Defense Infrastructure
Guam Needs Timely Information from DOD to Meet Challenges in Planning and Financing Off-Base Projects and Programs to Support a Larger Military Presence Gao ID: GAO-10-90R November 13, 2009The Department of Defense's (DOD) plans to increase the U.S. military presence on Guam are expected to increase the island's current military population by about two and a half times by 2020. If implemented as planned, this realignment would increase the military population on Guam from about 15,000 in 2009 to about 29,000 in 2014, and to more than 39,000 by 2020, which will increase the current island population of 178,430 by about 14 percent over those years. The government of Guam established the Civilian-Military Task Force in April 2006 to identify and develop cost estimates for potential nondefense projects and programs needed to support the larger military presence. To determine the processes used by the government of Guam to develop cost estimates for off-base projects and programs to support a larger military and civilian population resulting from the military buildup, the Government Accountability Office (GAO) obtained and analyzed studies and assessments used by the government of Guam to develop the cost estimates. GAO also examined the government of Guam's fiscal year 2010 budget request. GAO conducted this performance audit from March 2009 through November 2009 in accordance with generally accepted government auditing standards. Those standards require that GAO plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for GAO's findings and conclusions based on their audit objectives.
The processes used by the government of Guam to develop the key cost estimates for planned off-base projects and programs varied depending on project or program value, complexity, and size; whether independent consultants provided input; and the extent to which DOD provided data to help set project requirements. As a result, the estimates prepared to date vary in quality, and the overall costs to develop supporting off-base infrastructure are still uncertain. The government of Guam faces two key challenges in financing off-base infrastructure projects and programs required to support a larger military and civilian population resulting from the military buildup. First, the impact of Guam's debt ceiling on the ability of the government of Guam to incur debt to help fund off-base projects and programs is uncertain. Second, the government of Guam's operating deficit was approximately $415 million at the time of GAO's review, and this deficit can affect Guam's ability to borrow because of questions about the extent to which additional debt service payments are affordable.
GAO-10-90R, Defense Infrastructure: Guam Needs Timely Information from DOD to Meet Challenges in Planning and Financing Off-Base Projects and Programs to Support a Larger Military Presence
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United States Government Accountability Office:
Washington, DC 20548:
November 13, 2009:
The Honorable Jeff Bingaman:
Chairman:
The Honorable Lisa Murkowski:
Ranking Member:
Committee on Energy and Natural Resources
United States Senate:
The Honorable Daniel K. Akaka:
United States Senate:
Subject: Defense Infrastructure: Guam Needs Timely Information from DOD
to Meet Challenges in Planning and Financing Off-Base Projects and
Programs to Support a Larger Military Presence:
The Department of Defense's (DOD) plans to increase the U.S. military
presence on Guam are expected to increase the island's current military
population by about two and a half times by 2020. If implemented as
planned, this realignment would increase the military population on
Guam from about 15,000 in 2009 to about 29,000 in 2014, and to more
than 39,000 by 2020, which will increase the current island population
of 178,430 by about 14 percent over those years. The largest portion of
the military's population growth is related to the relocation of about
8,000 Marines and their 9,000 dependents from Okinawa, Japan, to Guam
as part of an agreement between the United States and Government of
Japan to reduce forces in Japan while maintaining a continuing presence
of U.S. forces in the region. The populations of each of the other
military services also are expected to increase as a result of DOD
plans to expand their operations and presence on Guam. DOD plans to
fund DOD-owned and on-base infrastructure to support the military
realignment and buildup, such as roads, buildings, and other
facilities, while the government of Guam is expected to be largely
responsible for funding and constructing government of Guam-owned off-
base roads and utilities and providing certain public services.
We have previously reported that the government of Guam faces
significant challenges in addressing the impacts of the buildup and
realignment. For example, Guam's infrastructure would likely be
inadequate to meet increased use resulting from the military buildup.
In June 2009, we reported that Guam will need to significantly expand
its existing utilities infrastructure and expand public services for
electric power generation, potable water production, wastewater
collection and treatment, and solid waste collection and disposal to
provide the additional utility capacities and services that will be
required following the buildup.[Footnote 1] Moreover, we have also
reported that Guam's major highways may not have enough capacity to
accommodate the increased military and civilian traffic since the
island's two major highways may need major improvements.[Footnote 2]
This report is one in a series of reports examining critical issues
relating to the planned military buildup. We have included a listing of
our past Guam reports at the end of this report.
The government of Guam established the Civilian-Military Task Force in
April 2006 to identify and develop cost estimates for potential
nondefense projects and programs needed to support the larger military
presence. The task force comprises 11 subcommittees that focus on
specific issues to identify community impacts resulting from the
buildup and develop appropriate mitigation plans.[Footnote 3] In
addition, the task force has identified initial estimates of the cost
to improve critical off-base infrastructure and expand needed public
services to ensure adequate support to the expanded military and
civilian community. In May 2008, the Governor of Guam testified before
the Senate Committee on Energy and Natural Resources and stated that
the government of Guam would need about $6.1 billion to expand the
commercial port; roadways; power, water, and other infrastructure; and
certain public services in support of the buildup.[Footnote 4] These
infrastructure needs and services are to be part of a multiyear funding
program to ensure that Guam is able to support the buildup and secure
post-buildup sustainability. In response to your request, this report
examines (1) the processes used by the government of Guam to develop
cost estimates for its off-base projects and programs related to the
military buildup and (2) the key challenges, if any, affecting the
government of Guam's ability to finance off-base projects and programs
that are needed to support the buildup and larger military and civilian
community.
To determine the processes used by the government of Guam to develop
cost estimates for off-base projects and programs to support a larger
military and civilian population resulting from the military buildup,
we obtained and analyzed studies and assessments used by the government
of Guam to develop the cost estimates.[Footnote 5] We also examined the
government of Guam's fiscal year 2010 budget request. In addition we
reviewed briefings, annual reports, and other pertinent documentation
prepared by the government of Guam, DOD, and U.S. federal departments
and agencies. In addition, we interviewed officials from DOD's Office
of Economic Adjustment, the Navy's Joint Guam Program Office, U.S.
Pacific Command, Naval Facilities Engineering Command-Pacific, Naval
Facilities Engineering Command-Marianas, the Department of the
Interior's Office of Insular Affairs, the Guam Buildup Office, the Guam
Office of the Public Auditor, the Guam Department of Public Works, the
Guam Bureau of Budget and Management, the Guam Public Works Authority,
and the Guam Waterworks Authority. To identify what key challenges, if
any, may be affecting the government of Guam's ability to plan and
finance off-base projects and programs related to the buildup, we
analyzed the government of Guam's most recent financial statements and
independent auditor's reports, as well as information on Guam's current
bond ratings. We also examined information on Guam's statutory debt
limitation. In addition, we discussed key challenges with the Guam
Buildup Office, the Office of the Public Auditor, the Bureau of Budget
and Management, the Department of the Interior's Office of Insular
Affairs, the Joint Guam Program Office, and the DOD Office of Economic
Adjustment.
