.
[End of figure]
Per the military service and major command instructions, an
installation will first identify and document its construction needs.
It will also develop the DD Form 1391 in support of all its projects,
including tenant-sponsored and centrally managed program projects. DD
Form 1391 contains four primary categories of information: (1)
description of the project, (2) construction cost, (3) justification,
and (4) back-up data. The document must be clear, concise, logical, and
complete, and must effectively describe, justify, and price the
project. This responsibility also includes those projects that may be
developed through support from the U.S. Army Corps of Engineers, Naval
Facilities Engineering Command, or architect-engineers. The
installation will then prioritize its projects, and prepare and submit
completed project documentation on designated projects forward through
its major command.
The major command (to include the Army's Installation Management Agency
and the Navy's Commander Navy Installations) will ensure that
all project documentation, including the DD Forms 1391, is complete and
properly addresses the requirement. Complete documentation is usually
a criterion for prioritizing at the service level, and incomplete
documentation could result in a lower ranking of the project. The
command will review the documentation of each project to ensure that
the requirement is valid and conforms to current service objectives,
policies, and procedures. It will also determine whether a survey of
the site has been conducted, available records reviewed, and
appropriate environmental analyses completed, and whether the site is
free from pollutants, contaminants, and ordnance and explosive waste
that would affect the start of construction. The command also considers
whether force protection considerations have been addressed and
documented properly. Furthermore, the command will certify that all
planning and related coordination have been accomplished on all budget
year projects and that there is sufficient information to begin concept
or parametric design before submission to the service headquarters. In
addition, a major command may add its own military construction
projects to the list of projects. Finally, the command will prioritize
its projects, and prepare and submit the completed documentation on
designated projects forward through the service headquarters.
The service headquarters will review all submissions for compliance
with service priorities, policies, procedures, and environmental laws.
As shown in table 1, priorities vary depending on a services' mission.
For example, the Army has made transformation a priority in order to
support brigades that can mobilize in a minimal amount of time. In
comparison, the Navy has made barracks, piers, and hangars its
priorities and the Air Force has made facilities that support new
missions and weapons systems, such as the C-17, its top priority. The
Marine Corps does not have specific categories but states that it will
fund its most essential needs.
Table 1: Comparison of the Military Services' Priorities for Military
Construction Projects, Fiscal Year 2004:
Army: Barracks;
Navy: Piers;
Air Force: New mission;
* Facilities to support new mission requirements.
Army: Transformation;
* Facilities to support new missions, such as Stryker brigades;
Navy: Hangars;
Air Force: Fact of life;
* Compliance with federal and state environmental laws or regulations.
Army: Training ranges;
Navy: Barracks;
Air Force: Corporate adjustments;
* Projects approved and planned by the Air Force Chief of Staff or
Secretary of the Air Force. Examples include quality of life projects
from the dormitory and fitness center master plans.
Army: Army power projection program;
Facilities to support mobilization;
Antiterrorism and force protection (considered in all facility
construction);
Focus facility strategy;
* Army National Guard readiness centers;
* Army Reserve centers;
* Physical fitness facilities;
* Trainee barracks;
* General instruction classrooms;
* Vehicle maintenance;
* Chapels.
Source: Military services.
Note: The Marine Corps does not have specific priorities.
[End of table]
The service identifies projects on the list that must be funded in the
immediate fiscal year and places those projects at the top of its
priority list. Next, each service headquarters rates the proposed
projects in a manner that reflects the projects' mission and impact.