We conducted this performance audit from March 2009 through November
2009 in accordance with generally accepted government auditing
standards. Those standards require that we plan and perform the audit
to obtain sufficient, appropriate evidence to provide a reasonable
basis for our findings and conclusions based on our audit objectives.
We believe that the evidence obtained provides a reasonable basis for
our findings and conclusions based on our audit objectives.
Summary:
The processes used by the government of Guam to develop the key cost
estimates for planned off-base projects and programs varied depending
on project or program value, complexity, and size; whether independent
consultants provided input; and the extent to which DOD provided data
to help set project requirements. As a result, the estimates prepared
to date vary in quality, and the overall costs to develop supporting
off-base infrastructure are still uncertain. These off-base projects
range from large, multiyear projects, such as improving Guam's road
network linking the commercial port to DOD's bases, to small, local
projects, such as expanding certain fire stations. In instances where
DOD was involved in clarifying or providing updated information on its
buildup requirements, and the government of Guam used independent
consultants to help develop and verify cost estimates, we found that
the government of Guam developed cost estimates that may better reflect
likely final requirements and may better justify investment decisions
since they are informed by expert analysis and the most up-to-date
planning information. For example, when Guam's Department of Public
Works initially estimated that it needed $4.4 billion to improve the
road network on Guam, it did not have the benefit of DOD's involvement.
However, after the May 1,2008, hearing and after engaging DOD in
further defining buildup requirements, Guam's Department of Public
Works was able to narrow the scope of the project from overall highway
improvements to roadways directly affected by the military buildup.
Guam hired consultants from two national transportation and engineering
firms, using funding from the Federal Highway Administration, to
develop and validate cost estimates based on DOD's input in clarifying
requirements. As a result, the government of Guam's road projects cost
estimate fell by nearly $3 billion to about $1.5 billion. This reduced
the overall estimate for multiyear projects from $6.1 billion to $3.2
billion. Conversely, on another large project--the expected expansion
of the water and sewer system--DOD input provided general buildup
information for cost estimates, but DOD and Guam had not reached
agreement on the key question of whether to have a single water system
for military and civilian customers or two separate systems, thus
making current system upgrade cost estimates potentially unreliable.
For the smaller fire station expansion project, the government of
Guam's Civilian-Military Task Force developed a cost estimate without
direct DOD involvement or use of independent consultants. The Guam Fire
Department followed National Fire Protection Association standards to
project expansion of the two fire stations, and the Civilian-Military
Task Force's Infrastructure Subcommittee then estimated that expanding
two stations would cost $425,000. However, since the process did not
have the benefit of updated DOD input, these estimates may not fully
reflect actual buildup requirements. Key buildup decisions to reflect
actual buildup requirements, such as the exact location, size, and
makeup of forces moving to Guam as well as the size and type of
facilities to be constructed, will not be finalized until the
environmental impact statement and its associated record of decision
are complete. These documents are currently targeted to be finalized in
January 2010.
The government of Guam faces two key challenges in financing off-base
infrastructure projects and programs required to support a larger
military and civilian population resulting from the military buildup.
First, the impact of Guam's debt ceiling on the ability of the
government of Guam to incur debt to help fund off-base projects and
programs is uncertain. While the Organic Act of Guam includes a
statutory debt limitation on government borrowing, limiting Guam's
public indebtedness to no more than 10 percent of the aggregate tax
valuation of the property on Guam, not all government obligations are
included in this debt ceiling. For example, bonds or other obligations
of the government of Guam payable solely from revenues derived from any
public improvement or undertaking are not considered public
indebtedness of Guam within the meaning of this limitation. Thus, until
the precise form and terms of the debt that the government of Guam
might contemplate for the purposes of the military buildup on Guam is
known, the impact that Guam's debt ceiling may have on the ability of
the government of Guam to incur such a debt obligation is unclear.
Second, the government of Guam's operating deficit was approximately
$415 million at the time of our review, and this deficit can affect
Guam's ability to borrow because of questions about the extent to which
additional debt service payments are affordable. Officials from Guam's
Bureau of the Budget and Management said that they will have difficulty
finding revenue sources to close the current deficit while also
attempting to fund projects related to the military buildup.
Nonetheless, the government of Guam may have some ability to raise
revenue through issuing bonds despite the deficit. In June 2009, the
government of Guam sold $473.5 million worth of bonds to help pay for
cost-of-living adjustments owed to government of Guam retirees and tax
refund payments owed to residents, and to fund part of the construction
of a new landfill to help meet projected expansion needs, demonstrating
that a market may exist among investors for Guam's debt. Also, Guam's
ability to finance needed infrastructure projects could improve because
of potentially improved local economic conditions as the military
buildup continues. We have previously reported that available studies
indicate that communities surrounding military growth installations can
expect to realize economic benefits stemming from the growth.[Footnote
6] DOD's Office of Economic Adjustment has provided the government of
Guam with approximately $2.5 million to hire an international
consulting firm to assist Guam with financial advisory services,
determine its ability to underwrite buildup requirements, and recommend
various options for Guam to consider in developing future revenue
streams needed to fund off-base infrastructure development and expanded
public services.
In commenting on this report, DOD stated that it accurately
characterizes the challenges that both DOD and Guam face in developing
cost estimates for off-base projects and programs designed to deal with
the impact of the military buildup and realignment on Guam. DOD also
provided technical comments, which we incorporated as appropriate into
this report. DOD's comments are reprinted in their entirety in
enclosure II.
Background:
In 2004, the U.S. Secretaries of State and Defense and the Japanese
Minister of Foreign Affairs and Minister of State for Defense began a
series of sustained security consultations aimed at strengthening the
U.S.-Japan security alliance and better addressing the rapidly changing
global security environment. The resulting U.S.-Japan Defense Policy
Review Initiative established a framework for the future of the U.S.
force structure in Japan and is to facilitate a continuing presence for
U.S. forces in the Pacific theater by relocating military units to
Guam. As part of this initiative, DOD plans to move 8,000 Marines and
their estimated 9,000 dependents from Okinawa, Japan, to Guam by 2014.
In addition to this initiative, the United States plans to expand the
capabilities and presence of Navy, Air Force, and Army forces on Guam.
As a result, the military population, including dependents, on Guam is
expected to grow by over 160 percent, from its current population of
about 15,000 to over 39,000 by 2020. Most of the extensive population
growth and development resulting from the buildup will occur on the
northern half of the island, primarily in the northwestern portion,
where DOD currently plans to construct a new Marine Corps base.
According to Joint Guam Program Office officials, the current planned
schedules and levels of population growth and force structure could
change as buildup plans are further refined and approved.
In response to the projected military buildup on Guam, the government
of Guam established the Civilian-Military Task Force as a means to
identify and develop cost estimates for potential nondefense projects
and programs needed to support the larger military presence on Guam.
[Footnote 7] The task force consists of 11 subcommittees that comprise
members from the community, the government of Guam, the military, the
business community, and civic organizations. The task force helps to
identify community impacts resulting from the buildup and develop
appropriate mitigation plans. At the time of our review, the task force
had developed cost estimates for two types of funding requests: (1) a
multiyear request to include major infrastructure needs and to secure
post-buildup sustainability and (2) a onetime fiscal year 2010 budget
request that identifies pre-buildup needs for Guam to adequately
prepare for the realignment and buildup. Enclosure I provides
additional information on the government of Guam's estimates for off-
base projects and programs. The government of Guam initially identified
its large, multiyear off-base projects and programs during the hearing
before the Senate Committee on Energy and Natural Resources in May
2008. The cost estimates for these off-base projects and programs
totaled $6.1 billion at that time and involved the expansion of Guam's
port, improvement to Guam's roadways, and expansion of Guam's water
infrastructure. In April 2008, the task force developed a fiscal year
2010 budget request that totaled approximately $238 million, which was
in addition to the $6.1 billion in the Governor's May 2008 hearing
statement. The government of Guam sent the 2010 budget request to the
Office of Management and Budget for funding consideration in July 2008.
The Navy holds primary responsibility for overseeing the military
buildup on Guam. In August 2006, the Office of the Secretary of Defense
directed the Navy to establish the Joint Guam Program Office, which
reports to the Assistant Secretary of the Navy (Installations and
Environment), to facilitate, manage, and execute requirements
associated with the rebasing of U.S. assets from Okinawa, Japan, to
Guam. Specifically, the office was tasked with leading the coordinated
planning efforts of all DOD components and other stakeholders to
consolidate, optimize, and integrate the existing military
infrastructure on Guam, and is currently preparing a Guam master plan
to address all aspects of the buildup. The Naval Facilities Engineering
Command is primarily responsible for contracting for the construction
of the military's buildup infrastructure as well as developing the
environmental impact statement.[Footnote 8]
In accordance with the National Environmental Policy Act of 1969, DOD
is currently preparing an environmental impact statement in order to
evaluate the likely environmental effects of its buildup and
realignment plans.[Footnote 9] The environmental impact statement is
also expected to contain an analysis of various socioeconomic impacts
of the realignment related to specific proposed actions (as
appropriate), among other matters. The environmental impact statement
and associated record of decision are currently targeted to be
finalized by January 2010, and are to be used by the Joint Guam Program
Office to finalize the buildup master plan. The master plan will form
the baseline for military construction budget planning and facility and
utility designs and provide a top-level view of the size and type of
facility requirements, candidate and preferred land sites, and proposed
use of the land to meet the requirements for new personnel and forces
planned for Guam.
The Office of Economic Adjustment is a DOD field activity that reports
to the Deputy Under Secretary of Defense (Installations and
Environment), under the Under Secretary of Defense (Acquisition,
Technology and Logistics). It is responsible for facilitating DOD
resources in support of local programs and providing direct planning
and financial assistance to communities and states seeking assistance
to address the impacts of DOD's actions. The Office of Economic
Adjustment's assistance to growth communities is primarily focused on
assisting these communities with organizing and planning for population
growth because of DOD activities, commonly referred to as defense-
affected communities.
DOD policies and guidance on assistance to defense-affected communities
indicate that DOD should seek to minimize negative economic impacts on
communities resulting from changes in defense programs, such as base
closures, realignments, consolidations, transfer of functions, and
reductions in force.[Footnote 10] Specifically, the secretaries of the
military departments are to provide maximum advance information and
support to local governments to allow planning for necessary
adjustments in local facilities and public services, workforce training
programs, and local economic development activities. In addition, DOD
is to take the leadership role in assisting substantially and seriously
affected communities with the negative effects of major defense base
closures, realignments, and contract-related adjustments. We previously
reported that it has been long-standing DOD policy that DOD take the
leadership role within the federal government in helping communities
respond to the effects of defense-related activities.[Footnote 11] This
is based on a series of executive orders, the current version of which
establishes the Economic Adjustment Committee made up of 22 federal
departments and agencies to, among other duties, advise, assist, and
support the Defense Economic Adjustment Program, which is to assist
defense-affected communities.[Footnote 12]
The Processes Used by the Government of Guam to Develop Cost Estimates
Varied, and Buildup Requirements Are Not Yet Fully Known:
The government of Guam used differing processes to develop cost
estimates based on (1) the type and size of off-base projects and
programs, (2) the extent to which DOD provided data to inform project
and program requirements, and (3) whether appropriate consulting
services were available or used to refine cost estimates. Off-base
projects range from large, multiyear projects, such as improving Guam's
road network linking the commercial port to DOD's bases and expanding
and modernizing Guam's port, to small, local projects, such as
expanding certain fire stations. Although the government of Guam has
developed some cost estimates, the environmental impact statement,
which will inform DOD's overall Guam master plan and plan
implementation decisions, and its associated record of decision are
targeted to be finalized by January 2010. Government of Guam officials
believe that their ability to plan for off-base infrastructure
development has been hampered by a lack of finalized buildup plans.
According to DOD officials, DOD has provided information on buildup
plans to the government of Guam as requirements have become more fully
known to try and assist the government of Guam with planning efforts.
Some Large, Multiyear Projects Were Developed Using Independent
Consultants and Increased DOD Involvement in Clarifying Requirements:
For some of the larger, multiyear off-base infrastructure projects, DOD
clarified or provided updated data regarding its potential buildup
requirements. The government of Guam also hired independent consultants
to help develop and verify cost estimates based on its understanding of
buildup requirements. In these instances, we found that the government
of Guam developed cost estimates that may better reflect likely final
requirements and may better justify investment decisions.[Footnote 13]
For example, as stated at the May 1, 2008, hearing, Guam's Department
of Public Works initially estimated that overall roadway improvements
related to the buildup would cost around $4.4 billion. However, the
Guam Department of Public Works subsequently engaged DOD to identify
specific improvements based on factors such as the preferred routing of
truck traffic, points of congestion, and the expeditious and safe
movement of military equipment, materials, supplies, and personnel.
Moreover, the Guam Department of Public Works hired two national
transportation and engineering firms, using funding from the Federal
Highway Administration, to develop and verify cost estimates on roadway
inputs based on the revised project requirements. This resulted in a
new estimate for roadway improvements that totaled $1.5 billion--a
decrease of $2.9 billion or almost 66 percent of the original estimate.
This revision also substantially affected the government of Guam's
overall estimate for larger, multiyear projects, reducing it from $6.1
billion to $3.2 billion.[Footnote 14] In addition to its input to the
government of Guam's estimate for roadway improvements, DOD supplied
the government of Guam with anticipated port throughput requirements
during and after the buildup, from 2010 to 2018, permitting a longer-
term planning horizon. Similarly, the Port Authority of Guam combined
its funding with that provided by the Office of Economic Adjustment to
hire a national engineering firm to develop a port master plan update
that incorporated DOD's cargo throughput requirements. The engineering
firm estimated that port upgrades addressing the projected increases in
population and ship traffic due to the buildup would cost approximately
$195 million (calendar year 2008 dollars).