The Army, Navy, and Air Force assign numerical ratings to the proposed
projects that reflect the projects' priority in terms of its impact on
the services' mission. (See table 2.) The Marine Corps also assigns
priority ratings to its projects but does not utilize a category-driven
prioritization process like the other services. As illustrated, the
Army uses a 100-point system to prioritize its projects. A project
receives up to 50 points, depending on where the project lies within
the major command's priority list (the number 1 priority automatically
receives 50 points, and the remaining projects receive fewer points,
depending on the facility's replacement value and number of projects);
up to 20 points, depending on the facility condition rating from the
installation status report (projects that are poor in quality or
quantity according to the installation status report's rating receive
more points); up to 20 points, depending on the major command's
presentation to the annual project review board; and up to 10 points if
the project follows certain leadership criteria (4 points, depending on
whether or not the demolition amount is equal to, greater than, or less
then the facility scope; 2 points if the project is a new or existing
facility; 2 points for headquarters assessment for facilities not
covered by the Army's criteria; and 2 points for having a correct DD
form 1391). Instead of a 100-point system, the Navy uses a more complex
weighting system without a predetermined maximum number of points. A
project receives up to 700 points, depending on where the project lies
within the major command's priority (higher-priority projects receive
more points); up to 500 points, depending on what function a project
fulfills (projects that fall in OSD and Navy priorities receive more
points); and up to 200 points are given to a project, depending on the
service headquarters' assessment of the project's priority. In
addition, if a project relates to bachelor quarters, it can receive up
to an additional 75 points, depending on the number of bachelor
quarters at the installation, and receives the sum of points on the
basis of factors--such as demolition, joint use, and political
interest--that range from 100 to negative 200. For example, projects
previously approved automatically receive 40 points, projects to reduce
sustainment automatically receive 35 points, and projects to eliminate
group latrines in barracks automatically receive 30 points. The Air
Force uses a 100-point system for projects that do not fall within the
services' top priorities--overseas projects receive automatically an
additional 2 points. Projects that support the Air Force's priorities
listed in table 1 are not ranked in this system because they are
automatically classified as the top priorities for funding
considerations. A project receives up to 60 points, depending on where
the project lies within the major command's priority list (the number 1
priority automatically receives 60 points, and the remaining projects
receive fewer points, depending on the total amount of submissions from
the major command); up to 35 points, depending on the facility's
mission (core modernization or force structure change, readiness and
sustainability, people, and infrastructure and other) and how the
facility deficiency affects the mission (critical, degraded, and
enhancement); up to 2 points, depending on the Air Force corporate
panel's opinion on whether a project must, should, or could receive
funding immediately (a project that must receive funding in the
immediate year receives 2 points, a project that should receive funding
receives 1 point, and a project that can be delayed receives no
points); and up to 3 points for projects that address efficiencies
(1.25 point), mission timing (1 point), demolition (0.75 point), and
overseas presence (2 points). Marine Corps officials said that owing to
its smaller size, the Marine Corps is able to review and prioritize all
proposed military construction projects submitted by its installations
and commands. A headquarters staff team personally reviews all the
proposed projects within the Marine Corps before the first
prioritization meeting of the facilities program evaluation group. The
group, representing all major commands and warfare areas within the
Marine Corps, prioritizes the proposed projects utilizing cost and
benefit analysis, determining how the projects fulfill requirements
necessary for the Marine Corps to accomplish its mission and assessing
the overall impact that each project will have on the Marine Corps as a
whole.
Table 2: Comparison of the Military Services' Systems to Prioritize
Military Construction Projects, Fiscal Year 2004:
Army: Major command priority (50 points);
Navy: Installation management claimant priority (700 points);
Air Force: Major command priority (60 points).
Army: Installation status report score (20 points);
Navy: Programmatic categories (500 points);
Air Force: Matrix model score (35 points).
Army: Project review board score (20 points);
Navy: Headquarters' assessment (200 points);
Air Force: Panel points score (2 points).
Army: Leadership criteria (10 points);
Navy: Barracks (75 points);
Air Force: Military construction issue process team (3 points).
Navy: Special considerations (The sum of factors that range from 100
to negative 200 points);
Air Force: Overseas presence (2 points if applicable).
Source: Military services.
Note: The Marine Corps does not use a numerical weighting system in its
prioritization process.
[End of table]
After all the projects are identified and prioritized, the service
headquarters forms its overall priority list to create the service's
military construction program. The service's budget director, who also
presents adjustments to the military construction program, then
verifies the budget estimates on the basis of the priority list. Once
the proposed adjustments and estimates are approved, the military
construction program is then submitted to the service Secretary and
chief of staff. Upon approval, the service Secretary will then submit
the military construction program with completed project documentation
forward to OSD. In addition, the service's budget director will send a
justification book to OSD, which contains a DD Form 1391 for each
requirement in the military construction program.