In other instances, the government of Guam hired independent
consultants to help develop cost estimates for larger, multiyear
infrastructure projects even though updated or detailed buildup
information was not available from DOD because certain agreements were
still to be negotiated. For example, the Guam Waterworks Authority
contracted with an independent consultant from a national environmental
engineering firm using its own funds and an Environmental Protection
Agency grant to develop a cost estimate for the expansion of Guam's
water system (e.g., potable water production and wastewater collection
and treatment) to meet increased demand from the military buildup. The
$192 million estimate was issued in 2007 and is based on the assumption
that a unified water and wastewater system will be used to serve both
the civilian and military populations. However, as we previously
reported, DOD is in the process of determining how it will meet its
potable and wastewater needs, and whether it will use a unified water
system or develop its own.[Footnote 15] The Guam Waterworks Authority
has indicated that if DOD provides additional detailed information, it
will modify the assumptions used to develop its estimate for expanding
Guam's water system. As the government of Guam and DOD reach agreements
on water and wastewater systems and more specific requirements are
identified, the cost estimate will likely have to be revised to reflect
material changes associated with these agreements.
Smaller Onetime Pre-Buildup Estimates Developed Solely by the
Government of Guam's Civilian-Military Task Force:
For smaller estimates that were part of the government of Guam's fiscal
year 2010 budget request, the Civilian-Military Task Force helped to
identify requirements and developed estimates without engaging DOD or
using independent consultants. As such, these estimates did not have
the benefit of updated DOD input on its plans to expand on Guam,
raising questions about how reliable these estimates are in that they
do not reflect updated or final buildup requirements. For example, the
Guam Fire Department followed National Fire Protection Association
standards in conjunction with the anticipated locations of population
growth due to the buildup to conclude that two fire stations will need
to be expanded by constructing dormitories to accommodate additional
firefighters as well as for a space to shelter new emergency vehicles.
The Fire Department provided that information to the Civilian-Military
Task Force's Infrastructure Subcommittee, which in turn estimated that
the expansion project would cost $425,000.
Similarly, Guam's Department of Public Health and Social Services used
the number of recent tuberculosis cases on Guam in conjunction with
information from the Centers for Disease Control and Prevention, the
anticipated number of construction laborers needed for the buildup, and
the percentage of tuberculosis cases occurring in countries expected to
supply these laborers to determine the need for a tuberculosis control
program. The program includes an increase in staff and additional
office space for Guam's Bureau of Communicable Disease Control in order
to provide an increase in surveillance, counseling, and treatment
services to help minimize the spread of tuberculosis on Guam thought to
be possible because of an influx of construction laborers from
countries where the disease is more prevalent. The Department of Public
Health and Social Services then provided the information to the Health
and Social Services Subcommittee, which estimated that establishing the
program would cost $458,988.
Guam's Economic Development and Commerce Authority, using past studies
in conjunction with the anticipated location of military facilities,
determined a need to assess the nature and types of infrastructure
necessary for economic development opportunities in civilian-owned
undeveloped areas in proximity to military bases, as these areas are
expected to be prime locations for development in support of or in
response to military growth. The Economic Development and Commerce
Authority provided this information to the Economic Development
Subcommittee, which estimated the total cost of performing such a
study, including hiring a project manager, to be $350,000.
Buildup Requirements Are Not Yet Fully Known:
The government of Guam will likely not receive finalized plans and
requirements from DOD until its master plan has been issued, although
DOD has provided some interim information. Naval Facilities and
Engineering Command is currently developing the environmental impact
statement related to the realignment and buildup, and this document and
its associated record of decision must be completed before the master
plan and key decisions, such as the exact location, size, and makeup of
forces moving to Guam as well as the size and type of facility
requirements, can be finalized. Both the environmental impact statement
and record of decision are currently targeted to be finalized in
January 2010. As such the government of Guam's ability to develop cost
estimates that reflect actual buildup requirements is somewhat limited
because there is greater potential for margins of error if its
estimates are based on requirements that can change. Though buildup
plans are not yet finalized, DOD's Office of Economic Adjustment, which
provides planning information and support to communities affected by
DOD programs, has been providing technical and financial assistance to
the government of Guam based on the government of Guam's incremental
response strategy and information provided by the Joint Guam Program
Office. However, government of Guam officials believe that their
ability to plan and develop cost estimates for the off-base
infrastructure development to support the larger population has been
hampered because overall buildup plans are not finalized. According to
DOD officials, DOD has provided information on buildup plans to the
government of Guam as requirements have become more fully known to
assist with Guam's planning.
Although the government of Guam has received some preliminary
information regarding the military buildup, we have previously reported
that uncertainties associated with the exact size, makeup, and timing
of the forces to be moved to Guam make it difficult for the government
of Guam to develop comprehensive plans to address the effects of the
proposed military buildup since the environmental impact statement
process has not been completed yet.[Footnote 16] Any delays in the
issuance of the environmental impact statement and its associated
record of decision until after January 2010 can adversely affect Guam
as it will compress the time period in which the government of Guam
plans and develops final cost estimates for the construction and
improvement of new off-base infrastructure, and ensures that enhanced
public services are available to serve the larger military force
currently scheduled to arrive by 2014.
The Government of Guam Faces Some Potential Challenges in Financing Off-
Base Projects and Programs, but May Also Be Able to Raise Some Revenue
on Its Own:
The government of Guam faces two key challenges in identifying and
financing its off-base projects and programs related to the military
buildup. These financing challenges are its statutory debt limitation
and operating deficit. Despite such challenges, Guam's ability to
finance needed infrastructure projects could improve because of
enhanced local economic conditions as the military buildup continues.
The Government of Guam Is Facing Challenges in Identifying and Securing
Financing to Help Carry Out Its Off-Base Projects and Programs Related
to the Military Buildup:
Guam's financing challenges are its statutory debt limitation and its
operating deficit. First, the government of Guam's ability to borrow
funds to help pay for off-base infrastructure projects and programs
related to the military buildup may be constrained because of a
statutory debt limitation contained in the Organic Act of Guam,
depending on the form and terms of the prospective debt. Section 11 of
the act places a limitation on government borrowing, limiting Guam's
public indebtedness to no more than 10 percent of the aggregate tax
valuation of property on Guam.[Footnote 17] However, not all government
obligations are included in the debt ceiling. For instance, section 11
notes that bonds or other obligations of the government of Guam payable
solely from revenues derived from any public improvement or undertaking
shall not be considered public indebtedness as defined in the Organic
Act of Guam. Further, whether certain government obligations constitute
debts, and thus are to be included in a particular debt limit
calculation, is generally a highly litigated issue.[Footnote 18] Thus,
until the government of Guam has determined and decided on the form and
terms of debt it plans to incur to help fund off-base projects and
programs related to the buildup, it is unknown what impact this debt
limitation provision will have on the ability of the government of Guam
to incur debt for the purposes of the buildup.
Second, Guam has faced an operating deficit over the past few years. In
May 2009 Guam's Office of the Public Auditor reported that the
government of Guam's general fund operating deficit for fiscal year
2007 was $510 million.[Footnote 19] An independent audit of the
government of Guam's fiscal year 2008 financial statements showed that
Guam's operating deficit had decreased to $415 million.[Footnote 20]
However, the estimated general fund expenditures for fiscal year 2009
total around $490 million. Thus the operating deficit is almost 85
percent of the government's total operating expenses. Officials from
Guam's Bureau of Budget and Management said that they will have
difficulty finding and securing enough revenue sources to close the
current deficit while also attempting to fund new off-base projects and
programs related to the buildup. The Office of Public Auditor noted
that while the military buildup may be a catalyst for growth, if all
revenue increases from the buildup will be used to fund current
government operations, little, if any, new cash will be available to
pay past debt, and cash shortfall problems could continue.
The Government of Guam May Have Some Potential to Raise Revenue in
Support of the Military Buildup:
The government of Guam has demonstrated that it can raise revenue by
issuing bonds. In June 2009, the government of Guam successfully sold
$473.5 million worth of bonds to help pay for cost-of-living
adjustments owed to government of Guam retirees and tax refund payments
owed to residents, and to fund part of the construction of a new
landfill to help meet projected expansion needs. This demonstrates that
a market may exist among investors for Guam's debt. Moreover, we have
reported that communities near military growth locations face growth-
impact challenges in the short term, including challenges to identify
and provide additional infrastructure--such as schools, roads, housing,
and other services--to support the expected population growth, but that
these communities can also expect to realize economic benefits in the
long term.[Footnote 21]
An increase in military and federal civilian employees on Guam stemming
from the buildup may be a potential source of additional revenue. For
instance, Guam receives federal income taxes paid by military and
civilian employees of the U.S. government stationed in Guam.[Footnote
22] As the buildup progresses and both military and federal civilian
personnel come to Guam, the amount of this income tax revenue provided
to Guam may increase.
The Office of Economic Adjustment has been providing technical and
financial assistance to the government of Guam in preparation for the
buildup since July 2006. At the time of our review, the Office of
Economic Adjustment had provided the government of Guam with
approximately $7.6 million in grants that have been used to: provide
logistical support to the Office of the Governor; develop a financial
modeling tool for the Port Authority of Guam and a port financial
feasibility study; undertake a variety of studies on the port expansion
and solid waste management; and support the government of Guam with
international consulting services. Office of Economic Adjustment
officials stated that the assistance provided to the government of Guam
is intended to enable the territory to make informed decisions on how
to respond to the buildup program. As part of the $2.5 million grant
provided by the Office of Economic Adjustment in September 2008, the
government of Guam hired an internationally recognized consulting team
with expertise in planning, environmental, and fiscal/financial
advisory services. The consulting team provides the government of Guam
with the expertise to develop response alternatives, evaluate the
associated risks, and determine appropriate financing mechanisms. At
the time of our review, the consulting team was developing a fiscal
impact analysis using information from the environmental impact
statement. This analysis will include an estimate of the impact of the
buildup on the territory's cash flow, taking into account projected
changes in expenses and tax revenues. This could help indicate the
extent to which the government of Guam may be able to identify and
develop revenue streams rather than rely solely on federal grants for
funding of off-base infrastructure.
Agency Comments:
In commenting on this report, DOD stated that it accurately
characterizes the challenges that both DOD and Guam face in developing
cost estimates for off-base projects and programs designed to deal with
the impact of the military buildup and realignment on Guam. DOD also
provided technical comments, which we incorporated as appropriate into
this report. DOD's comments are reprinted in their entirety in
enclosure II.
We are sending copies of this report to the appropriate congressional
committees. We are also sending copies to the Secretaries of Defense
and the Interior; the Secretaries of the Army, the Navy, and the Air
Force; the Commandant of the Marine Corps; and the Director of the
Office of Management and Budget. This report also is available at no
charge on our Web site at [hyperlink, http://www.gao.gov].
If you or your staff have any questions, about this report, please
contact me at (202) 512-4523 or leporeb@gao.gov. Contact points for our
Offices of Congressional Relations and Public Affairs may be found on
the last page of this report. GAO staff who made major contributions to
this report are listed in enclosure III.
Signed by:
Brian J. Lepore, Director:
Defense Capabilities and Management:
Enclosure I:
Government of Guam Cost Estimates for Off-Base Projects and Programs:
The government of Guam has developed cost estimates for two types of
funding requests: (1) a multiyear request to include major
infrastructure needs and to secure post-buildup sustainability and (2)
a onetime fiscal year 2010 budget request that identifies pre-buildup
needs for Guam to adequately prepare for the realignment and
buildup.[Footnote 23] These estimates were developed by the government
of Guam's Civilian-Military Task Force. Table 1 provides information on
the government of Guam's cost estimates for off-base projects and
programs. The fiscal year 2010 estimates in table 1 are categorized and
totaled by Civilian-Military Task Force subcommittee as they are in the
government of Guam's budget request.[Footnote 24] These estimates are
made up of smaller projects and programs that when summed together
produce each subcommittee's estimate. The examples provided for each
subcommittee category illustrate the types of projects and programs the
government of Guam has identified as needed to adequately prepare for
the buildup.
Table 1: Government of Guam Cost Estimates for Off-Base Projects and
Programs as of September 2009 (Dollars in millions):
Estimates: Multiyear estimates: Roadway improvements;
Descriptions: Identify and improve road infrastructure based on
military use during and after buildup;
Amount: $1,547.
Estimates: Multiyear estimates: Guam power infrastructure;
Descriptions: Expansion of power infrastructure capacity to generate
additional power and improve its reliability;
Amount: $666.
Estimates: Multiyear estimates: Education;
Descriptions: Expansion of educational services, including purchase of
school supplies and hiring additional staff;
Amount: $206.
Estimates: Multiyear estimates: Port expansion;
Descriptions: Expansion and modernization of Guam's port to address
increases in ship traffic;
Amount: $195.
Estimates: Multiyear estimates: Water infrastructure;
Descriptions: Expansion of Guam's water system, including potable water
production and wastewater collection and treatment;
Amount: $192.
Estimates: Multiyear estimates: Public health;
Descriptions: Expansion of Guam Memorial Hospital and construction of a
new central public health and social services building;
Amount: $135.
Total multiyear estimates;
Amount: $2,941.
Estimates: Multiyear estimates: Fiscal year 2010 estimates (example
projects and programs under each estimate); Infrastructure;
Descriptions:
* Purchase of additional X-ray machines and washdown facilities at
ports of entry to Guam;
* Architectural and engineering designs for expansion of Guam Memorial
Hospital;
* Expansion of fire stations;
* Increase in staff at Guam's Department of Agriculture; University of
Guam Health-Science Renovation and Expansion Project;
* Architecture and engineering services for construction of a new
building for the University of Guam's Center for Excellence in
Developmental Disabilities Education, Research, and Services;
* Renovation of building space for the University of Guam's Marine
Laboratory;
* Increase in Port Authority of Guam staff;
* Retrofit of the civilian airport to accommodate military aircraft;
* Design phase for new court facility;
* Architectural and engineering design for the construction of new
buildings for the Department of Health and Social Services;
* Installation of new water sources;
* Expansion of sewer capacity;
* Upgrade of power-generation infrastructure;
Amount: $170.0.