The Office of the Under Secretary of Defense (Comptroller), in
conjunction with other OSD offices--such as the Office of the Under
Secretary of Defense for Acquisition, Technology, and Logistics--
reviews the services' proposed construction projects to confirm and
adjust requirements as necessary. Also, members of the defense
resources board, the Assistant Secretary of Defense program managers,
or commanders develop program review proposals--each proposal contains
projects recommended for addition or deletion without changing the
overall amount of the services' proposed military construction budget.
In addition, officials of OSD and the Office of Management and Budget
conduct a joint budget review of the services' military construction
program, focusing on proper pricing, reasonableness, ability to
execute, and validity of requirements. Similar to the processes used in
the services, every project submitted is reviewed, and a decision is
issued on each. Through program budget decisions, the OSD and Office of
Management and Budget can choose to approve, disapprove, ask that the
project be revised, or defer the project to a future year. Before the
Under Secretary of Defense signs a program budget decision, the service
can challenge the program budget decision. OSD will then review the
challenge and with senior-level negotiations, issue a final program
budget decision on the project. Once signed by the Under Secretary of
Defense, the program budget decisions are sent to the appropriate
service official to be incorporated in the services' military
construction programs to be combined in the President's budget
submission to Congress. The budget request for military construction
funding for each fiscal year includes major construction, project
planning and design, and unspecified minor construction.
[End of section]
Appendix IV: Services' Plans to Meet OSD's Three Key Investment
Objectives:
While OSD has periodically revised its three key investment objectives
on the basis of the services' ability to meet them, the services still
do not plan to meet most of them within the expected time frames and,
in those instances where the service officials have indicated an intent
to meet the objectives, their plans are based on future funding that
requires unrealistically high rates of increase when compared with
previous funding trends and when considered against other defense
priorities.
First, the military services do not plan to fully fund their
sustainment requirements in fiscal year 2004--one of OSD's key
objectives for improving facilities. (See table 3.) We found that
sustainment funding must compete with other traditional operation and
maintenance funding priorities, such as base operations, organizational
supplies and equipment, environmental concerns, training, and travel.
Facility sustainment often rates a lower funding priority than other
operation and maintenance functions because the services have been
reluctant to fund facilities when they have other unfunded priorities
and programs. Officials want to do more but are limited by competing
demands within their respective service. In addition, sustainment
fundsæeven when appropriately budgetedæare often reallocated, with the
end result that the programmed sustainment funding never fully reaches
the intended installations.
Table 3: Planned Status for Achieving OSD's Objective of Fully Funding
Sustainment by Military Service and DOD-wide, Fiscal Years 2004 through
2009:
Defense component: Army;
Fiscal year: 2004: No;
Fiscal year: 2005: No;
Fiscal year: 2006: No;
Fiscal year: 2007: No;
Fiscal year: 2008: Yes;
Fiscal year: 2009: Yes.
Defense component: Navy;
Fiscal year: 2004: No;
Fiscal year: 2005: No;
Fiscal year: 2006: No;
Fiscal year: 2007: No;
Fiscal year: 2008: Yes;
Fiscal year: 2009: Yes.
Defense component: Air Force;
Fiscal year: 2004: No;
Fiscal year: 2005: No;
Fiscal year: 2006: No;
Fiscal year: 2007: No;
Fiscal year: 2008: Yes;
Fiscal year: 2009: Yes.
Defense component: Marine Corps;
Fiscal year: 2004: No;
Fiscal year: 2005: No;
Fiscal year: 2006: No;
Fiscal year: 2007: No;
Fiscal year: 2008: No;
Fiscal year: 2009: No.
Defense component: DOD-wide;
Fiscal year: 2004: No;
Fiscal year: 2005: No;
Fiscal year: 2006: No;
Fiscal year: 2007: No;
Fiscal year: 2008: Yes;
Fiscal year: 2009: Yes.
Source: DOD.
Note: The Marine Corps fully funded sustainment in fiscal year 2003.
[End of table]
Second, as shown in table 4, the military services plan to achieve the
recapitalization objective beginning in fiscal year 2008, with the
exception of the Army. According to Army officials, the Army will not
meet this objective during fiscal years 2004 through 2009 because of
competing funding priorities, especially force transformation.
Table 4: Planned Status for Achieving OSD's Objective of Attaining a
67-Year Recapitalization Rate by Military Service and DOD-wide, Fiscal
Years 2004 through 2009:
Defense component: Army;
Fiscal year: 2004: No;
Fiscal year: 2005: No;
Fiscal year: 2006: No;
Fiscal year: 2007: No;
Fiscal year: 2008: No;
Fiscal year: 2009: No.
Defense component: Navy;
Fiscal year: 2004: No;
Fiscal year: 2005: No;
Fiscal year: 2006: No;
Fiscal year: 2007: No;
Fiscal year: 2008: Yes;
Fiscal year: 2009: Yes.
Defense component: Air Force;
Fiscal year: 2004: No;
Fiscal year: 2005: No;
Fiscal year: 2006: No;
Fiscal year: 2007: No;
Fiscal year: 2008: Yes;
Fiscal year: 2009: Yes.
Defense component: Marine Corps;
Fiscal year: 2004: No;
Fiscal year: 2005: No;
Fiscal year: 2006: No;
Fiscal year: 2007: No;
Fiscal year: 2008: Yes;
Fiscal year: 2009: Yes.
Defense component: DOD-wide;
Fiscal year: 2004: No;
Fiscal year: 2005: No;
Fiscal year: 2006: No;
Fiscal year: 2007: No;
Fiscal year: 2008: Yes;
Fiscal year: 2009: Yes.
Source: DOD.
[End of table]
However, to achieve the 67-year recapitalization rate, all the services
call for rapid increases in restoration and modernization funding from
fiscal year 2004 through fiscal year 2009, but this growth appears
unrealistic when compared with prior funding levels. As shown in figure
5, using constant fiscal year 2004 dollars, the Army proposes to
increase its restoration and modernization funding 134 percent from
$1.14 billion in fiscal year 2004 to $2.67 billion in fiscal year 2009.
Under its funding proposal, the Navy plans to increase its funding
227 percent from $750 million to $2.45 billion during the same period.
More than half of this increase is planned during 3 fiscal years, from
fiscal year 2007 through fiscal year 2009, when the Navy proposes to
increase its funding by 87 percent to $2.45 billion from $1.31 billion.
From a low of $710 million in fiscal year 2004, the Air Force proposes
to increase its restoration and modernization funding 254 percent to
$2.51 billion in fiscal year 2009. Most of this increase occurs from
fiscal year 2005 through fiscal year 2006, when it plans to increase
its funding $1.04 billion (106 percent). The Marine Corps plans a
317 percent increase in restoration and modernization funding, from a
low of $118 million in fiscal year 2006 to $500 million in fiscal year
2009.
Figure 5: Military Services' Planned Annual Restoration and
Modernization Funding, Fiscal Years 2004 through 2009:
[See PDF for image]
[End of figure]
The services' rapid increases in restoration and modernization funding
from fiscal year 2004 through fiscal year 2009 appear uncertain when
compared with the need for funds for other defense priorities, such as
the war on terrorism, weapon systems modernization, and force
transformation. In practice, proposed funding for future years'
military construction programs are often reduced as the budget year
approaches. As a result of the war on terrorism, DOD is seeking higher
than previously planned funding during this period for a number of
pressing priorities against which facilities restoration and
modernization must compete, including the Global War on Terrorism,
Operation Enduring Freedom, the Balkans, military readiness, weapons
procurement, and research and development. Moreover, some of the
services have specific funding priorities. For example, Army officials
told us that funding for transformation is the service's highest
funding priority. At the Navy, officials said the fleet modernization
program is the service's highest funding priority. In the case of the
Air Force, officials said new aircraft procurement and associated
facilities are the Air Force's funding priorities. The Marine Corps'
highest funding priority is power projection.