Estimates: Multiyear estimates: Fiscal year 2010 estimates (example
projects and programs under each estimate); Labor;
Descriptions:
* Increase in Guam Department of Labor staff to assist in alien-labor
certification and workers compensation;
* Increase in Guam Department of Administration staff to assist in
training and development of worker training programs and to establish
employment and training programs;
* Increase in staff levels within the Guam Department of
Administration;
* Review of the classification and compensation of government of Guam
employees;
* Improvement in government of Guam human resources information
systems;
* Increase in staff at the Guam Board of Registration for Professional
Engineers, Architects, and Land Surveyors;
Amount: $29.0.
Estimates: Multiyear estimates: Fiscal year 2010 estimates (example
projects and programs under each estimate); Economic Development;
Descriptions:
* Establishment of revolving loan program to provide financial support
to local and small businesses that will vie for military contracts;
* Obtaining consultant services from University of Guam to prepare an
economic plan to guide the civilian community as a result of rapid
military growth;
* Designing, testing, and implementation of an econometric model to
identify income, output, and employment multipliers due to the buildup;
* Access and infrastructure feasibility studies;
* Financial advisory services; Increase in staff at Guam's Department
of Revenue and Taxation;
* Hiring of a consultant for the Chamorro Land Trust Commission;
* Development of a financial management and general services plan;
Amount: $12.0.
Estimates: Multiyear estimates: Fiscal year 2010 estimates (example
projects and programs under each estimate); Public Safety;
Descriptions:
* Recruiting, hiring, and training police officers as well as providing
additional equipment and vehicles for new officers;
* Impact study to address the effect of accelerated population growth
on the Guam Police Department;
* Purchase of emergency vehicles and hiring of additional customs
enforcement officers for the Guam Customs and Quarantine Agency;
* Increase in staff at the Attorney General of Guam's Prosecution and
Family Divisions;
* Increase in staff at the Guam Public Defender Service Corporation;
* Increase staff at the Guam Department of Corrections;
Amount: $9.0.
Estimates: Multiyear estimates: Fiscal year 2010 estimates (example
projects and programs under each estimate); Health and Social Services;
Descriptions:
* Increase in Guam Bureau of Communicable Disease Control staff to
improve surveillance of potential disease rate increases, increase
awareness of communicable diseases, and increase immunization outreach
services;
* Implementation of tuberculosis and sexually transmitted disease/HIV
control programs; Expansion of community health centers through hiring
of additional staff and purchase of medical equipment;
* Increase in staff and supplies at Guam's Bureau of Family Health and
Nursing Services;
* Increase in staff and supplies at Guam's Bureau of Professional
Support Services; Increase in staff and supplies at Guam's Bureau of
Inspection and Enforcement;
* Development of a master plan for Guam's Department of Mental Health
and Substance Abuse;
Amount: $5.0.
Estimates: Multiyear estimates: Fiscal year 2010 estimates (example
projects and programs under each estimate); Natural Resources;
Descriptions:
* Increase in staff in Guam's Coastal Management Program to provide an
adequate review of the environmental impact statement when it is
released by the U.S. Department of Defense;
* Implementation of a watershed restoration program to reforest badly
degraded areas in the southern part of Guam;
* Increase in the number of agricultural quarantine inspectors to deal
with the influx of military personnel and foreign workers;
* Conducting a fiscal year 2010 needs assessment for the Guam Historic
Preservation Office;
* Development of an overall master plan in obtaining a complete survey
of all farmers registered with the Guam Department of Agriculture;
* Increase in staff for the Plant Nursery Program in the Guam
Department of Agriculture; Increase in staff in the Guam Department of
Agriculture's Division of Animal Health, Quarantine, and Control;
Amount: $3.5.
Estimates: Multiyear estimates: Fiscal year 2010 estimates (example
projects and programs under each estimate); Education;
Descriptions:
* Increase in University of Guam personnel to expand its capacity to
increase academic and support staff functions in areas identified as
high priorities in producing more workforce personnel as well as
maintaining additional facilities expansion;
* Increase in institutional capacities in career and technical
education and apprenticeship programs at Guam Community College;
* Assessment of the needs of the Guam Public Library System to serve
the increased population anticipated from the buildup;
Amount: $3.0.
Estimates: Multiyear estimates: Fiscal year 2010 estimates (example
projects and programs under each estimate); Ports and Customs;
Descriptions:
* Purchase of additional X-ray machines and washdown facilities at
ports of entry to Guam;
* Increase in Port Authority of Guam staff[B];
Amount: $3.0.
Estimates: Multiyear estimates: Fiscal year 2010 estimates (example
projects and programs under each estimate); Environment;
Descriptions:
* Increase in Guam Environmental Protection Agency staff to issue
permits for buildup projects and monitor such projects for compliance
with both Guam and U.S. environmental regulations;
Amount: $2.0.
Estimates: Multiyear estimates: Fiscal year 2010 estimates (example
projects and programs under each estimate); Housing;
Descriptions:
* Property retracement surveys to ensure that property boundaries are
properly delineated and mapped;
Amount: $0.8.
Estimates: Multiyear estimates: Fiscal year 2010 estimates (example
projects and programs under each estimate); Social and Cultural;
Descriptions:
* Master planning for the Guam Visitors Bureau, the Guam Council on
Arts and Humanities, and the Department of Chamorro Affairs to plan out
services and needs in connection with the military buildup;
Amount: $0.2.
Total fiscal year 2010 estimates;
Amount: $237.5.
Source: GAO analysis of government of Guam data.
[A] Amounts rounded.
[B] These items also included in the Infrastructure Subcommittee's
estimates.
[End of table]
[End of section]
Enclosure II:
Comments from the Department of Defense:
Office Of The Under Secretary Of Defense:
Acquisition, Technology And Logistics:
3000 Defense Pentagon:
Washington, DC 20301-3000:
November 12, 2009:
Mr. Brian J. Lepore:
Director, Defense Capabilities and Management:
U.S. Government Accountability Office:
441 G Street, N.W.
Washington, DC 20548:
Dear Mr. Lepore:
This is the Department of Defense (DoD) response to the GAO draft
report, "Defense Infrastructure: Guam Needs Timely Information from DoD
to Meet Challenges in Planning and Financing Off-Base Projects and
Programs to Support a Larger Military Presence," dated October 5, 2009
(GAO Code 351302/GAO-10-90R). Detailed comments on the report are
enclosed.
The Department appreciates the opportunity to comment on this draft
report and concurs with the findings in the report regarding the
challenges that both the Department and Guam face in developing cost
estimates for necessary off-base projects and programs designed to deal
with the impacts military build-up and realignment on Guam.
The Department appreciates the work performed by the GAO in this regard
and the opportunity to comment on the draft report.