Third, the military services are unlikely to achieve OSD's objective to
improve the quality of facilities from the current C-4 and C-3 ratings
to C-2 by the end of 2010. To improve the overall condition of
facilities, DOD set an objective for the military services to
concentrate funding in order to eliminate C-3 and C-4 facility ratings,
bringing them up to a minimal C-2 level by fiscal year 2010. However,
at the time of our review, service officials said the Navy, the Air
Force, and the Marine Corps were not planning to meet this objective
owing to a lack of expected funding. Army officials stated that the
Army could meet the objective if the required funding were provided. To
achieve this objective, the Army would have to, at the very minimum,
fund the rapid increase in restoration and modernization funding shown
in figure 5. Even this minimum funding level appears unlikely when
compared with previous funding levels and considering other future Army
priorities and programs. DOD estimates that it would cost $62 billion
(or $7 billion annually during fiscal years 2002 through 2010) to
achieve this objective departmentwide. DOD also estimates that it would
cost more than $164 billion over the same time period to reach a C-1
level for all facilities.
[End of section]
Appendix V: Comments from the Department of Defense:
ACQUISITION, TECHNOLOGY AND LOGISTICS:
OFFICE OF THE UNDER SECRETARY OF DEFENSE:
3000 DEFENSE PENTAGON
WASHINGTON, DC 20301-3000:
09 FEB 2004:
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,
Thank you for the opportunity to review the draft GAO report, 'Defense
Infrastructure: Long-term Challenges in Managing the Military
Construction Program,' dated December 16, 2003 (GAO Code 350316/GAO-04-
288). We have considered comments from the Services and:
Defense Agencies, and have drafted a consolidated DoD response.
Regarding GAO's first recommendation to "complete the Department's
management tools, including the revision of defense facilities
strategic plan," I am pleased to report that the defense installations
strategic plan, a broader follow-on of the facilities strategic plan,
is being prepared and expected to be ready in March 2004. With regard
to the second recommendation to relax facilities goals, the Department
partially concurred because we regularly review timeframes for
achieving objectives as a normal course of business, and recent reviews
have resulted in some adjustments to target dates. For example, the
Department has accepted modest institutional risk in adjusting the
goal for a 67-year recapitalization rate from FY07 to FY08. With
respect to the third recommendation to develop a mechanism to
assess military construction policies, the Department is developing a
universal quality rating system to be used in conjunction with the
facilities recapitalization metric to track progress toward the FY 2010
C-2 goal for all facility types.
We request that you include our enclosed comments in your final report.
Sincerely,
Signed for:
Philip W. Grone:
Principal Assistant Deputy Under Secretary of Defense (Installations
and Environment):
ENCLOSURE:
GAO CODE 350316/GAO-04-288:
"DEFENSE INFRASTRUCTURE: LONG-TERM CHALLENGES IN MANAGING THE MILITARY
CONSTRUCTION PROGRAM":
DEPARTMENT OF DEFENSE COMMENTS TO THE RECOMMENDATIONS:
RECOMMENDATION 1: The GAO recommended that the Secretary of Defense
direct the Under Secretary of Defense for Acquisition, Technology, and
Logistics to complete the Department's management tools, including the
revision of defense facilities strategic plan, to provide a more
consistent approach to managing facilities and planning construction
projects. (Page 35/Draft Report):
DoD RESPONSE: Concur.
The defense installations strategic plan, a broader follow-on of the
facilities strategic plan, is being prepared and expected to be ready
in March 2004.
RECOMMENDATION 2: The GAO recommended that the Secretary of Defense
direct the Under Secretary of Defense for Acquisition, Technology, and
Logistics to reevaluate the time frames for completing the three key
objectives to reflect that there are competing funding priorities and
that the process of realigning and closing domestic bases to reduce
DoD's excess infrastructure and realigning overseas facilities will
take several years to accomplish and could affect meeting facilities
investment goals. (Page 35/Draft Report):
DoD RESPONSE: Partially Concur.
DoD regularly reviews timeframes for achieving objectives as a normal
course of business. Recent reviews have resulted in some adjustments to
target dates. For example, the Department has accepted modest
institutional risk in adjusting the goal for a 67-year recapitalization
rate from FY07 to FY08. However, the effect of restructuring the global
footprint through BRAG or other means cannot be assessed at this time.
While restructuring could slow progress toward objectives, it is also
possible for restructuring to accelerate recapitalization process and
eliminate a significant portion of the C-3/C-4 backlog. The
Department's models and metrics are flexible enough to address
adequately the effects of such restructuring.
RECOMMENDATION 3:
The GAO recommended that the Secretary of Defense direct the Under
Secretary of Defense for Acquisition, Technology, and Logistics to
develop a mechanism for periodically reassessing military construction
priorities for facility categories that fall outside the Department's
specific areas of emphasis to ensure that the risk of delaying proposed
military construction projects with potential operational and quality
of life impacts are being given appropriate consideration. (Pages
35-36/Draft Report):
DoD RESPONSE: Partially concur.
The Department is developing a universal quality rating system to be
used in conjunction with the facilities recapitalization metric to
track progress toward the FY 2010 C-2 goal. This mechanism will allow
for tracking progress across all facility types.
[End of section]
FOOTNOTES
[1] Sustainment includes the recurring maintenance and repair
activities necessary to keep an inventory of facilities in good working
condition.
[2] Recapitalization includes the major renovations or reconstruction
activities (including facility replacement) needed to keep facilities
modern and efficient in an environment of changing standards and
missions.
[3] As authorized by Congress in 2001--the National Defense
Authorization Act for Fiscal Year 2002 (Pub. L. No. 107-107, sec. 3001
(Dec. 28, 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 the
department has from 20 to 25 percent excess capacity in its facilities.
Accordingly, as a result of the round of base realignments and closures
anticipated in fiscal year 2005, the military services and defense
agencies will have to adjust their facility maintenance and
recapitalization plans.
[4] Military construction, as defined in 10 U.S.C. 2801 (2003)
"includes any construction, development, conversion, or extension of
any kind carried out with respect to a military installation."
Construction projects consist of all types of buildings, roads,
airfield pavements, and utility systems costing $750,000 or more.
[5] Restoration includes repair and replacement work to restore
facilities damaged by inadequate sustainment, excessive age, natural
disaster, fire, accident, or other causes. Modernization includes
altering or modernizing facilities to meet new or higher standards,
accommodate new functions, or replace structural components.
[6] See section 2805 of Title 10, United States Code (2003), which is
reproduced in appendix II.
[7] See 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) and U.S. General Accounting Office, Defense Infrastructure:
Changes in Funding Priorities and Management Processes Needed to
Improve Condition and Reduce Costs of Guard and Reserve Facilities,
GAO-03-516 (Washington, D.C.: May 15, 2003).
[8] The conference report (H.R. Conf. Rep. No. 108-342 [2003]),
accompanying H.R. 2559, directed DOD to prepare detailed comprehensive
master plans starting in 2006 for the changing infrastructure
requirements for U.S. military facilities within each of its overseas
regional commands. The Senate Report (S. Rep. No. 108-82 [2003] at p.
14) directed GAO to monitor the infrastructure master plans being
developed and implemented for the overseas regional commands and to
provide the congressional defense committees with a report by May 15 of
each year giving an assessment of the status of the plans, associated
costs, burden-sharing implications, and other relevant information
involving property returns to host nations, restoration issues, and
residual values.
[9] See U.S. Department of Defense, Defense Installations 2001: The
Framework for Readiness in the 21st Century (Washington, D.C.: August
2001).
[10] DOD defines the recapitalization rate as the number of years
required to replace or renovate facilities at a given level of
investment. The rate is computed by dividing recapitalizable plant
replacement value by total restoration and modernization investments.
The recapitalizable plant replacement value, as defined by DOD, is the
cost of replacing an existing facility of the same size at the same
location, using today's building standards.
[11] The Secretary of Defense and his staff prepare the Defense
Planning Guidance, issue policy, and articulate strategic objectives
that reflect the national military strategy. The Defense Planning
Guidance includes the Secretary's force and resource guidance to the
military departments, other combat support agencies, and the unified
combatant commands.
[12] DOD has periodically revised the objectives for improving
facilities on the basis of the services' ability to meet them.
[13] Annual unspecified costs are not justified on the basis of
specific projects.