Sincerely,
Signed by:
Dorothy Robyn:
Deputy Under Secretary of Defense (Installations and Environment):
Enclosure: As stated:
[End of letter]
GAO Draft Report ” Dated 05 October 2009:
GAO Code 351302/GA0-10-90R:
"Defense Infrastructure: Guam Needs Timely Information from DOD to Meet
Challenges in Planning and Financing Off-Base Projects and Programs to
Support a Larger Military Presence"
Department Of Defense Comments:
DOD Comments:
The report accurately characterizes the challenges that both DOD and
Guam face in developing cost estimates for off-base projects and
programs designed to deal with the impact of the military build-up and
realignment on Guam.
As the report points out, DOD is sharing information with Guam and its
consultants as it becomes available. This will lead to refined cost
estimates for necessary off-base projects and programs. Also, DOD is
supporting several consultant studies that will likely allow for
further refinement of these estimates.
Additionally, DOD is working within its statutory authorities and in
cooperation with Guam to fund road improvements and utilities system
upgrades, such as $50 million in fiscal year 2010 for upgrades to
roadways that arc expected to be heavily impacted by construction and
military traffic. DoD is reviewing additional projects for funding, as
well.
We suggest the following substitutions to clarify the report:
Page 11, last two sentences of the first paragraph: Similarly, the Port
Authority of Guam (PAG) combined its funding with that provided by the
Office of Economic Adjustment to hire a nationally recognized
engineering firm to develop a port master plan update that incorporated
DoD's cargo throughput requirements. The engineering firm estimated
that port upgrades addressing the projected increases in population and
ship traffic due to the buildup would cost approximately $195 million
(CY 2008 dollars).
Page 14, first new sentence of the paragraph carried over from the
previous page: Though buildup plans are not yet finalized, DoD's Office
of Economic Adjustment, which provides planning information and support
to communities affected by DoD programs, has been providing technical
and financial assistance to the Government of Guam based on the
Government of Guam's incremental response strategy and information
provided by the Joint Guam Program Office.
Page 17, second paragraph: The Office of Economic Adjustment has been
providing technical and financial assistance to the Government of Guam
in preparation for the buildup since July 2006. At the time of our
review, the Office of Economic Adjustment had provided the Government
of Guam with approximately $7.6 million in grants that have been used
to: provide logistical support to the Office of the Governor; develop a
financial modeling tool for the Port Authority of Guam and a port
financial feasibility study; undertake a variety of studies on the port
expansion and solid waste management; and support the Government of
Guam with international consulting services. Office of Economic
Adjustment officials stated that the assistance provided to the
Government of Guam is intended to enable the Territory to make informed
decisions on how to respond to the buildup program. As part of the $2.5
million grant provided by the Office of Economic Adjustment in
September 2008, the Government of Guam hired an internationally
recognized consulting team with expertise in planning, environmental,
and fiscal/financial advisory services. The consulting team provides
the Government of Guam with the expertise to develop response
alternatives, evaluate the associated risks, and determine appropriate
financing mechanisms. At the time of our review; the consulting team
was developing a fiscal impact analysis using information from the
Environmental Impact Statement. This analysis will include an estimate
of the impact of the buildup on the Territory's cash flow, taking into
account projected changes in expenses and tax revenues.
[End of section]
Enclosure III:
GAO Contact and Staff Acknowledgments:
GAO Contact:
Brian Lepore, (202) 512-4523 or leporeb@gao.gov:
Acknowledgments:
In addition to the contact named above, Harold Reich, Assistant
Director; Grace Coleman; Amy Frazier; Kate Lenane; Josh Margraf;
Richard Meeks; Richard Powelson; John Van Schaik; and Michael Willems
made key contributions to this report.
[End of section]
Related GAO Products:
Defense Infrastructure: DOD Needs to Provide Updated Labor Requirements
to Help Guam Adequately Develop Its Labor Force for the Military
Buildup. [hyperlink, http://www.gao.gov/products/GAO-10-72].
Washington, D.C.: October 14, 2009.
Defense Infrastructure: Planning Challenges Could Increase Risks for
DOD in Providing Utility Services When Needed to Support the Military
Buildup on Guam. [hyperlink, http://www.gao.gov/products/GAO-09-653].
Washington, D.C.: June 30, 2009.
High-Level Leadership Needed to Help Guam Address Challenges Caused by
DOD-Related Growth. [hyperlink,
http://www.gao.gov/products/GAO-09-500R]. Washington, D.C.: April 9,
2009.
Defense Infrastructure: Opportunity to Improve the Timeliness of Future
Overseas Planning Reports and Factors Affecting the Master Planning
Effort for the Military Buildup on Guam. [hyperlink,
http://www.gao.gov/products/GAO-08-1005]. Washington, D.C.: September
17, 2008.
Defense Infrastructure: High-Level Leadership Needed to Help
Communities Address Challenges Caused by DOD-Related Growth.
[hyperlink, http://www.gao.gov/products/GAO-08-665]. Washington, D.C.:
June 17, 2008.
Defense Logistics: Navy Needs to Develop and Implement a Plan to Ensure
That Voyage Repairs Are Available to Ships Operating near Guam when
Needed. [hyperlink, http://www.gao.gov/products/GAO-08-427].
Washington, D.C.: May 12, 2008.
Defense Infrastructure: Planning Efforts for the Proposed Military
Buildup on Guam Are in Their Initial Stages, with Many Challenges Yet
to Be Addressed. [hyperlink, http://www.gao.gov/products/GAO-08-722T].
Washington, D.C.: May 1, 2008.
Defense Infrastructure: Challenges Increase Risks for Providing Timely
Infrastructure Support for Army Installations Expecting Substantial
Personnel Growth. [hyperlink, http://www.gao.gov/products/GAO-07-1007].
Washington, D.C.: September 13, 2007.
Defense Infrastructure: Overseas Master Plans Are Improving, but DOD
Needs to Provide Congress Additional Information about the Military
Buildup on Guam. [hyperlink, http://www.gao.gov/products/GAO-07-1015].
Washington, D.C.: September 12, 2007.
U.S. Insular Areas: Economic, Fiscal, and Financial Accountability
Challenges. [hyperlink, http://www.gao.gov/products/GAO-07-119].
Washington, D.C.: December 12, 2006.
DOD's Overseas Infrastructure Master Plans Continue to Evolve.
[hyperlink, http://www.gao.gov/products/GAO-06-913R]. Washington, D.C.:
August 22, 2006.
Results-Oriented Government: Practices That Can Help Enhance and
Sustain Collaboration among Federal Agencies. [hyperlink,
http://www.gao.gov/products/GAO-06-15]. Washington, D.C.: October 21,
2005.
U.S. Insular Areas: Multiple Factors Affect Federal Health Care
Funding. [hyperlink, http://www.gao.gov/products/GAO-06-75].
Washington, D.C.: October 14, 2005.
Opportunities Exist to Improve Future Comprehensive Master Plans for
Changing U.S. Defense Infrastructure Overseas. [hyperlink,
http://www.gao.gov/products/GAO-05-680R]. Washington, D.C.: June 27,
2005.
Results-Oriented Government: GPRA Has Established a Solid Foundation
for Achieving Greater Results. [hyperlink,
http://www.gao.gov/products/GAO-04-38]. Washington, D.C.: March 10,
2004.