[14] The subcommittees of the House and Senate Appropriations
Committees are Military Construction, which drafts legislation for the
military construction appropriation, and Defense, which drafts
legislation for the national defense appropriation. The Subcommittee on
Readiness of the House Armed Services Committee and the Subcommittee on
Readiness and Management Support of the Senate Armed Services Committee
draft legislation to authorize military construction appropriations.
[15] The six military reserve components consist of the Army National
Guard, Army Reserve, Naval Reserve, Marine Corps Reserve, Air National
Guard, and Air Force Reserve.
[16] The security investment program is the U.S. contribution to
alliance funds for the construction of facilities and the procurement
of equipment essential to the wartime support of operational forces in
the common defense of the North Atlantic Treaty Organization region.
Facilities funded by this program include airfields, naval bases,
communication facilities, pipelines, and radar and missile
installations.
[17] See U.S. General Accounting Office, Defense Infrastructure: Basing
Uncertainties Necessitate Reevaluation of U.S. Construction Plans in
South Korea, GAO-03-643 (Washington, D.C.: July 15, 2003).
[18] The guard and reserve commands, using a similar process, submit
their military construction requirements separately from the active
components. Nevertheless, the guard and reserve must compete with their
active counterparts for the available military construction dollars
available each year.
[19] The Under Secretary of Defense (Comptroller) is the principal
advisor to the Secretary of Defense for budgetary and fiscal matters,
DOD program analysis and evaluation, and general management improvement
programs.
[20] The Under Secretary of Defense for Acquisition, Technology and
Logistics is the principal advisor to the Secretary of Defense for all
matters relating to the DOD acquisition system; research and
development; advanced technology; developmental test and evaluation;
production; logistics; installation management; military construction;
procurement; environment security; and nuclear, chemical, and
biological matters.
[21] See U.S. General Accounting Office, Military Infrastructure: Real
Property Management Needs Improvement, GAO/NSIAD-99-100 (Washington,
D.C.: Sept. 7, 1999).
[22] See U.S. General Accounting Office, High-Risk Series: An Update,
GAO-01-263 (Washington, D.C.: January 2001).
[23] See U.S. General Accounting Office, Defense Infrastructure: Most
Recruit Training Barracks Have Significant Deficiencies, GAO-02-786
(Washington, D.C.: June 13, 2002).
[24] See U.S. General Accounting Office, High-Risk Series: An Update,
GAO-03-119 (Washington, D.C.: January 2003), and High-Risk Series:
Federal Real Property, GAO-03-122 (Washington, D.C.: January 2003).
[25] See GAO-03-274.
[26] See GAO-03-516.
[27] See Department of Defense, Report of the Quadrennial Defense
Review (Washington, D.C.: May 1997).
[28] See Department of Defense, Installations' Readiness Report
(Washington, D.C.: 1999).
[29] See GAO-03-274.
[30] See Defense Installations 2001: The Framework for Readiness in the
21st Century.
[31] See GAO-03-274.
[32] DOD defines "recapitalizable plant replacement value" as the cost
of replacing an existing facility with a facility of the same size at
the same location using today's building standards, but it does not
include facilities planned for demolition, disposal by transfer to
other entities, and one-time use, as well as facilities recapitalized
by appropriations other than regular military construction or operation
and maintenance funds (such as military family housing), and facilities
recapitalized by sources outside DOD (such as facilities in Japan).
[33] See U.S. Department of Defense, DOD Facilities Pricing Guide,
Version 5, March 2003.
[34] Pub. L. No. 107-107, Sec. 3001, (Dec. 28, 2001).
[35] See GAO-03-516.
[36] Pub. L. No. 108-132 (Nov. 22, 2003).
[37] In November 1995 DOD adopted a new barracks construction standard,
referred to as the 1+1 design standard, for servicemembers permanently
assigned to an installation. The standard, which does not apply to
barracks for members in basic recruit or initial skill training,
provides each junior enlisted member with a private sleeping room and
with a kitchenette and bath shared by one other member. The Marine
Corps has a permanent waiver from the Secretary of the Navy to use a
different barracks design standard--one sleeping room and bath are
shared by two junior Marines.
[38] Pub. L. No. 108-132 (Nov. 22, 2003).
[39] Pub. L. No. 108-132 (Nov. 22, 2003).
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