Environmental Cleanup: Better Communication Needed for Dealing with
Formerly Used Defense Sites in Guam. [hyperlink,
http://www.gao.gov/products/GAO-02-423]. Washington, D.C.: April 11,
2002.
Compact of Free Association: Negotiations Should Address Aid
Effectiveness and Accountability and Migrants' Impact on U.S. Areas.
[hyperlink, http://www.gao.gov/products/GAO-02-270T]. Washington, D.C.:
December 6, 2001.
Foreign Relations: Migration From Micronesian Nations Has Had
Significant Impact on Guam, Hawaii, and the Commonwealth of the
Northern Mariana Islands. [hyperlink,
http://www.gao.gov/products/GAO-02-40]. Washington, D.C.: October 5,
2001.
Overseas Presence: Issues Involved in Reducing the Impact of the U.S.
Military Presence on Okinawa. [hyperlink,
http://www.gao.gov/products/GAO/NSIAD-98-66]. Washington, D.C.: March
2, 1998.
U.S. Insular Areas: Development Strategy and Better Coordination Among
U.S. Agencies Are Needed. [hyperlink,
http://www.gao.gov/products/GAO/NSIAD-94-62]. Washington, D.C.:
February 7, 1994.
[End of section]
Footnotes:
[1] GAO, Defense Infrastructure: Planning Challenges Could Increase
Risks for DOD in Providing Utility Services When Needed to Support the
Military Buildup on Guam, [hyperlink,
http://www.gao.gov/products/GAO-09-653] (Washington, D.C.: June 30,
2009).
[2] GAO, Defense Infrastructure: Planning Efforts for the Proposed
Military Buildup on Guam Are in Their Initial Stages, with Many
Challenges Yet to Be Addressed, [hyperlink,
http://www.gao.gov/products/GAO-08-722T] (Washington, D.C.: May 1,
2008).
[3] These subcommittees are (1) Health and Social Services, (2) Public
Safety, (3) Education, (4) Labor, (5) Ports and Customs, (6) Economic
Development, (7) Infrastructure, (8) Housing, (9) Social and Cultural,
(10) Government Services, and (11) the Environment.
[4] Statement of The Honorable Felix P. Camacho, Governor of Guam,
before the U.S. Senate Committee on Energy and Natural Resources
Concerning the United States Military Buildup on Guam: Impact on the
Civilian Community, Planning, and Response (May 1, 2008).
[5] We did not validate the underlying assumptions of the estimates.
[6] GAO, Defense Infrastructure: High-Level Leadership Needed to Help
Communities Address Challenges Caused by DOD-Related Growth,
[hyperlink, http://www.gao.gov/products/GAO-08-665] (Washington, D.C.:
June 17, 2008).
[7] The Civilian-Military Task Force was established in April 2006 by
Governor of Guam Executive Order 2006-10.
[8] The primary purpose of an environmental impact statement is to
serve as an action-forcing device to ensure that the policies and goals
defined in the National Environmental Policy Act of 1969 are infused
into the ongoing programs and actions of the federal government.
[9] The National Environmental Policy Act of 1969, codified as amended
at 42 U.S.C. § 4321-4347, establishes environmental policies and
procedures that are to be followed by all federal agencies to the
fullest extent possible. The act established the Council on
Environmental Quality, which is responsible for, among other things,
issuing guidelines and reviewing agencies' policies and procedures to
ensure compliance with the act. Council on Environmental Quality
regulations implementing the National Environmental Policy Act of 1969
appear at 40 C.F.R. Part 1500. In accordance with National
Environmental Policy Act of 1969 requirements and Council on
Environmental Quality regulations, federal agencies typically evaluate
the likely environmental effects of projects they are proposing to
undertake using an environmental assessment or, if a project
constitutes a major federal action significantly affecting the quality
of the human environment, a more detailed environmental impact
statement.
[10] DOD Directive 5410.12, Economic Adjustment Assistance to Defense-
Impacted Communities, July 5, 2006.
[11] GAO, High-Level Leadership Needed to Help Guam Address Challenges
Caused by DOD-Related Growth, [hyperlink,
http://www.gao.gov/products/GAO-09-500R] (Washington, D.C.: Apr. 9,
2009).
[12] Exec. Order No. 12049, 43 Fed. Reg. 13363 (Mar. 27, 1978), as
superseded by Exec. Order No. 12788, 57 Fed. Reg. 2213 (Jan. 21, 1992),
as amended.
[13] We have reported in the past that cost estimates will need to be
continually updated as actual costs begin to replace the original
estimates. GAO, GAO Cost Estimating and Assessment Guide: Best
Practices for Developing and Managing Capital Program Costs,
[hyperlink, http://www.gao.gov/products/GAO-09-3SP] (Washington, D.C.
March 2009).
[14] As the government of Guam has continued to revise its estimate for
larger, multiyear projects, the total is currently about $2.9 billion.
See enclosure I for more details about the projects.
[15] [hyperlink, http://www.gao.gov/products/GAO-09-653].
[16] [hyperlink, http://www.gao.gov/products/GAO-08-722T].
[17] 48 U.S.C. § 1423a. Most U.S. states and local municipalities have
similar constitutional or statutory limitations on borrowing. Debt
limitation provisions "serve as a limit to taxation and as a protection
to taxpayers; to maintain — solvency, both governmental and
proprietary; and to keep [local] — residents from abusing their credit,
and to protect them from oppressive taxation." In Re Request of
Camacho, 2003 Guam 16, 2003 WL 21697180 at 3 (Guam July 23, 2003),
quoting McQuillin (3RD ed., § 41.02); reversed on other grounds in
Limtiaco v. Camacho, 549 U.S. 483 (2007).
[18] Courts have interpreted "debt" to include a wide variety of
financial arrangements. For example, the Guam Supreme Court held that
bonds issued by the Guam Telephone Authority should be included in the
debt ceiling, because the government of Guam was committed to pay to
the authority any deficiencies in the bond reserve fund from general
tax revenues. Guam Telephone Authority v. Rivera, 416 F.Supp. 283
(1976).
[19] Office of the Public Auditor, Annual Report Calendar Year 2008
(Hagåtña, Guam, May 22, 2009). The general fund is the government of
Guam's primary operating fund.
[20] Deloitte and Touche, Government of Guam General Fund Financial
Statements and Independent Auditors Report Year Ended September 30,
2008 (Tamuning, Guam, May 11, 2009).
[21] [hyperlink, http://www.gao.gov/products/GAO-08-665].
[22] See 26 U.S.C. § 7654 and 48 U.S.C. § 1421h.
[23] The initial overall cost estimate for the government of Guam's
multiyear projects and programs was $6.1 billion, as indicated in
Governor Camacho's May 1, 2008, hearing statement. This initial
estimate was reduced to $3.2 billion because of subsequent revisions in
the estimate for roadway improvements. As the government of Guam has
continued to revise its estimate for larger, multiyear projects, the
total is currently about $2.9 billion.
[24] Government of Guam, Civilian-Military Task Force FY2010 Budget
Request (Hagåtña, Guam, July 16, 2008).
[End of section]
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